National Grid, KeySpan reach merger settlement agreement with New York Department of Public Service

Westborough, MA, and Brooklyn, NY, July 9, 2007 — National Grid and KeySpan Corp. announced they have reached agreement with the staff of the New York State Department of Public Service and other parties on National Grid’s acquisition of KeySpan.

The agreement focuses primarily on the delivery rate portion of a customer’s bill. The cost of the gas itself will fluctuate with market prices. The company said the merger will provide more than $600 million in savings to gas customers in New York City and Long Island over the next five years, compared with where delivery rates would have been without the merger.

For KeySpan customers in New York City, the proposal calls for a freeze on base gas delivery rates through 2012. The last increase occurred in 1993. On Long Island, the agreement calls for a one-time increase of $60 million in gas revenues to cover greater increases in property taxes and medical costs for employees. Base delivery rates on Long Island have not gone up since 1996. The one-time increase freezes rates to 2012, representing a single increase in 16 years.

In addition, the agreement presents National Grid with the option to enter into a long-term, fixed-price contract for all output from the 2,450-megawatt Ravenswood Generating Station in Queens, N.Y. National Grid will have up to three years to complete that option or divest the station.

In addition to the staff of the New York Department of Public Service and the companies, other parties participating in the agreement are New York State Consumer Protection Board, City of New York, Public Utility Law Project, and the International Brotherhood of Electrical Workers Locals 1049, 1381 and 97.

The settlement is subject to review by the administrative law judges overseeing the merger case and the review and approval of the New York State Public Service Commission.

The current schedule for the regulatory process calls for the proposal to be considered at the August 22 New York Public Service Commission meeting.

Approval by the New York Public Service Commission is one of the last remaining reviews required in the merger, which was announced on Feb. 27, 2006. Approval of a settlement with the staff of the New Hampshire Public Utilities Commission and other New Hampshire parties is pending. All other major approvals and clearances for the merger have been received.

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