National Grid reaches definitive agreement with Alliance Companies to manage Alliance Transco

WESTBOROUGH, Mass., Nov. 2, 2001 – National Grid and the Alliance Companies have executed a definitive Participation Agreement that details the terms for National Grid to be Managing Member of the Alliance Transco.

The agreement, filed at the Federal Energy Regulatory Commission (FERC) yesterday, expands upon the Alliance’s August 27 FERC filing which outlined the essential terms of the Alliance Transco/National Grid relationship.

The Alliance Transco is a proposed, for-profit independent transmission company whose member companies operate 51,400 miles of transmission in 11 states stretching from Missouri to Virginia. Upon approval by the FERC, and the fulfillment of other conditions, the Alliance would operate as a Regional Transmission Organization (RTO).

The Participation Agreement calls for a number of other agreements to be executed upon receipt of FERC approval and fulfillment of other conditions.

These include: a “Master Agreement” that sets out National Grid’s obligations to invest in the Alliance and the Alliance members’ right to divest transmission assets into the RTO; a “Limited Liability Agreement” that delineates the terms of ownership and management of the RTO; and an “Operation Agreement” which spells out the terms under which the RTO will exercise functional control of the transmission systems of non-divesting Alliance Companies.

“Today brings us closer to the formation of the nation’s first for-profit RTO, and the realization of the FERC’s goal to reshape electricity markets to enhance reliability, encourage cost-effective service to customers, and promote a competitive marketplace,” said Rick Sergel, National Grid USA president and chief executive officer.

National Grid Group plc (LSE,NYSE:NGG) is an international, U.K.-based company that builds, owns and manages electricity and telecommunications networks. National Grid USA is a wholly owned subsidiary of National Grid Group, and is headquartered in Massachusetts.

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