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Gas meters fiddle costs Grid record £41.6m fine
Robert Lea, Evening Standard25 Feb 2008
National Grid has been hit with a thumping £41.6 million fine today - a record in the energy industry - for anti-competitive practices that have artificially kept up household gas prices.
The Grid, responsible for the nation's electricity transmission and much of its gas mains, was today found guilty of preventing the widespread installation of new gas meters that save money by giving customers better information on their consumption patterns. Many in the industry are blaming the delays for preventing households from becoming greener and using less energy.
Ofgem chairman Sir John Mogg was withering in his judgment on the Grid, saying: "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."
Ofgem said that when the household metering market was opened up to competition, instead of plans for helping new innovative ways of changing domestic consumption, the Grid signed restrictive contracts for installation and maintenance with five of the six residential gas suppliers. These restrictive contracts included clauses that financially penalised the supply companies if they replaced more than a small number of meters at a time.
That, says Ofgem, has "severely restricted" the rate at which older meters are replaced with cheaper or more advanced smart meters which could be supplied by rival groups to National Grid.
In a statement Ofgem said: "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 metering."
National Grid today angrily hit back, saying that it will take Ofgem to the Competition Appeal Tribunal over the fine, which is among the largest levied for Competition Act breaches.
Grid claimed that the contracts signed in 2004 were entered into voluntarily, and had in fact saved customers around £120 million over the past four years.
"We strongly believe we have never acted anti-competitively in the development of our contracts," said Grid chief executive Steve Holliday.
• The French are back raiding the British energy market. State-owned giant Gaz de France is making its first foray into the UK by buying the Teesside power station, the biggest gas-fired plant of its kind in Europe. Teesside, once owned by the bust, scandal-hit US group Enron, is being sold by the private-equity arms of Cargill and Goldman Sachs to GdF in league with another French utility group, Suez, which used to own Northumbrian Water.
