Ofgem to investigate ScottishPower

Bulb in hand

ScottishPower is being investigated for misleading marketing practices by Ofgem.

The energy regulator is investigating the launch of the energy provider's Direct October 2012 offer for the potentially misleading claim that it will save customers £459.

ScottishPower says it believes all quoted figures are "accurate" but that it will "fully co-operate" with Ofgem's investigation.

The tariff is now fully subscribed with prices guaranteed to be 1% below standard monthly direct debit prices until 30 September 2012.

Summer energy increases

ScottishPower announced details of the offer at the same time that it revealed summer increases to its gas and electricity prices, by 19% and 10% respectively.

Alistair Buchanan, Ofgem's chief executive, said its investigation into ScottishPower is a "strong signal" to the industry that the regulator wants to see a "sea change in the way customers are treated". He added: "Companies that fail to play it straight with consumers need to understand that they risk facing enforcement action."

The difference between ScottishPower's standard credit and direct debit tariffs is also under Ofgem scrutiny for not being "cost reflective" and for potentially mis-selling energy to customers, along with other providers EDF Energy, npower and Scottish and Southern Electricity.

Ofgem's latest report also reveals that wholesale energy costs have gone up by 30% since December 2012. As a result it is calling on the energy providers to change how they deal with consumers and disband complex pricing structures.

"Ofgem is pressing ahead with its consultations to sweep away complex tariffs in order to expose energy suppliers' prices to consumer power," said Buchanan, adding: "We will also pursue breaking up the stranglehold of the Big Six on the electricity market to encourage more firms, such as new arrival the Co-op, to enter the energy market and increase the competitive pressure on the Big Six."