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National Grid Gas plc Annual Report and Accounts 2009/10 83
17. Commitments and contingencies
a) Future capital expenditure
b) Lease commitments
Land and buildings Other Total
2010 2009 2010 2009 2010 2009
£m £m £m £m £m £m
Expiring:
In one year or less 111122
In more than one year, but not more than five years 514394
In more than five years 46--46
10 85415 12
c) Other commitments and contingencies
d) Parent Company loan guarantees on behalf of subsidiary undertaking
s
e) Litigation and claims
The Company has guaranteed the repayment of principal sums, any associated premium and interest on specific loans due from its financial
subsidiaries to third parties. At 31 March 2010, the sterling equivalent amounted to £1,168m (2009: £1,487m).
At 31 March 2010, the Company’s total operating lease commitments for the financial year ending 31 March 2011 amounted to £15m (2009
commitments for 2010: £12m) and are analysed by lease expiry date as follows:
The value of other commitments, contingencies and guarantees at 31 March 2010 amounted to £209m (2009: £150m), including gas
purchase commitments amounting to £43m (2009: £70m), and guarantees relating to certain property obligations of a National Grid group
undertaking of £1m (2009: £1m).
As at 31 March 2010, the Company had placed contracts for capital expenditure (tangible fixed assets) amounting to £532m (2009: £480m).
As at 31 March 2010, we have provided for the fine together with associated costs and have provided against certain trade receivables and
other balance sheet items. Without prejudice to our position in relation to appealing the Court of Appeal's judgement, the £15m fine was paid
to GEMA on 1 April 2010.
We reported in previous Annual Reports and Accounts a decision by the Gas and Electricity Markets Authority (GEMA) to fine National Grid
£41.6m for a breach of the UK Competition Act 1998 in respect of term contracts with gas suppliers entered into by our metering services
business in 2004. This decision was overturned in part and the fine reduced to £30m by the Competition Appeal Tribunal in April 2009 and the
fine was further reduced to £15m by the Court of Appeal in a reserved judgement (not otherwise affecting the Competition Appeal Tribunal's
judgement) issued in February 2010. On 22 March 2010, National Grid applied for leave to appeal the Court of Appeal's judgement to the
Supreme Court.
In October 2008, we informed Ofgem that our mains replacement activity carried out by the Distribution business may have been misreported.
Ofgem's investigation continues, so that at present it is too early to determine the likely outcome of the investigation, including the quantum of
any amounts likely to be payable and any potential consequences as a result of it.