Ofgem, the energy watchdog, launched a formal investigation today into npower and the methods the UK's fourth-biggest gas and electricity group uses to sign up customers.

The regulator announced the investigation after The Sunday Times exposed the questionable sales techniques that npower employees use to sign customers to gas and electricity contracts.

The Ofgem investigation will examine potential breaches of licence obligations by which npower, which is owned by RWE, of Germany, must abide.

Ofgem said today: “This investigation is being carried out under Ofgem’s powers to enforce licence conditions. The decision to investigate follows recent allegations that npower sales representatives have been mis-selling energy contracts to customers.”

Npower boasts six million customers and holds 14 per cent of the UK market.

This year its parent, RWE, reported a 40 per cent increase in its operating profit to €724 million (£579.8 million).

RWE npower put its prices up by 17.2 per cent for gas and 12.7 per cent for electricity in January.

It was quickly followed by four of the other five suppliers, including British Gas.

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