James Ross Chairman, National Grid

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James RossChairman, National Grid
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Presentation team

• James Ross Chairman, National Grid
• Sir John Parker Chairman and Acting Chief
  Executive, Lattice
• Roger Urwin Chief Executive, National Grid
• Steve Lucas Finance Director, Lattice

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Creating a world class energy delivery group

• A recommended merger of equals
• Complementary businesses creating shareholder
  value
• No alteration of UK competitive landscape
• Enable further savings within UK businesses
• Financial strength and skills to secure
  opportunities overseas

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Sir John Parker Chairman and Acting Chief
Executive, Lattice
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Merger details

• Excellent fit
• Unique platform for growth
• 0.375 National Grid share for each Lattice share
• Ownership split National Grid 57.3 / Lattice
  42.7
• Strong and balanced Board
• Dividend policy targets 5 real growth p.a.
• Transaction closure expected Autumn 2002

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Roger UrwinChief Executive, National Grid
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Shared vision and strategy

• Enlarged UK business
• Implications for US business
• Expanded growth opportunities

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Driving efficiency

• Timing right
• Both companies confident of exceeding Ofgem
  targets
• National Grid to deliver additional 10 cost
  savings worth 80 million
• Lattice confident more to come

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Merger benefits

• At an annualised rate of 100 million by end of
  first full financial year
• Consolidate head offices
• Consolidate UK network headquarters
• Rationalise support services
• Share information systems
• Further savings to be quantified
• Combination of UK transmission businesses
• Sharing of best practice
• Further financial synergies
• Structural flexibility from separate price
  controls for LDZs
• Integration of Towers businesses

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Niagara Mohawk integration well on track

• On target to deliver 10.5 pre-tax nominal ROI by
  March 2005
• Management organisation in place
• Half of planned headcount reductions achieved by
  this summer
• Merger will not distract US integration activities

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A platform for growth
Opportunity to leverage best practice in gas and
electricity in the US
Electricity delivery costs per customer in
Northeast USA
Gas delivery costs per customer in Northeast USA
NG New England
Regional US gas utilities
Regional US electric utilities
Transco
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World class energy delivery company

• Distinctive strategy
• Strong management team
• Enhanced financial flexibility to pursue growth
  opportunities

Creating substantial shareholder value
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Steve LucasFinance Director, Lattice
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A leading international utility

• Earnings enhancing for both companies
• UK RAB 18 billion, US asset base 7 billion
• Revenues 9 billion, operating cash flow c. 3.5
  billion
• Market capitalisation around 15 billion
• Largest UK utility, FTSE top 20

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Strong capital structure

• Financial synergies / outperformance
• Seek to maintain single A credit ratings
• Capacity for investment

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Real dividend growth

• Policy - target 5 real growth to March 2006
• Base of 16.04p for 2001/02
• National Grid shareholders
• Proposed final dividend of 9.58p for year ended
  March 2002
• Lattice shareholders
• Will receive second interim dividend of 5.4p
  announced in February 2002
• No final dividend

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Next steps and outline timetable

• Scheme of Arrangement
• UK/US regulatory approvals - initial contact made
• Regulatory clearances - Autumn 2002
• Shareholder documentation - posted by end of June
• National Grid and Lattice EGMs to approve
  transaction - July
• Primary listing in London, ADS listing in New York

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Financial summary

• Robust balance sheet
• Strong predictable cashflows
• Enhanced earnings
• Attractive dividend policy

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2002 Timetable

• Announcement of National Grid results May 30
• SEC application made May
• Shareholder documentation posted (circulars and
  listing particulars) end of June
• Lattice AGM July 15
• National Grid AGM July 23
• Expected DTI, Ofgem and OFT clearance by end
  July
• SEC clearance autumn 2002
• National Grid Transco interim results
  announcement November/December

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National Grid Transco Creating a world class
energy delivery group

• 22 April 2002

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Disclaimer
DISCLAIMER This presentation contains certain
statements that are neither reported financial
results nor other historic information. These
statements are forward-looking statements
within the meaning of the safe-harbor provisions
of the U.S. federal securities laws. Because
these forward-looking statements are subject to
risks and uncertainties, actual future results
may differ materially from those expressed in or
implied by the statements. Many of these risks
and uncertainties relate to factors that are
beyond the companies ability to control or
estimate precisely, such as future market
conditions, currency fluctuations, the behaviour
of other market participants and the actions of
governmental regulators. Other factors that could
cause actual results to differ materially from
those described in this presentation include the
ability to integrate successfully Lattice Group
plc within the National Grid Group plc or to
realise synergies from such integration or the
failure to retain Lattice Group plc management
and other risk factors detailed in National Grid
Group plcs reports filed with the SEC or in
material furnished to the SEC by National Grid
Group plc or Lattice Group plc. Readers are
cautioned not to place undue reliance on these
forward-looking statements, which speak only as
of the date of this presentation. The companies
do not undertake any obligation to publicly
release any revisions to these forward-looking
statements to reflect events or circumstances
after the date of this presentation. This
presentation is being made only to and is
directly at (a) persons who have professional
experience in matters relating to investments
falling within Article (1) of the Financial
Services and Markets Act 2000 (Financial
Promotion) Order 2001 (the Order) or (b) high
net worth entities, and other persons to whom it
may otherwise lawfully be communicated falling
within Article 49(1) of the Order and (c) persons
who receive this presentation in the course of a
business which involves the dissemination through
a publication of information falling within
Article 47 or the Order (all such persons
together being referred to as relevant
persons). Any person who is not a relevant
person should not act or rely on this
presentation or any of its contents. This
presentation does not constitute an offer to sell
or invitation to purchase any securities or the
solicitation of any vote or approval. Unless
otherwise determined by National Grid Group plc
and Lattice Group plc and permitted by applicable
law and regulation, the terms of the Merger will
not be made, directly or indirectly in or into,
or by the use of mails of, or by any other means
or instrumentality (including, without
limitation, telephonically or electronically) or
interstate or foreign commerce of, or of any
facility of a national securities exchange of
Canada, nor will it be made in or into Australia
or Japan. Accordingly, unless otherwise
determined by National Grid Group plc and Lattice
Group plc and permitted by applicable law and
regulation, neither copies of this presentation
nor any other documents relating to the Merger
are being, or may be, mailed or otherwise
forwarded, distributed or sent in or into
Australia, Canada or Japan and persons receiving
such presentation (including custodians, nominees
and trustees) must not distribute or send them
into, or from such jurisdiction. The release,
publication or distribution of this presentation
in certain jurisdictions may be restricted by law
and therefore persons in such jurisdictions into
which this presentation is released, published or
distributed should inform themselves about and
observe such restrictions. Receipt of this
presentation will not constitute an offer in
those jurisdictions in which it would be illegal
to make the offer and in such circumstances it
will be deemed to have been sent for information
purposes only.