National Grid 2008 Annual Report Download - page 577

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 27502
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 57
Description: EXHIBIT 15.1
0/6253.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/253/6*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 27502
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 57 Description: EXHIBIT 15.1
0/6253.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/253/6*
Table of Contents
Annual Report and Accounts 2007/08
65
The system average interruption duration (SAIDI) for
2007/08, being the time the average customer is without
power during the year, was 110 minutes, compared with a
target of 110 to 120 minutes and 121 minutes in 2006/07.
We achieved all of our reliability regulatory targets in
Massachusetts and Rhode Island. In upstate New York, we
significantly reduced the number of times the average
customer was without power during the 2007 calendar year,
but still incurred an aggregate net penalty of $13.2 million
(£6.6 million).
We are seeing improved performance as a result of our
comprehensive reliability improvement programme, which
will involve investment of over $930 million (£470 million)
over the next five years.
We continue to be committed to reducing the frequency and
duration of service interruptions. We are therefore increasin
g
our investment in the coming financial year for asset
enhancement, replacement and maintenance. Continuation
of this programme into the future should improve reliability,
reduce inefficient use of resources in responding to outages
and create a safer working environment.
In order to improve performance, we have developed and
begun execution of a five year reliability enhancement
programme. This includes:
Our Long Island electricity generation units earned the
maximum possible performance incentives of $4 million
(£2 million) during the calendar year 2007. These incentives
are based on capacity, summer availability and efficiency.
These units maintained their efficiency despite reduced
output caused by the introduction of a new interconnector
cable between Long Island and the mainland.
Reliability
In addition to meeting reliability performance
targets agreed with our regulators, our objective is
to improve reliability.
vegetation management – incremental tree trimming to
address an increase in customer outages related to
contacts with tree branches;
feeder hardening – upgrading our worst performing
overhead electricity circuits by replacing aged and
deteriorated components and protecting against lightning
strikes and animal contacts;
asset replacement – replacing ageing distribution
equipment before its expected end of life, including poles,
underground cable, and substation equipment; and
inspection and maintenance – increasin
g
our preventative
maintenance and repair activities to find potential faults
before they occur to improve reliability and public safety.
Under our service quality plans, we met or exceeded our
customer service targets in Massachusetts. We met or
exceeded most of the customer service targets in New York,
but incurred a penalty of $1 million (£0.5 million) for missing
our customer satisfaction targets.
We believe that lower customer satisfaction in New York is
mainly a consequence of a negative reaction to sustained
higher commodity prices. However, reliability and service
issues are also a factor and we are taking steps to improve
customer outreach on mana
g
in
g
cost and use, billin
g
quality,
responsiveness to customer queries, regulatory complaints
and call handling. We also believe that our investment in
enhancing reliability will improve the way our customers
perceive us.
Capital investment in the replacement, reinforcement and
extension of our US electricity distribution networks was
£257 million in 2007/08, £218 million in 2006/07 and
£219 million in 2005/06. After excluding the effect of
exchange movements of £11 million in 2007/08 compared
with 2006/07, capital investment increased by £50 million.
This reflected an increase of £17 million in spend related to
our reliability enhancement programme, recognition of
finance leases related to vehicles of £18 million, other
increases in capital investment of £11 million and £13 million
of capital investment in the operations acquired with
KeySpan, partially offset by a non-recurring benefit
capitalisation adjustment made in 2006/07 of £9 million.
After excluding the effect of exchange movements of
£14 million in 2006/07 compared with 2005/06, capital
investment increased by £13 million. This reflected an
increase of £19 million in spend related to our reliability
enhancement programme and other increases in capital
investment, including a non-recurring benefit capitalisation
adjustment, partially offset by a £17 million reduction relating
to the Nantucket cable
p
ro
j
ect.
Customer
service
In addition to meeting customer service objectives
agreed with our regulators, our objective is to be
within the upper quartile of customer satisfaction
in the territories we o
p
erate in.
Capital
investment
Our objective is to deliver our capital investment
plans over the next five years, including our
$930 million (£470 million) reliability enhancement
p
ro
g
ramme.