SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
 
   
(Mark One)  
o
 REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended 31 March 31, 20072008
OR
o
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
 SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  Date of event requiring this shell company report _ _
  For the transition period from _ _ to _ _
 
Commission file number:001-14958
 
NATIONAL GRID PLC
(Exact name of Registrant as specified in its charter)
 
England and Wales
(Jurisdiction of incorporation or organization)
 
1-3 Strand, London WC2N 5EH, England
(Address of principal executive offices)
Helen Mahy
011 44 20 7004 3000
Facsimile No. 011 44 20 7004 3004
Company Secretary and General Counsel
National Grid, plc
1-3 Strand London WC2N 5EH England
(Name, Telephone,E-mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
 
   
Title of Each Classeach class
 
Name of Each Exchangeeach exchange on Which Registeredwhich registered
 
Ordinary Shares of 1117/43 pence each The New York Stock Exchange*
American Depositary Shares, each representing five
Ordinary Shares of 1117/43 pence each		 The New York Stock Exchange
6.625% Guaranteed Notes due 2018 The New York Stock Exchange
6.30% Guaranteed Notes due 2016The New York Stock Exchange
Preferred Stock ($100 par value-cumulative):
3.90% SeriesThe New York Stock Exchange
3.60% Series The New York Stock Exchange
 
 
*Not for trading, but only in connection with the registration of American Depositary Shares representing Ordinary Shares pursuant to the requirements of the Securities and Exchange Commission.
 
Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:None.
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Securities Exchange Act of 1934:None.
 
The number of outstanding shares of each of the issuer’s classes of capital or common stock as of March 31, 20072008 was
Ordinary Shares of 1117/43 pence each                         2,701,058,872
Ordinary Shares of 1117/43 pence each2,581,913,516
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:  Yes þ     No o
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes o     No þ
 
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes þ     No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” inRule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated fileroNon-accelerated filero
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP o     International Financial Reporting Standards as issued by the International Accounting Standards Board þ     Accelerated filer o     Non-accelerated filerOther o
 
IndicateIf “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:follow.  Item 17 o     Item 18 þo
 
IndicateIf this is an annual report, indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act).  Yes o     No þ
 

 
As used in this Annual Report, unless the context requires otherwise,
 
“National Grid”, the “Company”, “we”, “us” or “our” refers to National Grid plc and its subsidiaries.
 
Cautionary Statement
 
This Annual Report onForm 20-F contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information with respect to our financial condition, our results of operations and businesses, strategy, plans and objectives. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, “continue”, “project” and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of our future performance and are subject to assumptions, risks and uncertainties that could cause actual future results to differ materially from those expressed in or implied by such forward-looking statements. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid’sour ability to control or estimate precisely, such as delays in obtaining or adverse conditions contained in regulatory and shareholder approvals and contractual consents, including those required to complete the proposed acquisition of KeySpan when or as planned; unseasonable weather affecting demand for electricity and gas; competition and industry restructuring; changes in economic conditions; currency fluctuations; changes in interest and tax rates; changes in energy market prices; changes in historical weather patterns; changes in laws, regulations or regulatory policies; developments in legal or public policy doctrines; the impact of changes to accounting standards; and technological developments. Other factors that could cause actual results to differ materially from those described in this report includeinclude: the ability to integrate the businesses relating to announced acquisitions with National Grid’sour existing business to realise the expected synergies from such integration; the availability of new acquisition opportunities and the timing and success of future acquisition opportunities; the timing and success or other impact of the sales of National Grid’sour non-core businesses,businesses; the failure for any reason to achieve reductions in costs or to achieve operational efficiencies; the failure to retain key management; the behaviour of UK electricity market participants on system balancing; the timing of amendments in prices to shippers in the UK gas market; the performance of our pension schemes and the regulatory treatment of pension costs; and any adverse consequences arising from outages on or otherwise affecting energy networks, including gas pipelines, which we own or operate. For a more detailed description of these assumptions, risks and uncertainties, together with any other risk factors, please see Items 3 and 5 of this report (and in particular “Risk factors” under Item 3). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, National Grid doeswe do not undertake any obligation to revise these forward-looking statements to reflect events or circumstances after the date of this report. The effects of these factors are difficult to predict. New factors emerge from time to time and we cannot assess the potential impact of any such factor on our activities or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
 
The inclusion of our website address in this annual report does not, and is not intended to, incorporate the contents of our website into this report and such information does not constitute part of this annual report.


i

 

 
TABLE OF CONTENTS
 
     
PART I
Item 1.
 Identity of Directors, Senior Management and Advisers 1
Item 2.
 Offer Statistics and Expected Timetable 1
Item 3.
 Key Information 1
Item 4.
 Information on the Company 32
Item 4A.
 Unresolved Staff Comments 54
Item 5.
 Operating and Financial Review and Prospects 54
Item 6.
 Directors, Senior Management and Employees 54
Item 7.
 Major Shareholders and Related Party Transactions 5
Item 8.
 Financial Information 65
Item 9.
 The Offer and Listing 65
Item 10.
 Additional Information 76
Item 11.
 Quantitative and Qualitative Disclosures about Market Risk 1312
Item 12.
 Description of Securities Other than Equity Securities 1312
 
PART II
Item 13.
 Defaults, Dividend Arrearages and Delinquencies 1312
Item 14.
 Material Modifications to the Rights of Security Holders and Use of Proceeds 1312
Item 15.
 Controls and Procedures 1312
Item 16.
 [Reserved] 1413
Item 16A.
 Audit Committee Financial Expert 1413
Item 16B.
 Code of Ethics 1413
Item 16C.
 Principal Accountant Fees and Services 14
Item 16D.
 Exemptions from the Listing Standards for Audit Committees 1514
Item 16E.
 Purchases of Equity Securities by the Issuer and Affiliated Purchasers 1615
 
PART III
Item 17.
 Financial Statements 16
Item 18.
 Financial Statements 16
Item 19.
 Exhibits 1817
SIGNATURE
 2221
 EX-2.C.1.1: PROSPECTUSEX-2.A: AMENDED AND RESTATED DEPOSIT AGREEMENT
 EX-2.C.1.2:EX-2.B.4.2: SUPPLEMENTARY PROSPECTUS
 EX-2.D.1.1:EX-2.B.5.1: PROSPECTUS ISSUED BY NATIONAL GRID PLC
EX-2.B.5.2: SUPPLEMENTARY PROSPECTUS
 EX-4.C.2: SERVICE AGREEMENTEX-2.B.6.1: PROSPECTUS ISSUED BY NATIONAL GRID USA
 EX-4.C.3: SERVICEEX-2.B.6.2: SUPPLEMENTARY PROSPECTUS
EX-2.B.7.1: PROSPECTUS ISSUED BY NATIONAL GRID GAS PLC
EX-4.C.8: FIXED TERM EMPLOYMENT AGREEMENT
 EX-4.C.9: EMPLOYMENT AGREEMENT AMONG NATIONAL GRID PLC
EX-4.C.11: LETTER OF APPOINTMENT - PHILIP AIKEN
 EX-8: SUBSIDIARIES
 EX-12.1: CERTIFICATION
 EX-12.2: CERTIFICATION
 EX-13: CERTIFICATIONSCERTIFICATION
 EX-15.1: NATIONAL GRID PLC ANNUAL REPORT AND ACCOUNTS 2006/07
 EX-15.2: CONSENT OF PRICEWATERHOUSECOOPERLLPPRICEWATERHOUSECOOPERS LLP


ii

 
PART I
 
Item 1.Identity of Directors, Senior Management and Advisers
Item 1.  Identity of Directors, Senior Management and Advisers
 
Not applicable.
 
Item 2.Offer Statistics and Expected Timetable
Item 2.  Offer Statistics and Expected Timetable
 
Not applicable.
 
Item 3.Key Information
Item 3.  Key Information
 
The selected financial data set out below are derived, in part, from the Company’s consolidated financial statements. The selected data should be read in conjunction with the financial statements and with the Operating and Financial Review and Prospects in Item 5. The consolidated financial statements have beenof the Company are prepared in accordance with accounting policies that are in conformity with International Financial Reporting Standards (IFRS) as adopted by the European Union which differand IFRS as issued by the International Accounting Standards Board. We did not publish financial data in certain respects from US GAAP.accordance with IFRS in 2004, because at the time our financial statements were required to be presented in conformity with UK Generally Accepted Accounting Principles. For a summary of the material differences between IFRS and US GAAP, please see“Note 38 Differences between IFRS and US generally accepted accounting principles” on pages 153 to 162 and“Note 39 Condensed US GAAPthis reason, we have not provided selected financial information” on pages 163 to 167 of the Company’s Annual Report and Accounts 2006/07 contained in Exhibit 15.1 that is incorporated herein by reference.data for 2004.
 
