Ofgem is to examine allegations that energy supplier E.ON reportedly paid out £6 million to charity Age UK for pushing more expensive tariffs to the elderly.
The Sun newspaper claims Age UK had been recommending a special E.ON tariff which on average costs pensioners £1,049 a year – £245 more than the Big Six supplier’s cheapest deal.
It alleged the charity had been receiving around £41 for every person that signed up.
Around 152,000 customers are claimed to be on the deal.
The two organisations however do have a “long term commercial partnership”.
Last year Age UK’s research revealed almost a million elderly customers are “suffering in silence” about the poor service they receive from their energy suppliers.
E.ON said it makes sure its tariffs are competitively priced for all its customers.
A spokesperson added: “That is further evidenced by the fact that our current Age UK tariff was the cheapest product of its type in Britain when it was launched, a two-year fixed deal and when we launched our current one year fixed product, it was also the cheapest in Britain.
“Crucially, any of our customers can switch to any these products at any time, based on the suitability of their meter, without any charge being applied. This means they can pick a tariff that best suits their needs. That’s why we also offer a free Price Alerts system that lets customers know of potentially better deals being available as soon as they’re available.”
Age UK said it “strongly rejects” the allegations and the interpretation of figures.
It claims the Age UK two-year fixed tariff is more than £100 cheaper than the E.ON Standard Variable tariff and other variable tariffs.
A spokesperson added: “When customers contact us they are offered a choice of all four E.ON tariffs and many choose the one year tariff or variable option, however many prefer the reassurance of a fixed tariff for two years.
“The long term commercial partnership includes a typical commission to Age UK of £10 for each customer. Financial support beyond this is not linked to customer numbers. The past two years have seen much volatility in the energy market and with E.ON’s support we have managed to maintain our level of charitable work over this time. This reflects the strength of the 14-year relationship.”
Energy Secretary Amber Rudd has asked Ofgem to investigate the allegations.
She said: “People expect a fair deal when it comes to their energy bills, not a rough deal. I take very seriously this allegation that Britain’s pensioners are being misled so immediately contacted Ofgem who will now investigate this urgently and report back to me.”
A spokesperson from Ofgem added the regulator will “look at carefully at these claims”.
ELN has contacted Age UK for a comment.