Fthr re Niagara Mohawk

National Grid Group PLC
12 October 2001



                    National Grid and Niagara Mohawk File

                    Ten-year Incentivised Rate Settlement


National Grid and Niagara Mohawk have filed a 10-year negotiated rate
settlement with the New York Public Service Commission (NYPSC). This is the
next key step in the completion of National Grid's proposed $3 billion (£2
billion) acquisition of Niagara Mohawk and provides, among other things, a
framework for how the merger savings are proposed to be shared between Niagara
Mohawk's customers and National Grid's investors.


The plan is the first of this duration to be agreed by the New York regulatory
staff and offers a decade of regulatory stability with incentives to
outperform.


The major benefits for Niagara Mohawk customers are:


  * an 8% reduction in delivery rates upon completion of the acquisition
    (equivalent to $160 million a year)

  * delivery rates then fixed for 10 years, subject to limited adjustments

  * commitment to an agreed service plan, ensuring improved customer service
    and reliability


For National Grid shareholders, the key benefits are:


  * an allowed 10.6% post tax return on equity after equal sharing of the
    merger savings attributable to New York

  * retention of 100% of outperformance up to a post tax return on equity of
    11.75%

  * sharing with customers of further savings above 11.75%

  * continuation of full pass through of commodity cost charges to customers


Roger Urwin, Chief Executive of National Grid Group said, 'This plan is good
news for Niagara Mohawk customers and good news for National Grid investors.
It gives customers lower prices and improved quality of service. It gives
National Grid shareholders regulatory stability and the opportunity for
enhanced returns. This rate plan very much underscores the benefits of our
acquisition of Niagara Mohawk which will enhance Group earnings per share
after goodwill amortisation but before exceptionals in the first full year of
ownership. It also gives us confidence that we will meet our target of a 10.5%
pre-tax return on investment for our enlarged US business by March 2005.'


The agreement is based on the assumption of total annual savings of $190
million. Of this, $60 million a year is carried forward from Niagara Mohawk's
existing PowerChoice agreement which reflected efficiency gains following
divestiture of its generating business.


The remaining $130 million a year arises from merger-related savings. This is
an increase from the annual savings of $90 million estimated when the
acquisition was first announced and represents 13% of the enlarged US business
controllable cost base. Some $80 million a year of these merger-related
savings are assumed to be achieved in Niagara Mohawk's New York operations,
with the balance of $50 million to be achieved in National Grid's existing New
England operations. The agreement assumes that the savings are achieved within
four years of completion with half of these savings anticipated in the first
year.


The customer rate reductions are achieved both by sharing the merger and
efficiency savings attributable to New York operations and through extending
the period during which Niagara Mohawk's stranded costs are recovered.


The agreement also extends Niagara Mohawk's current gas rate settlement by 16
months until the end of December 2004.


The rate settlement is supported by the Staff of the NYPSC, a number of State
agencies, and consumer, business, and environmental groups and is now subject
to review and approval by the full NYPSC and the Securities and Exchange
Commission. When these approvals are received, the National Grid acquisition
of Niagara Mohawk will remain on track for completion early in the New Year.


National Grid and Niagara Mohawk announced on 5 September 2000, the signing of
a $3 billion Merger Agreement under which National Grid will acquire all of
the outstanding shares of Niagara Mohawk. Upon completion, more than 60% of
National Grid's operating profits will come from the US. The enlarged company
will have the largest transmission network and distribution business in the
New York/New England market, and will be the 9th largest electric utility in
the US.


ENQUIRIES:


National Grid:


Investors

Marcy Reed [phone] [phone](m)

Terry McCormick [phone] [phone](m)


Media

Susan Stevens [phone] [phone](m)

Clive Hawkins [phone] [phone](m)


Citigate Dewe Rogerson: [phone]

Anthony Carlisle [phone](m)




Summary materials available via www.nationalgrid.com on the investors page.


Analyst calls:

First call:

09:00 BST (04:00 EST)

UK: [phone] or [phone]

replay [phone] (access code 693232)

US: [phone]

replay [phone] (access code 693232)

Replay is available until Monday 22 October 2001


Second call:

09:30 EST (14:30 BST)

US: [phone]

replay [phone] (access code 693242)

UK: [phone] or [phone]

replay [phone] (access code 693242)

Replay is available until Monday 22 October 2001




These materials contain certain statements that are neither reported financial
results nor other historic information. These statements are forward looking
statements within the meaning of the safe-harbour provisions of the U.S.
federal securities laws. Because these forward-looking statements are subject
to risks and uncertainties, actual future results may differ materially from
those expressed in or implied by the statements. Many of these risks and
uncertainties relate to factors that are beyond the companies' ability to
control or estimate precisely, such as future market conditions and responses
by competitors to deregulation and open access rules, new regulatory or
legislative requirements, the future actions or decisions of federal or state
governmental regulators, the timing and extent of changes in supply and demand
of, and prices of, gas and electricity and other risk factors detailed in
National Grid's and Niagara Mohawk's reports filed with the SEC. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this document. The companies do not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
of these materials.