* E.ON says to hike UK energy prices
* Follows increases by Npower and Scottish Power
* Government says prepared to act if markets fail consumers (Updates with government comment on rises)
By Susanna Twidale
LONDON, March 7 (Reuters) - Britain said it was “prepared to act” if markets fail consumers, as E.ON on Tuesday became the latest of the country’s big six energy providers to announce price hikes.
The UK government is under pressure to help households struggling with bills, while higher energy costs could contribute to an increase in inflation which has already risen sharply this year, leading to a cut back in spending.
“Wherever markets are not working for consumers, this government is prepared to act,” said a spokesman for the Department for Business, Energy and Industrial Strategy (BEIS), responding to the E.ON price rise.
“We expect energy companies to treat their customers fairly and continue to be concerned by these price rises which will hit millions of people already paying more than they need to,” he said, without giving any further details on what the government could do.
E.ON UK, the British arm of German utility E.ON, said its standard dual fuel bill would rise by 8.8 percent from April 26.
This follows similar rises announced last month by Innogy-owned Npower and Iberdrola-owned Scottish Power.
E.ON said the rise in gas and electricity prices was due in part to the escalating costs of government schemes to support renewable electricity generation and to help customers use less energy.
“It is an announcement we never want to make but is due in large part to the fact that many of the costs we don’t directly control,” E.ON UK chief executive Tony Cocker said in a statement.
The government says its policies only make up a small portion of household bills, and that by the 2020s bills will be lower on average than they would have been without the initiatives.
Britain’s energy market regulator Ofgem said last month it had the power to cap energy price tariffs but would not do this without a strong signal from the government.
The majority of British households are on energy companies’ standard variable tariffs which can be much more expensive than deals offered to new customers or those who have fixed their prices. (Editing by Alexander Smith and Mark Potter)