Definitions and glossary of terms

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O| P | R | S | T | U | V |

Our aim is to use plain English in this Annual Report and Accounts. However, where necessary, we do use a number of technical terms and/or abbreviations and we summarise the principal ones below, together with an explanation of their meanings. The descriptions below are not formal legal definitions.

A

accelerated tax depreciation: Depreciation or amortisation charges that are allowed as deductions for tax purposes. This often differs from the amount of depreciation or amortisation recorded for accounting purposes, resulting in the recognition of deferred tax.
American Depositary Shares (ADSs): Securities of National Grid listed on the New York Stock Exchange, each of which represents five ordinary shares.
Annual General Meeting (AGM): Meeting of shareholders of the Company held each year to consider ordinary and special business as provided in the Notice of AGM.

B

B shares: Non-cumulative preference shares of 10 pence nominal value each that were issued in 2005 in connection with a £2 billion return of capital to shareholders. The last remaining B shares were converted into ordinary shares in September 2007.
BETTA: The British Electricity Trading and Transmission Arrangements, being the regulations that govern our role as operator of the electricity networks in Great Britain, together with those of other market participants.
Board: The Board of Directors of the Company (for more information see here).
brownfield: The term generally used to describe previously developed land, which may or may not be contaminated.

C

consolidated financial statements: Financial statements that include the results and financial position of the Company and its subsidiaries together as if they are a single entity.
called up share capital: Shares (common stock) that have been issued and have been fully paid for.
carrying value: The amount at which an asset or a liability is recorded in the balance sheet.
Combined Code: The Combined Code on Corporate Governance, being guidance on how companies should be governed applicable to UK listed companies, including National Grid.
the Company, National Grid, we, our or us: We use terms ‘the Company’, ‘National Grid’, ‘we’, ‘our’ or ‘us’ to refer to either National Grid plc itself or to National Grid plc and its subsidiaries collectively, depending on context.
contingent liability: A possible obligation or potential liability arising from past events for which no provision has been recorded, but for which disclosure in the financial statements is made.

D

deferred tax: For most assets and liabilities, this is the difference between the carrying value for accounting purposes in the balance sheet and the amount of tax that will be deductible (or payable) for that asset or liability in future tax returns.
Dth: A decatherm, being an amount of energy equal to 1 million British thermal units (BTUs), equivalent to approximately 293 kWh.
derivative: A financial instrument or other contract where the value is linked to an underlying index, such as exchange rates, interest rates or commodity prices. In most cases, contracts for the sale or purchase of commodities that are used to supply customers or for our own needs are excluded from this definition.

E

employee engagement index: A key performance indicator, based on the percentage of favourable responses to certain indicator questions repeated in each employee engagement survey, which provides a measure of how employees think, feel and act in relation to National Grid. Research shows that a highly engaged workforce leads to increased productivity and staff retention, therefore we use employee engagement as a measure of organisational health in relation to business performance.
equity: In financial statements, the amount of net assets attributable to shareholders.

F

FERC: The US Federal Energy Regulatory Commission.
finance lease: A lease where the asset is treated as if it was owned for the period of the lease and the obligation to pay future rentals is treated as if they were borrowings. Also known as a capital lease.
financial year: For National Grid this is an accounting year ending on 31 March. Also known as a fiscal year.
FRS: A UK Financial Reporting Standard as issued by the UK Accounting Standards Board. These apply to the Company’s individual financial statements, which are prepared in accordance with UK GAAP.
FSA: The UK Financial Services Authority, the financial markets regulator, which includes regulation of companies with listed securities in the UK, including National Grid and certain of its subsidiaries.

G

Great Britain: England, Wales and Scotland.
GW: Gigawatt, being an amount of power equal to 1 billion watts (10⁹ watts).
GWh: Gigawatt hours, being an amount of energy equal to delivering 1 billion watts of power for one hour (equivalent to 3.6 million joules).

H

HSE: Health & Safety Executive, the main safety regulator in the UK.

I

IAS or IFRS: An International Accounting Standard or International Financial Reporting Standard, as issued by the International Accounting Standards Board. IFRS is also used as the term to describe international generally accepted accounting principles as a whole.
individual financial statements: Financial statements of a company on its own, not including its subsidiaries or joint ventures.
IFRIC: The International Financial Reporting Interpretations Committee, which provides guidance on how to apply accounting standards.

J

joint venture: A company or other entity which is controlled jointly with other parties.

K

KeySpan: KeySpan Corporation and its subsidiaries, acquired by National Grid on 24 August 2007.
kV: Kilovolt, being an amount of electric force equal to 1,000 volts.
kW: Kilowatts, being an amount of power equal to 1,000 watts.
kWh: Kilowatt hours, being an amount of energy equal to delivering 1,000 watts of power for a period of one hour.

