National Grid to appeal against £42m fine for competition breaches

The National Grid intends to fight the £41.6m fine imposed by the energy watchdog Ofgem for restricting the availability of cheapgas meters.

An investigation by the regulator ruled that the energy network had broken the law by restricting the development of competition in the domestic gas meter market. "National Grid has abused its dominance in the domestic gas metering market, restricting competition and harming consumers," Ofgem's chairman, Sir John Mogg, said. "That abuse has prevented suppliers from contracting with other companies for cheaper metering deals, and could discourage suppliers from installing smart meters."

Ofgem found that when the metering market was opened to competition, National Grid struck long-term contracts with five of the six major energy suppliers to supply and maintain gas meters. These contracts include financial penalties that apply if suppliers replace more than the small number of meters allowed under the contract by Nat-ional Grid. "By restricting competition, National Grid has deprived gas suppliers and customers of access to lower prices and improved service," Sir John said.

The network plans to appeal against the fine, which it says is "wholly inappropriate".

"These contracts were negotiated over a two-year period, and were voluntarily entered into by gas suppliers," a statement by the Grid said. "They delivered immediate and substantial reductions in charges for meter services, saving customers around £120m over the four years of their operation.

"Ofgem was consulted throughout this process of contract development and negotiation, and has acknowledged that Nat-ional Grid had no intention to breach the Competition Act."

National Grid's chief executive Steve Holliday said: "Despite nearly three years of exhaustive analysis by Ofgem, we believe there is no evidence that National Grid has harmed consumers, competition orgas suppliers."

Ann Robinson, director of consumer policy for the price comparison site uSwitch.com, said the ruling should pave the way for the belated introduction of cheaper "smart meters", which accurately communicate gas and electricity usage to the supplier and consumer. "We have been waiting 10 years for the introduction of smart meters," she said. "I hope the fine and appeal willnot delay that introduction even further."

Carole Pitkeathley, head of regulation at Energywatch, said: "We now need the speedy resolution of any fallout from this decision to ensure any disputes don't delay the introduction of smarter meters to consumers. The roll-out of smarter meters needs to be accelerated to help consumers reduce their consumption, cut their energy costs and remove the scourge of estimated billing from the industry."