The regulator said it will investigate whether SSE used its position as a dominant distribution network operator to put smaller rival companies at a disadvantage in the electricity connections market.
New customers, such as recently built housing developments, do not have to opt for the local distribution company to connect to the grid. But Ofgem said that while there are signs of greater competition between local DNOs and independent connection companies, incumbent providers like SSE continue to dominate the market.
Ofgem said it has reported the “possible breach of competition law” to the Competition and Markets Authority which is already in the midst of a wide-ranging investigation into competition in the energy market more broadly.
“The competition review is yet more evidence that pressure on all aspects of the value chain is mounting to ensure sufficient competition and a fair value for money for customers,” said utilities analysts from Citigroup on Wednesday morning.
Alongside its investigation into SSE Ofgem has set out the next steps DNOs must take over the next six months to drive competition in the connections market further.
“The code levels the playing field for competitors by reducing their reliance on the local electricity network companies. Processes would also be made the same across the country, reducing hassle for consumers,” a statement from the regulator said.
The competition probe comes just weeks after SSE’s director of distribution, Mark Mathieson, stepped down after almost a decade in the position. Mathieson was replaced by Colin Nicol who moved across from his previous role as lead director of generation development.
SSE said it will co-operate fully with the investigating authorities and will not make any further comment until the investigation is completed.