ScottishPower to pay £750,000 for payment type price gap

Energy firm ScottishPower has agreed to pay a penalty of £750,000 for charging different prices to customers on different payment methods. The Big Six supplier’s price difference between standard credit […]

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By Priyanka Shrestha

Energy firm ScottishPower has agreed to pay a penalty of £750,000 for charging different prices to customers on different payment methods.

The Big Six supplier’s price difference between standard credit and direct debit payment types “was out of line with that of other suppliers” between September 2009 and December 2012, the regulator said.

Under Ofgem’s rules, suppliers can only have different prices for different payment methods if the amount reflects the costs involved in supplying those accounts. The rules are designed to protect consumers and take into account that some payment methods are more expensive to administer than others.

For example, it costs suppliers more to provide prepayment meter accounts than direct debit accounts.

ScottishPower will pay the penalty to Energy Best Deal, a public awareness campaign run by Citizens Advice and aimed at helping improve the confidence of domestic energy customers to reduce their bills and get help if they are falling behind with their energy payments.

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, ScottishPower 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.”

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

A ScottishPower spokesperson said: “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.”

The announcement comes as Ofgem also published its analysis on price differences between payment methods.