Energy prices continued to dominate the headlines in 2008, as prices to customers not protected by capped price deals rose on average by 45-50%, reflecting sharp hikes in the wholesale costs of oil, gas and coal.

UK energy suppliers were forced to increase prices to customers to cover the rising cost of gas and coal, which shot up by 65% and 45% respectively, between February and August 2008.

Rising energy prices, combined with higher food and living costs and reduced access to credit, made 2008 a challenging year for householders and small businesses.

Energy suppliers, including ScottishPower, launched a series of measures designed to help both vulnerable and ordinary customers. These are outlined in the Approach section of the Customer Experience impact area and in the Customers with Special Circumstances impact area, which sets out our policies and actions on fuel poverty.

Despite a difficult year, gas and electricity prices in the UK (at November 2008) were the fourth and fifth lowest, respectively, in Europe, despite the relative weakness of the pound to the Euro. [Source: House of Lords debate]

Ofgem, the energy industry regulator, completed a review of the UK energy markets in 2008, including pricing, following allegations of a cartel between the UK's six main energy suppliers.

The regulator concluded, after thorough investigation, that there was no evidence of prices increasing by more than could be justified by rising wholesale costs, or of the time lapse between wholesale price movements and tariff changes to customers being longer when prices are falling than when they are rising.

Ofgem was satisfied that there is no pricing cartel operating and also found that the level of customers actively switching supplier to obtain the best deal was among the highest of any retail energy market in the world.

Switching rates compare well with other retail services in the UK such as fixed and mobile telecommunications, insurance products and mortgages.

Following its market probe, Ofgem published a set of 20 recommendations, which it believes will improve the customer experience in the energy supply market.

It is consulting suppliers on the proposed reforms which include pricing structures, the information shown on the bill, the potential preparation of an annual statement for every customer and the roll out of smart meters that provide customers with 'real time' information on their energy use.

Another change in 2008 was the merger of industry consumer champion, energywatch, with the UK's consumer councils and Postwatch, to form a new customers' rights organisation, Consumer Focus. Part of energywatch's former remit in resolving complaints or disputes between energy suppliers and customers has also been taken over by Consumer Direct. Throughout 2008 ScottishPower liaised with frontline agencies to help during the transition period, providing direct access to specialist staff in order to help vulnerable customers.

During the year the Government increased the amount of money energy suppliers will spend on customer energy efficiency programmes through the Carbon Emissions Reduction Target (CERT) by 20%, taking funding to almost £4 billion from 2008-2011.

In the 2008 Budget the Chancellor announced an increase in suppliers' collective expenditure on their voluntary social programmes to at least £150 million a year by 2011. This expenditure can be directed at areas including social tariffs, rebates or trust funds which provide direct assistance to customers in, and vulnerable to, fuel poverty.

The Government also pledged that every home in Britain would benefit from smart metering technology by 2020 - helping to reduce carbon emissions and fuel bills.

Willie MacDiarmid, Impact Leader