26 February 2008 | Paul Snell
National Grid is to appeal against the £41.6 million fine imposed by the energy regulator.
Ofgem announced yesterday it was enforcing the penalty on the utility firm for preventing competition in the market for domestic gas meters.
But the utility firm said it was "extremely disappointed" with the decision, and the fine was "wholly inappropriate".
National Grid had signed long-term contracts with five of the six major energy suppliers for them to supply and maintain gas meters. The contracts included penalties if the suppliers replaced more than the small number of meters allowed. The regulator said this severely restricted the rate at which suppliers could replace meters.
"The abuse has prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters," said Sir John Mogg, chairman of Ofgem.
But National Grid said the contracts were negotiated over a two-year period and voluntarily entered into by suppliers. The firm said they "delivered immediate and substantial reductions in charges for meter services".
The case will now go before the competition appeal tribunal later this year.