OFGEM probes alleged unfair SSE tactics in £500m power connection market

SSE logoBritish energy regulator Ofgem has launched an investigation into whether Perth-based SSE has acted uncompetitively in the electricity connections market – which could result in the company being fined up to 10% of annual turnover.

The watchdog’s actions follow a review of the £500 million market for connecting customers to the electricity grid.

Ofgem has also published the findings of its review of the electricity connections market. It has set out steps that the local distribution network companies must take within the next six months to help improve competitiveness.

Ofgem has also opened an investigation that will examine whether SSE put its competitors at a disadvantage in the electricity connections market.

Customers who are not yet connected to the electricity grid, such as new housing developments, can choose who they get their electricity connection from. They don’t have to select the local distribution company, but can instead choose an alternative, independent, connection provider.

Ofgem aims to tackle this by requiring network companies to commit to an enforceable Code of Practice that will ensure a high standard performance in all aspects of the connections market.

 For example, rather than being reliant on the distribution companies, independent companies would be able to determine points of connection. The code levels the playing field for competitors by reducing their reliance on the local electricity network companies. Processes would also be made the same across the country, reducing hassle for consumers.

During the review, Ofgem also found evidence of a possible breach of competition law. Based on this information, and having notified the Competition and Markets Authority, Ofgem has used its competition powers to open an investigation into whether SSE put its competitors at a disadvantage in the electricity connections market.

Maxine Frerk, Ofgem’s senior partner, distribution, said: “We are requiring electricity network companies to work quickly to resolve the issues identified in the connections market, to reduce the hassle of getting connected to the grid and help lower costs for customers.

“We are determined to ensure this part of the energy market works in customers’ interest and will use the full range of our powers to do so.”

A spokesman for SSE said the company will co-operate with the regulator’s inquiry.

Meanwhile, new rules which require energy-supplier price-comparison websites to to list prominently which energy companies they have commission arrangements with, and make it clear that they earn commission on certain tariffs, come into force on 30 March 2015.

Rachel Fletcher, Senior Partner at British energy market regulator, Ofgem, said: “Our market reforms have made it easier for consumers to pick out better deals and switch suppliers.

“There has never been a better time to switch – consumers can make savings of around £200 by switching.

“Comparison sites are a great place to start energy shopping, but customers need to feel confident that the sites are providing information they can trust. From the end of March, these sites will need to be more transparent with their users”.

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