National Grid Plc · LSE:NG.
National Grid — Non-Deal Roadshow (May 2006)
42 slides from National Grid's roadshow presentation, May 2006
Slide 1: National Grid plc Canadian Roadshow Presentation
National Grid plc Canadian Roadshow Presentation May 2006
Slide 2: Cautionary statement
Cautionary statement This presentation 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 Securit
Slide 3: Introduction
Introduction Headlines Corporate Structure Strategy Regulation Funding Our Businesses 3
Slide 4: Headlines
Headlines 2005/06 Preliminary Results Looking ahead 11% Growth in pre-tax profit* £12bn Group-wide investment projected over Increased annual investment in our existing the five years to March 2011 businesses by over one third to over £2 billion Group net debt expected to rise by around Co
Slide 5: Summary corporate structure
Summary corporate structure: Including external net debt as at 31 March 2006 National Grid plc & NGG Finance plc (£2.0bn) National Grid USA National Grid Holdings One (£1.4bn) in US group Lattice Group National Grid National Grid Niagara Mohawk £0.3bn (cash) Holdings Wireless New England Power Grani
Slide 6: National Grid plc - strategy
National Grid plc - strategy Asset based network provider focused on ownership and operation of large complex networks: Operational expertise – to outperform benchmarks Shareholder value and regulatory targets Managing regulatory relations – to benefit customers Operational and shareholders expe
Slide 7: Growth through investment
Growth through investment £12bn Group-wide investment projected over the UK regulatory asset base (£ bn, nominal prices) five years to March 2011 20 Annual investment of around £2.5bn, mainly driven by: Changing UK energy infrastructure requirements 18 UK government renewable energy policy U
Slide 8: Growth through operational performance
Growth through operational performance 35% real cost reduction in UK gas distribution* UK gas distribution controllable costs* 500 Target reduction on March 2002 controllable costs 450 17% real reduction in 2005/06 400 Achieved one year early Actual £m 350 Target 300 23% profit growth in Wirel
Slide 9: Strategic growth
Strategic growth Agreed acquisition of KeySpan for $7.3bn cash Assumption of $4.5bn of debt Growth expected from KeySpan $200m synergy savings identified Rhode Island Investment in additional gas gas distribution Sale of 4 UK gas installations distribution networks Non-regulated portfolio
Slide 10: Acquisition of KeySpan and Rhode Island gas assets: Excellent operational fit
Acquisition of KeySpan and Rhode Island gas assets: Excellent operational fit National Grid USA KeySpan Maine Rhode Island gas distribution Vermont New National Grid USA KeySpan (New England) Hampshire 900,000 gas customers 3.3 million electricity customers 565,000 gas customers New York Massachuset
Slide 11: US and UK regulation
US and UK regulation National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Lattice Group Holdings Wireless Niagara Mohawk New England Power Granite State Electric Massachusetts Electric National Grid Electricity National Grid Nantucket Electric
Slide 12: UK regulation
UK regulation Features 5 year duration TO price controls Regulatory Asset Value (RAV) UK Transmission estimated RAV at April 2006: £8.3bn Electricity – £5.5bn Gas – £2.8bn UK Gas distribution estimated RAV at April 2006: £5.9bn Incentive mechanisms Investment and replacement Syst
Slide 13: US regulation
US regulation Features Long duration rate plans (10 years in NY, 20 years in New England) ROE targets and sharing Stranded cost recovery Commodity cost pass through Incentive mechanisms volumes service quality Financial requirements credit rating minimum capitalisation Pensio
Slide 14: Borrowings: external gross debt as at 31 March 2006
Borrowings: external gross debt as at 31 March 2006 National Grid plc & NGG Finance plc (£3.2bn) National Grid USA National Grid Holdings One (£1.5bn) in US group National Grid National Grid Lattice Group Niagara Mohawk Holdings Wireless New England Power Granite State Electric Massachusetts Electri
Slide 15: Funding needs for the next two years
Funding needs for the next two years Southern Union Gas: $498m KeySpan: $7.3bn Debt maturities: 2006/07: £1.7bn 2007/08: £0.4bn Net Debt increase of c. £1bn forecast in 2006/07 (excluding KeySpan acquisition) Group Capex in 2006/07 and 2007/08: around £0.5bn pa higher than 2005/06 Total fundin
