87QJ Hsbc Bk. 23

 

TIDMNG. TIDM46QK TIDM71GP TIDM35DT TIDM87QJ 
 
RNS Number : 6571G 
National Grid PLC 
04 February 2010 
 

 
                                                                 4 February 2010 
 
                 National Grid plc Interim Management Statement 
                for the period 1 October 2009 to 3 February 2010 
 
 
HIGHLIGHTS 
 
·       Well positioned for another year of strong performance, in line with our 
expectations 
·       Continued regulatory progress in US: Niagara Mohawk electric rate case 
filed 29 January 
·       UK transmission price control review to be rolled over for another year 
to April 2013 
·       In line with its policy, the Board expects to recommend an 8% increase 
in the full year dividend 
 
FINANCIAL UPDATE 
 
We continue to trade in line with our expectations, delivering both strong 
operational and financial performance this year. 
 
In the UK, where our revenues are "decoupled" from volumes, we do not expect to 
benefit financially from the cold weather in December and January.  In the US, 
although we have seen some decline in customer volumes, we have not seen the 
severe ice storms of last year - weather has been relatively normal for this 
period - and so we expect an improved performance from our Electricity 
Distribution and Generation business.  As reported at our half year results, we 
also expect a strong performance from our Transmission business.  Our Gas 
Distribution business will benefit from increases in net revenues under our UK 
and US rate plans, but will be impacted by timing differences and the absence of 
one off cost recovery.  In addition we expect our US Gas Distribution network to 
experience lower volumes as a result of the recession, which will impact rate 
plans yet to be decoupled.  This will result in lower operating profit in this 
business. 
 
We have completed our funding requirement of GBP2.5bn for 2009/10 and have 
already pre-funded a substantial portion of our funding requirement for 2010/11. 
 Our net debt at the full year is expected to be in line with our half year 
figure of around GBP22bn.  We continue to expect net interest charges this year 
to benefit from low inflation and the fixing of the majority of our variable 
rate debt at low interest rates.  We have recently seen a pick up in inflation, 
which will impact next year's UK revenues and index linked debt.Our UK regulated 
revenues are subject to an RPI + X indexation at the start of each financial 
year.  For the purpose of setting revenue for 2010/11 the average RPI + X 
element of the rate increases is expected to be 0.2* per cent. 
 
Our full year effective tax rate is expected to be in line with last year. 
 
Overall, we are well positioned to deliver another year of strong performance, 
with good cash flows, which will continue to underpin our dividend policy. 
 
BUSINESS UPDATE 
In the UK this period we experienced seven of the twenty coldest days in the 
last fifteen years.  Over the past month we have seen an all time record demand 
for gas on our UK network.  The system operated well with a good response from 
the market to the four gas balancing alerts we issued.  The cold weather has 
also resulted in an unprecedented number of contact centre emergency calls and 
repairs to our gas mains. 
We note Ofgem's decision to postpone for a year the next transmission price 
control review (TPCR5), due to be implemented from 1 April 2012, and roll over 
the current regime for the intervening period.  We look forward to working with 
Ofgem on the terms of the TPCR5 roll over to 2013. 
We have continued to make progress in line with our plans on our US rate case 
filings.  On 29 January we filed our Niagara Mohawk electric rate case and 
during this period we have received satisfactory US rate case decisions for 
Massachusetts Electric Company and LIPA generation, representing 14 % of our 
total US rate base: 
·     The Massachusetts electric rate plan was approved on 30 November 2009 with 
a base allowed return on equity of 10.35% and a $44 million rate increase 
effective 1 January 2010.  In addition we have agreement to recover $24 million 
over four years from 2011 in relation to past storm costs.  The plan also 
includes volume decoupling, annual trackers for capital investment and pension 
and healthcare costs and improved allowance for bad debt. 
·     On 5th January 2010 the Federal Energy Regulatory Commission (FERC) 
approved the agreement with the Long Island Power Authority, which agreed a 
$65.5million rate increase effective 1 February 2009 and a 10.75% return on 
equity.  In addition the agreement includes annual trackers for pension and 
healthcare costs as well as capital expenditure. 
Our US Gas and Electricity Distribution operations met or exceeded all their 
regulatory targets for system performance and customer satisfaction and, as a 
result, will not incur any performance penalties for the calendar year 2009. 
 
