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Scottish Power to Pay £750,000 following Ofgem Investigation

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.”

Story appears courtesy of Ofgem.