Scottish Power savings claim probed by watchdog

The energy watchdog said today that it had launched an investigation into a "potentially misleading" offer by Scottish Power promoted during its last price hike.

Ofgem, which is pressing ahead with a proposed shake-up of the industry, said it will look at Scottish Power's £459 savings claim from its "Direct October 2012" offer.

The energy supplier unveiled the offer earlier this month when it said gas tariffs will rise by an average of 19% from August 1 and electricity will go up by 10%.

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.

Under the Scottish Power Direct October 2012 Offer, the company guaranteed prices would remain a minimum of 1% per year below its standard monthly direct debit gas and electricity prices until September 30, 2012.

But discussing the product, Alistair Buchanan, chief executive of Ofgem, told the BBC that "when you look at the small print it looks very different from that".

He said: "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."

Ofgem stressed that an investigation being launched did not mean Scottish Power had breached its obligations.

Scottish Power is also under investigation over its pricing plans and, along with three other providers, into potential mis-selling of energy to customers.

Mr Buchanan said during its review of the energy market it struggled to see where up to £700 million of the £2.9 billion in profits generated by the industry came from.

He said the "big six" - British Gas, Npower, E.ON Energy, EDF Energy, Scottish Power and Scottish and Southern Energy - were engaging in the reform process.

The watchdog said it had received support for its proposed reforms for the wider industry from Consumer Focus, Which? and the Citizen's Advice Bureau.

Ofgem wants to "sweep away" complex tariffs so consumers can understand prices more easily and wants to "break the stranglehold" the big six energy firms have on the market.

The regulator hopes to publish full proposals for its reforms next year after consultation with interested parties, including suppliers.

Mr Buchanan said Ofgem found that over the last five years profits for the big six had remained "more or less the same" - just below £3 billion on aggregate.

He said: "We watch that quite carefully because of course, on the one hand, the companies, they say, 'we are losing money in a certain part of the energy chain' but it would appear, given that their overall profits stay at much the same level, that they regain profits elsewhere."

Mr Buchanan said Ofgem had appointed an independent official accountant look at the industry books.

Michael O'Connor, chief executive of Consumer Focus, said: "Energy suppliers have been in denial about their poor reputation, the health of the market, and scale of change needed to put it right. This market needs to change. Ofgem has taken another step today and we welcome it."







A Scottish Power spokesman said: "We agree that information about all energy tariffs across the market should be as clear as possible and we will fully co-operate with the Ofgem investigation.



"The tariff in question was a very limited offer with considerably discounted prices, which is now fully subscribed.



"However, there are a number of similar products still available on the market from competitors. We believe that all figures that have been quoted by us are accurate."

Start your day with The Independent, sign up for daily news emails
Voices
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Voices
Joseph Kynaston Reeves arguing with Russell Brand outside the RBS’s London offices on Friday
voicesDJ Taylor: The great tradition of St Paul and Zola reached its nadir with a worker's rant to Russell Brand
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
News
i100
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
News
Xander van der Burgt, at the Royal Botanic Gardens, Kew
scienceA Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Recruitment Genius: Medico-Legal Assistant

£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

Ashdown Group: (PHP / Python) - Global Media firm

£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

The Jenrick Group: Quality Inspector

£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick