Update on KeySpan Acquisition

National Grid PLC
09 July 2007


9 July 2007


                               National Grid plc

                 UPDATE ON NATIONAL GRID ACQUISITION OF KEYSPAN


National Grid announced on 6 July 2007 that it had reached an agreement in
principle with the staff of the New York State Department of Public Service and
several other parties regarding the acquisition of KeySpan. Formal documentation
of the settlement terms has now been filed with the New York State Public
Service Commission (NYPSC).


This settlement brings significant benefits to customers and shareholders.
Highlights of the agreement include:


Five year gas rate plans beginning 1 January 2008. In New York City base
delivery rates will be frozen at current levels for the rate plan duration. Base
delivery rates on Long Island will rise by $60m in 2008 to reflect higher costs
and be frozen at that level for the remainder of the rate plan.


50/50 earnings sharing from a 10.6% return on equity (RoE)*. From a base allowed
RoE of 9.8% National Grid will retain all earnings up to 10.6% RoE. Above this
level, earnings sharing factors apply, beginning at 50/50, with customers
benefiting fully from any earnings in excess of a 13.6% RoE. The regulatory
return on equity is calculated using a 45% equity capitalisation.


50/50 sharing of merger savings. The identified annual synergy savings arising
from the merger and accruing to the New York City and Long Island gas businesses
are shared equally with customers, and are excluded from the calculation of
earned returns. The associated costs to achieve are recovered over ten years
with a return.


Ravenswood power station. The agreement presents National Grid with the option
to enter into a long-term, fixed price contract for all of the output of the
Ravenswood Generating Station, a 2,450-megawatt site in Queens, New York.
National Grid will have up to three years to complete that option or divest the
site.


Deferral and true-up provisions. Provisions and deferrals allow adjustments to
rates for the reconciliation of certain costs outside of levels assumed in the
agreement. These include for instance pensions, property taxes and other
exogenous costs.


As previously announced, the latest procedural schedule indicates that the
merger approval will be placed before the NYPSC for a vote as on 22 August.
Subject to an approval vote, completion of the acquisition is expected shortly
thereafter.



* Including a 10 basis point uplift contingent on the achievement of certain
targets associated with the implementation and operation of demand-side
management programs.


Contacts


National Grid:

Investors

David Rees                  [phone]           [phone] (m)
Richard Smith               [phone]           [phone] (m)
James Waite                 [phone]           [phone] (m)

Media

Clive Hawkins               [phone]           [phone] (m)


Brunswick:

Paul Scott                  [phone]           [phone](m)


CAUTIONARY STATEMENT

This announcement contains certain statements that are neither reported
financial results nor other historical information. These statements are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These statements include information with respect to our financial
condition, our results of operations and businesses, strategy, plans and
objectives. Words such as 'anticipates', 'expects', 'intends', 'plans',
'believes', 'seeks', 'estimates', 'may', 'will', 'continue', 'project' and
similar expressions, as well as statements in the future tense, identify
forward-looking statements. These forward-looking statements are not guarantees
of our future performance and are subject to assumptions, risks and
uncertainties that could cause actual future results to differ materially from
those expressed in or implied by such forward-looking statements. Many of these
assumptions, risks and uncertainties relate to factors that are beyond our
ability to control or estimate precisely, such as delays in obtaining, or
adverse conditions contained in, regulatory approvals and contractual consents,
including those required to complete the proposed acquisition of KeySpan when or
as planned, unseasonable weather affecting the demand for electricity and gas,
competition and industry restructuring, changes in economic conditions, currency
fluctuations, changes in interest and tax rates, changes in energy market
prices, changes in historical weather patterns, changes in laws, regulations or
regulatory policies, developments in legal or public policy doctrines, the
impact of changes to accounting standards and technological developments. Other
factors that could cause actual results to differ materially from those
described in this announcement include the ability to integrate the businesses
relating to announced acquisitions with our existing business to realise the
expected synergies from such integration, the availability of new acquisition
opportunities and the timing and success of future acquisition opportunities,
the timing and success or other impact of the sales of our non-core businesses,
the failure for any reason to achieve reductions in costs or to achieve
operational efficiencies, the failure to retain key management, the behaviour of
UK electricity market participants on system balancing, the timing of amendments
in prices to shippers in the UK gas market, the performance of our pension
schemes and the regulatory treatment of pension costs, and any adverse
consequences arising from outages on or otherwise affecting energy networks,
including gas pipelines, which we own or operate. For a more detailed
description of some of these assumptions, risks and uncertainties, together with
any other risk factors, please see our filings with and submissions to the US
Securities and Exchange Commission (the 'SEC') (and in particular the 'Risk
Factors' and 'Operating and Financial Review' sections in our most recent Annual
Report on Form 20-F). Except as may be required by law or regulation, National
Grid undertakes no obligation to update any of its forward-looking statements.
The effects of these factors are difficult to predict. New factors emerge from
time to time and we cannot assess the potential impact of any such factor on our
activities or the extent to which any factor, or combination of factors, may
cause results to differ materially from those contained in any forward-looking
statement.



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