MORE competition in the energy connection market is needed, regulator Ofgem has warned – as it launched an investigation to uncover whether energy giant SSE puts its competitors at a disadvantage.
Currently, customers who are not yet connected to the electricity grid, such as those behind new housing developments, can choose where they get their electricity connection from.
They do not have to select the local distribution company, but can choose an alternative, independent, connection provider.
SSE’s power distribution arm – Scottish & Southern Energy Power Distribution – is one of seven firms across the UK, including ScottishPower Energy Networks and Northern Power Grid, which is responsible for maintaining the energy infrastructure connections to the National Grid.
However, it is the only one which is to be investigated by Ofgem.
The decision comes after a six-month review into the electricity connections market, during which time it invited responses from the public, carried out customer research and met a broad range of connection providers.
The regulator said that, while it had “seen more progress” over the last five years to increase competition, SSE remains the sole provider for a number of key parts of the connections process, potentially blocking other firms from winning new business in its area.
While other firms can take on the contract, certain aspects of the connection process, such as exactly where a connection point to the network is installed, are still the responsibility of SSE, forcing competitor firms to have a high level of reliance on the network company.
SSE Power Distributions covers parts of Scotland and the south of England, although the investigation is believed to be mainly focused on its work south of the Border. 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 has created an enforceable code of practice for network companies which would “level the playing field for competitors by reducing their reliance on the local electricity network companies”.
It added that the fact it had launched an investigation did not in itself imply that SSE had breached competition law.
Ofgem said it was expecting electricity distribution network companies to confirm their commitment to the code by 18 February and draw up the new code by the beginning of June.
A spokesman for SSE said: “SSE will co-operate fully with the investigating authorities and will not make any further comment until the investigation is completed.”
Big Six fail to impress users
Consumers continue to receive a poor deal from the Big Six energy suppliers, with smaller providers scoring far higher for the fourth year in a row, according to a survey.
The six largest companies, which account for 90 per cent of the market, all ranked towards the bottom of the table in the latest Which? energy company satisfaction survey. Npower achieved the lowest score for the fourth year running with 35 per cent, rating the worst for its complaint handling.
Scottish Power achieved a slightly higher score (41 per cent), below EDF Energy (49 per cent), British Gas (49 per cent), E.ON (50 per cent) and SSE (50 per cent).