Roger Urwin, Chief Executive Officer National Grid Group plc EEI Conference 18 February 2002

2 National Grid National Grid has a focused, distinctive strategy  To develop, own, and operate networks delivering world class levels of service and cost performance National Grid has a record of high achievement  Most successful regional transmission organisation in the world  Lowest cost distribution company in New England with most innovative rate plans in the country –Target to move newly-acquired Niagara Mohawk operations to similarly low cost levels  Increased dividends by an average 5% real per year since flotation and total shareholder value by 155% National Grid aims even higher  Drive costs lower and service performance higher in all of our energy delivery businesses  Utilise skills to expand in target markets - both through acquisition and management contract  Increase dividends by 5% real in each of the next 5 years

3 Investment profile Group investment (£13bn since 1990)

4 Telecoms - Risks and Rewards Energis  Early success and significant shareholder value creation  Maintaining exit strategy Latin America  Demonstrated our core skills  Exiting region due to economic and sector difficulties The future  Infrastructure related opportunities

5 US Distribution Transforming the shape of the Group  Will contribute 60% operating profit to Group  8th largest electric utility in the US  Premier utility in strong region  Long term incentive-based regulatory deals in MA, RI and NY  NEES and EUA contributed 10% to Group EPS in first year  Niagara Mohawk expected to be earnings enhancing in first year

6 New York Rate Plan Highlights 10-year agreement Initial cut of 8% in electricity delivery rates Fixed rates for remainder of 10-year period Commodity cost pass-through 10.6% post tax adjusted ROE Adjusted ROE excludes investors’ share of assumed savings New England share of savings largely retained by investors as per existing rate plans Incentives to outperform Support from NYPSC Staff, consumer, business and environmental groups Investors’ share Customers’ share

7 Integration - Gaining Momentum Management and staff  Top team in place  Middle management by March  250 vacancies held  400 redundancy offers  Trade union discussions initiated IT systems  Financial systems harmonised  HR systems integration under way Supply Chain  Standardised procurement practices  Reduction of inventory Facilities  Consolidation program beginning in May

8 Performance Push 2000 cost ranking- Northeast electric utilities National Grid US (pre-NiMo) Niagara Mohawk Cost / customer ($)

9 UK Transmission Achievements Created in 1990 Outstanding record as transmission operator  Reduced controllable costs by over 55% since privatisation  Target to reduce by further 20% over next 5 years  Unavailability halved  Connected over 20,000 MW of new generation Unique experience as system operator  Operate a system of over 50,000 MW with a single control centre  Reduced congestion costs by 65% since 1994 under incentive-based rates  Implemented seamless transition from bid-based pool to balancing system

10 UK Transmission Returns Legend: Actual return on regulated assets including TSS (pre-tax, real) Illustrative return on regulated assets (pre-tax, real) - based on modest outperformance of Ofgem controllable cost and BSIS targets % Financial year

11 US Transmission Opportunities US market changing dramatically  Fragmented, under-invested, inefficient sector  FERC applying pressure to separate transmission from generation  Regional Transmission Organisations  Independent Transmission Companies Our skills now the benchmark

12 Preferred allocation of transmission functions

13 US transmission - progress report Discussions on structure of Northeast  NE / NY ISOs filed agreement  ITC concept embraced by most NE / NY utilities Progress in the Mid-west  Alliance companies committed to ITC  National Grid Managing Member of Alliance  Productive discussions with MISO

14 Looking Forward Integration of Niagara Mohawk  Deliver benefits to customers and shareholders  Meld the operations into our existing US business US Distribution  Highly fragmented Northeast  Wide range of cost metrics and regulatory schemes  Further benefits available for customers and shareholders Transmission  North America  Europe