Big Six called to account as Scottish Power is punished

 

The Big Six energy providers came under increasing pressure yesterday as MPs summoned them to Parliament while the industry regulator fined Scottish Power £8.5m.

The bosses of British Gas, SSE, Scottish Power, npower, EDF and E.ON – as well as some smaller suppliers –have been called to Parliament next Tuesday to give evidence to the Energy and Climate Change Committee  about recent price increases.

Sir Robert Smith, the Liberal Democrat who is acting chairman of the inquiry, said: “The committee has decided to call in the energy bosses in the context of the latest round of price increases.”

The committee said the session will explore a range of issues, including the reasons and justification for the recent energy price rises, the differences in pricing policy between energy suppliers, and how the transparency of energy companies can be improved.

The committee made its summons as Sir John Major, the former Conservative prime minister, said there was a case for an excess-profit tax on the big six energy companies, which could be used to help subsidise bills for the poor.

Meanwhile, Scottish Power is to pay £8.5m to its customers after an investigation by the regulator found it gave misleading information during sales pitches.

The Ofgem inquiry into Scottish Power’s doorstep and telephone selling techniques found  it had failed to provide “accurate estimates of the annual charges that customers would pay and comparisons with their current supplier if they switched to SP”, and that, as a result, “unreliable information” was often provided to customers. The breaches occurred between 2009 and 2012.

“We accept Ofgem’s findings and we apologise unreservedly to those customers affected,” Neil Clitheroe, Scottish Power’s chief executive of energy retail and generation, said.

Scottish Power will pay £7.5m to the 140,000 customers it has on the government-led “warm home discount scheme”, aimed at supporting those likely to be at risk of fuel poverty. It estimates that each will receive a payment of about £50. The company has also set up a £1m compensation fund for those customers who believe they are victims of  mis-selling.

The company said the failings identified had all been rectified. It stopped doorstep sales in 2011 and has also put into place independent checks on the conduct of its telephone agents.

Sarah Harrison, a senior partner at Ofgem, admitted that the regulator had no power to ensure the cost of fines would not be passed straight back to consumers through higher bills.

She added, however: “Any company that finds itself in a position where it has failed its customers, and where it is told by Ofgem that it has got to repay money to its customers, would be really foolhardy to pass that cost back to customers.”

Scottish Power was also fined a nominal penalty of £1, which Ofgem said would have been higher had the company not admitted the breaches and agreed to compensate customers.

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