National Grid had annual revenues of £8.7 billion last year so, while painful, the £42 million fine announced by Ofgem this morning will not be catastrophic. The company also plans to appeal, so there is also a possibility that the fine could be dropped or reduced.

But the fine, the biggest that Ofgem has imposed, reflects the growing need for reform of the £260 million-a-year metering business. The Grid dominates this often ignored area of the power industry, owning about 21 million gas meters — or 99 per cent of all the units in the UK.

Since 2004 energy supply companies have been locked into long-term supply contracts that included financial penalties if they installed more than a small number of meters produced by rival operators.

Ofgem is right to argue that these contracts represented an abuse of National Grid's dominant market position that restricted competition, curbed innovation and potentially kept prices too high.

The debate is timely because changes in household metering are expected to form a key part of government plans to encourage greater energy efficiency in the UK.

The Government hopes that by introducing more sophisticated "smart meters", allowing consumers to monitor closely how much energy they are using, people will reduce their waste of energy, thereby helping the UK to meet its targets for emissions cuts.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive