26th May 2005 07:01
OFGEM26 May 2005 R/23 May 26 2005 GAS NETWORKS SALE GETS FULL CONSENT TO PROCEED Ofgem's Authority yesterday (Wednesday 25 May) gave its final consent forNational Grid Transco (NGT) to sell four of its low-pressure gas distributionnetworks. NGT hived-down the four networks into four wholly-owned Transco subsidiarycompanies on 1 May. This followed the announcement last month that NGT had metthe conditions precedent to hive-down, which Ofgem's Authority had attached toits consent for the sale in January. An additional condition of the January consent was that NGT could not sell theshares in the four relevant wholly-owned Transco subsidiary companies withoutthe Authority's further consent. All the conditions to the Authority's Januaryconsent have sought to ensure that customers' interests would be protected whenthe four networks are sold. Following today's announcement from Ofgem, NGT is now free to sell the shares inthese four companies to its prospective buyers. - ends - Notes to Editors 1. In August 2004 NGT announced that it had entered into conditional agreementswith third party purchasers on the sale of four of its gas distributionnetworks. NGT had to obtain approval from Ofgem and the Secretary of State forTrade and Industry, before the sale could go ahead. In addition, safety casesneeded to be accepted by the Health and Safety Executive. NGT has eightlow-pressure gas distribution networks in Britain in addition to owning thehigh-pressure National Transmission System. The four distribution networks NGTwill be selling are: Scotland, the North of England, the South of England andWales and West. The remaining four networks will be retained by NGT. 2. Ofgem has identified potential savings for customers of around £225 millionbetween 2005-2023. These potential benefits are expected to start to feedthrough to customers in future price controls as Ofgem is expected to be betterable to compare the performance of the distribution networks. In electricitydistribution, the ability to compare different companies' performance hasenabled Ofgem to halve the costs of distribution in real terms sinceprivatisation (1989). 3. The conditions for Ofgem's consent to hive-down and share sale related to theregulatory, commercial and operational arrangements required to protect theinterests of customers in a divested industry structure. For example: • clearly defined roles and responsibilities for network owners • new offtake arrangements (to be implemented from September 2005) • the introduction of an agency to carry out functions that NGT currently carries out centrally, including administering the processes needed to support gas competition. 4. The costs of gas distribution make up around 23 per cent of the averagedomestic customer's bill. 5. Ofgem is the Office of the Gas and Electricity Markets, which supports theGas and Electricity Markets Authority, the regulator of the gas and electricityindustries in Great Britain. Ofgem's aim is to bring choice and value to all gasand electricity customers by promoting competition and regulating monopolies.The Authority's powers are provided for under the Gas Act 1986, the ElectricityAct 1989 and the Utilities Act 2000. For further press information contact: Chris Lock: 0207 901 7225 or 07766 511470Mark Wiltsher: 020 7901 7006 or 07774 728971 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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