National Grid is facing fines to the tune of £8 million on charges of making double claims on pipe work and providing false information.
A whistle blower brought the matter to National Grid’s attention – market regulator Ofgem said in a statement. Inaccurate information was provided during the years 2005-06 and again in 2007-08. National Grid claimed that some employees left the company after the bungling was detected.
Ofgem claimed that any potential damage to consumers has been averted and National Grid did not gain financially. National Grid is the maintenance contractor for the country’s gas and electricity network.
The government appointed National Grid gas mains replacement programme in 2002 to replace existing networks over the next 30 years since some connections were more than 80 years old.
However, a whistle blower alerted the government saying the work-progress-report is being fudged. The company was double billing the government for the same work and also advance billing for works which were not completed till the following year.
On an average, the gas distribution cost is 20 percent of the consumer’s gas bill and a small component of distribution cost is diverted towards mains replacement programme. However, National Grid ensured that the customer’s bills were not loaded with extra charges.
Lord Mogg, Chairman of Ofgem 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”.
Saying the proposed penalty should act as a deterrent, he added: “National Grid has co-operated with our investigation, has accepted our proposed findings, and is taking action to seek to ensure this does not happen again. The penalty we are proposing to impose reflects this and would have been much higher otherwise”.
National Grid’s Executive Director Mark Fairbairn tried to put up a brave face saying: “We are disappointed that a matter such as this should ever have arisen”.
“National Grid prides itself on the professionalism and integrity of its workforce, and we take very seriously any instances which fall short of our high standards”, he continued.
“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.”
Terming Ofgem’s verdict a step in the right direction Richard Hall of the watchdog Consumer Focus, said: “This fine sends a welcome message that there are big consequences for energy firms which break the rules. The need for robust monitoring by Ofgem is going to become even more important as billions of pounds in necessary energy investment are passed onto customers”.