National Grid 2008 Annual Report Download - page 176

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 56469
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: 80
Description: EXH 2(B).5.1
0/2559.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/559/2*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 56469
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: 80 Description: EXH 2(B).5.1
0/2559.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/559/2*
If NGET is in default of any of the “ring fence” obligations, it is prohibited from declaring and paying a dividend.
NGET is prohibited by the Transmission Licence from purchasin
g
or otherwise acquirin
g
electricity on its own account for the
purpose of sale to third parties. Since the introduction of the New Electricity Trading Arrangements (“NETA”) in April 2001, the
exceptions to the prohibition have chan
g
ed so that NGET may purchase electricity where required as part of the activity of
procuring balancing services in its role as GBSO or where the purchase or acquisition has the consent of GEMA.
Recent Developments
The previous price control arrangements for NGET’s electricity network ceased on 31 March 2007 and the next price control
arrangements cover the period from 1 April 2007 to 31 March 2012. NGET accepted Ofgem’s final proposals in respect of its
role as owner of the electricity transmission network and the necessary licence amendments to enact the final proposals have
been implemented with effect from 1 April 2007. The key elements of these proposals are a 4.4 per cent. post-tax real rate of
return on its regulatory asset value, a £3 billion baseline five year capital expenditure allowance (in 2004/2005 prices) and a
£1.3 billion five year operating expenditure allowance (in 2004/2005 prices). NGET has also accepted Ofgem’s final proposals
for the system operator schemes:
These proposals have been implemented through licence changes to NGET’s Transmission Licence.
NGET continues to work with the U.K. Government and Of
g
em to make possible the necessary investments in the electricity
transmission network to support the development of renewable ener
g
y projects. In addition to the increase in capital investment
allowances agreed in the transmission price control, NGET also has a separate allowance of £107 million (in 2004/2005 prices)
for the upgrade of the Anglo-Scottish interconnector and associated works. As at 31 March 2007, access is bein
g
sou
g
ht by
approximately 12 GW of renewable
g
eneration consistin
g
of 165 projects, each with connection a
g
reements in Scotland. For
England and Wales, connection offers have been made to an additional 5 GW of renewable generation.
80
• prohibiting NGET from creating indebtedness (except in limited circumstances) other than on an arm’s len
g
th basis on
normal commercial terms for one of its permitted purposes;
•
p
rohibitin
g
the creation of “cross-default” obli
g
ations; and
• prohibiting NGET from giving or receiving any cross-subsidy to or from any other group business.
(
i
)
coverin
g
the external costs of its s
y
stem o
p
eration role to a
pp
l
y
for one
y
ear from 1 A
p
ril 2007; and
(ii) the internal costs of system operation to apply for the five years from 1 April 2007.