- Home
- Highlights
- Messages to Shareholders
- Business Overview
- Board of Directors
- Operating and Financial Review
- About National Grid
- Current and future developments
- Objectives and strategy
- Key performance indicators
- Performance during the year
- Transmission
- Gas Distribution
- Electricity Distribution
- Non–regulated Businesses and other
- Discontinued operations
- Financial position and financial management
- Accounting policies
- Corporate Governance
- Directors’ Reports
- Independent Reports
- Financial Statements
- Company Financial Statements
- General Information
- Shareholder Information
Current and future developments
Regulatory developments
UK and European regulatory developments
During the year ended 31 March 2007, there were no significant changes in the legislative and regulatory framework in the UK.
In January 2007, the European Commission published its final report on its energy sector competition inquiry, concluding that further action is required to improve energy markets in the European Union. It focused on problems from high levels of market concentration as well as vertical integration of supply, generation and infrastructure leading to a lack of equal access to, and sufficient investment in, infrastructure. The report also called for improvements in the regulatory framework to remove gaps in regulation, address concerns with market concentration and increase transparency in market operations.
US regulatory developments
The principal regulatory development in 2006/07 in the US was the implementation of the Energy Policy Act of 2005, which reaffirmed a commitment to competition in wholesale power markets as national policy, strengthened the regulatory powers of the Federal Energy Regulatory Commission (FERC) and provided for development of a stronger energy infrastructure. As part of these changes the Federal Power Act of 1935, the Natural Gas Act of 1938 and the Public Utility Regulatory Policies Act of 1978 were modified, and the Public Utility Holding Company Act of 1935 was repealed and replaced by the Public Utility Holding Company Act of 2005.
Significant new or expanded responsibilities for FERC include: oversight of the reliability of the nation's electricity transmission grid; the authority to levy larger penalties to prevent market manipulation; the establishment of rules governing transmission rate incentives; the approval of the construction of transmission infrastructure in designated national interest electricity transmission corridors; and the review of certain holding company mergers and acquisitions involving utilities.
FERC has also established, through the certification of the North American Electric Reliability Council as an electric reliability organisation, a process for the establishment, approval and enforcement of mandatory electric reliability standards (including financial penalties), replacing the previous voluntary US national electric reliability standards and supplementing electric reliability standards enforced by state regulators.
The independent system operator for New England has applied to become a regional transmission organisation. As a consequence, we have applied to FERC for an increased rate of return on our investment in transmission assets in our New England operations.
We have also been pursuing a regional planning process with the New York independent system operator to identify regional transmission needs. Progress has been made and the New York independent system operator, which is in the first year of its reliability planning process, has identified reliability needs and is evaluating both regulated and market solutions to meet those needs.