National Grid 2014 Annual Report Download - page 6

Chief
Executive’s
review
We need to be even more exible and
agileascustomer needs change, so we
canrespond faster and more efciently.
It has been a year of solid performance for National
Grid against a backdrop of intense public focus on
energy prices, as well as new regulatory frameworks
in both the UK and US.
Safety is, as always, at the heart of the way we
operate. In the UK we achieved an employee lost
time injury frequency rate (IFR) of below 0.1. This is a
world-class performance and I am incredibly proud
of our teamswho have worked so hard to get us to
this significant milestone. You can read more about
this achievement on page 10. The challenge now is
toreplicate this performance in the US, where we
have more work to do. We will never let up on our
relentless focus on safety.
Despite the freezing and protracted winter in the
USand the wettest winter on record in the UK, we
achieved one of our best years in terms of reliability,
keeping the lights on and the gas flowing. The
investment we made in bolstering our flood defences
in the UK protected potentially vulnerable assets
such as substations, even though in some cases the
surrounding areas suffered considerable flooding.
In the US, our reliability performance was excellent
as a result of continued targeted resiliency
investment and management of our networks.
Theintroduction of RIIO in the UK has been an
appropriate development for our industry. If we can
outperform against the incentives it offers and find
ways to reduce our costs, the benefits are shared
with our customers. Getting ready for RIIO has been
a significant challenge for the UK business, but I am
delighted to say that we have made a good start.
There have also been significant Government and
regulatory policy changes affecting our business
inthe UK, including the introduction of Electricity
Market Reform (EMR) and the evolution of the
system operator role in the long-term planning
ofthenetwork.
We have adapted our ways of working sowe can
meet the needs of our customers and stakeholders
and deliver value under RIIO. For example, we used
innovative techniques to protect asection of the
pipeline that carries gas from the liquefied natural
gas (LNG) importation terminal in west Wales, prior
to the construction of anew road. This meant we
were able to meet the timescales of the local
authority building the road without disrupting gas
supply toconsumers.
In the US, it has been the first year of working
underthe new upstate New York and Rhode Island
regulatory contracts and I am pleased that we have
performed well in both cases. You can read more
about developments in our US rate filings and
regulatory environment on page 164.
We have introduced Connect21, our thinking on
advancing the USA’s natural gas and electricity
infrastructure beyond its 20th century limitations
(seepage 35). Another priority in the US was the
transition of the operation and maintenance of
theLong Island Power Authority’s (LIPA) electric
transmission and distribution system on Long
Islandto Public Service Electric and Gas Company
– LongIsland (PSEG-LI). We successfully handed
overthe contract on 31 December 2013 and have
entered into a transition services agreement with
LIPA/PSEG-LI.
US enterprise resource planning system stabilisation
continued, remedying the errors of poor
implementation from the prior year. Over the course
of the year, the US business made significant
progress in the activities required to upgrade the
system, with implementation expected in mid-2014.
The focus is now on reducing the ongoing costs
associated with the complex manual processes
thatare required to compensate for identified
weaknesses in internal controls over financial
reporting in the US. While these control weaknesses
have not reduced the quality of financial statements
04 National Grid Annual Report and Accounts 2013/14