L

lifetime allowance: The lifetime allowance is an overall ceiling on the amount of UK tax privileged pension savings that any one individual can draw.
LNG: Liquefied natural gas, being natural gas that has been condensed into a liquid form, typically at temperatures at or below -163°C (-260°F).
lost time injury (LTI): An incident arising out of National Grid’s operations which leads to an injury where the employee or contractor normally has time off the following day or shift following the incident. It relates to one specific (acute) identifiable incident which arises as a result of National Grid’s premises, plant or activities, which was reported to the supervisor at the time and was subject to appropriate investigation.
lost time injury frequency: The number of LTIs per 100,000 hours in a 12 month period.

M

m³: A cubic metre.
mcm: Million standard cubic metres, equivalent to approximately 35.3 million standard cubic feet.
MW: Megawatts, being an amount of power equal to 1 million watts.
MWh: Megawatt hours, being an amount of energy equal to delivering 1 million watts of power for a period of one hour.

N

New England: The term refers to a region within the northeastern US that includes the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. National Grid’s New England operations are primarily in the states of Massachusetts, New Hampshire and Rhode Island.
northeastern US: The northeastern region of the US, comprising the states of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.

O

Ofgem: The UK Office of Gas and Electricity Markets, part of the UK Gas and Electricity Markets Authority (GEMA), which regulates the energy markets in the UK.
ordinary shares: Voting shares entitling the holder to part ownership of a company. Also known as common stock. National Grid’s ordinary shares have a nominal value of 11¹⁷∕₄₃ pence.

P

PAS 55: PAS (Publicly Available Specification) 55 is a universal benchmark published by the British Standards Institution (BSI) for the optimal management of physical assets.
Personal Lifetime Allowance: The lifetime allowance applicable to individuals who registered their pre 6 April 2006 UK pension benefits for protection.
purchase accounting: The accounting process of aligning the accounting policies of an acquired business with those of National Grid and of adjusting the carrying value of assets and liabilities acquired from their previous accounting book value to their fair values at the date control was acquired by National Grid.

R

regulated controllable operating costs: Total operating costs under IFRS less depreciation and certain regulatory costs where, under our regulatory agreements, mechanisms are in place to recover such costs in current or future periods.
regulatory asset value (RAV): The value ascribed by Ofgem to the capital employed in the relevant licensed business. It is an estimate of the initial market value of the regulated asset base at privatisation, plus subsequent allowed additions at historical cost, less the deduction of annual regulatory depreciation. Deductions are also made to reflect the value realised from the disposal of certain assets that formed part of the regulatory asset base. It is also indexed to the retail price index to allow for the effects of inflation.

S

scm: Standard cubic metre, a quantity of gas which at 15°C and atmospheric pressure (1.013 bar) occupies the volume of 1m³.
SEC: The US Securities and Exchange Commission, the financial regulator for companies with registered securities in the US, including National Grid and certain of its subsidiaries.
share premium: The difference between the amounts shares are issued for and the nominal value of those shares.
subsidiary: A company or other entity that is controlled by National Grid.

T

therm: An amount of energy equal to 10,000 British Thermal Units (BTUs), equivalent to approximately 29.3 kWh, primarily used to measure natural gas.
treasury shares: Shares that have been repurchased but not cancelled.
tonne: A unit of mass equal to 1,000 kilograms, equivalent to approximately 2,205 pounds.
tonnes CO₂ equivalent: A measure of greenhouse gas emissions in terms of the equivalent amount of carbon dioxide.
TWh: Terawatt hours, being an amount of energy equal to delivering 1 billion watts of power for 1,000 hours.

U

UK: The United Kingdom, comprising England, Wales, Scotland and Northern Ireland.
UK GAAP: Generally accepted accounting principles in the UK. These differ from IFRS and from US GAAP.
Uniform Network Code: The legal and contractual framework for the supply and transport of gas in the UK, comprising a common set of rules for all industry participants which ensure competition can be facilitated on level terms.
US: The United States of America.
US GAAP: Generally accepted accounting principles in the US. These differ from IFRS and from UK GAAP.

V

vanilla return: Metric used by Ofgem to define the allowed rate of return within the price control reviews for our UK regulated businesses. Our calculation uses IFRS business performance operating profit adjusted for various items to reflect the replacement of certain IFRS based accounting treatments with a regulatory based treatment, primarily these items are depreciation, capital costs, pensions and taxation. The adjusted IFRS operating profit is divided by the regulatory asset value inflated to mid year to generate a percentage rate of return.

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Annual Report and Accounts 2008/09

Definitions and glossary of terms

Annual Report
and Accounts
2008/09