Additional Information
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Additional information Contents The business in detail 184 The business in detail Key milestones 184 Key milestones Some of the key dates and actions in the corporate history 185 Where we operate of National Grid are listed below. The full history goes back 186 UK regulation much further. 188 US regulation 1986 192 Task force on Climate-related Financial Disclosures British Gas (BG) privatisation 193 Internal control and risk factors 1990 193 Disclosure controls Electricity transmission network in England and Wales transferred 193 Internal control over financial reporting to National Grid on electricity privatisation 193 Risk factors 1995 197 Shareholder information National Grid listed on the London Stock Exchange 197 Articles of Association 198 Depositary payments to the Company 1997 198 Description of securities other than equity Centrica demerged from BG securities: depositary fees and charges 198 Documents on display Energis demerged from National Grid 198 Events after the reporting period 198 Exchange controls 2000 199 Exchange rates Lattice Group demerged from BG and listed separately 199 Material interests in shares 199 Share capital New England Electric System and Eastern Utilities 200 Share price Associates acquired 200 Shareholder analysis 200 Taxation 2002 Niagara Mohawk Power Corporation merged 203 Other disclosures with National Grid in US 203 All-employee share plans 203 Change of control provisions National Grid and Lattice Group merged to 203 Code of Ethics form National Grid Transco 203 Conflicts of interest 203 Corporate governance practices: differences 2004 from New York Stock Exchange (NYSE) UK wireless infrastructure network acquired from listing standards Crown Castle International Corp 203 Directors’ indemnity 203 Employees 2005 204 Human Rights Four UK regional gas distribution networks sold 204 Listing Rule 9.8.4 R cross reference table and National Grid adopted as our name 204 Material contracts 204 Political donations and expenditure 2006 204 Property, plant and equipment Rhode Island gas distribution network acquired 204 Research and development and innovation activity 205 Unresolved SEC staff comments 2007 UK and US wireless infrastructure operations and 206 Other unaudited financial information the Basslink electricity interconnector in Australia sold 215 Commentary on consolidated financial information KeySpan Corporation acquired 218 Definitions and glossary of terms 2008 Ravenswood generation station sold 223 Want more information or help? 2010 Rights issue raised £3.2 billion 2012 New Hampshire electricity and gas distribution businesses sold 2016 National Grid separated the UK Gas Distribution business 2017 National Grid sold a 61% equity interest in its UK Gas Distribution business 184 National Grid Annual Report and Accounts 2017/18 Additional Information | Contents Additional Information Where we operate Our UK network UK Transmission1 cottish electricity transmission system Enlish and Welsh electricity transmission system St. Fergus Approimately 7200 ilometres 7 miles of oerhead line, 10 ilometres miles of underround cale and sustations Gas transmission system Approimately 70 ilometres 70 miles of hihpressure pipe and 2 compressor stations connectin to 8 distriution netors and also other thirdparty independent systems Terminal NG terminal oned y National Grid to/from LNG terminal Northern reland Electricity interconnector Gas interconnector Teesside to allylumford Principal offices to ulin Owned office space: Barrow aric and oinham Leased office space: to/from reland Easington Solihull and London eased office space totallin 022 suare from the Burton Point Theddlethorpe Netherlands metres 711 suare feet ith remainin terms of to 8 years Bacton to/from elium South Hook ritNed to/from Dragon the Netherlands Grain LNG to/from rance Our US network US Regulated1 Electricity transmission network Canada Gas distribution operatin area Electricity distribution area Vermont Gas and electricity distribution area oerlap An electricity transmission netor of approimately Maine 12 ilometres 8881 miles of oerhead line 18 ilometres 10 miles of underround cale and 87 transmission sustations An electricity distriution netor of approimately 117082 circuit ilometres 7271 miles and New Hampshire 70 distriution sustations in Ne nland and upstate Ne or A netor of approimately 7001 ilometres New York Massachusetts 1 miles of as pipeline serin an area of approimately 2 suare ilometres 07 suare miles ur netor also consists of approimately 787 ilometres 8 miles of as transmission pipe as defined y the Connecticut epartment of ransportation Generation Rhode Island Principal offices Pennsylvania New Jersey Owned office space: y racuse Ne York Leased office space: