National Grid 2008 Annual Report Download - page 173

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 10284
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.5.1, Doc: 4, Page: 77
Description: EXH 2(B).5.1
0/2556.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/556/2*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 10284
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.5.1, Doc: 4, Page: 77 Description: EXH 2(B).5.1
0/2556.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/556/2*
DESCRIPTION OF NATIONAL GRID ELECTRICITY TRANSMISSION PLC
Overview
National Grid Electricity Transmission plc (“National Grid Electricity Transmission” or “NGET”), a wholly-owned subsidiary of
National Grid, is the owner of the electricity transmission system in En
g
land and Wales and operator of the electricity
transmission system throughout Great Britain.
NGET is the holder of an electricity transmission licence (the “Transmission Licence”) under the Electricity Act. The Electricity
Act requires all persons who participate in the transmission of the electricity to hold a licence to do so (if not exempted from
such requirement)
The Transmission Licence permits NGET to:
NGET was incorporated in En
g
land and Wales on 1 April 1989 as a public company limited by shares under the Companies Act
1985. The address of NGET’s registered office is 1-3 Strand, London, WC2N 5EH and the telephone number of the main
switchboard at the registered office is [phone].
Business of NGET
NGET derives the vast majority of its turnover and profits from char
g
es for services provided by its transmission business (the
“Transmission Business”) to, inter alia, generators, interconnector owners and users, distributors, suppliers and directly-
connected customers.
As the electricity transmission asset owner in England and Wales, NGET:
Revenue from char
g
es for usin
g
the transmission network and char
g
es for connections made before March 1990 is controlled
by revenue restriction conditions set out in the Transmission Licence. This revenue restriction, known as a price control, takes
into account, among other factors, operating expenditure, capital expenditure and cost of capital (which for the current five-year
price control which commenced on 1 April 2007, is at a post-tax real rate of 4.4 per cent. on its re
g
ulatory asset value). In
addition, the costs of non-domestic rates and the fees payable by NGET to the Gas and Electricity Markets Authority (“GEMA”)
under the Transmission Licence are passed directly through to NGET’s customers through its charges.
77
• own electricity transmission assets in En
g
land and Wales (there are separate licensees in respect of transmission assets
in Scotland
)
; and
• operate (since the introduction of the British Electricity Trading and Transmission Arrangements (“BETTA”) on 1
April 2005) the electricity transmission system throu
g
hout Great Britain (that is, includin
g
the transmission systems owned
by the electricity transmission licensees in Scotland).
• owns and maintains assets comprising 8,671 miles of high-volta
g
e overhead lines, 420 miles of under
g
round cables and
337 substations at 244 sites;
• develops the network to accommodate new connections and disconnections; and
• mana
g
es a
p
ro
g
ramme of asset re
p
lacement and investment to ensure the lon
g
term reliabilit
y
of the s
y
stem.