Key Points:

• UK and US electricity businesses performing in line with expectations
• Niagara Mohawk acquisition on track
• Latin American telecoms businesses impacted by market conditions
  

Electricity

All of National Grid's electricity businesses are performing in line with expectations. In the UK, transmission price-controlled revenues will be slightly higher than last year reflecting the effect of the new price control which commenced on 1 April this year. Controllable costs will be some 3 per cent lower than last year in real terms. As expected, income from the UK interconnectors will be significantly lower following the introduction of the capacity auction arrangements for the French interconnector.

In the US, revenues are in line with expectations, as are reductions in controllable costs. Improvements in distribution operating profits will be offset by lower profits from stranded cost recovery due to a one-off rate settlement benefit last year of £12 million.

Niagara Mohawk

We are making good progress on receiving regulatory approvals and planning the integration for the acquisition of Niagara Mohawk, which is on schedule for completion shortly after this calendar year end.

Telecommunications

Intelig is expected to deliver strong operating performance with sales up over 30 per cent compared to the first half of last year. Our share of operating losses will be down significantly to under £30 million, with further improvements expected in the second half. However, the completion of permanent vendor financing is proving very difficult. In Argentina, Silica launched services into a very challenging economic climate. Against this background, the Company is reviewing its options for these ventures with its partners.

Other items

Net debt levels are flat compared with year end. Net interest costs will be approximately £70 million higher than the corresponding period last year largely as a result of our share of higher interest costs within our joint ventures, principally Intelig (£40 million), and a one-off interest benefit included last year (£17 million).

Stephen Box

Stephen Box, Group Finance Director, recently underwent surgery and is now convalescing. During Stephen's recuperation, Michael Jesanis, Chief Operating Officer (and previously Chief Financial Officer) of National Grid USA, has temporarily relocated to London to support Stephen.