Business

Scottish Power hit with price gap penalty by Ofgem

Energy bill
Image caption The way customers pay can affect the level of bills, under Ofgem rules

Scottish Power has been hit with a £750,000 penalty by regulator Ofgem following an investigation into price differences between payment methods.

Suppliers can charge different prices if customers pay in different ways, such as by cheque every quarter or by a cheaper monthly direct debit.

This should reflect the different costs involved in collecting these payments.

Ofgem found that Scottish Power did not have a robust process to assess these costs and set prices accordingly.

The problems occurred between September 2009 and December 2012, when the firm was out of line with other suppliers.

Ofgem ordered Scottish Power to pay £750,000 to Energy Best Deal - an awareness programme that explains the savings that consumers can make by shopping around and switching suppliers.

Since the investigation was launched, Ofgem said Scottish Power had reduced the gap between prices for different ways of paying.

A Scottish Power spokesman said: "Scottish Power has co-operated fully with this investigation. We recognise that historically we did not have a robust process in place but we are pleased that Ofgem has concluded its investigation and made no finding that any specific impact on customers resulted from our failure to have these processes in place.

"We fixed this problem by December 2012 and all of these processes are now fully compliant."

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