Age UK has strongly rejected claims in The Sun newspaper that it recommended a special energy tariff from energy provider E.ON that was more expensive than the firm’s cheapest rate as part of an arrangement that netted the charity £6m a year.
After carrying out an investigation, The Sun today claimed that Age UK had been recommending a special two-year tariff from E.ON that would result in pensioners typically paying £1,049 a year, £245 more than the firm’s cheapest rate for 2015.
The Sun also alleged that the charity had been getting £41 from E.ON for every person who signed up to the tariff, which would earn the charity about £6m a year.
E.ON’s website says the Age UK fixed tariff protects customers from price changes for two years, subject to VAT and regulatory charges, and has no exit fee.
It says prices on this tariff are lower than the firm’s standard variable price tariff, called E.ON EnergyPlan.
The energy regulator Ofgem has been asked to look into the allegations by Amber Rudd, the energy secretary. A spokesman for the Charity Commission said it was aware of the allegations and was in contact with Ofgem and Age UK to decide what action might be required. The Fundraising Standards Board also said it would be in touch with the charity about the matter.
A spokeswoman for Age UK said the charity strongly rejected the allegations and The Sun’s interpretation of the figures. She said the Age UK fixed two-year tariff offered a good deal and was the market leader when it was launched in January.
She said that the Age UK fixed two-year tariff was more than £100 cheaper than E.ON’s standard variable tariff and was cheaper than other variable tariffs.
"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.
"We have no exit fees, so customers can move at any time if they find a different deal. This means they can pick a tariff that best suits their needs. E.ON also offers a free price alerts system that lets customers know of potentially better deals as soon as they’re available.
"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."
A spokeswoman for E.ON said the current Age UK tariff "was the cheapest product of its type in Britain when it was launched".
She said: "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 as soon as they’re available."
Rudd said in a statement: "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, which will now investigate this urgently and report back to me."
A spokesman for Ofgem said the regulator would look carefully into the claims, but there was not yet a formal investigation.
Andrew Hind, chair of the FRSB, said: "We have contacted Age UK with regards to claims made about its commercial arrangements with E.ON. While the terms of the energy deal lie firmly under Ofgem's jurisdiction, our focus will be to assess whether the charity has breached any aspect of the Code of Fundraising Practice, and we will work closely with Age UK and Ofgem to establish this."
Age UK’s latest annual report highlights E.ON funding for Age UK’s winter warmth programmes, which include free home energy checks. E.ON has also contributed funding towards free benefit advice checks.