Energy regulator Ofgem has fined National Grid £41.6M for breaching competition law, by restricting competition in the domestic gas meter market.

The fine shows the hard line Ofgem wants to take with companies that restrict competition, but National Grid will appeal against the fine.

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."

According to Ofgem, National Grid signed long-term contracts with five of the six major energy suppliers to supply and maintain gas meters when the energy market opened to competition. 

Ofgem say National Grid restricted the rate at which suppliers can replace National Grid's meters with cheaper or more advanced meters from rival meter operators. Ofgem say this has restricted competition, and National Grid has deprived gas suppliers and customers of access to lower prices and improved service. 

National Grid say the contracts have not cost, but saved consumers more than £120M over four years. 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.

"Despite nearly three years of exhaustive analysis by Ofgem, we believe there is no evidence that National Grid has harmed consumers, competition or gas suppliers, and we are left with no option but to present our case to the Competition Appeal Tribunal."

Source : New Civil Engineer (NCE)