Selected financial data
 
IFRS:Amounts in accordance with IFRS1:
 
               
    Year Ended 31 March 
    2007  20061  20051 
 
Revenue £m  8,695   8,868   7,174 
Total operating profit £m  2,513   2,374   2,113 
Profit for the year from continuing operations £m  1,310   1,183   1,106 
Profit for the year £m  1,396   3,850   1,424 
Basic earnings per share from continuing operations pence  48.1   41.6 �� 35.9 
Diluted earnings per share from continuing operations pence  47.8   41.4   35.7 
Basic earnings per share pence  51.3   135.6   46.2 
Diluted earnings per share pence  50.9   135.0   46.0 
Number of shares — basic millions  2,719   2,837   3,082 
Number of shares — diluted millions  2,737   2,851   3,096 
Total assets £m  28,389   25,924   27,560 
Net assets £m  4,136   3,493   2,121 
Total parent company shareholders’ equity £m  4,125   3,482   2,111 
Dividends per ordinary share: paid during the year pence  26.8   25.4   20.4 
Dividends per ordinary share: approved or proposed during the year pence  28.7   26.1   23.7 
Dividends per ordinary share: paid during the year US$  0.513   0.455   0.381 
Dividends per ordinary share: approved or proposed during the year US$  0.549   0.467   0.443 


1

US GAAP:
                                          
   Year Ended 31 March    Year Ended 31 March 
   2007 20061 200512 20042 20032    2008 2007 2006 2005 
Revenue £m  8,686   8,891   7,208   7,747   6,730   £m   11,423   8,695   8,868   7,174 
Operating profit £m  1,862   1,749   1,803   1,470   1,367 
Net income from continuing operations attributable to equity shareholders £m  1,092   703   1,042   669   566 
Net income for the year attributable to equity shareholders £m  1,146   1,307   1,288   961   738 
Total operating profit  £m   2,964   2,513   2,374   2,113 
Profit for the year from continuing operations  £m   1,581   1,310   1,183   1,106 
Profit for the year  £m   3,199   1,396   3,850   1,424 
Basic earnings per share from continuing operations pence  40.2   25.9   38.5   24.8   27.5   pence   60.5   48.1   41.6   35.9 
Diluted earnings per share from continuing operations pence  39.9   25.8   38.3   24.8   26.0   pence   60.1   47.8   41.4   35.7 
Basic earnings per share pence  42.2   48.2   47.6   35.7   35.8   pence   122.5   51.3   135.6   46.2 
Diluted earnings per share pence  41.9   48.0   47.3   35.6   33.9   pence   121.8   50.9   135.0   46.0 
Number of shares — basic millions  2,719   2,710   2,705   2,694   2,060   millions   2,609   2,719   2,837   3,082 
Number of shares — diluted millions  2,737   2,724   2,719   2,701   2,180   millions   2,624   2,737   2,851   3,096 
Total assets £m  35,126   32,952   37,274   35,347   36,947   £m   37,822   28,389   25,924   27,560 
Net assets employed/total shareholders’ funds £m  9,367   9,788   10,629   9,875   9,515 
Shareholders’ equity £m  9,330   9,747   10,591   9,821   9,426 
Common stock £m  308   310   309   309   308 
Net assets  £m   5,380   4,136   3,493   2,121 
Total parent company shareholders’ equity  £m   5,362   4,125   3,482   2,111 
Dividends per ordinary share: paid during the year pence  26.8   25.4   20.4   18.25   16.44   pence   29.5   26.8   25.4   20.4 
Dividends per ordinary share: approved or proposed during the year pence  28.7   26.1   23.7   19.78   17.20   pence   33.0   28.7   26.1   23.7 
Dividends per ordinary share: paid during the year US$  0.513   0.455   0.381   0.307   0.261  US$    .593   0.513   0.455   0.381 
Dividends per ordinary share: approved or proposed during the year US$  0.549   0.467   0.443   0.332   0.273  US$    .663   0.549   0.467   0.443 
 
 
1ComparativesSince the implementation of IFRS by the Company, there have been adjusted to reclassify amounts relating to discontinued operations.
2Comparisonsno significant changes in accounting standards, interpretations or policies that have been restated due tohad a material financial impact on the change in methodology for calculating net periodic pension charge more fully described in“Note 38 (c) Pensions andselected financial data other post-retirement benefits” on page 155 of the Company’s Annual Report and Accounts 2006/07 contained in Exhibit 15.1 incorporated herein by reference.


21

than the adoption of accounting standards IAS 32 and IAS 39 on 1 April 2005, subsequent to which derivative financial instruments have been recorded at the fair value and remeasurements in those fair values have been recorded in the income statement to the extent that hedge accounting was not effective or has not been applied. Prior to 31 March 2005, derivative financial instruments were not recorded as assets or liabilities in the balance sheet and changes in the fair values of those instruments were not recognised in the income statement.
The selected financial data incorporates businesses acquired in the period from the date of their acquisitions, principally KeySpan Corporation acquired in August 2007, our Rhode Island gas distribution operations acquired in August 2006 and UK wireless operations acquired in August 2004.
The selected financial data for continuing operations excludes businesses discontinued during the periods presented, principally our former UK and US wireless operations and our former electricity interconnector business in Australia, disposed of in April and August 2007 and four gas distribution networks in the UK disposed of in June 2005. Also excluded from continuing operations are discontinued operations acquired with KeySpan Corporation, principally the Ravenswood generation station.
 
Exchange rates
 
The following table sets forth the history of the exchange rates of one pound sterling to US dollars for the periods indicated and as at 15 June 2007.2008.
 
as at 15 June 2007 1.9765:2008:
 
         
  High  Low 
 
June 2007*  1.9941*  1.9657*
May 2007  1.9993   1.9695 
April 2007  2.0061   1.9608 
March 2007  1.9694   1.9235 
February 2007  1.9699   1.9443 
January 2007  1.9847   1.9305 
December 2006  1.9794   1.9458 
         
  High  Low 
 
June 2008*  1.9758*  1.9467*
May 2008  1.9818   1.9451 
April 2008  1.9994   1.9627 
March 2008  2.0311   1.9823 
February 2008  1.9923   1.9405 
January 2008  1.9895   1.9515 
December 2007  2.0658   1.9774 
 
   
  Average**
 
2007/082.01
2006/07 1.91
2005/06 1.78
2004/05 1.85
2003/04 1.70
2002/03 1.55
 
 
* For the period to 1513 June 2007.2008.
**The average for each period is calculated by using the average of the exchange rates on the last day of each month during the period.
 
Risk factors
 
The information set forth under the heading“Risk factors” on pages 8495 to 8597 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
Item 4.Information on the Company
Item 4.  Information on the Company
 
National Grid plc was incorporated on 11 July 2000.  The Company is registered in England and Wales, with its registered office at 1-3 Strand, London WC2N 5EH (telephone +44 20 7004 3000). The Company’s agent in the United States is Lawrence J. Reilly, Executive Vice President and General Counsel, National Grid USA, 25 Research Drive, Westborough, MA 01582.


2

The information set forth under the headings“Operating and Financial Review” on pages 2014 to 63,73,“Note 3637 Subsidiary undertakings, joint ventures and joint ventures”associates” on page 152,172, and“GlossaryDefinitions and glossary of Terms”terms” on page 180 and“Definitions” on page 181pages 186 to 188 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
Property, plant and equipment
 
United Kingdom
 
National Grid’s Corporate CentreOur corporate centre operates principally from offices at1-3 Strand, London. These offices, of approximately 25,08025,000 square feet, are held on a15-year lease from 24 June 2002. At present, environmental issues are not preventing the businesses from utilising any material operating assets in the course of their business.
 
UK electricity and gas transmission.  We own the freehold of the majority of all sites associated with our UK electricity and gas transmission business in England and Wales. The remainder are held on long-term leaseholds, including all the transmission offtake sites in the service areas of the UK gas distribution networks sold on 1 June


3

2005. In Scotland, we own the majority of our gas transmission sites outright through a disposition purchase. The remainder are owned through a feudal disposition where purchase was subject to various rights retained by the previous owner, for example mineral or forestry rights. In addition, we have three principal commercial lettings, at St Fergus to Royal Dutch Shell and Exxon Mobil, and at Theddlethorpe (in England) to ConocoPhillips. The electricity transmission business does not own any sites in Scotland.
 
Our gas transmission network comprises approximately 4,3004,600 miles (approx 7,400 kilometers) of high pressure transmission pipelines. Agreements with landowners or occupiers are only required for those pipes that cross private land. These agreements largely comprise perpetual easements in England and Wales and deeds of servitude in Scotland. Any land issues impacting on normal agricultural activity local to pipelines and their associated easement or servitude are covered by national agreements with the National Farmers Union, the Country Land and Business Association of England and Wales and the Scottish Landowners Association.
 
Our electricity transmission systems consists of overhead transmission lines and underground cable of approximately 4,900 miles (approx. 7,200 kilometers of overhead transmission lines and 675 kilometers of underground cable). Agreements with landowners or occupiers are required for the overhead lines and underground cables, which make up our electricity network in England and Wales. The majority of agreements are in the form of terminable wayleaves. The remainder are in the form of perpetual easements under which rights have been granted in perpetuity in return for a lump sum payment. The sites at which we have electricity substations are split between freehold and leasehold. Of the leasehold sites, the large majority are substations located on the premises of generators and are held on long-term leases for nominal rental payments. Of the remaining sites, most are held as ground rents (market price payable for land only) from the respective landlords, who include electricity distribution companies.
 
We also own the freehold of our control centre in Berkshire and we have major offices in Leeds (freehold) and Warwick, which the Company sold and leased back during the year.fiscal year 2007. The Warwick offices, of approximately 235,884 square feet, are now held on a20-year lease from 2 February 2007 with a one-time tenant only break option (i.e. Company lease termination right) exercisable during the 15th15th anniversary of the lease.
 
UK gas distribution.  Following the sales of four of our regional gas networks (Scotland, South of England, Wales and West and North of England), which were completed on 1 June 2005, our retainedOur UK gas distribution system consists of approximately 82,000 miles (approx. 132,000 kilometers) of distribution pipelines. Agreements with landowners or occupiers are only required for those pipes that cross private land. These agreements largely comprise perpetual easements. Any land issues impacting on normal agricultural activity local to pipelines and their associated easement are covered by national agreements with the National Farmers Union and the Country Land and Business Association of England and Wales.
 
We own the freeholds of the substantial majority of the operational sites where there are larger operational plant and gas storage facilities used in our UK gas distribution business. The vast majority of office buildings, depots and stores used by UK gas distribution are leased from another company within National Grid.


3

National Grid Wireless.  The Company sold its UK wireless infrastructure operations on 3 April 2007. The information set forth under the heading“Discontinued operations” on page 63, of the Company’s Annual Report and Accounts 2006/07 contained in Exhibit 15.1 is incorporated herein by reference.
United States
 
We either own in fee (i.e. freehold) or lease the office buildings that comprise our principal US business premises located in New York and New England. We own in fee the office buildings located in Westborough and Northborough, Massachusetts and in Syracuse, Albany, Buffalo and Buffalo,Hicksville New York. SubstantiallyWe lease approximately 335,000 square feet of office space in Brooklyn, New York, at a building known as MetroTech, held on a twenty year lease through 28 February 2025. We are currently negotiating to reduce our lease at MetroTech by approximately 80,000 square feet. In addition to our principal US offices, we lease other offices and building space in various locations in New York and New England and office equipment, vehicles and power operated equipment necessary to meet our current and expected business requirements and operational needs.
In addition to the US property described above, with respect to our US electric distribution, transmission and gas distribution businesses located in northeastern US (more fully described below), we either own property in fee or in the case of certain rights of way, hold necessary property rights pursuant to municipal consents, easements or long-term leases. Other than the New York downstate property acquired as part of the acquisition of KeySpan Corporation, substantially all of National Grid’sour US properties and franchises (including, our US electric distribution, transmission and gas distribution systems owned and operated by our US operations) are subject to the liens of various mortgage indentures and deeds of trust under which mortgage bonds have been issued. At present, environmental issues are not preventing the companiesour US businesses from utilising any material operating assets in the course of their business. We continually examine our real property and other property for contribution and relevance to our US businesses and when such properties are no longer productive or suitable, they are disposed of as promptly as possible. In the case of leased office space, we anticipate no significant difficulty in leasing alternative space at reasonable rates in the event of the expiration, cancellation or termination of a lease.
 
