SCOTTISHPOWER which has successfully pushed for a taxpayer-backed £100bn loan fund to help energy firms freeze energy bills has been told by the energy market regulator that it is failing vulnerable customers.

Ofgem has issued a warning to the Glasgow-based energy supplier that is has to meet its obligations to protect vulnerable customers in the cost of living crisis.

It has issued a provisional order to the company to take action to support vulnerable customers and take action to protect customers with debt repayment plans.

A review conducted by Ofgem into ScottishPower found what it called a "number of apparent failings" around the way it sets debt repayment plans and deals with customers struggling with bills.

ScottishPower said it was "disappointed" that staff efforts to support customers had resulted in the regulator's action.

The Glasgow-based firm, which serves 2.6m electricity and 1.9m gas customers has been at the forefront of efforts to provided a £100bn energy prices safety next to freeze bills for two years, underpinned by a taxpayer-backed loan - a plan similar to one that Prime Minister Liz Truss has implemented.

ScottishPower's chief executive Keith Anderson's plan involved creating a deficit fund underwritten by government which would have to be paid back through bills over a ten to 20 year period.

He said the fund would be made up of the difference between what people pay now and how much it actually costs to supply homes with gas and electricity to "help people in the here and now".

Ofgem issues warning to ScottishPower over failing vulnerable customers

He has said the scheme would allow government to buy time over the next two years and speed up investment in cheap green energy.

He indicated the fund could be paid off by the rest of customers who can afford their bills or the government could partially fund it.

Liz Truss has introduced a similar plan and has insisted that it will not be paid for through a windfall tax on energy companies.

As part of a series of measures to help customers, Ofgem has told ScottishPower to contact and review all customers on debt repayment plans of £5 per week, per fuel, or below to ensure they are based on each customer’s ability to pay.

They said the company should pause disconnections for those customers with active, agreed or overdue repayment plans of £5 per week or below.

Provisional orders were issued to ScottishPower on Wednesday and to energy firm Utilita on September 9, compelling both companies to bring themselves into compliance with their obligations to protect customers in particular circumstances.

The orders come ahead of the findings of a full market review into how suppliers make sure they are supporting customers struggling with bills, due to be published by Ofgem shortly.

Ofgem issues warning to ScottishPower over failing vulnerable customersNone

Cathryn Scott, Ofgem enforcement and emerging issues director said: “These orders to Utilita and Scottish Power are a clear signal to suppliers about the vital importance of protecting customers.

"The rise in cost of living is an increasingly important public issue, and we expect urgent and immediate action on the points raised, as well as constructive engagement with Ofgem during the process.

"Suppliers must consider a customer’s vulnerability and ability to pay to a closer degree, particularly with what is likely to be a very challenging winter for many.”

Ofgem has also called on ScottishPower to commission an independent audit of its own processes to assess whether they have been effectively implemented and provide the report to Ofgem by no later than October 31.

Ofgem has also required ScottishPower to review and update all call scripts, training materials, policies, communications with customers and provide training for company staff, "to ensure they reflect that there is no default minimum repayment amount when sufficient information is available on a customer’s ability to pay.

The Herald on Sunday revealed that ScottishPower had handed over nearly £7bn in dividends to its foreign owners since being taken over 14 years ago.

ScottishPower's dividend payments to Iberdrola have amounted to nearly one billion pounds in the past two years alone as customers face a doubling of energy bills since last winter - despite Liz Truss's energy price freeze.

A ScottishPower spokesperson said: “We’re disappointed that all of the effort our staff make to help our customers manage affordability challenges has resulted in this conclusion from Ofgem. We will now work with Ofgem to implement their recommendations.”