National Grid 2008 Annual Report Download - page 612

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 32229
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: 88
Description: EXHIBIT 15.1
0/3284.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/284/3*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 32229
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: 88 Description: EXHIBIT 15.1
0/3284.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/284/3*
Table of Contents
96
Cor
p
orate Governance continued
National Grid plc
Breaches of, or changes in, environmental or health and
safety laws or regulations could expose us to claims for
financial compensation and adverse regulatory
consequences, as well as damaging our reputation.
Aspects of our activities are potentially dangerous, such as
the operation and maintenance of electricity generation
facilities and electricity lines and the transmission and
distribution of gas. Electricity and gas utilities also typically
use and generate in their operations hazardous and
potentially hazardous products and by-products. In addition,
there may be other aspects of our operations that are not
currently regarded or proved to have adverse effects but
could become so; for example, the effects of electric and
magnetic fields. We are subject to laws and regulations
relating to pollution, the protection of the environment, and
how we use and dispose of hazardous substances and
waste materials. These expose us to costs and liabilities
relatin
g
to our operations and our properties whether current,
including those inherited from predecessor bodies, or
formerly owned by us. We are also subject to laws and
regulations governing health and safety matters protecting
the public and our employees. We commit significant
expenditure toward complying with these laws and
regulations and to meeting our obligations under negotiated
settlements. If additional requirements are imposed or our
ability to recover these costs changes, this could have a
material impact on our businesses and our results of
operations and financial position. Any breach of these
obligations, or even incidents that do not amount to a
breach, could adversely affect our results of operations and
our reputation.
For further information about environmental and health and
safety matters relating to our businesses, see the ‘Our
Responsibility’ section of our website at
www.national
g
rid.com.
Network failure, the inability to carry out critical non-network
operations and damage to infrastructure may have
si
g
nificant adverse impacts on both our financial position and
reputation.
We may suffer a major network failure or may not be able to
carry out critical non-network operations. Operational
performance could be adversely affected by a failure to
maintain the health of the system or network, inadequate
forecasting of demand or inadequate record keeping. This
could cause us to fail to meet agreed standards of service or
be in breach of a licence or approval, and even incidents that
do not amount to a breach could result in adverse regulatory
and financial consequences, as well as harming our
reputation. In addition to these risks, we may be affected by
other potential events that are largely outside our control
such as the impact of weather or unlawful acts of third
parties. Weather conditions can affect financial performance
and severe weather that causes outages or damages
infrastructure will adversely affect operational and potentially
business performance and our reputation. Terrorist attack,
sabotage or other intentional acts may also damage our
assets or otherwise significantly affect corporate activities
and as a consequence have an adverse impact on the
results of operations.
Our results of operations depend on a number of factors
relating to business performance including performance
a
g
ainst re
g
ulatory tar
g
ets and the delivery of anticipated cost
and efficiency savings.
Earnings maintenance and growth from our regulated gas
and electricity businesses will be affected by our ability to
meet or exceed efficiency and inte
g
ration tar
g
ets and service
quality standards set by, or agreed with, our regulators. In
addition, from time to time, we publish cost and efficiency
savings targets for our businesses. We have also
substantially completed reorganising our operations along
lines of business. To meet these targets and standards, we
must continue to improve operational performance, service
reliability and customer service. If we do not meet these
targets and standards, or we do not complete
implementation of this reorganisation as envisaged, we may
not achieve the expected benefits, our business may be
adversely affected and our performance, results of
operations and our reputation may be harmed.
Business development activity, including acquisitions and
disposals, may be based on incorrect assumptions or
conclusions; significant liabilities may be overlooked or there
may be other unanticipated or unintended effects.
Business development activities, including acquisitions and
disposals, may be based on incorrect assumptions or
conclusions; significant liabilities may be overlooked or there
may be other unanticipated or unintended effects. There is
no certainty that planned levels of synergy and efficiency
savings from acquisitions, such as our acquisition of
KeySpan, will be achieved. This could impact our ability to
enter into other transactions.
For further details concerning the acquisition of KeySpan
and other transactions that we have undertaken over the
period, see the ‘Performance against our objectives’ section
of the Operating and Financial Review on page 26.
Chan
g
es to the re
g
ulatory treatment of commodity costs may
have an adverse effect on the results of operations.
Changes in commodity prices could potentially impact our
energy delivery businesses. Current regulatory
arrangements in the UK and the US provide the ability to
pass through virtually all of the increased costs related to
commodity prices to consumers. However, if regulators in
the UK or the US were to restrict this ability, it could have an
adverse effect on our operating results.
Our reputation may be harmed if consumers of ener
g
y suffer
a disruption to their supply.
Our energy delivery businesses are responsible for
transporting available electricity and gas. We consult with,
and provide information to, regulators, governments and
industry participants about future demand and the availability
of supply. However, where there is insufficient supply, our
role is to manage the relevant network safely which, in
extreme circumstances, may require us to disconnect
consumers, which may damage our reputation.