National Grid fined £8m for report breaches

Power provider National Grid was hit with an £8 million fine today after it fudged reports to the energy watchdog in a move which could have led to higher gas bills for consumers.

Ofgem imposed its second-largest penalty on the energy firm for providing inaccurate information about a gas replacement programme, which is used by the regulator to set price controls.

A whistleblower within National Grid raised the breaches, which included reporting maintenance which was yet to be done and claiming twice for work completed, before the power company turned itself over to Ofgem.

Lord Mogg, chairman of Ofgem, said: "Ofgem's actions today reinforce our strong message to all energy companies that misreporting cannot and will not be tolerated."

Ofgem said National Grid had not benefited financially from the misreporting and any "consumer detriment" had been corrected.

When Ofgem sets its price controls - the level at which companies can charge for power - it takes into account how much the firm has spent on maintenance.

By providing inaccurate information between 2005/06 and 2007/08 on major replacement work, National Grid could have prompted Ofgem to set higher prices, which in turn could be passed on to the end consumer.

The watchdog said the progress reports were key to ensuring that customers were receiving value for money.

The proposed level of penalty on National Grid would have been higher had it not been for the action the firm took in bringing the misreporting to Ofgem's attention quickly, and subsequently in its co-operation with the investigation, the regulator added.

Accepting Ofgem's proposed decision, National Grid executive director Mark Fairbairn said: "We are disappointed that a matter such as this should ever have arisen.

"National Grid prides itself on the professionalism and integrity of its workforce, and we take very seriously any instances which fall short of our high standards.

We are glad that we have been able to work constructively and professionally with Ofgem in this investigation and in dealing with its outcomes.

"National Grid has taken all necessary steps to ensure that it has not benefited financially from the inaccurate reporting and that there has been no prejudice caused to customers.

"Significant enhancements have been made, including to processes and systems in the mains replacement programme within National Grid, to ensure the accuracy and completeness of the data provided to Ofgem."

National Grid owns the high-voltage electricity transmission network in England and Wales and operates the system across Britain.

It also owns and operates the high-pressure gas transmission system in Britain and its distribution business delivers gas to 11 million homes and businesses.