Power distribution company National Grid is to challenge the multi-million pound fine issued by energy regulator Ofgem, which claimed the company's restrictive contracts were holding back developments in the energy metering market.
Ofgem imposed the fine after nearly three years of analysis led to the conclusion that National Grid was in "serious" breach of competition laws. By entering into restrictive long-term contracts with five of the nation's six largest energy suppliers, National Grid is alleged to be preventing those companies from replacing outdated and manual gas meters with more modern and potentially cheaper 'smart' meters from rival meter suppliers.
Smart meters can give consumers a better understanding of their energy consumption. For example, some meters provide a portable display device that gives users their real-time energy consumption rates both in terms of energy used and the cash value it is costing them.
Smart meters are capable of transmitting users' consumption rates wirelessly back to the energy provider. This allows for more accurate billing and reduces the need for physical meter reading by power company staff.
Financial penalties in the contracts deter energy providers from buying cheaper, more advanced meters from other providers, and from replacing more than a small number of the National Grid-managed meters, Ofgem determined.
Executives at National Grid were quick to refute Ofgem's claims, insisting that their contracts were well-negotiated and completely sound.
"We strongly believe we have never acted anti-competitively in the development of our contracts," said Steve Holliday, chief executive of National Grid.
"National Grid has been instrumental in helping Ofgem to develop competition in the UK."
Ofgem begs to differ, however, alleging that National Grid's control of the metering market has harmed customers and slowed growth in the industry.
"The abuse has prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters," Sir John Mogg, chairman of Ofgem said.
By showing consumers what they are paying to use (or waste) energy, smart meters could significantly decrease unnecessary consumption. The more readily they are available to consumers, obviously, the greater their impact could be.
