National Grid 2010 Annual Report Download - page 7

National Grid Gas plc Annual Report and Accounts 2009/10 5
In March 2008, Ofgem announced a review of the current RPI-X
based regulatory framework. The RPI-X@20 review is an
assessment of the current regulatory regime and its ability to
address the challenges facing energy networks in the future.
Ofgem’s intention was for the output from this project to feed
into the future price controls. To allow the output of RPI-X@20
to be fully incorporated into the next full transmission price
control review, the current transmission price control will be
rolled over one year and extended to March 2013. The current
gas distribution price control is also scheduled to end in March
2013. The outcome of this review is unlikely to impact our
current regulatory settlements, but could influence future price
controls from 2013.
In early 2009, Ofgem launched Project Discovery, an
examination of the prospects for secure and sustainable energy
supplies over the next 10 to 15 years. We will continue to work
with Ofgem as they consult on their range of options.
The European Commission’s third legislative package of
proposals for the European gas markets was passed in July
2009 and must now be implemented into UK domestic
legislation by April 2011. The new legislation consists of two
directives on rules for the internal gas and electricity markets,
two regulations on conditions for access to those markets, and
one regulation establishing an Agency for the Cooperation of
Energy Regulators. The original legislation, published in
September 2007, contained measures to force energy
companies to unbundle their transmission businesses from
supply and generation activities. The final proposals include
alternatives to full unbundling. In summer 2009, the European
Commission published an initial proposal for a regulation
concerning security of gas supply, and National Grid has
worked closely with the UK government and through Gas
Infrastructure Europe to help in its development. The legislative
processes are expected to be complete by the end of 2010. Key
features on the new proposed regulation include improving
information flows and coordination of actions in an emergency.
Price control
The price controls for the UK gas transmission business were
due to be reviewed during 2010 and 2011 but they have been
delayed by a year and are now expected to be implemented in
April 2013.
We were subject to one year system operator price controls for
our gas transmission operations for 2009/10, and new one year
controls have been agreed for 2010/11.
Other developments
Security of supply and climate change
We are focused on the long-term security of supply and
environmental challenges arising from the transition to a low
carbon economy and the decline of the UK's gas production
from the North Sea. We are also working with governmental
and regulatory bodies to ensure we help facilitate the
implementation of the new climate change initiatives and policy
being developed around integrating increasing amounts of
renewable energy.
Legal and related matters
An update on the ongoing Metering competition investigation
that was reported in last year’s Annual Report and Accounts
and the gas distribution main replacement investigation is
provided on page 22.
National Grid plc rights issue
On 20 May 2010, the Board of National Grid plc announced a
fully underwritten rights issue to raise approximately £3.2 billion,
net of expenses. The issue closed on 11 June 2010. The
proceeds are expected to be used to fund a portion of National
Grid plc's capital investment programme and for general
corporate purposes.
External relationships
We aim to enhance our relationships with all of our external
stakeholders including customers, regulators, governments,
suppliers and the communities in which we operate.
Responsibility
Our reputation depends on the trust and confidence of our
stakeholders. We will only earn this by working to the highest
standards, by trusting our employees to do the right thing and
by running our Company responsibly and sustainably.
National Grid’s Framework for Responsible Business, in which
NGG participates, first published in 2002, has been extensively
revised this year to provide a clearer line of sight from National
Grid’s vision to how we manage our business and our day-to-
day dealings with our stakeholders. Our company-wide policies
and position statements, available on National Grid’s website,
underpin the Framework.
National Grid’s Standards of Ethical Business Conduct provide
a common set of practical guidelines to help ensure that our
behaviours are lawful, comply with our policies and licences,
and follow the values set out in the Framework and our core
values. We undertake online training for employees annually to
ensure they understand the Standards.
More information on National Grid’s approach to corporate
responsibility and business ethics is included in the Corporate
Governance section of the National Grid plc Annual Report and
Accounts 2009/10.
Investors
As a subsidiary company of National Grid, NGG participates in
communications to both National Grid’s equity shareholders
and to holders of debt in NGG, supporting National Grid‘s
programme of active communication.
Customers
We aim to treat customers with respect, to communicate clearly
with them, and to make their interactions with us as
straightforward as possible. We aim at all times to provide a
safe, reliable and efficient service to our customers. We have a
very wide range of customers, including: gas shippers, local
distribution companies; and industrial, commercial and domestic
consumers.