Business

E.on increases energy bills for elderly 'due to new rules'

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Image caption E.on's move will turn up the heat on the government's reforms

Tens of thousands of elderly customers face a rise in their energy bills, after one of the UK's biggest suppliers withdrew a tariff for the over 60s.

E.on has announced that it will scrap its StayWarm scheme, which offered fixed-price bills.

The firm blamed new rules which limit the number of tariffs that energy companies can offer.

The changes are part of the government's plans to cut bills, and have been backed by the Prime Minister.

They are being implemented by the regulator, Ofgem, and will limit the total number of tariffs to four per fuel.

"Due to new Ofgem rules, which includes limiting the number of tariffs we can offer, the StayWarm tariff will close as current contracts come to an end from October 7th," an E.on spokesperson said.

The customers concerned will be written to, and advised to switch to another tariff.

However, if they cannot be contacted, they will be automatically moved to the company's more expensive standard tariff.

Savings

Ofgem said E.on could have continued with the StayWarm tariff if it had wanted to.

"We have never told suppliers which tariffs they have to close to comply with this rule, as that is a decision for them," said an Ofgem spokesperson.

"In fact we have been clear with all suppliers that they would have been allowed to keep social tariffs (which for example offer discounts to customers who have difficulty paying bills) under our rules.

But some experts warn that Ofgem's reforms could lead to more cheaper tariffs being withdrawn.

"Whilst Ofgem's reforms to simplify the market are well meaning, they will lead to the end of special deals such as StayWarm," said Mark Todd, the director of the price comparison site energyhelpline.

"In fact by restricting choice they are likely to make the issue worse not better," he said.

Under the new rules, which are due to be in place by the end of 2013, the customers affected will have to be given details of the next cheapest tariff offered by E.on.

E.on said that another tariff for customers over 60 remains open.

The Age UK 1 year fixed tariff protects consumers against price rises for 12 months.

Anyone who pays by direct debit can also save 3% compared to the company's standard tariff.