National Grid Today ® ® ® ® One of the world’s largest public owned utilities focused on transmission and distribution activities in electricity and gas in both the United Kingdom and the United States March 2014 regulated assets of around £36bn generating operating profit of £3.7bn with a strong dividend Strong growth opportunities in well regulated utility markets, particularly in the UK Dividend policy effective 1 April 2013 – aim is to grow ordinary dividend at least in line with RPI for the foreseeable future Our investment proposition We aim to be a business focused on generating shareholder value through both dividends and asset/equity growth by under predominantly regulated market conditions to service low risk investing in essential assets long-term sustainable consumer led demands Reducing risk... ...Investing in essential assets... ...Our performance – returns and value added... ...Sustainable consumer-led demands Developing the business Total shareholder return Performance and returns Focus on operating performance Managing our cost base Maximising incentives ® ® ® ® Generating strong cash flows Delivering on commitments Balance of activities Regulated income growth Macro-economic protection Commodity and volume protection UK RAV Group ROE Value added per share 31 March 2014 31 March 2014 31 March 2014 31 March 2014 31 March 2014 US Rate Base Net Debt £ bn 24.9 11.4% 57.2p $ bn 16.3 £ bn 21.2 National Grid is a portfolio of distinct regulated businesses in the UK and the US and some unregulated businesses, primarily in the UK. This includes a mixture of cash generative developed assets with minimal investment requirements (such as our existing interconnectors and National Grid Metering business), businesses with low to medium levels of growth and positive cash generation (such as our US and UK distribution businesses) and businesses with high levels of investment and growth (such as our UK electricity transmission business and potential new unregulated investments). ® ® ® ® Maintaining strong credit ratings – key driver of value for the Group Low single A credit ratings for UK operating companies Majority of US OpCos rated low single A NG plc rated BBB+ ® ® Excludes $2.4bn of other regulated assets including $0.3bn of working capital outside of rate base US capex remains broadly in line with levels expected by our different regulators Core growth Additional opportunities UK and US regulated ~5% Accelerated UK load related US network modernisation US gas roll out Business development: - UK interconnectors - US transmission and repowering ® ® ® ® ® ® ® Measure of value we create at operational and group level Reflects our ability to balance growth and pay dividends ® ® Captures total return per share created on an operational basis Shows increased value created in the balance sheet, plus dividends, less increase to net debt ® ® ® Increased incentive to deliver innovative and efficient capital investments Totex regime allows opportunity to grow RAV without investment RPI inflation applies to RAV May 2014 Operating return measures Regulators Allowed United Kingdom United States Shareholder value Equity investors Achieved Group ROE Electricity Transmission Electricity Transmission 10.2% 12.4% 10.0% 12.8% 11.4% vs last year 11.7%* 9.9% 9.8% 13.0% 9.0% Gas Transmission Gas Transmission Gas Distribution Total US Gas Distribution Total US FERC Gas Distribution Gas Transmission 12.2% KEDNY KEDLI US RoE UK returns NiMo Electric Allowed returns 2013/14 RAV and Rate base Generating returns Base returns 12.4% 12.8% 13.0% Electricity Transmission RAV and Rate base £0 $0 £24.9bn $16.3bn total shareholder return = dividend yield + growth in the per share value of shareholders’ equity 2014/15 priorities ® ® ® Strong balance sheet Opportunities to improve returns Priority remains delivery of attractive total returns for shareholders ® ® ® We manage a leveraged business model to drive consistent TSR performance by providing growth in dividends and assets Balancing the rate of asset growth with secure financing produces the optimal TSR Additional investments need to enhance our TSR Conclusion and outlook Portfolio evolution Distribution Non-regulated businesses UK Transmission Growth Yield Not to scale National Grid plc 1 –3 Strand London WC2N 5EH United Kingdom www.nationalgrid.com Download our iPad app free on the App Store @nationalgridIR Andy Mead Victoria Davies Senior Investor Relations Officer T +44 (0)20 7004 3166 M +44 (0)7752 890787 [email protected] Investor Relations Officer +44 (0)20 7004 3171 +44 (0)7771 973447 [email protected] John Dawson George Laskaris Director of Investor Relations T +44 (0)20 7004 3170 [email protected] T +1 718 403 2526 M +1 917 375 0989 george.laskaris@ M +44 (0)7810 831944 US Investor Relations Director nationalgrid.com Tom Hull Caroline Dawson Investor Relations Manager +1 718 403 2487 +1 917 524 4099 [email protected] Investor Relations Manager T +44 (0)20 7004 3169 M +44 (0)7789 273241 [email protected] Further information National Grid National Grid plc Important notice This document 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 National Grid’s financial condition, its results of operations and businesses, strategy, plans and objectives. Words such as ‘anticipates’, ‘expects’, 'should', ‘intends’, ‘plans’, ‘believes’, 'outlook', ‘seeks’, ‘estimates’, ‘targets’, ‘may’, ‘will’, ‘continue’, ‘project’ and similar expressions, as well as statements in the future tense, identify forward-looking statements. Furthermore, this document, which is provided for information only, does not constitute summary financial statements and does not contain sufficient information to allow for as full an understanding of the results and state of affairs of National Grid, including the principal risks and uncertainties facing National Grid, as would be provided by the full Annual Report and Accounts, including in particular the Strategic Review section and the ‘Risk factors’ on pages 176 to 178 of National Grid's latest Annual Report and Accounts, as updated by National Grid’s unaudited half year financial information for the six months ended 30 September 2013 published on 21 November 2013 . Copies of the most recent Annual Report and Accounts are available online at www.nationalgrid.com or from Capita Registrars. Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements, which speak only as of the date of this document. The content of any website references herein do not form part of this document. 11.8% 9.5% 8.8% 8.0% 8.5% 6.4% Mass Elec Mass Gas ® ® ® ® UK and US Electricity and gas Transmission and distribution lobal functions Local expertise and g ® ® ® RPI linked UK revenues Asset growth leading to increased revenues Updated rate cases ® ® ® Bad debt trackers and credit protection UK inflation linked revenues and assets Price control ‘re-openers’ ® ® Revenue decoupling Energy commodity pass through Low carbon economy and long term growth in demand Replacing ageing assets Security of supply = system resilience NiMo Gas 10.3% Narragansett Electric 10.1% Narragansett Gas 9.9% Investment: Asset Growth 5+% pa UK Electricity Transmission UK GasTransmission UK Gas Distribution US Regulated Significant investment program Several important upgrades required Challenge to improve customer service Sustain returns and growth * Excluding major storms