Return of Cash

National Grid Transco PLC
06 June 2005

                                                                     6 June 2005

                           National Grid Transco plc

                   £2 billion return of cash to shareholders

National Grid Transco plc ('National Grid Transco' or the 'Company') announces
that it is posting a circular to its shareholders and convening an extraordinary
general meeting, to be held on 25 July 2005, to obtain shareholder approval for
the proposed return of £2 billion of cash to shareholders.

Return of cash to shareholders

On 1 June 2005 the Company announced the completion of the sales of four of its
gas distribution networks. As previously announced, £2 billion of the cash
proceeds from the sales will be used to fund a return of cash to shareholders of
65 pence per ordinary share. This return of cash is to be implemented through an
issue of B shares and a capital reorganisation and is subject to approval by
shareholders. Subject to such approval, shareholders will receive one B share
for every existing ordinary share, and will be able to elect between the
following alternatives:

  • Single B share dividend: to receive a single dividend of 65 pence per B
    share for some or all of their B shares. Following this, the B shares for
    which a shareholder has chosen to receive the single dividend payment will
    automatically be converted into deferred shares which will have negligible
    value.

  • Initial repurchase offer: to sell some or all of their B shares to
    JPMorgan Cazenove for 65 pence per B share, free of all dealing expenses and
    commissions.

  • Future repurchase offers: to retain some or all of their B shares and have
    the opportunity to sell them on certain future dates for 65 pence per B
    share, free of all dealing expenses and commissions.

Election forms in respect of these alternatives and the circular will be sent to
shareholders on or around 15 June 2005 along with the papers for the annual
general meeting to be held on 25 July 2005. Shareholders who do not elect for
any of these alternatives will by default receive the single B share dividend
for all of their B shares.

In conjunction with the return of cash, a capital reorganisation will be
undertaken. Existing ordinary shares will be subdivided and consolidated so that
shareholders will receive 43 new ordinary shares for every 49 existing ordinary
shares they own as at 5.00pm on 29 July 2005. The intention is that, subject to
normal market movements, the share price of one new ordinary share immediately
after listing should be approximately equal to the share price of one existing
ordinary share immediately beforehand. The ratio used for the capital
reorganisation has been set by reference to the closing price of 546 pence per
existing ordinary share on 3 June 2005 (being the latest practicable date prior
to the posting of documents to shareholders on 15 June 2005) after adjusting for
the proposed final dividend of 15.2 pence per existing ordinary share. New
ordinary shares will be traded on the London Stock Exchange in the same way as
existing ordinary shares and will be equivalent to the existing ordinary shares
in all material respects, including their dividend, voting and other rights. The
effect of the consolidation will be to reduce the number of issued ordinary
shares to reflect the return of 65 pence per B share to shareholders, but
shareholders will own the same proportion of National Grid Transco as they did
previously, subject to adjustments for fractional entitlements.

A number of changes to the articles of association of the Company are required
in order to implement the return of cash.

Full details of the return of cash and associated capital reorganisation are
contained in the circular.

A separate memorandum providing details of the return of cash will be sent to
holders of American Depositary Receipts ('ADRs') and shareholders with
registered addresses in the United States ('US Shareholders') to set out the
impact of the return of cash on their holdings in National Grid Transco. In
connection with the return of cash to holders of ADRs the Company will undertake
a tender offer pursuant to the United States Securities Exchange Act of 1934 (as
amended).

Timetable

An extraordinary general meeting ('EGM') is being convened for 2.15pm or, if
later, immediately following the annual general meeting ('AGM') on 25 July 2005,
to seek shareholder approval for the return of cash to shareholders.

Expected timetable of principal events                                        2005
Ex-dividend date for the final dividend                                       8 June
Record date for the final dividend                                            10 June
Combined mailing of AGM and EGM papers                                        15 June
Latest time and date for receipt of form of proxy for EGM                     2.15pm on 23 July
EGM                                                                           2.15pm on 25 July
Latest time and date for dealings in existing ordinary shares                 4.30pm on 29 July
Record time and date for the capital reorganisation. Existing ordinary share  5.00pm on 29 July
register closed and existing ordinary shares disabled in CREST
New ordinary shares and B shares admitted to the Official List and admitted   8.00am on 1 August
to trading on the London Stock Exchange's market for listed securities
Dealings in the new ordinary shares and B shares commence and enablement in   8.00am on 1 August
CREST. New ordinary shares and B shares entered into CREST
Latest time for receipt of election forms and USE instructions from CREST     4.30pm on 5 August
holders in relation to the B share alternatives
B share record time and date                                                  4.30pm on 5 August
Single B share dividend declared and B shares in respect of which the single  8 August
B share dividend is payable convert into deferred shares
JPMorgan Cazenove accepts B Shares for purchase under the initial repurchase  8 August
offer by means of an announcement on the Regulatory News Service of the
London Stock Exchange
Despatch of new ordinary share certificates, retained B share certificates,   22 August
sale advices, cheques in respect of the single B share dividend and/or B
shares purchased under the initial repurchase offer, as appropriate and
cheques for fractional entitlements, and CREST accounts credited
Final dividend payment date                                                   24 August

In the United States, National Grid Transco will file a Tender Offer Statement
containing the circular, the US supplemental memorandum, the election form and
the letter of election and transmittal for US Shareholders and ADR holders,
respectively, and other related documentation with the Securities and Exchange
Commission (the 'SEC') on Schedule TO. Free copies of the Schedule TO and the
other related documents to be filed by National Grid Transco in connection with
the B share alternatives will be available from the date the circular and the US
supplemental memorandum are mailed to US Shareholders and ADR holders on the
SEC's website at http://www.sec.gov.

Enquiries:

National Grid Transco plc
Investors
Alexandra Lewis                             [phone]
David Campbell                              [phone]
Richard Smith                               [phone]

Media
Clive Hawkins                               [phone]

JPMorgan Cazenove, Broker to National Grid Transco
Jonathan Wilcox                             [phone]
Matthew Lawrence                            [phone]

Citigate Dewe Rogerson, PR Advisers to National Grid Transco
Anthony Carlisle                            [phone]


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