National Grid 2014 Annual Report Download - page 134

This section includes information that is important to enable a full understanding of our financial position, particularly areas
ofpotential risk that could affect us in the future.
We also include specific disclosures for British Transco Finance Inc., Niagara Mohawk Power Corporation and National Grid
Gas plc in accordance with various rules including Rule 3-10 of Regulation S-X (a US SEC requirement), as they have issued
public debt securities which have been guaranteed by National Grid plc and one of its subsidiary companies, National Grid
Gas plc. Additional disclosures have also been included in respect of the two guarantor companies. These disclosures are
inlieu of publishing separate financial statements for these companies. See note 34 for further information.
27. Commitments and contingencies
Commitments are those amounts that we are contractually required to pay in the future as long as the other party meets its obligations.
These commitments primarily relate to operating lease rentals, energy purchase agreements and contracts for the repurchase of
network assets which, in many cases, extend over a long period of time. We also disclose any contingencies, which include guarantees
that companies have given, where we pledge assets against obligations that will remain for a specific period.
2014
£m
2013
£m
Future capital expenditure
Contracted for but not provided 2,624 3,011
Operating lease commitments
Less than 1 year 84 109
In 1-2 years 76 84
In 2-3 years 70 74
In 3-4 years 66 72
In 4-5 years 56 70
More than 5 years 278 333
630 742
Energy purchase commitments1
Less than 1 year 1,103 1,094
In 1-2 years 481 535
In 2-3 years 356 394
In 3-4 years 279 306
In 4-5 years 235 263
More than 5 years 1,083 1,403
3,537 3,995
Guarantees and letters of credit
Guarantee of sublease for US property (expires 2040) 232 293
Guarantees of certain obligations of Grain LNG Import Terminal (expire up to 2028) 155 159
Guarantee of certain obligations for construction of HVDC West Coast Link (expected expiry 2016) 594 618
Other guarantees and letters of credit (various expiry dates) 271 262
1,252 1,332
1. Energy purchase commitments relate to contractual commitments to purchase electricity or gas that are used to satisfy physical delivery requirements to our customers or for energy that
we use ourselves (ie normal purchase, sale or usage) and hence are accounted for as ordinary purchase contracts. Details of commodity contracts that do not meet the normal purchase,
sale or usage criteria, and hence are accounted for as derivative contracts, are shown in note 30 (e) on page 142.
The total of future minimum sublease payments expected to be received under non-cancellable subleases is £21m (2013: £23m).
Through the ordinary course of our operations, we are party to various litigation, claims and investigations. We do not expect the ultimate
resolution of any of these proceedings to have a material adverse effect on our results of operations, cash flows or financial position.
Notes to the consolidated
financial statements
– supplementary information
132 National Grid Annual Report and Accounts 2013/14