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About National Grid
External market environment
The principal markets in which we operate are the electricity and gas markets in the UK and the northeastern US.
The generation and supply of electricity and gas in the UK and in most states in the northeastern US are competitive in that consumers can contract with different suppliers to obtain the energy they need. Those suppliers are then responsible for sourcing that energy from electricity generators or from gas extractors or importers as appropriate, as well as arranging for that energy to be delivered through physical delivery networks.
These networks, including the ones we operate, are generally monopolies in their local areas as, for the majority of consumers, there are no alternative methods of receiving electricity or gas.
Energy delivery in the UK
In Great Britain, domestic and commercial consumers contract with energy suppliers who obtain the electricity and gas required from electricity generators and gas shippers respectively. Gas shippers contract with gas producers or importers to deliver gas to network entry points.
In general, energy is transported through electricity or gas transmission networks to regional electricity or gas distribution networks that then deliver energy to consumers on behalf of suppliers. Certain end customers, primarily large industrial users, receive electricity or gas direct from the relevant transmission network.
We are the owner and operator of the electricity transmission network in England and Wales, operator (but not owner) of the two electricity transmission networks in Scotland and owner and operator of the gas national transmission system and of four of the eight regional gas distribution networks in Great Britain.
The other principal infrastructure owners and operators in the UK are EDF, which owns three electricity distribution networks, Scottish & Southern Energy, Scottish Power, Western Power Distribution and CE Electric UK, each of which own two electricity distribution networks and United Utilities which owns one electricity distribution network. Scottish & Southern Energy and Scottish Power also each own an electricity transmission network in Scotland, which we operate in both cases. The gas distribution networks in Scotland and southern England are owned by Scotia Gas Networks, in the north of England by Northern Gas Networks and in Wales and the west of England by Wales & West Utilities. Viridian is responsible for the transmission and distribution of electricity in Northern Ireland.
Energy delivery in the northeastern US
In most states in the northeastern US, consumers are able to purchase their energy through independent energy suppliers, but the majority of consumers still purchase electricity or gas from their local electricity or gas distribution network business. The major alternative fuel source is oil, which is used by many consumers for domestic heating purposes.
Electricity is transported either direct from generators into local electricity distribution networks or via electricity transmission networks, while gas is obtained from import terminals or interstate pipelines and then transported through local gas distribution networks. Certain end customers, primarily large industrial users, receive electricity or gas direct from the electricity transmission networks or inter-state pipelines. Electricity transmission and distribution networks, including the ones we own, are members of the regional transmission operators or independent system operators that have the responsibility for balancing electricity supply with demand and for the reliability of the regional transmission network. Gas distribution networks, including our New York and Rhode Island gas distribution networks, are each responsible for balancing gas supply with demand in their distribution area.
Our US electricity and gas distribution businesses promote competition by encouraging customers to purchase their energy from independent suppliers. Where this occurs, we deliver that energy to consumers on behalf of those suppliers. For the majority of consumers in our operating areas who continue to purchase their energy from us, we source energy from electricity generators or gas suppliers on behalf of our customers in accordance with regulatory approved arrangements. We charge customers for that commodity in addition to delivery or other cost pass-through charges; however, we do not charge a margin on the electricity and gas itself.
There are more than 25 companies and organisations that own or operate energy delivery infrastructure in the northeastern US, including Consolidated Edison, Dominion and Northeast Utilities, in addition to National Grid and KeySpan.
Other markets in which we operate
Our other businesses, with the exception of discontinued operations, primarily operate in energy related markets in the UK or are directly connected to our regulated businesses described above. Although there is now a competitive market for metering services in the UK, in which we participate, we are also the owner of a legacy portfolio of gas meters comprising the majority of the gas meters in operation in the UK.