National Grid Transco plc (“NGT”) today announces that it has reached agreement on the sale of four of its regional gas distribution networks (“distribution networks”) (the “Transactions”). The total cash consideration is £5.8 billion. In addition, the purchasers are assuming certain environmental and other liabilities amounting to some £130m. The total enterprise value represents a 20% premium over the end March 2004 regulatory asset value of the distribution networks being sold and a 14% premium over NGT’s estimate of their regulatory asset value as at 31 March 2005.

Sir John Parker, Chairman of National Grid Transco, said:

“We are delighted with the outcome of our sales process. Having secured premium values, the Board has no hesitation in announcing a substantial return of capital and a further increase in the dividend. The fact that these sales will also bring customer benefits makes this a positive outcome for all parties.”

Roger Urwin, Chief Executive of National Grid Transco, said:

“These sales represent a further major step in the process of value creation from the National Grid and Lattice merger. We have already delivered operational and financial out-performance in our gas distribution networks and today have convincingly demonstrated they are worth a substantial premium. We will remain by far the largest UK gas distributor and the reshaped business will enable us to achieve the targeted reduction in controllable costs more effectively. Today National Grid Transco is in even better shape to deliver its growth strategy and superior value.”