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National Grid unveils plans for major investment in UK infrastructure

National Grid yesterday surprised investors with the announced of a £22 billion investment plan for the next five years and a rights issue to raise £3.2 billion.

The announcement came as the company revealed its end of year results, which show pre-tax profits up 12%, earnings per share up 14% and an 8% increase on full-year dividends.

The rights issue will offer existing shareholders the option to buy two new shares at a heavily discounted price of 335p for every five shares already held.

“We believe that the rights issue announced today will give us the scope and appropriate financial flexibility to deliver the Group’s strategy,” said National Grid’s chief executive Steve Holliday in a statement.

The capital raised through the rights issue will be divided between efforts to link up new nuclear power stations and offshore wind farms to the grid, plans to update wiring in London and Birmingham and new gas interconnectors.

The investment in updated grid infrastructure will ultimately cost the average UK household an extra £4 a year, but National Grid argues that this represents “good value” for transforming the system into one fit for a new decarbonised energy future.

The company says it also expects to continue “constructive” discussions with Ofgem on the UK regulatory regime and will carry on supporting the organisation on Project Discovery, which is looking at the ability of the current energy market to support climate change targets while maintaining affordable prices for consumers.

National Grid says it is also progressing with a £200 million investment between now and 2012 in the energy infrastructure to enable early connection of new renewable energy sources.

The company also wants to see the development of new regulatory arrangements to make the connection of new renewable energy sources quicker and more efficient in future.

For further information:
www.nationalgrid.com/

21 May 2010

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