US electricity transmission.  Our US electricity transmission systems consist of approximately 8,600 miles (approx. 13,800 kilometers) of transmission and sub-transmission lines located withinright-of-way corridors that traverse both public and private property. Statutory authority, legislative charters and municipal franchise grants generally provide the National Grid USA companies with the rights required to locate transmission and sub-transmission facilities within and across public ways.Right-of-way corridors that cross privately owned land have generally been acquired in fee ownership (freehold) or pursuant to grants of perpetual easements. Transmission and sub-transmission substation facilities are principally located on properties that are owned in fee.


4

US electricity and gas distribution.  Our US electricity and gas distribution systems consist of approximately 71,00072,000 circuit miles (approx. 116,000 kilometers) of electric distribution lines located on rights-of-way in New England and New York, and approximately 11,80036,000 miles (approx. 58,000 kilometers) of gas distribution pipelines located on rights-of-way in New York, New York City, Long Island, Massachusetts, New Hampshire and Rhode Island. Statutory authority, legislative charters and municipal franchise grants generally provide the National Grid USA companiesour US operations with the rights required to locate distribution facilities within and across public ways.Right-of-way corridors that cross privately owned land have principally been acquired in fee ownership or pursuant to grants of perpetual easements. Electric distribution substations and gas distribution regulator stations are principally located on properties owned in fee pursuant to grants of perpetual easements or pursuant to legislative charters and municipal franchise grants.
 
Item 4A.  Unresolved Staff Comments
 
There are no unresolved staff comments required to be reported under this Item 4A.
 
Item 5.Operating and Financial Review and Prospects
Item 5.  Operating and Financial Review and Prospects
 
The information set forth under the headings“Operating and Financial Review” on pages 2014 to 7585 and“Research and development” on page 8698 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
Item 6.Directors, Senior Management and Employees
Item 6.  Directors, Senior Management and Employees
 
The information set forth under the headings“Board of Directors” on pages 1812 and 19,13,“Directors’ Remuneration Report” on pages 88100 to 98,110,“Note 85 Pensions and other post-retirement benefits” on pages 119


4

132 to 123,133 and“Note 31 Actuarial information on pensions and other post-retirement benefits” on pages 156 to 158,“Corporate Governance” on pages 7788 to 83,97,“Employees” on page 8799“Operating Costs 3(b) Number of Employees” on page 129 and“Note 3125 Share capital” on pages 145149 to 148150 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
The actual number of employees at 31 March 2007,We negotiate with recognised unions. It is our policy to maintain well-developed communications and the average numbersconsultation programmes and there have been no material disruptions to our operations from labour disputes during the years ended 31 March 2007, 2006, 2005past five years. National Grid believes that it can conduct its relationship with trade unions and 2004, are as follows:
                     
  31
  Average
  Average
  Average
  Average
 
  March
  Fiscal
  Fiscal
  Fiscal
  Fiscal
 
  2007  2007  2006  2005  2004 
 
United Kingdom  10,015   10,356   11,421   11,784   11,943 
United States  8,753   8,618   8,414   8,663   9,402 
Rest of the World  8   8   8   13   10 
                     
Continuing operations  18,776   18,982   19,843   20,460   21,355 
Discontinued operations  735   730   686   4,147   4,303 
                     
Total  19,511   19,712   20,529   24,607   25,658 
                     
employees in a satisfactory manner.
 
Item 7.Major Shareholders and Related Party Transactions
Item 7.  Major Shareholders and Related Party Transactions
 
Major shareholders
 
As at 1513 June 2007,2008, we had been notified of the following beneficial ownersholdings in voting rights of 3% or more of ourin the issued share capital:capital of the Company:
 
                
 Number of
 % of Outstanding
  Number of
 % of Outstanding
 
 Ordinary Shares Share Capital*  Ordinary Shares Share Capital* 
Legal and General Investment Management Ltd  111,803,477   4.12   145,542,289   5.82 
Fidelity International Limited  82,805,863   3.06   82,805,863   3.06 
 
 
*This number is calculated in relation to the issued share capital at the time the holding was disclosed.
 
No further notifications had been received. NoAs at 13 June 2008, 91,813,398 shares wereare held in treasury. Treasury shares do not receive dividends and do not have voting rights
 
All ordinary shares have the same voting rights.


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Approximately 14.8%14.7% of National Grid’s ordinary shares, including ADSs, are held beneficially by persons in the US, and there are 3,2833,523 US holders on the ordinary share register and approximately 20,31520,300 registered holders of ADSs.
 
The information set forth under the heading“Note 3430 Related party transactions” on page 151155 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
Item 8.Financial Information
Item 8.  Financial Information
 
The information set forth under the headings“Accounting policies” on pages 114 to 120,“Adoption of new accounting standards” on page 121,“Consolidated balance sheet” on page 109,123,“Consolidated income statement” on page 108,122,“Consolidated statement of recognised income and expense” on page 110,124,“Consolidated cash flow statement” on page 111,125,“Notes to the accounts”consolidated financial statements-analysis of items in the primary statements” on pages 112126 to 172,152,“Notes to the consolidated financial statements — supplementary information” on pages 153 to 178,“Legal and related matters” on page 2523 and“Returns to shareholders”Shareholder returns” on page 43 of the Company’s Annual Report and Accounts2006/07 2007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
Item 9.The Offer and Listing
Item 9.  The Offer and Listing
 
Price history
 
The following table sets forth the highest and lowest market prices for National Gridour ordinary shares and ADSs for the periods indicated. As described in Item 18 under note 31 to the consolidated financial statements,“Note 25 Share capital b shares” on 29 July 2005,page 149, the Company’s ordinary shares were consolidated to reflect the £2 billion return of cash to shareholders by way of a B share scheme. Shareholders received 43 new ordinary shares for every 49 existing ordinary shares, which resulted in the existing 3,091,247,761


5

issued ordinary shares of 10 pence each being replaced by a total of 2,712, 727,6272,712,727,627 new ordinary shares of 1117/43 pence each.
 
                                
 Ordinary Share (Pence) ADS ($)    Ordinary Share
   
 High Low High Low  (Pence) ADS ($) 
 High Low High Low 
2007/08  863.00   686.00   86.58   69.22 
2006/07  797.50   552.00   78.81   48.83   797.50   552.00   78.81   48.83 
2005/06  613.50   489.25   53.45   44.48   613.50   489.25   53.45   44.48 
2004/05  549.50   421.25   52.06   37.59   549.50   421.25   52.06   37.59 
2003/04  438.00   374.75   41.45   30.19   438.00   374.75   41.45   30.19 
2002/03  511.50   365.75   37.40   26.69 
2007/08 Q4  863.00   691.50   85.48   69.22 
Q3  790.50   686.00   80.23   69.85 
Q2  845.50   761.50   86.58   78.40 
Q1  816.50   719.50   80.75   71.46 
2006/07 Q4  797.50   717.00   78.81   69.55   797.50   717.00   78.81   69.55 
Q3  749.50   664.50   74.00   63.10   749.50   664.50   74.00   63.10 
Q2  672.00   587.00   63.24   53.32   672.00   587.00   63.24   53.32 
Q1  615.00   552.00   57.34   48.83   615.00   552.00   57.34   48.83 
2005/06 Q4  613.50   551.00   53.45   48.69 
Q3  573.50   503.50   49.85   44.48 
Q2  561.00   511.00   51.64   45.20 
Q1  550.75   489.25   50.72   46.37 
June 2007*  788.50   720.00   78.26   71.46 
May 2007  786.00   759.00   78.86   75.10 
April 2007  816.50   780.00   80.75   78.20 
March 2007  797.50   748.50   78.81   71.82 
February 2007  797.00   763.00   78.26   75.08 
January 2007  770.50   717.00   75.61   69.55 
December 2006  749.50   701.50   74.00   69.56 
June 2008*  748.50   696.00   73.27   67.91 
May 2008  749.50   704.00   74.89   68.77 
April 2008  730.00   695.50   73.46   68.95 
March 2008  734.50   691.50   74.61   69.22 
February 2008  790.50   733.50   77.89   72.60 
January 2008  863.00   748.00   85.48   74.95 
December 2007  845.50   811.00   86.58   82.65 
 
 
*For the period to 1513 June 2007.2008.
 
Markets
 
National Grid’sOur equity securities are listed on the Official List of the London Stock Exchange (ordinary shares) and on the New York Stock Exchange (ADSs ).(ADSs).


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Item 10.Additional Information
Item 10.  Additional Information
 
Memorandum and Articles of Association
 
The following description is a summary of the material terms of National Grid’sour Memorandum and Articles of Association (the ‘Articles’). The following description is a summary only and is qualified in its entirety by reference to the Articles, which are provided as an exhibit to this report.
 
The CompanyWe adopted new “Plain English” articles at itsour Annual General Meeting on 25 July 2005.
 
General
 
National Grid is incorporated under the name National Grid plc and is registered in England and Wales with registered number 4031152. The Company’s objects are set forth in the fourth clause of its Memorandum of AssociationArticles and cover a wide range of activities, including the following:
 
 • carrying on the business of a holding company;
 
 • employing the funds of the Company to develop and expand its business; and


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 • carrying on any other activity supplemental to the foregoing or capable of enhancing the Company’s profitability.
 
The Memorandum of Association grantsArticles grant National Grid a broad range of corporate powers to effect these objectives.
 
Directors
 
Under the Articles, a Director must disclose any personal interest in a contract and may not vote in respect of that contract, subject to certain limited exceptions.
 