Slide 16: Credit ratings
Credit ratings Long term senior unsecured debt and short term debt credit ratings Moody’s1 S&P2 Fitch1 National Grid plc Baa1/P2 A-/A1 A-/F2 National Grid Electricity Transmission plc A23/P1 A/A1 A5/F2 National Grid Holdings One plc ---- A-/A1 Not rated National Grid Gas plc A23/P1 A/A1 A+/F1 Nation
Slide 17: Expected ratings movements on completion of KeySpan acquisition
Expected ratings movements for active debt issuers on completion of Keyspan acquisition Long term senior unsecured bond ratings (LT) and short term ratings (ST) Agency NG plc NGET NGGas S&P LT: A- → BBB+ LT: A to A- LT: A to A- ST: A1 → A2 ST: A1 → A2 ST: A1 → A2 Moody’s LT: Baa1 → Baa2 LT: Stay a
Slide 18: Long term debt maturity profile
Long term debt National Grid long term debt maturity profile 18 May 2006 2,500 National Grid USA 2,000 National Grid/NGGF National Grid Electricity Transmission £ equiv (m) 1,500 National Grid Gas Holdings Group 1,000 500 0 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015
Slide 19: Group borrowing facilities and liquidity
Group borrowing facilities and liquidity as at 18 May 2006 National Grid plc National Grid Gas plc $1.55bn undrawn syndicated loan facility; no £870m undrawn committed bank lines – 5 MAC event of default or ratings related year duration, minimal covenants covenants minimal covenants $3bn
Slide 20: Summary
Summary Asset based network provider focused on ownership and operation of large complex networks Regulated utility network businesses represent the bulk of cash flows and operating profits for the group Very significant funding requirements over the next year/18 months including KeySpan acqui
Slide 21: Our businesses
Our businesses Other Transmission UK Distribution US Distribution Wireless Businesses UK Electricity Gas Electricity & Gas Grain LNG National Grid US Electricity Australia UK Gas Metering Property 21
Slide 22: Group financials
Group financials £' millions y/e 31 March 2006 y/e 31 March 2005 Capital Capital continuing operations - business segments Revenue Operating Profit* Expenditure Revenue Operating Profit* Expenditure Electricity Transmission Owner 454 538 Electricity System Operator 38 21 Gas Transmission Owner 171 1
Slide 23: UK transmission
UK transmission National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Lattice Group Niagara Mohawk Holdings Wireless New England Power Granite State Electric Massachusetts Electric National Grid National Grid Electricity Nantucket Electric Gas H
Slide 24: UK transmission
UK transmission Owner and manager of the electricity transmission assets in England & Wales Operator of the transmission network in Great Britain under the British Electricity Trading and Transmission Arrangements (BETTA) Owner and operator of the gas transmission network in Great Britain 4,
Slide 25: UK electricity transmission
UK electricity transmission £3.9bn investment projected over five years to 2011 Asset replacement (non-load related investment) Condition of assets necessitates a projected increase in investment to around £500m per year Infrastructure for new generation and demand (load related investment)
Slide 26: UK gas transmission
UK gas transmission £1.9bn investment projected over five years to 2011 Changing supply patterns in gas Imports set to grow to around 50% by 2011 and Vesteried, FLAGS 2007+ to around 70% by 2015 Projected investment of around £1.4bn Asset replacement Projected investment of around £0.5bn O
Slide 27: UK gas distribution
UK gas distribution National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Lattice Group Niagara Mohawk Holdings Wireless New England Power Granite State Electric Massachusetts Electric National Grid National Grid Electricity Nantucket Electric T
Slide 28: UK gas distribution
UK gas distribution UK gas distribution facts Owner, manager and operator of gas distribution assets in the Northwest, West Midlands, East of England and London Distribute gas to 11 million end users Single and consistent operating model Focus on driving efficiency and effectiveness Improvemen
Slide 29: UK gas distribution
