National Grid 2008 Annual Report Download - page 396

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 56033
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.7.1, Doc: 8, Page: 53
Description: EXH 2(B).7.1
0/3807.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/807/3*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 56033
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.7.1, Doc: 8, Page: 53 Description: EXH 2(B).7.1
0/3807.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/807/3*
DESCRIPTION OF NATIONAL GRID GAS plc
53
Incorporation and Businesses
National Grid Gas is a licensed
g
as trans
p
orter under the Gas Act 1986, as amended
(
the “Gas Act”
)
.
National Grid Gas is the parent undertaking of the National Grid Gas Group and is an indirectly wholly-owned subsidiary
undertakin
g
of National Grid
p
lc. National Grid Gas is incor
p
orated in En
g
land and Wales.
National Grid Gas was incorporated in En
g
land and Wales on 1 April 1986 as a public company limited by shares under the
Companies Act 1985. The address of National Grid Gas’s registered office is 1-3 Strand, London, WC2N 5EH and the
telephone number of the registered office is [phone].
Business of National Grid Gas
p
lc
The business of National Grid Gas comprises three principal activities:
(i) owning and operating the high pressure gas national transmission system (“NTS”) in Great Britain, comprisin
g
approximately 4,326 miles of hi
g
h pressure pipe and 26 compressor stations, connectin
g
to ei
g
ht distribution networks and
to third
p
art
y
inde
p
endent s
y
stems for onward trans
p
ortation of
g
as to end consumers as well as interconnectors;
(ii) operating four gas distribution networks (“DNs”), comprisin
g
approximately 82,000 miles of distribution pipeline, conveyin
g
g
as to domestic and industrial/commercial users in central, eastern and north west En
g
land, as well as a lar
g
e part of
London and the northern Home Countries;
(
iii
)
p
rovidin
g
re
g
ulated
g
as meterin
g
and meter readin
g
services in Great Britain; and
(iv) owning and operating liquefied natural gas (“LNG”) storage facilities.
National Grid Gas holds a
g
as transporter licence under the Gas Act in respect of each of its NTS and DN
g
as transportation
activities (i.e. the activities described in (i) and (ii) above) (together, the “Licences”).
National Grid Gas’s customers are
g
as shippers, for whom it transports
g
as throu
g
h the NTS and throu
g
h its DNs to consumers
or through the NTS to other gas transporters’ gas distribution networks for onward conveyance to consumers.
National Grid Gas is responsible for residual energy balancing on the gas transportation system in Great Britain (the “GB
system”). This role is
g
iven to National Grid Gas under the commercial arran
g
ements
g
overnin
g
the GB system (the Uniform
Network Code). To facilitate this, the Licences permit National Grid Gas to (and it does) buy
g
as or ri
g
hts to use
g
as systems
(includin
g
capacity ri
g
hts) in order to meet anticipated physical requirements for ener
g
y balancin
g
on the GB system. In some
circumstances National Grid Gas may also sell
g
as or capacity ri
g
hts it has bou
g
ht if it becomes clear that the anticipated
physical position will not be required (and may make a profit, or avoid a loss in doin
g
so). The purpose of this activity is not to
make a profit, but to balance the GB system (although National Grid Gas’s price control does incentivise it to keep its costs of
s
y
stem o
p
eration to a minimum
)
.
Aside from the permitted balancin
g
activities described above, the Licences prohibit National Grid Gas from purchasin
g
or
otherwise acquirin
g
g
as,
g
as derivatives or capacity ri
g
hts in respect of the flow of
g
as for the purposes of resale or other
disposition to third parties. As a result, National Grid Gas is prohibited from (i) engaging in any gas “trading” activity (other than
in the very limited circumstances broadly related to the need to balance the GB system as described above) and (ii) actin
g
as a
gas shipper or gas supplier.
National Grid Gas is the parent company of National Grid Meterin
g
. National Grid Meterin
g
primarily provides
g
as meterin
g
services to National Grid Gas for both (i) industrial and commercial, and (ii)