The compensation awarded to the Executive Directors is decided by the Remuneration Committee, which consists entirely of Non-executive Directors. The fees of the Non-executive Directors are determined by the Executive Directors with the guidance of the Chairman and after taking appropriate external advice.
 
The Directors are empowered to exercise all the powers of National Grid to borrow money, subject to the limitation that the aggregate principal amount outstanding of all borrowings shall not exceed an amount equal to four times National Grid’s share capital and aggregate reserves, calculated in the manner described in the Articles, unless sanctioned by an ordinary resolution of the Company’s shareholders. At the Annual General Meeting of the Company held on 31 July 2006 a resolution proposing a change in respect of borrowing powers was passed which replaced the current limit with a fixed borrowing limit of £30 billion.
 
There is no specific requirement for a director to retire whenhe/she reaches the age of 70. However, upon appointment or reappointment, the age of a person aged 70 or over must be declared in the notice convening the relevant shareholder meeting.
 
A Director is not required to hold shares of National Grid in order to qualify as a Director.
 
Rights, preferencesPreferences and restrictionsRestrictions
 
National Grid may not pay any dividend otherwise than out of profits available for distribution under the Companies Act and the other applicable provisions of English law. In addition, as a public company, National Grid may make a distribution only if and to the extent that, at the time of the distribution, the amount of its net assets is not less than the aggregate of itscalled-up share capital and undistributable reserves (as defined in the Companies Act). Subject to the foregoing, National Grid may, by ordinary resolution, declare dividends in accordance with the respective rights of the shareholders but not exceeding the amount recommended by the Board of Directors. The Board of Directors may pay interim dividends if the Board of Directors considers that National Grid’s financial position justifies the payment.


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Except insofar as the rights attaching to any share otherwise provide, all dividends will be apportioned and paid proportionately to the amounts paid up (otherwise than in advance of calls) on the shares.
 
All dividends or other sums payable unclaimed for one year after having been declared may be invested or otherwise made use of by the Board of Directors for the benefit of National Grid until claimed. Any dividend or interest unclaimed for 12 years from the date when it was declared or became due for payment willmay be forfeited and revert to National Grid.
 
Subject to any rights or restrictions attached to any shares and to any other provisions of the Articles, at any general meeting on a show of hands every shareholder who is present in person will have one vote and on a poll every shareholder will have one vote for every share which he holds. On a poll, shareholders may cast votes either personally or by proxy and a proxy need not be a shareholder. Under the Articles all resolutions must be decided on a poll, other than those of a procedural nature.
 
Directors must stand for reappointment at the first Annual General Meeting following their appointment to the Board. Each Director must retire at least every three years but will be eligible for re-election.
 
In awinding-up, a liquidator may, with the sanction of a special resolution of National Grid and any other sanction required by applicable provisions of English law, (a) divide among the shareholders the whole or any part of National Grid’s assets (whether the assets are of the same kind or not) and may for this purpose value any assets and determine how the division should be carried out as between different shareholders or different classes of shareholders or otherwise as the resolution may provide, or (b) vest the whole or any part of the assets in trustees upon such trusts for the benefit of the shareholders as the liquidator, with the sanction of a special resolution, determines, but in neither case will a shareholder be compelled to accept assets upon which there is a liability.


7

Variation of Rights
 
Subject to applicable provisions of English law and the rights attached to any specific class of shares, the rights attached to any class of shares of National Grid may be varied with the written consent of the holders of three-fourths in nominal value of the issued shares of that class, or with the sanction of an extraordinary resolution passed at a separate meeting of the holders of the shares of that class.
 
General Meetings
 
Annual General Meetings must be convened upon advance written notice of 21 clear days. An Extraordinary General Meeting must be convened upon advance written notice of 21 clear days for the passing of a special resolution and 14 clear days for any other resolution. The notice must specify the nature of the business to be transacted. The notice must also specify the place, the day and the time of the meeting.
 
Rights of Non-Residents
 
There are no restrictions under National Grid’s Memorandum and Articles of Association that would limit the rights of persons not resident in the UK, as such, to vote ordinary shares.
 
Disclosure of interestsInterests
 
A shareholder may lose the right to vote his shares if he or any other person appearing to be interested in those shares fails to comply within a prescribed period of time with a request by National Grid under the Companies Act to give the required information with respect to past or present ownership or interests in those shares. In the case of holders of more than 0.25% in nominal amount of any class of the share capital of National Grid, in addition to disenfranchisement, the sanctions that may be applied by National Grid include withholding of the right to receive payment of dividends and other monies payable on shares, and restrictions on transfers of the shares.
 
For purposes of the notification obligation, the interest of a person in shares means any kind of interest in shares including interests in any shares (a) in which a spouse, or child or stepchild under the age of 18 is interested, (b) in which a corporate body is interested and either (i) that corporate body or its directors generally act in accordance with that person’s directions or instructions or (ii) that person controls one-third or more of the voting


8

power of that corporate body or (c) in which another party is interested and the person and that other party are parties to a ‘concert party’ agreement. A concert party agreement is one which provides for one or more parties to acquire interests in shares of a particular company and imposes obligations or restrictions on any one of the parties as to the use, retention or disposal of such interests acquired under the agreement, and any interest in the company’s shares is in fact acquired by any of the parties under the agreement. Some of the interests (eg those held by certain investment fund managers) may be disregarded for the purposes of calculating the 3% threshold, but the obligations of disclosure will still apply where those interests exceed 10% or more of any class of the company’s relevant share capital and to increases or decreases of 1% or more thereafter.
 
In addition, the Companies Act provides that a public company may send a written notice to a person whom the company knows or has reasonable cause to believe to be, or to have been at any time during the three years immediately preceding the date on which the notice is issued, interested in shares constituting the company’s ‘relevant share capital’. The notice may require that person to state whether he has an interest in the shares, and in case that person holds or had held an interest in those shares, to give additional information relating to that interest and any other interest in the shares of which that person is aware.
 
Where a company serves notice under the provisions described above on a person who is or was interested in shares of the company and that person fails to give the company any information required by the notice within the time specified in the notice, the company may apply to an English court for an order directing that the shares in question be subject to restrictions prohibiting, among other things, any transfer of those shares, the taking up of rights in respect of those shares and, other than in a liquidation, payments in respect of those shares.
 
A person who fails to fulfil the obligations imposed by those provisions of the Companies Act described above is subject to criminal penalties.
B Shares
Out of the profits available for distribution in respect of each financial year or other accounting period of National Grid, the holders of B shares are entitled, in priority to any payment of dividend or other distribution to the holders of any new ordinary shares and before profits are carried to reserves, to be paid a non-cumulative preferential dividend. All B share continuing dividends payable on B shares which are unclaimed for a period of 12 years from the date of due payment will be forfeited and will revert to National Grid.
The aggregate entitlement of each holder of B shares on awinding-up in respect of all of the B shares held by him will be rounded up to the nearest whole penny. The holders of the B shares are not entitled to any further right of participation in the profits or assets of National Grid.
The holders of the B shares are not entitled, in their capacity as holders of such shares, to receive notice of any general meeting of National Grid nor to attend, speak or vote at any such general meeting unless: (i) the business of the meeting includes the consideration of a resolution for thewinding-up of National Grid; or (ii) at the date of the notice convening the meeting, the B share continuing dividend has remained unpaid for six months or more. National Grid may at any time and at its sole discretion purchase B shares: (i) in the market, (ii) by tender available alike to all holders of B shares, or (iii) by private treaty, in each case at a price and upon such terms and conditions as the Directors may think fit.
National Grid may, at any time after 8 August 2007, without obtaining the sanction of the holders of the B shares: (i) appoint any person to execute on behalf of all the holders of the B shares a transfer of all of the B shares to National Grid; and (ii) cancel all or any B shares so purchased. National Grid may at any time after 8 August 2007, and will in any event before 31 December 2009, convert all of the outstanding B shares into new ordinary shares.
Material contracts
The Company agreed to acquire KeySpan Corporation pursuant to an Agreement and Plan of Merger dated as of 25 February 2006 between National Grid plc, National Grid US8 Inc. and KeySpan. Upon the merger, each outstanding share of KeySpan capital stock will be converted into the right to receive $42.00 in cash and KeySpan will become a wholly owned subsidiary of National Grid USA upon completion of the of the transaction. The


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information set forth under the heading“Acquisitions and disposals” on pages 33 to 34, of the Company’s Annual Report and Accounts 2006/07 contained in Exhibit 15.1 is incorporated herein by reference. As contemplated in the Merger Agreement, National Grid plc has provided notice extending the termination date of the Merger Agreement through to 25 August 2007.Material contracts
 
As described in Item 6, each of our Executive Directors has a Service Agreement and each Non-executive Director has a Letter of Appointment.
 
Apart from these, no contract (other than contracts entered into in the ordinary course of business) has been entered into by National Gridus within the two years immediately preceding the date of this report which is, or may be, material; or which contains any provision under which any member of National Grid has any obligation or entitlement which is material to National Gridus at the date of this report.
 
Exchange controls
 
There are currently no UK laws, decrees or regulations that restrict the export or import of capital, including, but not limited to, foreign exchange control restrictions, or that affect the remittance of dividends, interest or other payments to non-UK resident holders of ordinary shares except as otherwise set out in ‘Taxation’ below and except in respect of the governments ofand/or certain citizens, residents or bodies of certain countries (described in applicable Bank of England Notices or European Union Council Regulations in force as at the date of this document).
 
Taxation
 
The following summary describes the principal US FederalUnited States (“US”) federal income and UKUnited Kingdom (“UK”) tax consequences for a beneficial owner of ADSs or ordinary shares who is:
 
 • a citizen or resident of the United States,US,
 
 • a corporation or other entity taxable as a corporation, created or organised under the laws of the United StatesUS or any state thereof, or
 
 • a trust or an estate the income of which is subject to US federal income tax without regard to its source and that holds such shares or ADSs as capital assets.
 
The summary is not a complete analysis or listing of all the possible tax consequences of ownership, in particular those pertaining to the August 2005 return of £2 billion to shareholders as discussed below under ‘Taxation of dividends’.ADSs or ordinary shares. It does not discuss special tax rules that may be applicable to certain classes of investors including traders, collective investment schemes, banks, insurance companies, securities dealers, investors with a ‘functional currency’ other than the US dollar and any corporation which directly or indirectly controls 10% or more of the voting share capital of National Grid.
 
