Age UK energy deals with E.On to be examined by Ofgem

The Sun newspaper claims energy deals offered by Age UK with supplier E.On may have been much more expensive than the cheapest offers from the firm.

 

In return, the Sun alleged, the charity had received about £6m from E.On.

Age UK has rejected the allegations, while E.On said its tariffs were competitively priced.

The Sun claimed that Age UK recommended a special rate from E.On which would typically cost pensioners £1,049 for the year - £245 more than its cheapest rate in 2015.

It also alleged Age UK received about £41 from energy supplier E.On for every person signed up, amounting to £6m a year.

BBC personal finance correspondent Simon Gompertz said it was standard practice for price comparison websites to receive a commission for passing on business.

Age UK would not comment on any payments it had received from E.On. But it said E.On "have been generous supporters of our charity over and above the number of customers on the tariff".

Switching option

The charity added it had been working "openly and above board" with E.On for 14 years.

A spokesman said: "We strongly reject the allegations and interpretation of figures in this article.

"Energy prices change all the time and we have always advised older people to look out for new good deals and we will continue to do so."

E.On said the Sun had made a comparison between two different types of tariffs.

It said the Age UK product referenced by the paper as costing pensioners about £1,049 annually was a two-year fixed deal which, although more expensive than its cheapest rate, was favoured by some customers because it provided longer-term certainty over potential price increases.

E.On said: "We always work to make sure our tariffs, for all customers, are competitively priced and that is further evidenced by the fact that our current Age UK tariff was the UK's cheapest product of its type in the UK 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 the UK."

It added its customers could switch tariffs at any time without any charge being applied and sign up to be alerted to potentially better deals when they became available.

In a statement, Energy Secretary Amber Rudd 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."

Ofgem said its rules required energy companies to treat consumers fairly when they were marketing and selling energy.

It said: "Ofgem has a track record of punishing firms who mislead consumers and we will look at carefully at these claims."

Under scrutiny

Last month, E.On announced a 5.1% reduction in its standard gas price for residential customers.

At the time, it said it had Britain's cheapest fixed energy tariff.

Energy firms have been cutting prices recently in response to the falling prices of wholesale energy.

However, critics say that they have not been quick enough to pass those falls on to consumers.

The Competition and Market Authority (CMA) is still examining whether the industry needs reforming to improve competition between suppliers.