9th Jul 2007 07:01
National Grid PLC09 July 2007 9 July 2007 National Grid plc UPDATE ON NATIONAL GRID ACQUISITION OF KEYSPAN National Grid announced on 6 July 2007 that it had reached an agreement inprinciple with the staff of the New York State Department of Public Service andseveral other parties regarding the acquisition of KeySpan. Formal documentationof the settlement terms has now been filed with the New York State PublicService Commission (NYPSC). This settlement brings significant benefits to customers and shareholders.Highlights of the agreement include: Five year gas rate plans beginning 1 January 2008. In New York City basedelivery rates will be frozen at current levels for the rate plan duration. Basedelivery rates on Long Island will rise by $60m in 2008 to reflect higher costsand be frozen at that level for the remainder of the rate plan. 50/50 earnings sharing from a 10.6% return on equity (RoE)*. From a base allowedRoE of 9.8% National Grid will retain all earnings up to 10.6% RoE. Above thislevel, earnings sharing factors apply, beginning at 50/50, with customersbenefiting fully from any earnings in excess of a 13.6% RoE. The regulatoryreturn on equity is calculated using a 45% equity capitalisation. 50/50 sharing of merger savings. The identified annual synergy savings arisingfrom the merger and accruing to the New York City and Long Island gas businessesare shared equally with customers, and are excluded from the calculation ofearned returns. The associated costs to achieve are recovered over ten yearswith a return. Ravenswood power station. The agreement presents National Grid with the optionto enter into a long-term, fixed price contract for all of the output of theRavenswood Generating Station, a 2,450-megawatt site in Queens, New York.National Grid will have up to three years to complete that option or divest thesite. Deferral and true-up provisions. Provisions and deferrals allow adjustments torates for the reconciliation of certain costs outside of levels assumed in theagreement. These include for instance pensions, property taxes and otherexogenous costs. As previously announced, the latest procedural schedule indicates that themerger approval will be placed before the NYPSC for a vote as on 22 August.Subject to an approval vote, completion of the acquisition is expected shortlythereafter. * Including a 10 basis point uplift contingent on the achievement of certaintargets associated with the implementation and operation of demand-sidemanagement programs. Contacts National Grid: Investors David Rees +44 (0)20 7004 3170 +44 (0)7901 511322 (m)Richard Smith +44 (0)20 7004 3172 +44 (0)7747 006321 (m)James Waite +44 (0)20 7004 3171 +44 (0)7977 440902 (m) Media Clive Hawkins +44 (0)20 7004 3147 +44 (0)7836 357173 (m) Brunswick: Paul Scott +44 (0)20 7396 5333 +44 (0)7974 982333(m) CAUTIONARY STATEMENT This announcement contains certain statements that are neither reportedfinancial results nor other historical information. These statements areforward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,as amended. These statements include information with respect to our financialcondition, our results of operations and businesses, strategy, plans andobjectives. Words such as "anticipates", "expects", "intends", "plans","believes", "seeks", "estimates", "may", "will", "continue", "project" andsimilar expressions, as well as statements in the future tense, identifyforward-looking statements. These forward-looking statements are not guaranteesof our future performance and are subject to assumptions, risks anduncertainties that could cause actual future results to differ materially fromthose expressed in or implied by such forward-looking statements. Many of theseassumptions, risks and uncertainties relate to factors that are beyond ourability to control or estimate precisely, such as delays in obtaining, oradverse conditions contained in, regulatory approvals and contractual consents,including those required to complete the proposed acquisition of KeySpan when oras planned, unseasonable weather affecting the demand for electricity and gas,competition and industry restructuring, changes in economic conditions, currencyfluctuations, changes in interest and tax rates, changes in energy marketprices, changes in historical weather patterns, changes in laws, regulations orregulatory policies, developments in legal or public policy doctrines, theimpact of changes to accounting standards and technological developments. Otherfactors that could cause actual results to differ materially from thosedescribed in this announcement include the ability to integrate the businessesrelating to announced acquisitions with our existing business to realise theexpected synergies from such integration, the availability of new acquisitionopportunities 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 achieveoperational efficiencies, the failure to retain key management, the behaviour ofUK electricity market participants on system balancing, the timing of amendmentsin prices to shippers in the UK gas market, the performance of our pensionschemes and the regulatory treatment of pension costs, and any adverseconsequences arising from outages on or otherwise affecting energy networks,including gas pipelines, which we own or operate. For a more detaileddescription of some of these assumptions, risks and uncertainties, together withany other risk factors, please see our filings with and submissions to the USSecurities and Exchange Commission (the "SEC") (and in particular the "RiskFactors" and "Operating and Financial Review" sections in our most recent AnnualReport on Form 20-F). Except as may be required by law or regulation, NationalGrid undertakes no obligation to update any of its forward-looking statements.The effects of these factors are difficult to predict. New factors emerge fromtime to time and we cannot assess the potential impact of any such factor on ouractivities or the extent to which any factor, or combination of factors, maycause results to differ materially from those contained in any forward-lookingstatement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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