National Grid Fined £41.6million

Utilities giant National Grid has been fined a massive £41.6million by Ofgem as a penalty for unlawful practices in the domestic gas meter market.

The energy regulator upholds that National Grid’s breach has restricted competition within the metering sector, slowing technological progress and ultimately restricting consumers’ ability to save on both the gas they use and the price they pay to power their homes.

Ofgem Chairman, Sir John Mogg commented: "National Grid has abused its dominance in the domestic gas metering market, restricting competition and harming consumers".

The issue lies with contracts National Grid entered into with 5 of the UK’s 6 major energy suppliers after the gas meter market was opened up to competition in 2003. The agreements effectively guaranteed National Grid exclusivity in the supply and maintenance of domestic gas meters for what is in real terms a very large proportion of the UK.

As any breach of these contracts would attract a hefty penalty they have prevented suppliers from looking to cheaper or more advanced metering technology to record the of gas used by consumers. And, as a result many households are still being metered using old National Grid models rather than upgrading to ‘smart meters’, newer versions that allow consumers to actively monitor the amount of gas they use in their homes.

National Grid does however plead innocence, claiming that Ofgem were consulted throughout the negotiation and agreement of these contracts.

They are currently planning to appeal the fine, emphasizing that the agreements were entered into voluntarily by the gas suppliers and have resulted in consumer savings of up to £120million in meter charges since their introduction.

Ofgem however deny that they were involved at any point during the negotiation process. Speaking to the BBC, a representative commented: "Ofgem was not consulted throughout the process of contract development negotiation. National Grid could have asked us for guidance but didn't".

Despite National Grid’s argument it is unlikely that this decision will be overturned as, in a time of great consumer unease with the energy sector, Ofgem need to show that they’re taking their job as industry regulator seriously.