National Grid fined £8m for ’misreporting’ gas mains replacement work

Ofgem finds organisation in breach of obligations to provide accurate information

National Grid Gas is to be fined £8 million by energy regulators following a failure to provide accurate information on work to upgrade the gas mains network.

The fine is being imposed following a whistleblower bringing misreporting on the gas mains replacement programme to the attention of National Grid and subsequently Ofgem. Under the replacement programme, the Health and Safety Executive and gas network companies agreed that all spun/cast and ductile iron gas mains within 30 metres of habitation within their gas distribution networks would be replaced over a 30-year period beginning in 2002.

Reliable reporting of the work is important because it could have an impact on the prices that gas companies can fix for consumers. Ofgem said, however, that National Grid had not benefited financially from the misreporting. “Any consumer detriment has already been corrected,” the energy regulator said.

Ofgem added: “[We] take failures by regulated companies to meet reporting obligations very seriously. This is an important part of ensuring that the ‘regulatory contract’ is met and consumers receive value for money.” National Grid had previously given the regulator assurances about the quality of its internal control systems before the whistleblower struck.

Ofgem praised National Grid for responding quickly once the misreporting came to light. “National Grid immediately informed Ofgem of the issue and co-operated with Ofgem’s investigation.”

It added that the breaches involved “different forms of inaccurate reporting and weaknesses in processes, procedures and management oversight on the mains replacement programme”. National Grid had put in place plans to improve, Ofgem said, which would be scrutinised.

National Grid said it had “accepted Ofgem’s decision that it intends to find that National Grid breached its gas distribution licence obligations by failing to provide accurate information relating to gas mains replacement work during the reporting period 2005/06 to 2007/08”.

“It has also accepted the £8 million penalty that the UK energy regulator proposes to impose for the breach.”