UK gas distribution £2.3bn investment projected over five years to 2011 Potential 30 year replacement programme 2,500 Replacement expenditure (repex) projected to rise to around £300m per year 2,000 50% added to the regulatory asset base under km of pipe 1,500 current regulatory treatment 1,000
Slide 30: US transmission and distribution
US transmission and distribution National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Lattice Group Niagara Mohawk Holdings Wireless New England Power Granite State Electric Massachusetts Electric National Grid National Grid Electricity Nantuck
Slide 31: US electricity transmission
US electricity transmission Northeast US transmission assets 8,900 miles of overhead lines (>69kV) 94 miles of underground cables Maine Vermont Member of New England RTO Filing for enhanced returns under FERC New transmission regulation Hampshire Member of New York ISO New York Massachusetts I
Slide 32: US electricity and gas distribution
US electricity and gas distribution Growth through operational performance Reduced real controllable costs by 20% over 3 years to March 2005. Further 1% reduction in 2005/06 (excluding the impact of commodity price rises on bad debt) Continued volume growth Maine 3.4 million electric and cus
Slide 33: Agreed acquisitions of Rhode Island gas distribution & KeySpan
Agreed acquisitions of Rhode Island gas distribution & KeySpan National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Niagara Mohawk Lattice Group Holdings Wireless New England Power Granite State Electric Massachusetts Electric Nantucket Electri
Slide 34: Rhode Island gas distribution
Rhode Island gas distribution Vermont Maine Lake Strong overlap with National Grid Ontario New electricity distribution in Rhode Island Hampshire Same state regulator New York State Boston Opportunities for synergy Connecticut Pennsylvania Rhode savings Island Rhode Island gas distribution
Slide 35: Overview of KeySpan
Overview of KeySpan Major US energy delivery business Operational excellence Low risk earnings Well positioned for growth Asset profile Operating income (2005) 8% 4% 1% Key 5% 7% Gas Distribution 8% Electricity T&D Uncontracted Generation 26% 9% Contracted Generation Energy Services & Invest
Slide 36: Acquisition of KeySpan and Rhode Island gas assets: Excellent operational fit
Acquisition of KeySpan and Rhode Island gas assets: Excellent operational fit National Grid USA KeySpan Maine Rhode Island gas distribution Vermont New National Grid USA KeySpan (New England) Hampshire 900,000 gas customers 3.3 million electricity customers 565,000 gas customers New York Massachuset
Slide 37: Wireless infrastructure
Wireless infrastructure National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Lattice Group Niagara Mohawk Holdings Wireless New England Power Granite State Electric Massachusetts Electric National Grid Gas National Grid Electricity Nantucket El
Slide 38: Wireless infrastructure
Wireless infrastructure Mobile infrastructure Revenue split Leading independent mobile towers owner and 12 months to 31 March 2006 operator ~11% market share Other independents ~7% market share Investment New 3G infrastructure – market led roll-out 2G infrastructure infill Regional presence in
Slide 39: Other businesses
Other businesses National Grid plc & NGG Finance plc National Grid Holdings One National Grid USA National Grid National Grid Lattice Group Niagara Mohawk Holdings Wireless New England Power Granite State Electric Massachusetts Electric National Grid National Grid Electricity Nantucket Electric Tran
Slide 40: Other businesses
Other businesses LNG import terminal at the Isle of Grain (UK) The first modern LNG terminal in the UK, able to deliver c.13% of current UK gas demand by 2008 Phase 1 operational since July 2005 – annual capacity of 3.3m tonnes of LNG (4.4bcm of gas) Phase 2 expected to be operational late 2
Slide 41: Summary
Summary Asset based network provider focused on ownership and operation of large complex networks Other network related businesses 41
Slide 42: Treasury contacts
Treasury contacts Malcolm Cooper (Group Tax and Treasury Director) D: +44 (0) 20 7004 3340 [email protected] Andrew Kluth (Assistant Treasurer) D: +44 (0) 20 7004 3365 [email protected] Andy Mead (Manager, Corporate Banking) D: +44 (0) 20 7004 3369 [email protected] David Bonar