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Last Updated: Tuesday, 7 September, 2004, 15:51 GMT 16:51 UK
Powergen starts customer switch
A thermostat
The Staywarm tariff allows customers to budget
Powergen is moving thousands of elderly customers off a fixed-price tariff because they are using too much energy.

The popular Staywarm deal is the only one of its kind for the over 60s and is currently used by 350,000 households as it helps them to budget.

The firm has now introduced usage caps which means 30,000 heavy users will be switched to variable-rate deals.

Customers who are on certain benefits, including Disability Living Allowance, can remain on the tariff.

With the Staywarm tariff, the price is fixed and linked to the number of bedrooms and occupants.

Powergen said it was not going to publish the criteria by which it will exclude customers from the tariff. It argues that if it did publish the usage threshold over which someone would no longer qualify for the tariff, pensioners would panic.

"We are trying to be as responsible about this as possible," said a spokesman.

Powergen, which acquired the unique tariff when it took over energy company TXU in 2002, said it was still committed to tackling fuel poverty.

We are dismayed at the way Powergen has gone about telling its customers
Allan Asher, Energywatch

Energywatch, the gas and electricity consumer watchdog, has said it has received calls from worried pensioners and it is unhappy with the manner in which Powergen is contacting users.

Chief Executive Allan Asher said the letter informing customers of the switch was "insensitive".

"While we accept the need for the tariff to change, we are dismayed at the way Powergen has gone about telling its customers. Its clumsy actions fail the basics of customer care."

Powergen announced the need for the switch in June.

At the same time, Powergen also announced it would be reviewing prices on a quarterly basis instead of yearly.

However, these reviews will take effect when annual contracts are renewed.

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