Acquisition

National Grid PLC
16 February 2006



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                               AUSTRALIA OR JAPAN


16 February 2006

   NATIONAL GRID ANNOUNCES AGREEMENT TO ACQUIRE RHODE ISLAND GAS DISTRIBUTION
                      BUSINESS FROM SOUTHERN UNION COMPANY

• Rhode Island gas distribution business to be acquired from Southern
  Union Company for $575m (£329m)

   • Significantly expands National Grid's gas distribution activities in the
     Northeastern US
   • Strong overlap with National Grid's existing electricity distribution
     operations creates synergy potential

National Grid plc ('National Grid') today announces that it has reached
agreement with Southern Union Company ('SUG') to acquire its Rhode Island gas
distribution business for a cash consideration of $498m (£285m), along with the
assumption of $77m (£44m) of debt. The consideration also includes a
reimbursement for working capital and a benefit from step up in tax basis
available under US tax regulations for an asset sale.

SUG's Rhode Island gas business serves approximately 245,000 customers through a
distribution network of over 3,000 miles of mains. The network substantially
overlaps National Grid's existing electricity distribution company in Rhode
Island, which serves approximately 477,000 customers. This strong overlap is
expected to create opportunities for savings.

The acquisition also increases the size of National Grid's US gas operations and
reinforces its position as a leading player in energy distribution in the
Northeastern US. The rates for SUG's Rhode Island gas distribution business are
set by the same state regulators as National Grid's electricity distribution
company in Rhode Island. Both businesses have a history of performing under
incentive based rate plans which provide substantial benefits to customers and
shareholders.

The transaction is expected to enhance National Grid's earnings per share
(before exceptional items), immediately following completion. The consideration
will be satisfied by general corporate debt.

Michael E. Jesanis, President and Chief Executive Officer of National Grid's US
business said,

'This transaction is a natural for us and is right in our backyard. But even
more importantly, our company has provided utility service in Rhode Island for
more than a century. We are looking forward to serving the additional one
quarter million gas consumers in Rhode Island.'

Mr. Jesanis added, 'National Grid delivers gas to 11 million homes in the UK and
565,000 customers in upstate New York. Our new customers will reap the benefits
of our considerable international expertise in developing and implementing new
technologies and innovations that enable us to serve customers safely, reliably
and efficiently.'

The transaction is subject to approval by Rhode Island regulatory authorities
and clearance under the Federal Hart-Scott-Rodino Act. The sale is expected to
close in the summer of 2006.

Rothschild acted as financial adviser to National Grid on the transaction.

For ease of reference, in this document, all currency conversions between pounds
sterling and US dollars have been made at a rate of $1.75:£1.00.

Contact details:

National Grid
Investors
David Campbell [phone] [phone](m)
Richard Smith [phone] [phone](m)
James Waite [phone] [phone](m)

Media
Clive Hawkins [phone] [phone]

Citigate Dewe Rogerson
Anthony Carlisle [phone] [phone](m)




Cautionary statement

This announcement 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. Because these forward-looking statements are subject to assumptions,
risks and uncertainties, actual future results may differ materially from those
expressed in or implied by such statements. Many of these assumptions, risks and
uncertainties relate to factors that are beyond National Grid's ability to
control or estimate precisely, such as delays in obtaining, or adverse
conditions contained in, regulatory approvals, competition and industry
restructuring, changes in economic conditions, currency fluctuations, changes in
interest and tax rates, changes in energy market prices, changes in historical
weather patterns, changes in laws, regulations or regulatory policies,
developments in legal or public policy doctrines, the impact of changes to
accounting standards, technological developments, the failure to retain key
management, the availability of new acquisition opportunities or the timing and
success of future acquisition opportunities. Other factors that could cause
actual results to differ materially from those described in this announcement
include the ability to continue to integrate the US and UK businesses acquired
by or merged with National Grid, the failure for any reason to achieve
reductions in costs or to achieve operational efficiencies, unseasonable weather
impacting on demand for electricity and gas, the behaviour of UK electricity
market participants on system balancing, the timing of amendments in prices to
shippers in the UK gas market, the performance of National Grid's pension
schemes and the regulatory treatment of pension costs, the impact of the
separation and sale by National Grid of four of its UK gas distribution networks
and any adverse consequences arising from outages on or otherwise affecting
energy networks owned and/or operated by National Grid.

For a more detailed description of these assumptions, risks and uncertainties,
together with any other risk factors, please see National Grid's filings with
the US Securities and Exchange Commission (and in particular the 'Risk Factors'
and 'Operating and Financial Review' sections in its most recent annual report
on Form 20-F). Recipients are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
announcement. National Grid does not undertake any obligation to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date of this announcement.

Notes to Editors

National Grid plc

National Grid is an international energy delivery business, whose principal
activities are in the regulated electricity and gas industries. It owns the
high-voltage electricity transmission system in England and Wales and operates
the system across Great Britain. It also owns and operates the high pressure gas
transmission system in Britain and its distribution business delivers gas to 11
million homes and businesses in Britain.

The Group has electricity transmission systems in northeastern US, and
distributes electricity in the Northeastern US to approximately 3.3 million
customers, and gas in upstate New York to around 565,000 customers.

National Grid also has a number of businesses operating in related areas such as
wireless infrastructure for broadcast and telecommunications, metering, and
interconnectors. It also operates a liquefied natural gas importation terminal.

Southern Union Company

Southern Union Company is engaged primarily in the transportation, storage and
distribution of natural gas. Through Panhandle Energy, the company owns and
operates 100% of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea
Robin Pipeline Company, Southwest Gas Storage Company and Trunkline LNG Company
- one of North America's largest liquefied natural gas import terminals. Through
CCE Holdings, LLC, Southern Union also owns a 50% interest in and operates the
CrossCountry Energy pipelines, which include 100% of Transwestern Pipeline
Company and 50% of Citrus Corp. Citrus Corp. owns 100% of the Florida Gas
Transmission pipeline system. Southern Union's pipeline interests operate
approximately 18,000 miles of interstate pipelines that transport natural gas
from the San Juan, Anadarko and Permian Basins, the Rockies, the Gulf of Mexico,
Mobile Bay, South Texas and the Panhandle regions of Texas and Oklahoma to major
markets in the Southeast, West, Midwest and Great Lakes region. Through its
local distribution companies, Missouri Gas Energy, PG Energy and New England Gas
Company, Southern Union also serves approximately one million natural gas
end-user customers in Missouri, Pennsylvania, Rhode Island and Massachusetts.





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