UPDATE 1-E.ON says to cut gas prices by 3.3 pct from Sat

(Recasts, adds comment, adds background)

LONDON, July 3 (Reuters) - E.ON (EONGn.DE) will cut gas prices to British customers from Saturday by an average of 25 pounds per year, or 3.3 percent, the company said.

E.ON said in a statement the cut would affect 2 million customers. It followed a 9 percent reduction in power prices introduced in March.

Short-term British gas prices touched a year low of 24.25 pence per therm on Wednesday, in reflection of ample supply and low demand.

Gas for Monday delivery was traded at 25.75 pence late on Friday.

The company is also removing the standing charge for its gas prepayment meters, effectively reducing bills by around 26 pounds for its dual gas and power customers.

Consumer watchdogs said the reduction was not enough.

UK consumer advice group uSwitch said in a statement the cuts would not wipe out increases from 2008, and prices after Friday's cut would still be 35 percent higher than 18 months ago.

Utilities British Gas (CNA.L), Scottishpower (IBE.MC), and Scottish & Southern Energy (SSE.L) have cut gas prices for consumers in 2009 by between 4 and 10 percent. (Reporting by Kwok W. Wan, Barbara Lewis/Anthony Barker)