Energy regulator Ofgem today responded to widespread public anger over the “Big Six” suppliers with tougher new rules governing fixed tariffs and an £8.5 million penalty for Scottish Power for misleading customers.
Ofgem’s double announcement this morning was welcomed as the latest “clear, strong signal” to energy companies that they need to restore shattered public trust in their industry.
Suppliers will be banned from hiking prices on fixed-term tariffs over the course of a contract and stop them from automatically rolling customers on to another fixed-term offer when the current one ends.
The Scottish Power penalty comes after its sales teams were found to be wrongly enticing customers to switch supplier between October 2009 and January 2012 with inaccurate estimates of savings. The Spanish-owned supplier, which has hundreds of thousands of customers in the South-East, will pay £7.5 million to help vulnerable customers and set up a £1 million compensation fund.
More than 140,000 people on the Warm Home Discount scheme will receive payments of about £50.
It follows a wave of price increases over recent weeks from three of the big six — SSE, British Gas and npower. Andrew Wright, Ofgem’s chief executive, said: “Ofgem is resetting the energy market in consumers’ favour to make it simpler, clear and fairer. If suppliers fail to deliver, then Ofgem stands ready to take enforcement action to protect consumers.”
Energy Secretary Ed Davey said: “This is a clear, strong signal that energy companies shouldn’t expect to get away with bad practice.
“We’re giving Ofgem powers that force energy companies to make direct payments to consumers hurt by these kinds of activities.”
Ann Robinson, director of consumer policy at price comparison website uSwitch.com, said: “Fixed now means fixed so consumers will know where they stand. At the end of the term they will have the freedom to decide what their next tariff should be.”
