National Grid appeals Ofgem fine


Sir John Mogg,
London, U.K. — (METERING.COM) — March 25, 2008 – Last month U.K. energy regulator Ofgem fined utility National Grid £41.6 million ($82.5 million) for a breach of competition law that restricted the development of competition in the domestic gas meter market; National Grid has appealed the decision.

At the time Ofgem’s Chairman, Sir John Mogg, said: “Ofgem has imposed a substantial fine on National Grid for a serious breach of competition law. National Grid has abused its dominance in the domestic gas metering market, restricting competition and harming consumers.

“The abuse has prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters.”

When the metering market was opened to competition, National Grid entered into 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 replaced more than the small number of meters allowed under the contract by National Grid. Ofgem believes that 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. Furthermore, it has curbed innovation in the provision and maintenance of domestic–sized metering.

In announcing the fine, Ofgem also gave National Grid 90 days to re-draw existing contracts. The utility has asked the Competition Appeal Tribunal to suspend the 90 day ruling, on the grounds that if implemented it would cause serious and irreparable damage to its metering service. The Competition Appeal Tribunal has decided that contracts will not have to be changed until the appeal is heard.