* weighted average RPI + X revenue increase for UK Gas Distribution, Gas 
Transmission and Electricity Transmission based on their regulatory asset values 
at 31 March 2009. The individual RPI+X revenue increases are Gas Distribution 
0%, Gas Transmission -0.4% and Electric Transmission 0.7%. 
 
CONTACTS 
 
Investors 
David Rees                 +44 (0)20 7004 3170              +44 (0)7901 511322 
(m) 
George Laskaris         +1 718 403 2526                     +1 917 375 0989 (m) 
Victoria Davies            +44 (0)20 7004 3171              +44 (0)7771 973447 
(m) 
 
Media 
Clive Hawkins             +44 (0)20 7004 3147              +44 (0)7836 357173 
(m) 
Chris Mostyn               +1 781 907 1726                     +1 347 702 3740 
(m) 
Gemma Stokes           +44 (0)1926 653 555              +44 (0) 7974 198333 (m) 
 
Brunswick 
Tom Burns                  +44 (0)20 7404 5959              +44 (0)7974 982333 
(m) 
 
 
 
This announcement contains certain statements that are neither reported 
financial results nor other historical information. These statements are 
forward-looking statements within the meaning of Section 27A of the Securities 
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, 
as amended. These statements include information with respect to our financial 
condition, our results of operations and businesses, strategy, plans and 
objectives.  Words such as "anticipates", "expects", "intends", "plans", 
"believes", "seeks", "estimates", "may", "will", "continue", "project" and 
similar expressions, as well as statements in the future tense, identify 
forward-looking statements.  These forward-looking statements are not guarantees 
of our future performance and are subject to assumptions, risks and 
uncertainties that could cause actual future results to differ materially from 
those expressed in or implied by such forward-looking statements. Many of these 
assumptions, risks and uncertainties relate to factors that are beyond our 
ability to control or estimate precisely, such as delays in obtaining, or 
adverse conditions contained in, regulatory approvals and contractual consents, 
including unseasonable weather affecting the demand for electricity and gas, 
competition and industry restructuring, changes in economic conditions, currency 
fluctuations, changes in interest and tax rates,  changes in energy market 
prices, changes in historical weather patterns, changes in laws, regulations or 
regulatory policies, developments in legal or public policy doctrines, the 
impact of changes to accounting standards and technological developments. Other 
factors that could cause actual results to differ materially from those 
described in this announcement include the ability to integrate the businesses 
relating to announced acquisitions with our existing business to realise the 
expected synergies from such integration, the availability of new acquisition 
opportunities and the timing and success of future acquisition opportunities, 
the timing and success or other impact of the sales of our non-core businesses, 
the failure for any reason to achieve reductions in costs or to achieve 
operational efficiencies, the failure to retain key management, the behaviour of 
UK electricity market participants on system balancing, the timing of amendments 
in prices to shippers in the UK gas market, the performance of our pension 
schemes and the regulatory treatment of pension costs, and any adverse 
consequences arising from outages on or otherwise affecting energy networks, 
including gas pipelines, which we own or operate.  For a more detailed 
description of some of these assumptions, risks and uncertainties, together with 
any other risk factors, please see our filings with and submissions to the US 
Securities and Exchange Commission (the "SEC") (and in particular the "Risk 
Factors" and "Operating and Financial Review" sections in our most recent Annual 
Report on Form 20-F).  Except as may be required by law or regulation, National 
Grid undertakes no obligation to update any of its forward-looking statements. 
The effects of these factors are difficult to predict. New factors emerge from 
time to time and we cannot assess the potential impact of any such factor on our 
activities or the extent to which any factor, or combination of factors, may 
cause results to differ materially from those contained in any forward-looking 
statement. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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