The energy regulator has confirmed new rules governing fixed rate energy deals while announcing an £8.5m penalty against Scottish Power over misleading sales techniques.
Ofgem said Scottish Power would pay £7.5m to benefit vulnerable customers and establish a £1m customer compensation fund for breaching the terms of its market licence between October 2009 and January 2012.
It said Scottish Power provided customers with inaccurate estimations of annual charges and comparisons with their current supplier both on the doorstep and over the phone.
The settlement, the company said, meant that more than 140,000 people on the Warm Home Discount scheme would automatically receive payments of around £50 each.
Scottish Power accepted the failings but said it had now rectified the problems. It stopped door-to-door selling in 2011.
The penalty comes at a sensitive time for the big six energy firms – under fire from customers over inflation-busting increases to bills ahead of winter while politicians scrap over intervention in the market.
To date, three of the firms have announced average rises of between 8 and 11%.
As part of moves to ensure the market acts fairly, Ofgem said new rules were now in force meaning energy suppliers were banned from increasing prices on fixed term tariffs over the course of a contract and banned from automatically rolling householders on to another fixed term offer when their current one ended.
From December 31, firms will have to cut the number of tariffs they offer customer to just four for gas or electricity while from March companies will have to show the cheapest tariff they offer on every customers’ bill.