National Grid looks forward to strong year

UTILITY National Grid announced today it had continued to trade in line with expectations, and was looking forward to strong operational and financial performances this year.

In the UK, where its revenues are ‘decoupled’ from volumes, it said it did not expect to benefit financially from the cold weather in December and January.  

In the United States, although it had seen some decline in customer volumes, it had not seen the severe ice storms of last year and as such expected an improved performance from its Electricity Distribution and Generation business.  

It also expects a strong performance from its Transmission business, with the Gas Distribution business benefiting from increases in net revenues under our UK and US rate plans.

However, it warned this would be impacted by timing differences and the absence of one-off cost recovery.  

“In addition we expect our US Gas Distribution network to experience lower volumes as a result of the recession, which will impact rate plans yet to be decoupled.  This will result in lower operating profit in this business,” it said in a statement to accompany its Interim Management Statement for the period October 1 to February 3.

Beyond this, it said it had completed its funding requirement of £2.5bn for 2009/10 and had already pre-funded a substantial portion of its funding requirement for 2010/11.

Net debt at the full year is expected to be in line with half year predictions of around £22bn.  

“We continue to expect net interest charges this year to benefit from low inflation and the fixing of the majority of our variable rate debt at low interest rates,” said the statement.

However, it added that it had recently seen a pick up in inflation, which was likely to impact next year’s UK revenues and index linked debt.  

“Overall, we are well positioned to deliver another year of strong performance, with good cash flows, which will continue to underpin our dividend policy,” said the Warwickshire-based company.

In the UK this winter, the firm said it had experienced seven of the twenty coldest days in the last fifteen years.  

During the past month it had seen an all time record demand for gas on our UK network.  Despite this, the system operated well with a good response from the market to the four gas balancing alerts it issued.  

It said the cold weather had also resulted in an unprecedented number of contact centre emergency calls and repairs to its gas mains.   

Highlights included the continued regulatory progress in the US and the decision that the UK transmission price control review would be rolled over for another year to April 2013.

In line with its policy, the Board expects to recommend an 8% increase in the full year dividend