National Grid fined £41.6 million over metersOfgem says firm curbed competition

25 February 2008

99%

National Grid's share of UK's gas meters

Power distributor National Grid has been fined £41.6 million for restricting competition in the UK's gas metering market.

Energy regulator Ofgem said the company, which owns 99% of the UK's gas meters, had 'severely restricted' rival suppliers from replacing its equipment with cheaper or more advanced devices.

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

National Grid said there was no evidence customers or competition had been harmed and added that it would be lodging an appeal.

Biggest ever fine

The fine is the biggest ever imposed by the regulator.

Ofgem said National Grid had struck deals with five of the UK's six major energy suppliers to supply and maintain meters. The contracts include financial penalties that apply if suppliers replace more than the 'small' number of meters allowed under the contract, the regulator said.

Ofgem said: 'They have severely restricted the rate at which suppliers can replace even National Grid's older meters with cheaper or more advanced meters from rival meter operators. By restricting competition, National Grid has deprived gas suppliers and customers of access to lower prices and improved service.'

Meters

National Grid, which owns about 21 million gas meters, said it was disappointed with the ruling. It said the contracts were negotiated over a two-year period, were voluntarily entered into by gas suppliers, and delivered 'immediate and substantial reductions in charges' for meter services.

The company added that Ofgem was consulted throughout the contract process.

National Grid's chief executive, Steve Holliday, said: 'National Grid has been instrumental in helping Ofgem to develop competition in the UK metering industry, and we strongly believe we have never acted anti-competitively in the development of our contracts.'

Ofgem told Which? that, technically, consumers who could prove they had suffered financial loss as a result of National Grid's behaviour could take legal action to claim compensation, but added that anyone considering this should seek legal advice.