ScottishPower feeling the heat over 'potentially misleading' price pledge

ScottishPower is to be investigated by the energy watchdog over a "potentially misleading" offer made during its latest round of price increases.

The Office of Gas and Electricity Markets (Ofgem) said yesterday it was "very concerned" about the firm's claims about how much consumers would save through a special offer made when it hiked its charges earlier this month.

Under its Direct October 2012 scheme, the company guaranteed that prices would remain a minimum of 1 per cent per year below its standard monthly direct debit gas and electricity prices until 30 September, 2012.

It said this would save consumers 459.

The promotion coincided with ScottishPower's announcement that it would hike gas tariffs by an average of 19 per cent from 1 August and electricity by 10 per cent.

But Ofgem warned that it would examine the offer "very carefully" .

"When you look at the small print, it looks very different from that," said Ofgem chief executive Alistair Buchanan. "We have been looking at their marketing material in particular, and under our consumer protection powers we are very concerned about some of the claims they have made and so we will be having a look at that very carefully."

It is understood that Ofgem doubts whether consumers would save as much as 459. However, the watchdog stressed that an investigation being launched did not mean ScottishPower had breached its obligations.

It is thought that around 1,000 consumers took up the offer.

ScottishPower - along with three other providers - is also under investigation over its pricing plans and potential mis-selling of energy to customers.

Ofgem said most consumers were "completely confused" by some 400 tariffs on offer from energy suppliers, and few had the time and patience to compare them and switch provider.

Ofgem has called for the number of tariffs to be radically reduced to one per payment method per type of fuel.

Mr Buchanan said during its review of the energy market, the watchdog had struggled to see where up to 700 million of the 2.9 billion in profits generated by the industry came from.

Consumer groups and politicians welcomed the investigation.

"It is vital big energy companies are transparent about how they calculate bills and are honest with customers," said Labour finance spokesman Richard Baker.

"We cannot have a situation where hardworking Scots are being duped by big energy companies."A ScottishPower spokesman said: "We agree that information about all energy tariffs across the market should be as clear as possible and we will fully co-operate with the Ofgem investigation.

"The tariff in question was a very limited offer with considerably discounted prices, which is now fully subscribed.

"However, there are similar products still available on the market from competitors. We believe that all figures that have been quoted by us are accurate."