OREANDA-NEWS. August 6, 2012. National Grid pIc Interim Management Statement for the period 1 April 2012 to 29 July 2012.

HIGHLIGHTS

•           Solid operational and financial performance during the period

•           UK: Initial RIIO proposals received for Transmission and Gas Distribution businesses

•           US: Sale of New Hampshire distribution businesses completed

Steve Holliday, Chief Executive, said:

“Our businesses have started the year well. In the UK, our focus has been on strengthening the resources, processes and organisational model needed to deliver future performance improvements. At the same time, we are working with Ofgem to secure appropriate long term financial frameworks for our regulated businesses. In the US, our team continues to focus on improving customer service and returns by securing the benefits of the new organisational model and through filing for new rate agreements in selected service areas.

As a result, we are maintaining our positive outlook for 2012/13, reflecting the expected delivery of another year of solid operating and financial performance."

BUSINESS UPDATE

In May we outlined four main strategic priorities for this financial year: delivering our investment programme in a disciplined manner; finalising the development of an appropriate UK regulatory framework for the future; further improving returns in our US business and continuing to drive efficiency across our businesses.

Growth and Investment

In line with our guidance for the current year given in May 2012, we expect to invest in the region of Ј3.5bn to Ј3.8bn in our businesses in 2012/13. We believe that this investment will deliver additional benefits for our customers whilst adding value to our businesses in both the UK and the US.

In our regulated UK Transmission business expected capital investment for 2012/13 remains over Ј1.5bn.

In the US, investment continues at a steady level, in line with our long term guidance of Ј1bn to Ј1.2bn p.a., focused on the improvement and renewal of our existing infrastructure, the delivery of improved customer service and the addition of new customers.

Regulatory Developments

In the UK, on 27 July Ofgem published the detailed initial proposals for price controls for our regulated UK Transmission and Distribution businesses. These new “RIIO” price controls will run from April 2013 to March 2021. Overall, the proposals outline plans for around Ј35bn of total expenditure, in nominal terms, over the eight year period, together with uncertainty mechanisms to allow additional revenue if

further investment is required. The consultation period on these proposals is open until 21 September and final proposals are expected in December 2012.

In the US, as we detailed in April, we have filed for new rates in our gas and electric businesses in upstate New York and Rhode Island. The rate cases in each state are proceeding on schedule, with substantial exchange of information with the respective staffs of the regulatory agencies in New York and Rhode Island. As a result, we continue to expect the outcomes of both of these filings to be concluded before the end of this financial year.

Efficiency Programmes

Following the delivery of our new organisational model and US cost reduction programme last year we are continuing the focus on efficiency, partly through implementing new information systems and a programme of process and customer service improvements. In the UK, we are nearing completion of our UK Gas Distribution Front Office systems roll-out which should enable further service improvements and cost savings.

FINANCIAL UPDATE

There have been no material changes to the financial position of the Company during the period. National Grid has a strong balance sheet, underpinned by regulatory revenues, which is key to our ability to secure the required long-term funding for our businesses in both the UK and the US. Interest cover, gearing and other credit metrics remain within comfortable ranges to sustain appropriate credit ratings in the medium term.

On 3 July, we completed the sale of our US New Hampshire electric and gas distribution businesses, Granite State Electric Company and Energy North Natural Gas Inc., to Liberty Energy Utilities (New Hampshire) Corp., a subsidiary of Algonquin Power & Utilities Corp. The gross proceeds from the transaction totalled USD 309m, including working capital of USD 24m.

TECHNICAL GUIDANCE

Our technical guidance is unchanged from that included in the full year results statement of 17 May 2012.