Regulator imposes fine for restricting competition and harming consumers


Sir John Mogg,
London, U.K. — (METERING.COM) — February 26, 2008 – U.K. energy regulator Ofgem has fined National Grid £41.6 million ($82 million) for a breach of competition law that restricted the development of competition in the domestic gas meter market. The decision demonstrates Ofgem’s commitment to taking action where there is evidence that a company has acted in a way that restricts competition and harms customers.

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 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 replaced more than the small number of meters allowed under the contract by National Grid. 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.

Carole Pitkeathley, Head of Regulation at energy watchdog energywatch, said: "The finding by Ofgem arises from its plan to bring competition to the gas and electricity metering markets. energywatch has always had doubts as to how this move would benefit consumers. To stand any chance of success the market had to be truly open and allow fair access for new meter operators. Ofgem has decided that National Grid blocked that access.

"energywatch is calling for the speedy resolution of any fall-out 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."