E.ON, the energy company, said that some of its electricity-only customers would receive a £14 reduction in their annual bill - £41 less than the amount Ofgem, the regulator, recommended.

The German-owned gas and electricity provider will reduce annual bills by £14 for hundreds of thousands of residential electricity customers in the the North West, the East Midlands and Eastern England who do not have a mains gas supply.

Ofgem said in October that more than four million consumers were missing out on the full benefits of competition in the energy markets because they did not have a gas supply and therefore could not obtain the most competitive “dual fuel” electricity and gas deals. It said that these customers could save £55 a year on electricity.

However, E.ON said yesterday that the figure was out of date because it was derived from analysis covering the period between 2005 and 2007, and was a national average across all suppliers rather than focusing on E.ON.

The company, which provides energy to about 5.5 million people in the UK, said last week that it hoped to reduce tariffs for all customers next year if wholesale gas and electricity prices continued to fall. In August it raised prices by 16 per cent for electricity and 26 per cent for gas after wholesale prices rose dramatically.

Graham Bartlett, managing director of E.ON's retail business, said: “We, like Ofgem, saw that our electricity customers who have no mains gas are simply not able to get some of our best deals.”

An Ofgem spokesman said: “We feel these [reductions] are a step in the right direction and it's good news for customers but we're evaluating all the responses the companies have made and we will respond in due course.”

Last month Alistair Buchanan, chief executive of Ofgem, said that it was “putting on the regulatory hobnails” to increase pressure on energy companies to cut prices after it had conducted an investigation into concerns about lack of competition in the energy market.

The regulator said then that it may ask the Competition Commission to launch a more detailed inquiry unless changes are made to energy companies' pricing.

This has not yet resulted in changes to energy bills, despite falling gas and oil prices.

The Bank of England said last month that it expected energy prices to fall by 10 per cent in the coming months, a considerably smaller decline than in the wholesale gas markets, where prices are down 40 per cent. British Gas said that customers with prepayment meters would see an average annual reduction of £22 in their bills, which consumer groups said was not enough.

Earlier this week npower, owned by RWE of Germany, said that it would follow British Gas and reduce the cost of prepayment meters for gas and electricity by £30 a year from Monday. The reduction would bring the prices in line with standard quarterly cash-cheque power and gas tariff.

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