National Grid 2008 Annual Report Download - page 218

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 7461
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 12
Description: EXH 2(B).6.1
0/1616.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/616/1*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 7461
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 12 Description: EXH 2(B).6.1
0/1616.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/616/1*
RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under Instruments issued under th
e
Programme. All of these factors are contingencies which may or may not occur and the Issuer is not in a position to express
a
view on the likelihood of any such contingency occurring.
Factors which the Issuer believes may be material for the purpose of assessing the market risks associated with Instrument
s
issued under the Programme are also described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing in Instruments issue
d
under the Programme, but the Issuer may be unable to pay interest, principal or other amounts on or in connection with an
y
Instruments for other reasons. If this occurs, prospective investors may lose the value of their entire investment or part of it.
Prospective investors should read the detailed information set out elsewhere in this Prospectus and reach their own views prio
r
to making any investment decision.
Factors that may affect the Issuer’s ability to fulfil its obligations under Instruments issued under the Programme
Risks relating to the Issuer and its businesses
Holding company status and changes in law or regulation in the geographies in which the Group operates could hav
e
an adverse effect on its results of operations.
The Issuer is a holdin
g
company with no business operations of its own and depends on the earnin
g
s and cash flow of, and
dividends or distributions from, its subsidiaries. The Issuer conducts all of its businesses throu
g
h its subsidiaries. Each of the
Issuer’s public utility subsidiaries are subject to various dividend restrictions contained in federal and state re
g
ulatory approvals,
financin
g
instruments and or
g
anisational documents which, under certain circumstances, may limit the ability of these
subsidiaries to pay dividends; none of these subsidiaries are currently prohibited from paying a dividend. Many of the Issuer’s
businesses are utilities that are subject to regulation by governments and other authorities; these businesses’ le
g
al authority to
pay dividends or make other distributions to the Issuer is subject to re
g
ulation by the utility re
g
ulatory commissions of the states
in which it operates. A significant portion of the Group’s revenues in its utility businesses is directly dependent on rates
established by federal or state re
g
ulatory authorities, and any chan
g
e in these rates and re
g
ulatory structure could si
g
nificantly
impact the Group’s financial results. Increases in utility costs, not otherwise offset by increases in revenues or reductions in
other expenses, could have an adverse effect on earnin
g
s due to the time la
g
associated with obtainin
g
re
g
ulatory approval to
recover such increased costs and expenses in rates. Chan
g
es in federal law, or in state or local law in the jurisdictions in which
the Group operates, could adversely affect it. Re
g
ulatory decisions concernin
g
, for example, whether licences or approvals to
operate are
g
ranted or are renewed, whether there has been any breach of the terms of a licence or approval, the level of
permitted revenues for the Group’s businesses and proposed business development activities could have an adverse impact on
its results of operations, cash flows, the financial condition of its businesses and the ability to develop those businesses in the
future.
Breaches of, or changes in, environmental or health and safety laws or regulations could expose the Group to claim
s
for financial compensation and adverse regulatory consequences, as well as damaging the reputation of the Group.
Aspects of the Group’s activities are potentially dan
g
erous, such as the operation and maintenance of electric
g
eneration
facilities, electricity lines and the transmission and distribution of
g
as. Electricity and
g
as utilities also typically use and
g
enerate
in their operations hazardous and potentially hazardous products and by-products. In addition, there may be other aspects of
the Group’s operations that are not
12