National Grid fined £8m for misreporting gas work

By THIS IS MONEY
Updated: 07:51 EST, 6 January 2011

The energy watchdog has slapped National Grid with an £8m fine for misreporting gas mains work that could have ended up landing customers with higher bills.

Reporting breaches: Ofgem takes into account how much firms spend on maintainance when setting price controls

The planned penalty comes after a whistleblower within National Grid raised the breaches, and it is the second largest ever imposed by Ofgem.

The inaccurate information given between 2005/06 and 2007/08 involved a gas mains replacement programme. The breaches included reporting maintenance which was yet to be done and claiming twice for work completed.

When Ofgem sets its price controls - the level at which companies can charge for power - it takes into account how much the firm has spent on maintenance.

Ofgem said National Grid had not benefited financially from the misreporting and any 'consumer detriment' had been corrected.

Chairman Lord Mogg said: 'Ofgem's work to ensure consumers receive value for money for network investment and replacement relies heavily on receiving accurate reporting from companies.

'Ofgem's actions today reinforce our strong message to all energy companies that misreporting cannot and will not be tolerated.'

The proposed level of penalty on National Grid would have been higher had it not been for the action the firm took in bringing the misreporting to Ofgem's attention quickly, and subsequently in its co-operation with the investigation, the regulator added.

Accepting Ofgem's proposed decision, National Grid executive director Mark Fairbairn said: 'We are disappointed that a matter such as this should ever have arisen.

'National Grid has taken all necessary steps to ensure that it has not benefited financially from the inaccurate reporting and that there has been no prejudice caused to customers.

'Significant enhancements have been made, including to processes and systems in the mains replacement programme within National Grid, to ensure the accuracy and completeness of the data provided to Ofgem.'

National Grid owns the high-voltage electricity transmission network in England and Wales and operates the system across Britain.

It also owns and operates the high-pressure gas transmission system in Britain and its distribution business delivers gas to 11m homes and businesses.