- Scottish Power did not have a robust process for ensuring the level of price difference by payment type complied with Ofgem rules
- Scottish Power to pay £750,000 to Energy Best Deal
- Since December 2012 Scottish Power has improved its processes to calculate price differences for payment methods
Scottish Power has agreed to pay £750,000 to Energy Best Deal following Ofgem’s investigation into price differences between its standard credit and direct debit tariffs.
Under Ofgem rules, suppliers can only have different prices for different payment methods if the amount reflects the costs involved in supplying those accounts. These rules are designed to protect consumers and take into account that some payment methods are more expensive to administer than others. Ofgem’s investigation found that between September 2009 and December 2012 Scottish Power did not have a robust process in place to assess the costs associated with different payment types and set prices accordingly.
At the time our investigation opened, Scottish Power’s price differential between standard credit and direct debit payment methods was out of line with that of other suppliers. Since the investigation was launched, Scottish Power has significantly reduced its price differential.
Scottish Power has cooperated with Ofgem and has taken steps to ensure that it can comply in future. The size of the penalty reflects the scale of the breach and takes into account Scottish Power’s willingness to accept its failings and make payments that benefit consumers.
Sarah Harrison, Senior Partner in charge of enforcement at Ofgem said: “Suppliers need to clearly justify the different prices they set for different payment methods. In this instance, Scottish Power did not have a robust process in place when setting their prices to ensure that the difference between their tariffs complied with Ofgem’s rules. We’ve held them to account for this and they will now pay £750,000 to benefit Energy Best Deal.”
Notes to editors
1. Penalty Notice
Read the penalty notice for more information on today’s announcement.
2. About Energy Best Deal
Energy Best Deal is a public awareness campaign run by Citizen’s Advice, aimed at helping improve the confidence of domestic energy customers across England, Wales and Scotland to shop around, reduce their bills and get help if they are falling behind with energy payments.
The campaign is aimed at low income consumers and front-line staff who work with people at risk of fuel poverty who can be signposted to a range of further help with issues such as fuel debt, benefits entitlement and energy efficiency. The campaign aims to:
- make people aware of the savings that can be made by switching fuel providers or negotiating with existing providers
- provide information about help available from energy suppliers and government for people struggling to pay their gas and electricity bills
- inform consumers about how they might save money by using less energy and sources of advice and help around energy efficiency.
3. About Ofgem
Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority's functions are set out mainly in the Gas Act 1986, the Electricity Act 1989, the Competition Act 1998 and the Utilities Act 2000. In this note, the functions of the Authority under all the relevant Acts are, for simplicity, described as the functions of Ofgem.
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