Warning over price competition problems from E.ON

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E.ON has warned Ofgem that new rules aimed at making energy prices fairer could stifle competition in the marketplace.

Lack of competition could be bad news for people switching their supplier using price comparison sites as electricity and gas company's prices will start to get more similar.

E.ON has an issue with the energy regulators plan to stop suppliers charging customers with pre-payment meters more.

"Prices will have to be more cost-based than market-based," the company said.

"This would pose further risks to the development of competition in the UK."

Competition in the marketplace is essential if switching tariffs is to remain a worthwhile task for consumers, but with talk of an ongoing energy price war in the UK it seems electricity and gas customers will have little to worry about.

Meanwhile, despite being criticised by E.ON, Ofgem has been championing consumer rights be demanding that suppliers explain their pricing procedures.

Alistair Buchanan, chief executive of the energy regulator, Ofgem said: "In a strong competitive market, we would expect prices to respond to such falls."

Written by Lisa Swainston.

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