National Grid fine cut to £30m

The complaint centred on smart gas meters

The electricity transmission and gas pipeline company National Grid has been told it must pay a fine of £30m for abusing competition law.

The company had appealed against last year's decision by the regulator Ofgem to levy a fine of £41.6m for stifling the market for installing gas meters.

The Competition Appeals Tribunal upheld Ofgem's finding but cut the penalty.

Ofgem had found that National Grid had restricted gas suppliers from replacing old meters with newer ones.

The regulator welcomed the tribunal ruling, and said the reduced fine was still the highest it had yet levied on a regulated firm for breaking competition rules.

"This case illustrates Ofgem's commitment to make full use of its powers to tackle abuse and ensure energy markets work effectively for consumers," said the regulator's chairman, Lord Mogg.

"The ruling upholds Ofgem's decision and confirms that National Grid has abused its dominance in the domestic gas metering market, restricting competition and harming consumers."

Ofgem explained that the company had struck long-term contracts with five of the biggest energy suppliers to install and maintain gas meters.

But the contracts had included financial penalties for the suppliers if they replaced more than the few meters that National Grid allowed.

"These contracts have severely restricted the rate at which suppliers can replace even National Grid's older meters with cheaper or more advanced, smarter meters from rival competing meter operators," said Ofgem.

"By restricting competition, National Grid has deprived gas suppliers and gas customers of access to lower prices and improved service," it added.

Ofgem has had a long-standing objective of improving energy efficiency and lowering costs to consumers by the use of smart metering.