Energy secretary Amber Rudd has urged energy watchdog Ofgem to launch an investigation into the allegations that the charity Age UK recommended unfavourable gas deals with energy provider E.On to the elderly in exchange for cash.
The move comes after a Sun investigation allegedly revealed the charity accepted a total of £6m ($8.8m, €7.8m) a year from E.On by recommending the company's services. According to The Sun, pensioners could have saved £245 in 2015 if they had opted for a cheaper rate, not mentioned by Age UK.
An estimated 152,000 elderly customers were affected by the deal according to The Sun, which claimed that £37m was overspent because of the partnership between Age UK and E.On.
"People expect a fair deal when it comes to their energy bills, not a rough deal," Rudd said. "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."
IBTimes UK has reached out to Age UK, but the charity could not provide a comment as of publication time. The organisation told the BBC that energy provider E.On has been a "generous supporters of our charity over and above the number of customers on the tariff".
E.On claims that The Sun is comparing apples with oranges by using two different tariffs. The energy provider announced on 20 January it would cut the price of its standard-tariff gas prices for residential customers by 5.1% from 1 Feburary in response to the ongoing decline in wholesale costs.
In response to the news, an Ofgem spokeswoman told IBTimes UK: "Ofgem rules require energy companies to treat consumers fairly when they are marketing and selling energy. Ofgem has a track record of punishing firms who mislead consumers and we will look carefully at these claims."
Adding insult to injury, Age UK urged energy firms to cut prices in response to falling wholesale costs after a study by price comparison website comparethemarket.com in January found that over the past two years, wholesale energy prices fell by almost 50%, but the average household bill of more than £1,300 a year has come down by only 14%.
Age UK sent IBTimes UK the following statement:
"We strongly reject the allegations and interpretation of figures.
"The Age UK Fixed 2 Year tariff offers a good deal and was the market leading 2 year tariff when launched in January. For example, the Age UK Fixed two Year tariff(1) is over £100 cheaper than that E.ON Standard Variable tariff (2) and is 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 anytime 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."