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56 National Grid Gas plc Annual Report and Accounts 2010/11
Notes to the consolidated financial statements -
supplementary information
24. Commitments and contingencies
a) Future capital expenditure
2011 2010
£m £m
Contracted for but not provided 428 533
b) Operating lease commitments
Total commitments under non-cancellable operating leases were as follows:
2011 2010
£m £m
A
mounts due:
Less than 1 year 16 16
In 1 - 2 years 11 11
In 2 - 3 years 99
In 3 - 4 years 78
In 4 - 5 years 57
More than 5 years 22 26
70 77
c) Amounts receivable under sublease arrangement
s
The total of future minimum sublease payments expected to be received under non-cancellable subleases is £5m (2010: £5m).
d) Other commitments, contingencies and guarantee
s
e) Parent Company loan guarantees on behalf of subsidiarie
s
f) Litigation and claims
Metering competition investigation
G
as
Di
s
t
r
ib
u
ti
on ma
i
ns rep
l
acemen
t
i
nves
ti
ga
ti
on
As previously reported, in October 2008 we informed Ofgem that mains replacement activity carried out by our Gas Distribution business may
have been inaccurately reported. Ofgem has now concluded its investigation and, following the reaching of a settlement between Ofgem and
the Company, on 6 January 2011, Ofgem announced its proposed decision to impose a penalty of £8m and to find the Company in breach of
certain obligations in respect of the reporting of mains replacement data. Ofgem also stated that the penalty would have been higher had it
not been for the cooperation and corrective action by National Grid. On 10 March 2011, following the end of the period in which
representations could be made, Ofgem wrote to the Company to confirm its decision. On 13 May 2011, we received the Final Penalty Notice
and the penalty has now been paid.
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 2011, the sterling equivalent amounted to £1,104m (2010: £1,168m).
The value of other commitments, contingencies and guarantees at 31 March 2011 amounted to £121m (2010: £209m), including gas
purchase commitments amounting to £102m (2010: £43m).
As previously reported, on 25 February 2008 the Gas and Electricity Markets Authority (GEMA) announced it had decided we had breached
Chapter 11 of the Competition Act 1998 and Article 82 (now Article 102) of the Treaty of the Functioning of the European Union and fined us
£41.6m. Following appeals, the Competition Appeal Tribunal reduced the fine to £30m and the Court of Appeal further reduced the fine to
£15m. On 22 March 2010, we applied to the Supreme Court for leave to appeal the Court of Appeal's judgement. On 28 July 2010, the
Supreme Court denied our application and this ends the legal process. The £15m fine was paid to GEMA on 1 April 2010.