25 February 2008 12:46:56
|Ofgem issues fine for breach of competition law|
Energy regulator, Ofgem has fined National Grid £41.6 million for restricting the development of competition in the domestic gas meter market.
Ofgem said that the move to issue the fine was a demonstration of their commitment to taking action where there is evidence that a company has acted in such a way that it has restricted competition and harmed consumers.
Sir John Mogg, Ofgem’s Chairman, 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 had prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters.”
The decision, by Ofgem, is in relation to a number of metering contracts gas suppliers entered into with National Grid in 2004.
National Grid, which operates the UK’s main gas pipeline system and is also responsible for the UK’s long distance electricity transmission network, has said that it will be appealing against Ofgem’s decision.
“These 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, saving customers around £120m over the four years of their operation,” said National Grid.
“Ofgem was consulted throughout this process of contract development and negotiation and has acknowledges that National Grid had no intention to breach the Competition Act.”
Ofgem countered by saying: “These contracts include financial penalties that apply if suppliers replaced more that 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.”
Steve Holliday, National Grid’s Chief Executive, 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 have harmed consumers, competition to gas suppliers, and we are left with no option but to present out case to the Competition Appeal Tribunal,” he added.