Energy News

Ofgem launches inquiry over Scottish Power’s ‘misleading deal’

Wednesday 22 June, 2011

By Martin Fagan - news@consumerchoices.co.uk

Regulator will also push ahead with a radical overhaul of the energy market.

Energy regulator Ofgem has confirmed it has launched an inquiry into what it calls a “misleading” deal offered by Scottish Power, which was promoted at the same time as the energy giant’s latest price hike.

Ofgem is investigating the terms and conditions of Scottish Power's "Direct October 2012" offer that guaranteed prices would remain a minimum of 1% below its standard monthly direct debit prices until 30 September 2012 and claimed consumers could save £459 a year.

The energy supplier unveiled the offer earlier this month at the same time it announced gas tariffs would rise by an average of 19% and electricity by 10% from 1 August, affecting 2.4 million householders in the UK.

The regulator insisted the small print on the "Direct October 2012" offer did not match up to the promise.

Speaking to the BBC, Alistair Buchanan, Ofgem chief executive, said the tariff in question was being investigated because the marketing material was misleading.

"We have been looking at their marketing material in particular and, under our consumer protection powers, we are very concerned about some of the claims they have made and so we will be having a look at that very carefully," he said.

In light of the investigation, Scottish Power has now removed this tariff from the market.

As well as the investigation of Scottish Power, Ofgem has also announced its determination to press ahead with a radical overhaul of the retail energy market following wide support from consumers, Consumer Focus, Which?, CAB and Age UK along with independent generators and small energy suppliers.

Earlier this year, the regulator threatened the "big six" with a referral to the Competition Commission if they did not simplify prices and sell off between 10% and 20% of their electricity output to allow smaller firms to enter the market.