Ofgem Plans Radical Energy Market Reforms & Announces ScottishPower Investigation
Ofgem says it will continue with plans to radically alter the gas and electricity market as the regulator announces it plans to investigate ScottishPower marketing.
Ofgem said it would look into a “potentially misleading” offer from ScottishPower after the energy firm announced a massive price hike a few weeks ago.
Ofgem is also threatening to refer the Big Six utility companies to the Competition Commission with the chief executive of Ofgem, Alistair Buchanan saying “We will 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”.
British Gas said just a few weeks ago that wholesale energy prices had risen around 25% and that gas and electricity prices both domestic and business had to go up to compensate for this. We’ve already seen increases in business electricity prices and business gas prices with more increases expected.
ScottishPower blamed its increase in energy prices on wholesale price rises but Ofgem is to investigate its tariffs to see if it has missold energy to customers.
Consumer Focus said it was pleased with Ofgem’s announcement saying the energy market needed to be reformed. The chief executive of Consumer Focus, Mike O’Connor said “The fact that Scottish Power was trying to push a dubious product to cover for their price rise shows just how far the penny needs to drop. Energy suppliers have been in denial about their poor reputation, about the health of the market and about the scale of changes needed to put it right. This market needs to change”.
After a review of the energy market, Ofgem announced in March that it would work to reform the utility market. Ofgem wants to encourage smaller energy companies into the market and has told the bigger suppliers that they need to make their tariffs fairer and simpler.
While Ofgem admits that the energy providers are working with them to reform it warns that it will refer them to the Competition Commission if the process fails.