Two of Scotland's biggest power companies face an investigation after the energy regulator pledged to look at a complaint alleging abuse of a dominant market position.
Ofgem said it had launched its inquiry into ScottishPower and Scottish & Southern Energy under section 18 of the Competition Act. It said the decision was based on a formal complaint, "alleging abuse of a dominant position in the electricity generation sector arising from constrained capacity on the transmission network, as well as informal enquiries."
Ofgem declined to comment on the origin of the complaint, although an industry source said it was likely to have come from one of Britain's other major power generators.
An Ofgem spokesman said: "The regulators have launched an investigation, whether it has serious consequences for the companies is impossible to say; we don't know what we're going to find ... this is the firing of a starting gun."
Experts said the investigation is likely to focus on the Betta power-trading system - a market for Britain's electricity transmission network - and the possibility that the firms have benefited from bottlenecks in the system.
ScottishPower and SSE export some electricity south of the border to England and Wales, and power traders say capacity constraints are an issue at the border.
One UK power trader said: "I don't know who complained but it is not a massive surprise as there is a constraint on the interconnector at the moment."
ScottishPower said it was confident its participation in the market had been "lawful and appropriate at all times". A spokesman added: "We will of course co-operate fully with the Ofgem investigation."
Scottish & Southern Energy is one of the largest energy companies in the UK, also trading as Southern Electric, Scottish Hydro Electric and Swalec.
An SSE spokesman said: "No specific allegations have yet been put to SSE, but we are confident that our actions have always been justifiable in economic terms and consistent with the operation of a competitive market.
"With any Competition Act investigation there is a process to be followed and we will cooperate fully with Ofgem throughout this process in order to bring it to a speedy conclusion."
Ofgem said in February it would investigate the relationship between retail and wholesale energy prices.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article