Each investor is urged to consult his or her own tax advisor regarding the tax consequences of the purchase, ownership and disposition of ADSs or ordinary shares under the laws of the US, the UK and their constituent jurisdictions.
 
The US and the UK signed a convention (the ‘Income Tax Convention’) for the avoidance of double taxation with respect to income and capital gains on 24 July 2001. The Income Tax Convention entered into force following the exchange of instruments of ratification on 31 March 2003 and was effective for withholding taxes beginning 1 May 2003. This summary describes the rules of taxation under the new convention.Income Tax Convention.
 
The statements regarding US Federalfederal tax laws set out below are based on:
 
 • the US Internal Revenue Code of 1986, as amended (the ‘Code’“Code”) and regulations issued thereunder, all of which are subject to change, possibly with retroactive effect, and in part on
 
 • the representationrepresentations of The Bank of New York as depositary (the ‘Depositary’).
 
These statements assume that each obligation provided for in or otherwise contemplated by the deposit agreement entered into by and among National Grid Transco plc (now National Grid plc), the Depositary and the


10

registered holders of ADRs pursuant to which ADRs have been issued dated as of 21 November 1995 and amended and restated as of 31 January 2002 and any related agreement will be performed in accordance with its terms. Beneficial owners of ADSs who are residents or citizens of the United States will be treated as the owners of the underlying ordinary shares for the purposes of the Code.


9

For the purposes of this discussion, the term ‘US Holder’ refers to a beneficial owner of ADSs or ordinary shares who is a resident of the United States for US Federalfederal income tax purposes and, as to the description under ‘Taxation of dividends’ and ‘Taxation of capital gains’ below, is also a resident of the United States for the purposes of the Income Tax Convention.
 
The statements regarding UK tax set out below are based on UK tax law and what is understood to be the published practice of HM Revenue and Customs in the United Kingdom as at the date of this document and are subject to any change therein (including any change having retroactive effect).
 
Taxation of dividendsDividends
 
Under the Income Tax Convention the United Kingdom is allowed to impose a 15% withholding tax on dividends paid to US shareholders controlling less than 10% of the voting capital of National Grid. The United Kingdom does not, however, currently impose a withholding tax on such dividends. If it were to impose such a tax, the treaty provides for an exemption from withholding taxes for dividends paid on shares held through a tax exempt pension fund, 401(k) plan or similar ‘pension scheme’ as defined in the Income Tax Convention. The Income Tax Convention does not provide for refunds to be paid in respect of tax credits arising on dividends paid by UK resident companies. To obtain benefits under the Income Tax Convention, a US holder must otherwise satisfy the requirements of the limitations on benefits article of the Income Tax Convention.
 
Dividends paidCash distributions received by National Grida US Holder with respect to its ADSs or ordinary shares generally will be treated as a dividend subject to US shareholders arefederal income taxation as ordinary income. Subject to certain exceptions for short-term and hedged positions, the US dollar amount of dividends received by certain non-corporate US Holders with respect to ADSs or ordinary shares before January 1, 2011 will be subject to tax in the United States. Such dividends may qualify for the reduced taxtaxation at a maximum rate of 15% if the US shareholder has held the National Griddividends are “qualified dividends.” Dividends received with respect to ADSs or ordinary shares will be qualified dividends if National Grid (i) is eligible for the requisite holding period,benefits of a comprehensive income tax treaty with the United States that the US Internal Revenue Service (“IRS”) has approved for purposes of the qualified dividend rules and (ii) was not, in the year prior to the extentyear in which the dividend was paid, outand is not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). The Income Tax Convention has been approved for purposes of earningsthe qualified dividend rules. Based on National Grid’s audited financial statements and profits. Any dividends paidrelevant market and shareholder data, National Grid believes that doit was not qualifytreated as a PFIC for US federal income tax purposes with respect to its 2007 taxable year. In addition, based on its audited financial statements and its current expectations regarding the special reduced rate will bevalue and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, National Grid does not anticipate becoming a PFIC for its 2008 taxable to a US Holder atyear or in the higher rate normally applicable to ordinary income.foreseeable future. Dividends paid by National Grid to corporate shareholdersUS holders will not be eligible for the dividends received deduction generally allowed to corporation.corporations. This discussion is based on current law and previous guidance issued by the IRS which could be changed.
 
The Company returned £2 billion to shareholders in August 2005 following the sales of four of the UK gas distribution networks in June 2005 by way of a B share scheme, followed by a share consolidation. The distribution, to the extent paid out of earnings and profits, was generally taxable to a US Holder as foreign source dividend income. A distribution in excess of earnings and profits would have been treated as a non-taxable return of cash to the extent of the US Holder’s basis in the existing ordinary shares or ADSs, and thereafter as capital gain. In its information reporting to shareholders, National Grid relied on IRS guidance which provides that if the payor of a distribution is unable to determine whether the distribution is paid out of earnings and profits, the entire distribution must be treated and reported as dividend income.
Taxation of capital gainsCapital Gains
 
Subject to the provisions set out in the next paragraph in relation to temporary non-residents, a US Holder who is not resident and not ordinarily resident in the UK for UK tax purposes is not liable for UK taxation on capital gains realized or accrued on the sale or other disposal of ADSs or ordinary shares. A US Holder is, however, liable for US Federalfederal income tax on such gains to the same extent as on any other gains from sales of stock. The gain, if any, is generally US source.
 
The following taxpayers may be subject to tax in both jurisdictions for any capital gain realized on the sale or other disposition of ADSs or ordinary shares:
 
 • a US citizen who is resident or ordinarily resident in the UK
 
 • a US corporation which is resident in the UK by reason of its business being managed and controlled in the UK


11

 • a US citizen who is trading or carrying on a profession or vocation in the UK and used, held or acquired ADSs or ordinary shares for the purpose of such trade, profession or vocation


10

 • a US corporation which is otherwise carrying on business through a permanent establishment in the U.K.UK and used, held or acquired ADSs or ordinary shares for the purpose of such permanent establishment.
 
Such holder, however, is generally entitled to foreign tax credit, subject to certain limitations, against any US Federalfederal tax liability for the amount of any UK tax (namely capital gains tax in the case of an individual and corporation tax on chargeable gains in the case of a corporation) which has been paid in respect of such gain.
 
A US Holder who becomes resident in the UK after a period of temporary non-residence (of up to five years) following an earlier period of residence in the UK is also potentially liable to UK capital gains tax on gains made in the period of temporary non-residence.
 
A US Holder must also comply with the limitation on benefits article in the Income Tax Convention in order to obtain treaty benefits.
 
In addition, a tax loss on future sales of shares may be characterised as long-term capital loss if some or all of a US Holder’s dividends are characterised as an ‘extraordinary dividend’“extraordinary dividend”. This characterisation may result depending on the proportionate amount of the dividend compared with the cost basis in the shares.
 
UK stamp dutyStamp Duty and stamp duty reserve taxStamp Duty Reserve Tax (‘SDRT’)
 
Transfers of ordinary shares — Generally speakingBroadly, SDRT at the rate of 0.5% of the amount orof value of the consideration paid is payable where an agreement to transfer ordinary shares is not completed by a duly stamped transfer to the transferee. Where an instrument of transfer is executed and duly stamped before the expiry of the period of six years beginning with such date, the SDRT liability will be cancelled, and any SDRT which has been paid will be refunded. SDRT is due whether or not the agreement or transfer of such chargeable securities is made or carried out in the UK and whether or not any party to that agreement or transfer is a UK resident. Purchases of ordinary shares completed by execution of a stock transfer form will generally give rise to a liability to UK stamp duty at the rate of 0.5% (rounded up to the nearest £5) of the actual consideration paid.amount or value of the consideration. Paperless transfers under the CREST paperless settlement system will generally be liable to SDRT at the rate of 0.5%, and not stamp duty. The transfer of ordinary shares where there is no change of beneficial ownership will generally attract fixed rate stamp duty of £5 per transfer. However, if the Finance Bill 2008 is enacted in its current form, any such transfer executed on or after 13 March 2008 will not attract stamp duty. SDRT is generally the liability of the purchaser and UK stamp duty is usually paid by the purchaser or transferee.
 
Transfers of ADSs — No UK stamp duty will be payable on the acquisition or transfer of existing ADSs or beneficial ownership of ADSs, provided that any instrument of transfer or written agreement to transfer is executed outside the UK and remains at all times outside the UK. An agreement for the transfer of ADSs in the form of ADRs will not give rise to a liability for SDRT. On a transfer of ordinary shares from the London, England office of The Bank of New York as agent of the Depositary (the ‘Custodian’) to a holder of ADSs upon cancellation of the ADSs, only a fixed stamp duty fee of £5 per instrument of transfer will be payable. However, if the Finance Bill 2008 is enacted in its current form, any such transfer executed on or after 13 March 2008 will not attract stamp duty. Any transfer for value of the underlying ordinary shares represented by ADSs may give rise to a liability on the transferee to UK stamp duty or SDRT. A charge to stamp duty or SDRT may arise on the issue or transfer of ordinary shares to the Depositary or the Custodian. The rate of stamp duty or SDRT will generally be 1.5% of either (i) in the case of an issue of ordinary shares, the issue price of the ordinary shares concerned, or (ii) in the case of a transfer of ordinary shares, the value of the consideration or, in some circumstances, the value of the ordinary shares concerned. The Depositary will generally be liable for the stamp duty or SDRT. In accordance with the terms of the Depositary Agreement, the Depositary will charge any tax payable by the Depositary or the Custodian (or their nominees) on the deposit of ordinary shares to the party to whom the ADSs are delivered against such deposits. If the stamp duty is not a multiple of £5, the duty will be rounded up to the nearest multiple of £5.
 
US information reportingInformation Reporting and backup withholdingBackup Withholding
 
A US Holder who holds ADSs may in certain circumstances be subject to information reporting to the IRS and possible US backup withholding at a rate of 28% with respect to dividends on ADSs and proceeds from the sale or


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other disposition of ADSs unless such holder furnishes a correct taxpayer identification number or is otherwise exempt.
 
