E.On is the first big energy supplier to announce that it will not raise prices in 2012.
Millions of households can breath a sign of relief after E.On said that it would not be raising gas and electricity prices this year.
The announcement comes just days after British Gas hinted that it would be forced to raise energy prices amid increasing wholesale costs.
"Unfortunately global energy markets are expected to see an overall trend of rising wholesale prices," Tony Cocker, chief executive of E.On UK, said, but he added that the company would still keep residential prices unchanged.
Britain's 'Big Six' energy suppliers EDF Energy, Centrica (LSE: CNA.L - news) , SSE (Frankfurt: A0RFBG - news) , E.On, RWE (Xetra: 703712 - news) npower and Scottish Power which control 99pc of the market, had announced tariff cuts in January following a decline in wholesale prices due to mild weather and an economic slowdown. At the time, E. On announced plans to cut its UK power prices by 6pc.
Tom Lyon, energy expert at uSwitch.com, said: “There is some uncertainty over prices and consumers will be worried about what this might mean for their bills. While SSE has moved to reassure its customers that they will be protected from higher prices at least until the autumn, E.On has gone one step further by promising a price freeze throughout 2012. This is good news for its five million domestic customers."
Last week British Gas, the UK’s biggest energy supplier, said the rising cost of gas on the wholesale market as well as increased transportation costs and green taxes meant that consumers would face higher bills next winter.
The rises will add around £100 to the typical dual fuel household bill, taking the cost of heating a home to around £1,125 a year. Phil Bentley, the managing director of British Gas, recently warned that energy bills would rise for the next decade.
He said: “People will have to pay more per unit [over the next 10 years] and they are therefore going to have to be more diligent in saving energy."
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