Brooklyn Ne Yor and altham Massachusetts At present enironmental issues are not preentin our and usinesses from utilisin any material operatin assets in the course eased office space totallin approimately of their operations 8 suare metres 000 suare feet 1 Access to electricity and as transmission assets on property oned y others is controlled throuh arious areements ith remainin terms of 7 to 11 years Additional Information | The business in detail National Grid Annual Report and Accounts 2017/18 185 The business in detail continued UK Regulation There is a range of different regulatory models available for Our licences to participate in transmission and interconnection activities interconnector projects. These involve various levels of regulatory are established under the Gas Act 1986 and Electricity Act 1989, as intervention, ranging from fully merchant (the project is fully reliant on amended (the Acts). They require us to develop, maintain and operate sales of interconnector capacity) to cap and floor (where sales revenues economic and efficient networks and to facilitate competition in the above the cap are returned to transmission system users and revenues supply of gas and electricity in Great Britain (GB). They also give us below the floor are topped up by transmission system users, thus statutory powers, including the right to bury our pipes or cables under reducing the overall project risk). public highways and the ability to use compulsory powers to purchase land so we can conduct our business. The cap and floor regime is now the regulated route for interconnector investment in GB and may be sought by project developers who do not Our networks are regulated by Ofgem, which has a statutory duty qualify or do not wish to apply for exemptions from European legislation under the Acts to protect the interests of consumers. As part of our which would facilitate a merchant development. licences, Ofgem established price controls that limit the amount of revenue our regulated businesses can earn. This gives us a specified RIIO price controls level of revenue for the duration of the price control that is sufficient The building blocks of the RIIO price control are broadly similar to the to meet our statutory duties and licence obligations, and make a historical price controls used in the UK. However, there are some reasonable return on our investments. significant differences in the mechanics of the calculations. The price controls include a number of mechanisms designed to How is revenue calculated? help achieve its objectives. These include financial incentives that Under RIIO, the outputs we deliver are explicitly articulated and our encourage us to: allowed revenues are linked to their delivery. These outputs have been • efficiently deliver by investment and maintenance the network outputs determined through an extensive consultation process, which has given that customers and stakeholders require, including reliable supplies, stakeholders a greater opportunity to influence the decisions. new connections and infrastructure capacity; • innovate in order to continuously improve the services we give There are five output categories for transmission: our customers, stakeholders and communities; and • efficiently balance the transmission networks to support the Safety: ensuring the provision of a safe energy network. wholesale markets. Reliability (and availability): promoting networks capable of delivering The main price controls for electricity and gas transmission networks long-term reliability, as well as minimising the number and duration of came into effect on 1 April 2013 for the eight-year period until 31 March interruptions experienced over the price control period, and ensuring 2021. They follow the RIIO (revenue = incentives + innovation + outputs) adaptation to climate change. framework established by Ofgem. Environmental impact: encouraging companies to play their role in Following the sale of a majority interest in the National Grid UK Gas achieving broader environmental objectives – specifically, facilitating Distribution business (now known as Cadent) on 31 March 2017, the reduction of carbon emissions – as well as minimising their own Cadent now has responsibility for operating within the price controls carbon footprint. relating to its four gas distribution networks. Customer and stakeholder satisfaction: maintaining high levels Our UK Electricity Transmission (UK ET) and UK Gas Transmission of customer satisfaction and stakeholder engagement, and improving (UK GT) businesses operate under four separate price controls. These service levels. comprise two for our UK ET operations, one covering our role as transmission owner (TO) and the other for our role as System Operator Customer connections: encouraging networks to connect customers