UK inheritance taxInheritance Tax
 
An individual who is domiciled in the US for the purposes of the convention between the US and the UK for the avoidance of double taxation with respect to estate and gift taxes (the ‘Estate Tax Convention’) and who is not a national of the UK for the purposes of the Estate Tax Convention will generally not be subject to UK inheritance tax in respect of the ADSs or ordinary shares on the individual’s death or on a gift of the ADSs or ordinary shares during the individual’s lifetime, unless the ADSs or ordinary shares are part of the business property of a permanent establishment of the individual in the UK or pertain to a fixed base in the UK of an individual who performs independent personal services. Special rules apply to ADSs or ordinary shares held in trust. In the exceptional case where the ADSs or shares are subject both to UK inheritance tax and to US Federalfederal gift or estate tax, the Estate Tax Convention generally provides for the tax paid in the UK to be credited against tax paid in the US.
 
Documents on display
 
National Grid is subject to the filing requirements of the Securities Exchange Act of 1934.1934, as amended. In accordance with these requirements, we file reports and other information with the Securities and Exchange Commission. These materials, including this document, may be inspected during normal business hours at our registered office1-3 Strand, London WC2N 5EH or at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. For further information about the Public Reference Room, please call the SEC on1-800-SEC-0330. Some of our filings are also available on the SEC’s website at www.sec.gov.
 
Item 11.  Quantitative and Qualitative Disclosures about Market Risk
 
The information set forth under the headings“Treasury policy” on pages 65 to 66 andpage 76,“Commodity contracts” on pages 6778 to 6879,“Note 32 Supplementary information on derivative financial instruments” on page 159,“Note 33 Financial risk” on pages 160 to 164, and“Note 34 Commodity risk” on pages 165 to 166 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
Item 12.  Description of Securities Other than Equity Securities
 
Not applicable.
 
PART II
 
Item 13.  Defaults, Dividend Arrearages and Delinquencies
 
There has been no material default in the payment of principal, interest, a sinking or purchase fund instalment or any other material default with respect to the indebtedness for or in respect of monies borrowed or raised by whatever means of the Company or any of its significant subsidiaries. There have been no arrears in the payment of dividends on, and no material delinquency with respect to, any class of preferred stock of any significant subsidiary of the Company required to be reported under this Item 13.
 
Item 14.  Material Modifications to the Rights of Security Holders and Use of Proceeds
 
None.
 
Item 15.  Controls and Procedures
 
Disclosure controls and procedures
 
The Company hasWe have carried out an evaluation under the supervision and with the participation of itsour management, including the Chief Executive and Finance Director, of the effectiveness of the design and operation of National Grid’sour disclosure controls and procedures as of the end of the period covered by this report.31 March 2008. There are inherent limitations to the effectiveness of any


12

system of disclosure controls and procedures, including the


13

possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. Based on and as of that evaluation, the Chief Executive and Finance Director concluded that the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that National Grid fileswe file and submitssubmit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarised and reported as and when required and communicated to the Company’sour management, including the Chief Executive and Finance Director, as appropriate, to allow timely decisions regarding disclosure.
 
Managements’ evaluation of the effectiveness of internal control over financial reporting
 
TheOur management of National Grid is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRules 13a-15(f) and15d-15(f) under Securities Exchange Act of 1934, as amended. National Grid’sOur internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as adopted by the European Union includingand IFRS as published by the reconciliations to US GAAP.International Accounting Standards Board. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
 
National Grid’sOur management, with the participation of the Chief Executive and Finance Director, conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management concluded that National Grid’sour internal control over financial reporting was effective as of 31 March 2007.2008.
Because KeySpan Corporation was acquired by us during the financial year ended 31 March 2008, it was not required to be included in management’s assessment of internal control over financial reporting for the year ended 31 March 2008, and therefore, management have excluded it from its assessment. KeySpan Corporation is a wholly-owned subsidiary whose total assets and total revenues represented 25% and 22%, respectively, of the related consolidated financial statement amounts as of and for the year ended 31 March 2008.
 
PricewaterhouseCoopers LLP, which has audited theour consolidated financial statements of National Grid for the fiscal year ended 31 March 2007,2008, has also audited management’s assessment of the effectiveness of National Grid’sour internal control over financial reporting and the effectivenessreporting. The attestation report of National Grid’s internal controls over financial reporting; their reportPricewaterhouseCoopers LLP is included herein.under Item 18 of thisForm 20-F.
 
Change in internal control over financial reporting
 
During the period covered by this report, there were no changes in the Company’sour internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
Item 16.  [Reserved]
 
Item 16A.  Audit Committee Financial Expert
 
The Board of Directors has determined that George Rose, chairman of the Company’s Audit Committee, is an “audit committee financial expert”expert’’ within the meaning of this Item 16A. A brief listing of Mr. Rose’s relevant experience is included as part of Item 6. Mr. Rose is also “independent”“independent’’ within the meaning of the New York Stock Exchange listing rules.
 
Item 16B.  Code of Ethics
 
We have adopted a code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer.officer or controller, and any person performing similar functions. This code is available on our website at www.nationalgrid.com, where any amendments or waivers will also be posted. There were no amendments to, or waivers under, our Code of Ethics in the fiscal year ended 31 March 2007.2008.


13

Item 16C.  Principal Accountant Fees and Services
 
PricewaterhouseCoopers LLP, independent registered public accounting firm, served as auditors of the Company for the fiscal year ended 31 March 2007.


14

Audit Fees2008.
 
         
  Year Ended
 Year Ended
  March 31,
 March 31,
  2008 2007
  (£m)
 
Audit fees  8.3   6.2 
Audit related fees  0.4   1.8 
Tax fees  1.2   1.3 
All other fees  0.7   1.1 
Total  £10.6   £10.4 
The aggregate fees billed by PricewaterhouseCoopers LLP for the audit of the Company’s financial statements and regulatory reporting for the fiscal year ended 31 March 2007 and the review of interim financial statements for the six months ended 30 September 2006 were £6.2 million. Fees billed by PricewaterhouseCoopers LLP for the audit of the Company’s financial statements and regulatory reporting for the fiscal year ended 31 March 2006 and the review of interim financial statements for the six months ended 30 September 2005, were £4.5 million.
Audit-Related Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for assurance and related services that were reasonably related to the performance of the audit or review of the Company’s financial statements and are not disclosed under “Audit Fees” above were £1.8 million in fiscal 2006/07 and £0.5 million in fiscal 2005/06. Included within the fees in fiscal 2006/07 and 2005/06 is accounting advice on various transactions, both planned and completed, and the audit of pension schemes.
Tax Fees
Aggregate fees billed by PricewaterhouseCoopers LLP for tax compliance, tax advice and tax planning were £1.3 million in fiscal 2006/07 and £1.4 million in fiscal 2005/06.
All Other Fees
Aggregate fees billed by PricewaterhouseCoopers LLP for all other services in fiscal 2006/07 were £1.1 million. The most significant items were analysis of financial and other market related data. Aggregate fees billed by PricewaterhouseCoopers LLP for all other services in fiscal 2005/06 were £0.5 million. The most significant items were services provided as reporting accountant on the prospectus for the issue of B shares in connection with the £2 billion return of cash to shareholders and market analysis relating to National Grid’s U.S. gas distribution business.
 
Subject to the Company’s Articles of Association and the UK Companies Act , the Audit Committee is solely and directly responsible for the approval of the appointment, re-appointment, compensation and oversight of the Company’s independent auditors. It is our policy that the Audit Committee must approve in advance all non-audit work to be performed by the independent auditors.
 
During fiscal 2006/07,2007/08, all of the above services were pre-approved by the Audit Committee.
1The aggregate fees billed by PricewaterhouseCoopers LLP for the audit of the Company’s financial statements and regulatory reporting for the fiscal year ended 31 March 2008 and the review of interim financial statements for the six months ended 30 September 2007 were £8.3 million. Fees billed by PricewaterhouseCoopers LLP for the audit of the Company’s financial statements and regulatory reporting for the fiscal year ended 31 March 2007 and the review of interim financial statements for the six months ended 30 September 2006, were £6.2 million.
2The aggregate fees billed by PricewaterhouseCoopers LLP for assurance and related services that were reasonably related to the performance of the audit or review of the Company’s financial statements and are not disclosed under “Audit Fees” above were £0.4 million in fiscal 2007/08 and £1.8 million in fiscal 2006/07. Included within the fees in fiscal 2007/08 are services principally related to comfort letters and SAS 70 control reports.
3Aggregate fees billed by PricewaterhouseCoopers LLP for tax compliance, tax advice and tax planning were £1.2 million in fiscal 2007/08 and £1.3 million in fiscal 2006/07.
4Aggregate fees billed by PricewaterhouseCoopers LLP for all other services in fiscal 2007/08 were £0.7 million. The most significant item was providing vendor due diligence services related to the proposed sale of National Grid’s property business. Aggregate fees billed by PricewaterhouseCoopers LLP for all other services in fiscal 2006/07 were £1.1 million.
 
Item 16D.  Exemptions from the Listing Standards for Audit Committees
 
Not applicable.


