National Grid 2008 Annual Report Download - page 175

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 57213
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: 79
Description: EXH 2(B).5.1
0/1558.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/558/1*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 57213
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: 79 Description: EXH 2(B).5.1
0/1558.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/558/1*
There are no potential conflicts of interest between the duties to NGET of any of the Directors listed above and their private
interests or other duties.
Regulation
The electricity industry in Great Britain is re
g
ulated under the Electricity Act, as modified by the Utilities Act 2000 and Ener
g
y
Act 2004. This le
g
islation establishes the GEMA as the specialist economic sectoral re
g
ulator with responsibility for both the
electricity industry and the onshore
g
as industry and provides that various activities may not be conducted unless the person
carryin
g
on those activities is either exempted from the requirement to hold a licence, or holds the relevant licence. The
licenseable activities established under the Electricity Act are the
g
eneration, participation in transmission, distribution and
supply of electricity together with participation in the operation of an electricity interconnector.
The Electricity Act (together with the Transmission Licence) requires NGET to:
GEMA is responsible for the supervision and enforcement of the licensin
g
re
g
ime (althou
g
h the Secretary of State does retain
some limited functions). Under the Electricity Act, GEMA’s (and the Secretary of State’s) principal objective in carryin
g
out its
functions is to protect the interests of consumers in relation to electricity conveyed by distribution systems or transmission
systems, wherever appropriate by promotin
g
effective competition between persons en
g
a
g
ed in, or in commercial activities
connected with, the
g
eneration, transmission, distribution or supply of electricity or the provisions or use of electricity
interconnectors.
GEMA must, in carrying out its functions, have regard to:
The Transmission Licence can only be amended in accordance with the Electricity Act. The Transmission Licence came into
effect on privatisation and, unless revoked, will continue in force until determined by not less than 25 years’ notice by the
Secretary of State. The Transmission Licence may also be revoked by the Secretary of State on shorter notice (immediately or
not less than 30 days) in specified circumstances, including non-payment of fees or penalties, insolvency, cessation of the
Transmission Business and non-compliance with enforcement orders made by GEMA and non-compliance with orders issued
under certain provisions of general competition legislation.
The Transmission Licence also contains conditions which have the effect of “ring fencing” NGET’s business. These include:
79
• develop, operate and maintain an efficient, co-ordinated and economical system of electricity transmission; and
• facilitate com
p
etition in the su
pp
l
y
and
g
eneration of electricit
y
.
• the need to secure that all reasonable demands for electricit
y
are met; and
• the need to secure that licence holders are able to finance their activities.
•
p
rohibitin
g
NGET from carr
y
in
g
on activities other than those
p
ermitted b
y
the Transmission Licence;
• requirin
g
that the business has sufficient mana
g
erial and financial resources available to it to conduct its licensed
activities;
• requiring NGET to maintain an investment grade issuer credit rating;