RIIO-T1 business plan submission

London | Tuesday 6 September 2011

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 Securities

Exchange Act of 1934, as amended. These statements include information with respect to National Grid’s financial condition, its results of

operations and businesses, strategy, plans and objectives. Words such as ‘anticipates’, ‘expects’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’,

‘estimates’, ‘targets’, ‘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 National Grid’s 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’s ability to control or estimate

precisely, such as changes in laws or regulations and decisions by governmental bodies or regulators; breaches of, or changes in,

environmental, climate change and health and safety laws or regulations, including breaches arising from the potentially harmful nature of its

activities; network failure or interruption, the inability to carry out critical non network operations and damage to infrastructure, owing to adverse

weather conditions or otherwise; performance against regulatory targets and standards and against National Grid’s peers with the aim of

delivering stakeholder expectations regarding costs and efficiency savings, including those related to restructuring and internal transformation

projects; and customers and counterparties failing to perform their obligations to the Company and its arrangements with the Long Island Power

Cautionary statement

2

projects; and customers and counterparties failing to perform their obligations to the Company and its arrangements with the Long Island Power

Authority not being renewed. Other factors that could cause actual results to differ materially from those described in this presentation include

fluctuations in exchange rates, interest rates and commodity price indices; restrictions in National Grid’s borrowing and debt arrangements,

funding costs and access to financing; National Grid’s status as a holding company with no revenue generating operations of its own; inflation;

seasonal fluctuations; the funding requirements of its pension schemes and other post-retirement benefit schemes; the loss of key personnel or

the ability to attract, train or retain qualified personnel and any disputes arising with its employees or the breach of laws or regulations by its

employees; accounting standards, rules and interpretations, including changes of law and accounting standards and other factors that may

affect National Grid’s effective rate of tax; and incorrect or unforeseen assumptions or conclusions relating to business development activity.

For a more detailed description of some of these assumptions, risks and uncertainties, together with any other risk factors, please see National

Grid’s filings with and submissions to the US Securities and Exchange Commission (the ‘SEC’) (and in particular the ‘Risk factors’ and

‘Operating and Financial Review’ sections in our most recent Annual Report on Form 20-F). The effects of these factors are difficult to predict.

New factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its 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. Except

as may be required by law or regulation, the Company undertakes no obligation to update any of its forward-looking statements, which speak

only as of the date of this presentation. The content of any website references herein do not form part of this presentation.

Hurricane Irene – Sunday 28th August

� Nearly one third of our

customers affected

(approximately 1.5 million)

� Wednesday 31st - 66% of

customers restored

� 100% restored by Monday 5th

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� Costs still being

assessed

� Recovery

mechanism varies

by jurisdiction

Recap of headlines

�Total investment of £30.7bn� £25.4bn in Capex and £5.4bn in Opex

� £22bn in Electricity and £9bn in Gas

�Notional equity injections totaling £4.1bn over 8 yrs

�Range of measures to deliver ‘just financeable’

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�Range of measures to deliver ‘just financeable’

package� Cost of equity of 7.5%

� 55% gearing

� Two period transition to 45 years (electricity)

� 72% capitalisation ratio (gas)

Transitional arrangements and

financeability measures

Electricity

� Asset lives increase from 20 to

45 years over two price control

periods

- Increase by 1/16th of 25 years

each year for 16 years

- eg spend in 2013/14 has asset

Asset life for new investment in the year

0

10

20

30

40

50

2011/12 2015/16 2019/20 2023/24 2027/28 2031/32 2035/36

RIIO – T1 RIIO – T2

- eg spend in 2013/14 has asset

life of 21.5625 years

Gas

� Capitalisation rate of 72% of

totex

- e.g. for every £1 of spend, 72p

goes into RAV, 28p recovered in

year through opex

5

NG Published

Electricity RAV

Mar 2010 (Annual report and accounts) Mar 2010 (Transmission annual report)

Base RAV £7.1bn

Spend not yet in the RAV £0.4bn

SO £0.1bn

Total £7.5bnTotal £7.5bn

NG Published

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Mar 2013 (RIIO submission forecast) Mar 2013 (Rollover initial proposals)

Base RAV £9.0bn

Spend not yet in the RAV £0.1bn

SO* £0.1bn

Total (09/10 prices) £9.1bn

Total (nominal prices) £10.5bn

Total £9.0bn

Total (nominal prices) £10.4bn

Forecast and historic RAV closely aligned with Ofgem publications

RAV additions 10/11 – 12/13 c. £3bn

*National Grid estimate

NG PublishedNG Published

Gas RAV

Mar 2010 (Annual report and accounts) Mar 2010 (Transmission annual report)

Base RAV £4.1bn

Spend not yet in the RAV £0.4bn

SO £0.0bn

Total £4.5bnTotal £4.5bn

RAV additions 10/11 – 12/13 c.£0.7bn

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Mar 2013 (RIIO submission forecast) Mar 2013 (Rollover initial proposals)

Base RAV £4.0bn

Spend not yet in the RAV £0.6bn

SO* £0.1bn

Total (09/10 prices) £4.6bn

Total (nominal prices) £5.3bn

Total (09/10 prices) £4.9bn

Total (nominal prices) £5.6bn

Reported historic RAV closely aligned with Ofgem publications Difference in forecasts not yet reconciled: expected to be primarily due forecast

revenue driver / shadow RAV spend

RAV additions 10/11 – 12/13 c.£0.7bn

*National Grid estimate

Transmission Process update

14th OctoberOfgem feedback on July submission

2nd MarchUpdated submission to Ofgem

JulyInitial Proposals published

DecemberFinal Proposals published

RIIO-T1

fast track consultation

Non-fast track process

March/AprilQ&A and cost visits

fast track decision

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2011 2012

Sep Oct MarFebJanDecNov Apr May Jun Jul Aug Sep Oct Nov Dec

12th SeptemberResponse to Initial Proposals

21st NovemberFinal Proposals published

1st AprilControl period starts

Rollover

consultation cost visitsdecision

Group context

5.0

6.0

7.0

(no

min

al)

Group Capital ExpenditureModelling uncertainties to the baseline plan

� Rights issue in 2010 raised

£3.2bn

Funding increased expenditureModelled notional company equity injections not equivalent to National Grid plc equity injections

0.0

1.0

2.0

3.0

4.0

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21

£b

n(n

om

ina

l)

� Ratios and capital structure

different at Group level

� Portfolio and performance

benefit of other activities

Position unchanged : well funded through to at least 2015

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RIIO-T1 business plan submission

Q&A