National Grid, the UK gas and power infrastructure operator, has been fined a record £41.6 million by UK energy market watchdog Ofgem for restricting competition in the market for domestic gas meters.

Ofgem said that National Grid had abused its dominant position in the market, restricted the number of meters made by competitiors from being installed. Ofgem say this harmed consumers.

“Ofgem has imposed a substantial fine on National Grid for a serious breach of competition law,” Sir John Mogg, the chairman of the watchdog, said in a statement.

“The abuse has prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters.”

National Grid has been accused of restricting the process through which customers can replace their existing gas meters with more efficient ones from rival companies.

Agreements that National Grid had signed with five of the six big UK energy companies to supply and maintain gas meters featured penalties if they replaced more than a limited number of meters, thereby slowing the process.

National Grid responded by saying that it was “extremely disappointed” by Ofgem's decision and intended to appeal.

“These contracts were negotiated over a two-year period, were voluntarily entered into by gas suppliers and delivered immediate and substantial reductions in charges for meter services," the company said.

It claimed that the agreements had saved customers about £120 million over four years.

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