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E.ON's StayWarm tariff offers fixed-price gas and electricity for those aged 60 or over.
A fixed-priced tariff energy scheme that has provided some protection from harsh winters for thousands of pensioners for more than 12 years is being axed by a utility giant as part of the national drive towards simplification of bills and pricing.
The StayWarm product – which is administered by the German-owned utility giant E.ON – offers fixed-price gas and electricity providing peace of mind for people aged 60 or over. Unlike a standard tariff where bills are driven by meter readings and therefore consumption, StayWarm prices are based on consumption over the previous 12 months and on the state of the wholesale energy market. The amount a customer pays is fixed for 12 months from when they sign up, so there are no unexpected bills.
However, the company has been writing to customers whose contracts are close to renewal, informing them that the scheme is being axed and that their contracts will not be renewed.
In a package of reforms unveiled by the industry regulator Ofgem earlier this year, which aim to make the energy market more transparent and simplify pricing, energy companies have been told that they must offer no more than four tariffs for each type of fuel.
On its website E.ON said: "We're closing StayWarm to comply with Ofgem's proposed new rules. So if your StayWarm plan ends after the 6th of October we'll renew you onto E.ON EnergyPlan unless you call us."
The EnergyPlan is more expensive than the StayWarm tariff.
Pensioner groups said elderly people – among the most vulnerable and cash-strapped groups in society – would suffer from reforms that are supposed to benefit consumers.
Caroline Abrahams, charity director general at Age UK said: "While reducing the number of energy tariffs available should help simplify the energy market, we are concerned that many older people are unaware of the changes, how this will affect them and what action they need to take.
"If older people do not stay informed about the changes and take action, there is a danger that they will end up paying more unnecessarily."
Pensioner Thomas Howley, aged 80, of Wetherby, said: "The termination of StayWarm will have a frightening impact on old people, particularly those who live alone in small homes, who pay a lower tariff, and will be obliged to seek other providers of gas and electricity."
He claimed the closure had not been properly announced and that "the first indication that users have of the change will be when their arrangement with E.on ends". By being switched to an alternative tariff, Mr and Mrs Howley's annual bill will increase from £1,446.84 to £1,658, he said.
David Cameron pledged last year to force energy companies to offer customers their lowest tariffs – a promise the regulator is now trying to deliver. All UK households will receive simplified gas and electricity tariffs by the end of the year and must be told the cheapest deal available from their supplier by the spring, Ofgem has said.
But record average fuel bills of £1,500 a year have been predicted as British Gas and other big six power companies prepare to announced big price increases of around 8%.
British Gas, which has 11 million gas and electricity customers, warned this summer that prices might have to rise again this year. The company increased its prices by 6% last November and its most recent half-year profits rose 3% to £356m. Its parent company Centrica recorded a 14% increase in operating profits to £2.74bn.
http://www.theguardian.com/money/201...iff-pensioners
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