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BOWNE INTEGRATED TYPESETTING SYSTEM

CRC: 9391

Name: NATIONAL GRID

Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: (212)924-5500Site: BOWNE OF NEW YORK

Y59930.SUB, DocName: EX-2.B.5.1, Doc: 4, Page: 18

Description: EXH 2(B).5.1

0/1497.00.00.00Y59930BNY

[E/O] EDGAR 2 *Y59930/497/1*

BOWNE INTEGRATED TYPESETTING SYSTEM

CRC: 9391

Name: NATIONAL GRID

Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: (212)924-5500Site: BOWNE OF NEW YORK

Y59930.SUB, DocName: EX-2.B.5.1, Doc: 4, Page: 18

Description: EXH 2(B).5.1

0/1497.00.00.00Y59930BNY

[E/O] EDGAR 2 *Y59930/497/1*

potentially hazardous products and by-products. In addition, there may be other aspects of NGET’s operations that are not

currently re

arded or proved to have adverse effects but could become so, for example, the effects of electric and ma

netic

fields. NGET is subject to laws and re

ulations relatin

to pollution, the protection of the environment, and how NGET uses and

disposes of hazardous substances and waste materials. NGET is also subject to laws and re

ulations

overnin

health and

safety matters, protectin

both the public and its employees. Any breach of these obli

ations, or even incidents relatin

to the

environment or health and safety that do not amount to a breach, could adversely affect the results of operations and NGET’s

reputation.

Network failure or the inability to carry out critical non-network operations may have significant adverse impacts on bot

NGET’s financial position and its reputation

NGET may suffer a major network failure or may not be able to carry out critical non-network operations. Operational

performance could be adversely affected by a failure to maintain the health of the network, inadequate forecastin

of demand

or inadequate record keepin

. This could cause NGET to fail to meet a

reed standards of service or to be in breach of a licence

or approval. Even incidents that do not amount to a breach could result in adverse re

ulatory action and financial

consequences, as well as harming NGET’s reputation. In addition to these risks, NGET may be affected by other potential

events that are lar

ely outside of its control such as the impact of weather or unlawful acts of third parties. Weather conditions

can affect financial performance and severe weather that causes outa

es or dama

es infrastructure will adversely affect

operational and, potentially, business performance. Terrorist attack, sabota

e or other intentional acts may also physically

damage NGET’s businesses or otherwise si

nificantly affect corporate activities and as a consequence adversely impact the

results of operations.

NGET’s results of operations depend on a number of factors relating to business performance including performance agains

regulatory targets and the delivery of anticipated costs and efficiency savings

Earnings maintenance and growth from NGET’s business will be affected by its ability to meet or better re

ulatory efficiency

tar

ets set by Of

em. From time to time, NGET also publishes cost and efficiency savin

s. To meet these tar

ets, NGET must

continue to improve management and operational performance. Earnings from NGET’s business also depend on meetin

standards set by Of

em. To meet these standards, NGET must maintain and/or improve reliability and other measures.

Earnings from NGET’s re

ulated business may also be affected by its ability to recover incurred expenditure. The company is

also part of National Grid’s reor

anisation of its operations alon

lines of business. If NGET does not meet these tar

ets and

standards or is unable to recover incurred expenditure or does not implement its part of this reor

anisation as envisa

ed its

business, performance, results of operations and its reputation may be harmed.

Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of operations

Changes in commodity prices could potentially impact on NGET’s business. Current re

ulatory arran

ements in the U.K.

provide the ability to pass throu

h virtually all of the increased costs related to commodity prices to consumers. However, if

Ofgem were to restrict this ability, it could have an adverse effect on NGET’s operating results.

NGET’s reputation may be harmed if consumers of energy suffer a disruption to their supply even if this disruption is outside o

NGET’s control