Ofgem has imposed a £41.6m fine on National Grid for a breach of competition law.

National Grid, one of the largest investor-owned energy companies in the world, has lodged an appeal against the £41.6 million fine imposed on it by energy regulator Ofgem for a breach of competition law in the domestic gas meter market.

Ofgem stated that National Grid’s contracts with five of the six major energy suppliers restricted the rate at which domestic gas meters could be replaced, and therefore deprived customers of access to lower prices and improved service.

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 has prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters [meters that automatically send accurate readings to energy companies, eliminating the need for meter readings].”

National Grid responded to the fine by lodging an appeal with the Competition Appeal Tribunal. The company stated that Ofgem was consulted throughout the process of contract development, furthermore that National Grid had saved customers £120m over the four years that the contracts were in place.

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 has harmed consumers, competition or gas suppliers.”