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."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Lead Application Developer

£80000 - £90000 per annum + competitive: Progressive Recruitment: I am current...

Year 3 Welsh Teacher vacancy in Penarth

£110 - £120 per day + Travel Scheme and Free training: Randstad Education Card...

Senior Developer - HTML, CSS, PHP, JavaScript, VBA, SQL

£30000 - £35000 per annum + benefits: Ashdown Group: We are working with one o...

Male Behaviour Support Assistant vacancy in Penarth

£55 - £65 per day + Travel Scheme and Free Training: Randstad Education Cardif...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz