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SSE faces Ofgem competition probe

Energy firm SSE is facing an investigation by Ofgem over concerns that it restricted competition in the electricity connections market.

The regulator has launched a probe over the way in which housing developments and other sites not yet connected to the grid choose where they get their power from - which can include a local distribution company or an alternative provider.

Ofgem said it wanted to increase competition in this market but had found evidence that SSE possibly breached competition law. It is to investigate whether the company put its rivals at a disadvantage.

It came as the regulator published a separate announcement on new rules for price comparison websites to meet tighter standards on how tariffs are displayed.

The "confidence code" is designed to ensure customers can trust that some deals are not hidden from their view.

Ofgem said sites would have to list prominently the companies with which they had commission arrangements and to make it clear that they earn commission on certain tariffs.

Price comparison sites must meet the new rules by the end of March or face losing their accreditation with the regulator.

The Ofgem announcements come at a time when the sector is in focus after three of the Big Six household suppliers - E.ON, British Gas and Scottish Power - said they were cutting tariffs following falls in wholesale energy prices.

Ofgem has been reviewing the electricity connections market over the last six months to identify how competitive it is.

It found that while there had been progress in the last five years, the network company remained the sole provider for a number of key parts of the process.

The regulator has set out steps these firms must take in the next six months to improve competitiveness.

A new code of practice will give independent competitors more say in the process, with the aim of levelling the playing field with network operators.

Maxine Frerk, Ofgem's senior partner for 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."

Ofgem added that the fact it had launched an investigation into a possible breach of competition law by SSE did not imply it had reached a conclusion that this was the case.

SSE said: "SSE acknowledges Ofgem's announcement of an investigation into its distribution business's provision of electricity connections services in central southern England.

"SSE will co-operate fully with the investigating authorities and will not make any further comment until the investigation is completed."

The announcement on price comparison websites comes after Ofgem launched a consultation on the code governing the sector in August, with the newly revised rules announced today. It will be published by January 30.

The regulator said comparison sites were the most popular way to shop around for gas and electricity, with around 40% of energy shoppers using a comparison site to compare suppliers at their last switch.

Ofgem said its code gave customers assurances that accredited sites were independent of suppliers, carried every tariff available in the market, and would meet high standards of accuracy when showing tariff information.

It will ban comparison websites from automatically showing a partial view of tariffs from suppliers paying commission to it.

Instead, they will have to show all those available in the market unless customers actively choose to see a smaller number of tariffs.

The code will say sites must end the use of confusing language to make sure the wording of any choice is clear to users.

Ofgem senior partner Rachel Fletcher 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."

Energy Secretary Ed Davey said: "We've made switching faster and these changes will make it even easier to find the best deal out there.

"But it's vital that consumers have confidence that they really are being offered the best deal, so I expect to see the Confidence Code implemented across the board."

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