Ofgem pushes ahead with energy market reform plan and investigates Scottish Power

Energy market: Ofgem to press ahead with plans for reform
Energy market: Ofgem to press ahead with plans for reform

Energy sector regulator Ofgem is pushing ahead with plans to shake-up the gas and electricity markets, aiming to break the stranglehold of the Big Six suppliers.

The regulator said it would also launch an investigation into Scottish Power, one of the leading power companies, over a potentially misleading marketing campaign.

It is undertaking an ongoing probe into Britain's big six utilities companies – British Gas, EDF Energy, Npower, Scottish and Southern Energy, Scottish Power, and EON.

Ofgem said rising fuel prices had forced it to enact sweeping reforms to ensure customers were treated fairly. The body is looking to encourage increased competition in the sector.

Its decision to shake up the utility sector follows its review published in March, which concluded that companies must introduce fairer and simpler-to-understand tariffs.

Support for reform has been widespread among consumer groups, with Consumer Focus, Which?, CAB, Age UK and uSwitch backing the case for change, along with independent generators and small energy suppliers.

Alistair Buchanan, chief executive of Ofgem, said there was now increasing consensus that suppliers had to transform the way they do business.

He said: "This is why Ofgem is pressing ahead with its consultations to sweep away complex tariffs in order to expose energy suppliers’ prices to consumer power.

"We will also pursue breaking up the stranglehold of the Big Six on the electricity market to encourage more firms, like new arrival the Co-op, to enter the energy market and increase the competitive pressure on the Big Six."

Buchanan said there were signs "the penny has dropped" with the Big Six suppliers and that they were ready to take part constructively in the debate.

He said: "Our latest report on prices also gives even more impetus to the need for radical reform, as it shows that turmoil in global energy markets during 2011 has pushed up wholesale costs by 30% since December 2010.

"Now, more than ever, consumers need to have confidence that competition can operate effectively in setting energy prices."

Ofgem said its planned Enterprise Act investigation into Scottish Power should be seen as its wish that "a sea change" came about in the way customers were treated by the industry.

"Companies that fail to play it straight with consumers need to understand that they risk facing enforcement action," Buchanan added.

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."

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