The energy regulator is considering whether Scottish Power is unfairly locking customers on a popular fixed rate deal that ended last month into an expensive capped tariff.
Those who are inadvertently rolled onto the new deal which could leave them £270 out of pocket could face a £50 exit fee if they fail to opt out by the end of this month (see the Cheap Gas & Electricity guide).
Consumer groups have labelled Scottish Power's practice as "unacceptable".
Specifically, the company is moving anyone on its Fixed Price Energy 2009 deal, that ended on 31 August, to the Capped Price Energy September 2010 offer that lasts a year (first reported in the Scottish Power warning MSE News story last month).
Ofgem, which polices the industry, has told MoneySavingExpert.com it is reviewing the terms and conditions of the Fixed Price Energy 2009 deal to see whether customers were given adequate warning they could be transferred onto a deal with exit penalties.
Extracts of those terms sent to MoneySavingExpert.com by Scottish Power show anyone who signed-up for the original fixed price offer was told they could be moved onto whatever deal the power firm chose on expiry. However, there was no firm indication customers could be locked-in to a deal with exit penalties.
An Ofgem spokeswoman says: "We are looking into the matter." If found guilty, Scottish Power could face censure.
Audrey Gallacher, from lobby group Consumer Focus, says: "We will be taking this matter up with Scottish Power. Passing on a termination charge on a roll-over contract is not acceptable."
Scottish Power stresses it is contacting affected customers by email or letter making it clear that they can opt out. The worry is many emails may end up unread in junkmail boxes.
The original fixed price deal proved popular when it came out last summer, at a time when many were fixing or capping their energy costs (see the Is Your Capped Tariff Ending? guide).
The new Capped Price Energy September 2010 offer costs the same as the firm's standard monthly direct debit prices, but with the guarantee prices will not rise, though many experts suggest prices are more likely to fall than rise.
If the price of energy falls on the standard deal so too will the price of the capped tariff.
Yet it is nevertheless expensive to start with for many. Figures from price comparison site Energyhelpline.com, assuming current prices prevail, show families could be up to £270 a year better off by switching to a cheaper tariff (figures explained in the Scottish Power warning MSE News story).
If you've been moved onto Scottish Power's Capped Price Energy September 2010 deal, you have until the end of September to opt out penalty-free, if you find a cheaper alternative.
From October, gas customers will pay a £20 exit fee and electricity customers will pay £30. Those with both will pay the combined £50 charge.
Before choosing a new deal, first do a comparison to find the best alternative (see the Is Your Capped Tariff Ending? guide).
Some MoneySavers have complained on this site's forum that Scottish Power is still telling them they will be rolled onto the new capped tariff even though they had already opted out.
The firm stresses anyone who informs it in time will not be charged an exit fee to cancel.
A Scottish Power spokesman says: "We are happy to demonstrate our approach has been fair."
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