LONDON, May 20 (Reuters) - Scottish Power has agreed to pay a penalty because prices it set for different customer card payment methods were not in line with other suppliers, British energy regulator Ofgem said on Tuesday.
The utility will pay 750,000 pounds ($1.26 million) to Energy Best Deal, a public awareness campaign aimed at helping domestic energy customers switch suppliers, reduce their bills and get help if they are falling behind on payments.
Under Ofgem rules introduced in 2009, suppliers can only vary prices for different payment methods, such as by credit card or direct debit, if they reflect the costs involved in supplying those accounts.
Those rules are designed to protect customers and take into account that some payments are more expensive to administer than others, Ofgem said.
Between September 2009 and December 2012, Scottish Power did not have a robust process in place when setting its prices to ensure that the difference between their tariffs complied with Ofgem's rules, the regulator said.
"Scottish Power has cooperated with Ofgem and has taken steps to ensure that it can comply in future," Ofgem said.
"The size of the penalty reflects the scale of the breach and takes into account Scottish Power's willingness to accept its failings and make payments that benefit consumers," it added.
On Tuesday, Ofgem published findings showing customers using prepayment meters pay around 80 pounds a year more for electricity and gas than direct debit customers, down from a gap of around 140 pounds in 2009.
"We have found that price differences between payment methods reflect the costs suppliers face, and that they have dropped significantly since Ofgem introduced the rules," said Rachel Fletcher, senior partner for markets at Ofgem.
$1 = 0.5943 British Pounds Reporting by Nina Chestney; editing by Jason Neely