The watchdog is to investigate claims that Scottish Power customers could save £459 with its Direct October 2012 offer.
Ofgem wants to reform the consumer energy market by “breaking up the stranglehold” of the Big Six energy suppliers to make sure that consumers are getting a fair deal from British Gas, EDF Energy, E,on. Scottish Power, nPower and Scottish and Southern Energy.
The regulator hopes to simplify the tariffs offered to consumers and change the way they are treated by energy providers. It also hopes to make room for more, smaller companies to enter the market and increase competition.
Ofgem welcomed the entry of The Co-operative Group which revealed the launch of Co-operative Energy last month.
Ofgem’s CEO Alistair Buchanan says: “Responses to our reforms show that there is increasing consensus across a range of consumer and business groups that in a period of rising energy prices energy suppliers have to transform the way they deal with consumers. We are also seeing signs that the penny has dropped with the Big Six and they are ready to take part constructively in the debate. Now more than ever, consumers need to have confidence that competition can operate effectively in setting energy prices.”
Ofgem’s plans to reform the energy market are supported by a number of small energy suppliers and consumer organisations including Consumer Focus, Which?, Age UK and uSwitch. The Big Six are said to be “ready to take part constructively in the debate” over transforming the industry but could still be referred to the Competition Commission.
Speaking about the investigation into Scottish Power, Buchanan says: “This is a further strong signal to the industry that we wish to see a sea change in the way customers are treated. Companies that fail to play it straight with consumers need to understand that they risk facing enforcement action.”