1514

Item 16E.  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 
The following table provides information on Ordinary Shares purchased by the Company during fiscal2006/07
2007/08
                 
        c. Total Number of
  d. Maximum Number
 
        Shares Purchased
  of Shares (Rounded)
 
     b. Average
  as Part of Publicly
  that May Yet Be
 
  a. Total Number of
  Price Paid
  Announced Plans
  Purchased Under the
 
Period
 Shares Purchased  per Share  or Programs  Plans or Programs 
 
Month 1
1st November to 30 November 2006 (actual purchases from 20 to 30 November)		  3,220,000   £7.10   3,220,000   269 million 
Month 2
1 to 31 December 2006 (actual purchases from 18 to 21 December)		  1,053,381   £7.42   4,273,381   268 million 
Month 3
1 to 31 January 2007 (actual purchases from 3 to 26 January)		  5,175,000   £7.32   9,448,381   263 million 
Month 4
1 to 28 February 2007 (actual purchases from 5 to 28 February)		  6,135,000   £7.82   15,583,381   257 million 
Month 5
1 to 31 March 2007 (actual purchases from 1 to 22 March)		  6,805,000   £7.65   22,388,381   250 million 
Month 6
1 to 31 May 2007 (actual purchases from 18 to 31 May)		  8,930,000   £7.71   31,318,381   241 million 
Month 7
1 to 31 June 2007 (actual purchases from 1 to 15 June)		  19,990,000   £7.37   51,308,381   221 million 
                 
      (c). Total Number of
  
      Shares Purchased
 (d). Maximum Number
      of Shares purchased
 of Shares (Rounded)
    (b). Average
 as Part of Publicly
 that May Yet Be
  (a). Total Number of
 Price Paid
 Announced Plans
 Purchased Under the
Periods
 Shares Purchased per Share or Programs Plans or Programs
1 June to 30 June 2007
(actual purchases from 18 to 28 June)		  14,000,000  £7.31   65,308,381   207 million 
1 July to 30 July 2007
(actual purchases from 2 to 31 July)		  32,050,959  £7.08   97,359,340   175 million 
1 August to 31 August 2007
(actual purchases from 1 to 30 August)		  19,566,000  £7.13   116,925,340   155 million 
1 September to 31 September 2007
(actual purchases from 3 to 28 September)		  16,016,544  £7.49   132,941,884   139 million 
1 October to 28 October 2007
(actual purchases from 1 to 31 October)		  19,520,305  £7.82   152,462,189   120 million 
1 November to 31 November 2007
(actual purchases from 1 to 30 November)		  19,815,480  £7.92   172,277,669   100 million 
1 December to 31 December 2007
(actual purchases from 3 to 28 December)		  10,500,430  £8.29   182,778,099   89 million 
1 January to 31 January 2008
(actual purchases from 2 to 31 January)		  16,103,326  £8.15   198,881,425   73 million 
1 February to 29 February 2008
(actual purchases from 1 to 29 February)		  10,325,351  £7.65   209,206,776   63 million 
1 March to 31 March 2008
(actual purchases from 3 to 31 March)		  13,328,023  £7.16   222,534,799   50 million 
1 April to 30 April 2008
(actual purchases from 1 to 30 April)		  10,775,000  £7.12   233,309,799   39 million 
1 May to 31 May 2008
(actual purchases from 1 to 30 May)		  7,896,000  £7.24   241,205,799   31 million 
1 June to 31 June 2008
(actual purchases from 2 to 13 June)		  4,935,000  £7.10   246,140,799   26 million 
 
Note: At the Company’s 2006 Annual General Meeting (AGM), held in July 2006, shareholder approval was given to purchase up to 10% of the ordinary shares in issue (up to 272 million shares) which approval was repeated at the Company’s 2007 AGM, held in July 2007, to purchase 10% of the then issued share capital (up to 270 million shares). As part of the interim results for the six months to 30 September 2006, a share buy-back programme was announced to return around $1.9 billion (£1 billion) (based on cash flows from stranded assets under our US rate plans). On 3 April 2007 the Company announced the sale of its UK Wireless business and that it would return £1.8 billion to shareholders via an extension of the existing share buy-back programme, expected to be effected on the London Stock Exchange over the next 12 to 18 months and dependent on market and economic conditions. Shares will be repurchased in accordance with the Board’s general authority to make market repurchases of ordinary shares, as previously approved by shareholders. The Board will seek shareholder approval to renew this authority at the next AGM in July 2007.
2008. The ordinary share buyback commenced on 20 November 2006 and continued until shortly beforeis ongoing pursuant to the normal close period from 31 March and recommenced on 18 May and is ongoing.Board’s general authority as approved by the shareholders.


15

 
PART III
 
Item 17.Financial Statements
 
The Company has responded to Item 18 in lieu of this Item.
 
Item 18.Financial Statements
 
The information set forth under the headings“Statement of Directors’ responsibilities” on page 100,“Accounting policies” on pages 102114 to 107,120,“Adoption of new accounting standards” on page 121,“Consolidated income statement” on page 108,122,“Consolidated balance sheet” on page 109,123,“Consolidated cash flow statement” on page 111,125,“Consolidated statement of


16

recognised income and expense” on page 110124,“Notes to the consolidated financial statements-analysis of items in the primary statements” on pages 126 to 152, and“Notes to the accounts”consolidated financial statements — supplementary information” on pages 112153 to 172178 of the Company’s Annual Report and Accounts 2006/072007/08 contained in Exhibit 15.1 is incorporated herein by reference.
 
The report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm is presented below.
 
Report of Independent Registered Public Accounting Firm
to the Board of Directors and Shareholders of National Grid plc
We have completed an integrated audit of National Grid plc’s 31 March 2007 consolidated financial statements and of its internal control over financial reporting as of 31 March 2007 and the audits of its 31 March 2006 and 31 March 2005 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.
Consolidated financial statements
 
In our opinion, the accompanying consolidated income statements and the related consolidated balance sheets, consolidated statements of cash flows, consolidated statements of recognised income and expense, accounting policies and the related notes present fairly, in all material respects, the financial position of National Grid plc and its subsidiaries (National Grid) at 31 March 20072008 and 20062007 and the results of their operations and cash flows for each of the three years in the period ended 31 March 20072008, in conformity with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board and in conformity with International Financial Reporting Standards as adopted by the European Union. TheseAlso, in our opinion the Company maintained, in all material respects, effective internal control over financial reporting as of 31 March 2008, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management are responsible for these financial statements, are the responsibilityfor maintaining effective internal control over financial reporting and for its assessment of the Company’s management.effectiveness of internal control over financial reporting, included in Managements’ evaluation of the effectiveness of internal control over financial reporting under Item 15 in thisForm 20-F. Our responsibility is to express an opinionopinions on these financial statements and on the Company’s internal control over financial reporting based on our audits.audits (which were integrated audits in 2007 and 2008). We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditmisstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements includesincluded examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed under the heading “Basis of preparation of consolidated financial statements” in the Accounting policies, as a result of adopting IAS 32 and IAS 39 on 1 April 2005, National Grid changed its method of accounting for financial instruments. In line with the relevant transitional provisions, the prior period comparatives have not been restated.
IFRSs as adopted by the European Union vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Notes 38 and 39 to the consolidated financial statements.
Internal control over financial reporting
Also, in our opinion, management’s assessment, included in the accompanying “Managements’ evaluation of the effectiveness of internal control over financial reporting” as set out in Item 15, that National Grid maintained effective internal control over financial reporting as of 31 March 2007 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of 31 March 2007 based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit.
We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform


17

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includesincluded obtaining an understanding of internal control over financial reporting, evaluating management’s assessment,assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control andbased on the assessed risk. Our audits also included performing such other procedures as we considerconsidered necessary in the circumstances. We believe that our audit providesaudits provide a reasonable basis for our opinions.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting standards and principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting standards and principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable


16

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
/s/ PRICEWATERHOUSECOOPERS LLPAs described in Managements’ evaluation of the effectiveness of internal control over financial reporting, included under Item 15 in thisForm 20-F, management has excluded KeySpan Corporation from its assessment of internal control over financial reporting as of 31 March 2008 because KeySpan Corporation was acquired by the Company in a purchase business combination during the year ended 31 March 2008. We have also excluded KeySpan Corporation from our audit of internal control over financial reporting. KeySpan Corporation is a wholly-owned subsidiary whose total assets and total revenues represent 25% and 22%, respectively, of the related consolidated financial statement amounts as of and for the year ended 31 March 2008.
PricewaterhouseCoopers LLP
London, United Kingdom
1614 May 20072008
 
Item 19.Exhibits
 
Pursuant to the rules and regulations of the US Securities and Exchange Commission, National Grid has filed certain agreements as exhibits to this Annual Report onForm 20-F. These agreements may contain representations and warranties by the parties to them. These representations and warranties have been made solely for the benefit of the other party or parties to such agreement and (i) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements if those statements turn out to be inaccurate, (ii) may have been qualified by disclosures that were made to such other party or parties and that either have been reflected in the company’s filings or are not required to be disclosed in those filings, (iii) may apply materiality standards different from what may be viewed as material to investors and (iv) were made only as of the date of such agreements or such other date or dates as may be specified in such agreements and are subject to more recent developments. Accordingly, these representations and warranties may not describe National Grid’s actual state of affairs at the date hereof.
 
In accordance with the instructions to Item 2(b)(i) of the Instructions to Exhibits to theForm 20-F, National Grid agrees to furnish to the US Securities and Exchange Commission, upon request, a copy of any instrument relating to long-term debt that does not exceed 10 percent of the total assets of National Grid and its subsidiaries on a consolidated basis.


17

     
  
Description
  
 
1.1 Memorandum and Articles of Association of National Grid Transco plc (Exhibit 1 to National Grid GroupForm 20-F dated 21 June 2002 FileNo. 1-14958).Incorporated by reference
1.2Amendment to Memorandum and Articles of Association of National Grid Transco plc (Exhibit 1 to National Grid TranscoForm 20-F dated 11 June 2003 FileNo. 1-14958).Incorporated by reference
1.3Articles of Association of National Grid plc adopted by Special Resolution passed on 25 July 2005. (Exhibit 1.3 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958) Incorporated By Reference
2(a)Amended and restated Deposit Agreement dated as of 1 August 2005 among National Grid, plc and The Bank of New YorkFiled herewith
2(b).1.1Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 18 August 2005 relating to €12,000,000,000 (previously €6,000,000,000) issuable under the Euro Medium Term Note Programme. (Exhibit 2 (b).1.1 to National Grid PLC Form 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).1.2Supplementary Prospectus dated 26 August 2006. (Exhibit 2 (b).1.2 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).1.3Supplementary Prospectus dated 17 November 2005. (Exhibit 2 (b).1.3 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).1.4Supplementary Prospectus dated 6 March 2006. (Exhibit 2 (b).1.4 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).1.5Supplementary Prospectus dated 12 May 2006. (Exhibit 2 (b).1.5 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).1.6Supplementary Prospectus dated 19 May 2006. (Exhibit 2 (b).1.6 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).2.1Prospectus issued by National Grid Gas Holdings plc and National Grid Gas plc on 24 February 2006 relating to €10,000,000,000 issuable under the Euro Medium Term Note Programme. (Exhibit 2 (b).2.1 to National Grid plc Form 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).2.2Supplementary Prospectus dated 6 March 2006. (Exhibit 2 (b).2.2 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).2.3Supplementary Prospectus dated 22 May 2006. (Exhibit 2 (b).2.3 to National Grid plcForm 20-F dated 20 June 2006 File No. 1-14958)Incorporated by reference
2(b).3.1Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 11 August 2006 relating to €12,000,000,000 issuable under the Euro Medium Term Note Programme (Exhibit 2 (c).1.1 to National Grid plc Form 20-F dated 19 June 2007 FileNo. 1-14958)Incorporated by reference
2(b).3.2Supplementary Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 1 December 2006 relating to €12,000,000,000 issuable under the Euro Medium Term Note Programme(Exhibit 2 (c).1.2 to National Grid plcForm 20-F dated 19 June 2007 File No. 1-14958)Incorporated by reference
2(b).4.1Prospectus issued by National Grid Gas Holdings plc and National Grid Gas plc and National Grid Gas Finance (No 1) plc on 23 February 2007 relating to €10,000,000,000 issuable under the Euro Medium Term Note Programme (Exhibit 2 (d).1.1 to National Grid plcForm 20-F dated 19 June 2007 File No. 1-14958)Incorporated by reference
2(b).4.2Supplementary Prospectus issued by National Grid Gas Holdings plc and National Grid Gas plc and National Grid Gas Finance (No 1) plc on 4 February 2008 relating to €10,000,000,000 issuable under the Euro Medium Term Note ProgrammeFiled herewith
2(b).5.1Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 2 August 2007 relating to €15,000,000,000 issuable under the Euro Medium Term Note ProgrammeFiled herewith


