E.ON and Centrica, two of the UK's so-called "big six" energy providers, today warned of a toughening retail market, raising the chance of cost cuts in response to falling profits. 

Britain's major energy utilities have faced competition from small, more flexible rivals entering the fray while the government has put a cap on electricity prices.

This has caused several companies to cut their earnings outlooks. 

"We will have to talk to the regulator," E.ON finance chief Marc Spieker said today after reporting first-quarter results and flagging cost cuts at its British unit, where profits fell by 60%. 

"Self-help measures alone won't fix this," he added. 

British regulator Ofgem was told by parliament last year to cap energy prices after lawmakers said customers were being overcharged for electricity and gas. Prime Minister Theresa May had called the tariffs a "rip-off". 

Ofgem increased the cap by 10% on April 1 and all big six suppliers raised their standard prices by the same amount, including Centrica's British Gas, E.ON and Innogy's Npower. 

However, due to unseasonably low wholesale prices for gas, analysts expect Ofgem to announce in August the cap will be reduced when the next price review begins in October. 

Large energy retailers in Britain have also struggled due to competition from smaller rivals, often able to offer customers cheaper deals due to their frequently lower overheads and nimbler operations. 

Small and mid-tier suppliers control around 25% of the market, up from less than 1% around seven years ago.

Between them, E.ON and Centrica - which owns Bord Gáis Energy here - have lost more than 400,000 customers in Britain so far this year. 

Centrica, Britain's largest energy supplier, said it faced a challenging trading environment in the first half, but maintained its full-year outlook for operating cash flow and net debt.

As part of a larger asset swap with peer RWE, E.ON is likely to end up owning Npower, which has been hit even harder by the sectoral crisis.

Spieker said E.ON was in talks with Npower's management, adding that it was considering all options for the unit.