Ofgem has announced that it intends to impose a penalty of £8 million and to find National Grid Gas in breach of licence obligations on providing accurate information to the energy regulator.

This covers the reporting period 2005/06 to 2007/08. Ofgem takes 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. In 2006 and 2007 Ofgem's Chairman, Lord Mogg, wrote to all network companies to emphasise the importance of accurate regulatory reporting, in response to which the Chairman of National Grid gave assurances about the quality and integrity of National Grid's systems of internal control.

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The proposed level of penalty on National Grid Gas would have been higher had it not been for the action NGG took first in bringing the misreporting to Ofgem's attention quickly, and subsequently in its co-operation with the investigation and actions to put things right. National Grid has not benefitted financially from the misreporting and any consumer detriment has already been corrected.

The matter came to light when a whistleblower brought misreporting on the gas mains replacement programme to National Grid's attention. National Grid immediately informed Ofgem of the issue and co-operated with Ofgem's investigation, appointing Ernst and Young to investigate the extent of the misreporting to the regulator and National Grid. The misreporting relates to data National Grid must provide to Ofgem on its progress in completing works for a mains replacement programme.

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."

(CD/GK)