18

     
  
Description
  
 
2(a)Amended and restated Deposit Agreement dated as of 31 January 2002 (Exhibit 2(a) to National Grid GroupForm 20-F dated 21 June 2002 FileNo. 1-14958).Incorporated by reference
2(b).1.1Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 18 August 2005 relating to €12,000,000 (previously €6,000,000,000) issuable under the Euro Medium Term Note Programme. (Exhibit 2(b).1.1 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).1.2Supplementary Prospectus dated 26 August 2006. (Exhibit 2(b).1.2 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).1.3Supplementary Prospectus dated 17 November 2005. (Exhibit 2(b).1.3 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).1.4Supplementary Prospectus dated 6 March 2006. (Exhibit 2(b).1.4 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).1.5Supplementary Prospectus dated 12 May 2006. (Exhibit 2(b).1.5 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).1.6Supplementary Prospectus dated 19 May 2006. (Exhibit 2(b).1.6 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).2.1Prospectus issued by National Grid Gas Holdings plc and National Grid Gas plc on 24 February 2006 relating to €10,000,000,000 issuable under the Euro Medium Term Note Programme. (Exhibit 2(b).2.1 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).2.2Supplementary Prospectus dated 6 March 2006. (Exhibit 2(b).2.2 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(b).2.3Supplementary Prospectus dated 22 May 2006. (Exhibit 2(b).2.3 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
2(c).1.1Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 11 August 2006 relating to €12,000,000 issuable under the Euro Medium Term Note ProgrammeFiled herewith
2(c).1.2.5.2 Supplementary Prospectus issued by National Grid plc and National Grid Electricity Transmission plc on 1 December 20064 February 2008 relating to €12,000,000€15,000,000,000 issuable under the Euro Medium Term Note Programme Filed herewith
2(d).1.12(b).6.1 Prospectus issued by National Grid Gas Holdings plc,USA on 3 December 2007 relating to €4,000,000,000 issuable under the Euro Medium Term Note ProgrammeFiled herewith
2(b).6.2Supplementary Prospectus issued by National Grid USA on 4 February 2008 relating to €4,000,000,000 issuable under the Euro Medium Term Note ProgrammeFiled herewith
2(b).7.1Prospectus issued by National Grid Gas plc and National Grid Gas Finance (No 1) plc on 2326 February 20072008 relating to €10,000,000,000 issuable under the Euro Medium Term Note Programme Filed herewith
4(a)Agreement and Plan of Merger dated as of February 25, 2006 between National Grid plc, National Grid US8 Inc. and KeySpan Corporation. (Exhibit 4(a) to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958)Incorporated by reference
4(c).1 Service Agreement among The National Grid Group plc, National Grid Company plc and Edward Astle dated 27 July 2001 (Exhibit 4.3 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).2 Service Agreement among National Grid plc and Mark Fairbairn dated 23 January 2007 (Exhibit 4 (c).2 to National Grid TranscoForm 20-F dated 19 June 2007 File No. 1-14958) Filed herewithIncorporated by reference
4(c).3 Service Agreement among The National Grid plc and Steven Holliday dated 1 April 2006. (Exhibit 4.(c).3 to National Grid Transco Form 20-F dated 19 June 2007 File No. 1-14958) Filed herewithIncorporated by reference
4(c).4 Service Agreement among National Grid Transco plc, National Grid USA and Michael E. Jesanis dated 8 July 2004 (Exhibit 4.5 to National Grid TranscoForm 20-F dated 15 June 2005 FileNo. 1-14958). Incorporated by reference

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Description
4(c).5 Service Agreement among National Grid Group plc, National Grid Company plc and Steve Lucas dated 13 June 2002 (Exhibit 4.5 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).6 Service Agreement among The National Grid Group plc, National Grid Company plc and Roger J. Urwin dated as of 17 November 1995 (Exhibit 4.7 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).7 Service Agreement among National Grid Transco plc, National Grid Company plc and Nicholas Winser dated 28 April 2003 (Exhibit 4.8 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).8 Changes to Directors’ remunerationFixed Term Employment Agreement among National Grid plc, National Grid USA and Robert B. Catell dated 26 October 2007Filed herewith
4(c).9Employment Agreement among National Grid plc, National Grid USA and Thomas King dated 11 July 2007Filed herewith
4(c).10Letter of Appointment — Linda Adamany (Exhibit 4(c).74 (c).9 to National Grid plcForm 20-F dated 2019 June 20062007 FileNo. 1-14958). Incorporated by reference
4(c).9.11 Letter of Appointment — Linda AdamanyPhilip Aiken Filed herewith
4(c).10.1.12.1 Letter of Appointment — John Allan (Exhibit 4.10 to National Grid TranscoForm 20-F dated 15 June 2005 FileNo. 1-14958). Incorporated by reference
4(c).10.2.12.2 Letter dated 7 March 2006 to John Allan relating to appointment as chairman of Remuneration Committee. (Exhibit 4(c)4 (c).8.2 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958) Incorporated by reference


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4(c).11.1 
Description
4(c).13.1Letter of Appointment — John Grant (Exhibit 4.9 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).11.2.13.2 Letter dated 7 March 2006 to John Grant relating to retirement as chairman of Remuneration Committee. (Exhibit 4(c)4 (c).9.2 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958) Incorporated by reference
4(c).12.14 Letter of Appointment — Ken Harvey (Exhibit 4.10 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).13.15 Letter of Appointment — Paul Joskow (Exhibit 4.11 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).14.16 Letter of Appointment — Sir John Parker (Exhibit 4.12 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).15.17 Letter of Appointment — Stephen Pettit (Exhibit 4.13 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).16.18 Letter of Appointment — Maria Richter (Exhibit 4.14 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).17.19 Letter of Appointment — George Rose (Exhibit 4.15 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958). Incorporated by reference
4(c).18.20 National Grid plc Deferred Share Plan. (Exhibit 4(c)4 (c).16 to National Grid plcForm 20-F dated 20 June 2006 FileNo. 1-14958) Incorporated by reference
4(c).19.21 National Grid Executive Share Option Plan 2002 (Exhibit 4(c)4 (c) to National Grid GroupForm 20-F dated 21 June 2002 FileNo. 1-14958). Incorporated by reference
4(c).20.22 National Grid Group Share Matching Plan 2002 (Exhibit 4(c)4 (c) to National Grid GroupForm 20-F dated 21 June 2002 FileNo. 1-14958). Incorporated by reference
4(c).21.23 National Grid Transco Performance Share Plan 2002 (as approved 23 July 2002 by a resolution of the shareholders of National Grid Group plc, adopted 17 October 2002 by a resolution of the Board of National Grid Group plc, amended 26 June 2003 by the Share SchemesSub-Committee of National Grid Transco plc, and amended 5 May 2004 by the Share SchemesSub-Committee of National Grid Transco plc) (Exhibit 4.19 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958).Incorporated by reference

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Description
4(c).22National Grid Executive Share Option Plan 2000 (Exhibit 4C to National Grid GroupS-8 dated 26 July 2001 FileNo. 333-65968). Incorporated by reference
4(c).23.24 National Grid Executive Share Option Scheme (Exhibit 4D to National Grid GroupS-8 dated 26 July 2001 FileNo. 333-65968). Incorporated by reference
4(c).24.25 Lattice Long Term Incentive Scheme (Exhibit 4(c)(vi) to National Grid Transco 20-F dated 11 June 2003 FileNo. 1-14958).Incorporated by reference
4(c).24Lattice Group Short Term Incentive Scheme (approved by a resolution of the shareholders of BG Group plc effective 23 October 2000; approved by a resolution of the Board of National Grid Transco plc on 30 April 2004; amended by resolutions of the Board of Lattice Group plc effective on 21 October 2002 and 13 May 2004) (Exhibit 4.23 to National Grid TranscoForm 20-F dated 16 June 2004 FileNo. 1-14958).Incorporated by reference
6Earnings per share: The information set forth under the heading “Note 13 Earnings per share” on page 126 of the Company’s Annual Report and Accounts 2006/07 contained in Exhibit 15.1 is incorporated herein by reference. Incorporated by reference
8 List of subsidiaries.subsidiaries Filed herewith
12.1 Certification of Steve Holliday Filed herewith
12.2 Certification of Steve Lucas.Lucas Filed herewith
13 Certifications of Steve Holiday and Steve Lucas furnished pursuant to 18 U.S.C. Section 1350.1350 Filed herewith
15.1 National Grid plc Annual Report and Accounts 2006/07,2007/08, in extracted form.form Filed herewith
15.2 Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm to National Grid plc.plc Filed herewith

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SIGNATURE
 
The registrant hereby certifies that it meets all of the requirements for filing onForm 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.
 
NATIONAL GRID PLC
 
 By: /s/  Steve Lucas
Steve Lucas

Finance Director
 
London, England
1917 June 20072008


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