Trading Statement

National Grid Group PLC
24 September 2002

24 September 2002

National Grid pre-close trading update for six months ending 30 September 2002

National Grid Group plc (National Grid) is today starting its usual analyst
briefings ahead of the close period prior to the announcement, on 26 November,
of its Interim results for the six months ending 30 September 2002. The
following information will be provided:

Key points

  • UK transmission operating profits expected to be higher than in the
    equivalent period last year.
  • Integration of US businesses being delivered ahead of schedule.
  • Significant progress made in exiting all alternative telecoms investments.
    Confident of exit by financial year end, within existing financial
    provisions.
  • Merger with Lattice on track for completion this autumn.

Electricity

The UK transmission business has continued to trade strongly with an
approximately 10 per cent real reduction in controllable costs over the same
period last year. We have made good progress over the summer on this year's
Balancing Services Incentive Scheme, including the successful introduction of a
one-hour gate closure on 2 July. Overall profits are therefore expected to be
higher than the equivalent period last year.

Integration of our US businesses is being delivered ahead of schedule, with a
reduction in controllable costs of approximately 5 per cent real.

In our New England business, excluding an expected reduction in operating
profits from interconnectors and generation and stranded costs, underlying US
dollar profits are expected to be slightly ahead of the same period last year.
Operating profit from our New York business (where second half profits,
particularly from gas, are normally higher) is expected to be around £200
million.

A significantly weaker US dollar over the period will affect US operating
profits. However, beneficial effects on interest, goodwill amortisation, tax and
minority interests will mean that, overall, the US dollar exchange rate is not
expected to have a material impact on earnings per share.

Operating profits from Transener are expected to fall substantially as a result
of the devaluation of the Argentine peso.

Telecoms

Our share of pre-exceptional operating losses from telecoms joint ventures and
associates is expected to be slightly lower than last year, largely as a result
of continued improvements at Intelig. Because our telecoms joint ventures are
fully written down, their pre-exceptional operating losses are offset by
equivalent exceptional credits.

As Energis went into administration during the period, we no longer treat
Energis as an associate and we will not be including any losses from it in our
half year results, or in future periods. Our investment in Energis was fully
written down at 31 March 2002.

We have reached agreement to restructure the shareholdings of Energis Polska,
such that our stake falls below 20 per cent. We have agreed the sale of our
stake in Silica to management, and are in advanced discussions to find a
solution for Manquehue net and Intelig before the end of our financial year. We
remain confident we will complete our exit from all these businesses within the
financial provisions made last year.

Other items

Net debt is expected to have fallen by £0.5 billion from the year end, largely
as a result of the depreciation of the US dollar.

Net interest expense is expected to be some 90 per cent higher than in the first
half last year, primarily due to increased debt associated with the acquisition
of Niagara Mohawk, partially offset by a weaker US dollar.

Exceptional restructuring costs in the UK and US are expected to amount to
around £30 million. Approximately half of this relates to the US integration
programme and the 'Staying Ahead' programme in the UK, with the remainder
relating to our proposed merger with Lattice.

In Latin America, both Transener and Intelig are expected to incur exceptional
foreign exchange losses through their interest charge. However, as explained
above, for Intelig these are balanced by equivalent exceptional credits.

Unless otherwise indicated, profit numbers are stated before exceptional items
and goodwill amortisation.

Tax charge

The effective tax rate for the half-year on profit before tax, excluding
exceptional items, is expected to be slightly above 30 per cent. We do not
expect any releases of prior year tax provisions in the half year results (£42
million of releases in first half last year).

Merger with Lattice

Our proposed merger with Lattice to form National Grid Transco remains on track
for completion during the autumn of this year.







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 the safe-harbour provisions of
the federal securities laws of the United States. These forward-looking
statements rely on a number of assumptions and are subject to a number of risks
and uncertainties, many of which are outside the control of National Grid Group
plc ('National Grid'), that could cause actual results to differ materially from
those expressed in or implied by such statements, such as future market
conditions, currency fluctuations, the behaviour of other market participants
and the actions of governmental and state regulators. Other factors that could
cause actual results to differ from those described in this material include the
ability to integrate Lattice Group plc and National Grid successfully or to
realise all of the synergies from such integration or the failure to retain key
management. For a more detailed description of these assumptions, risks and
uncertainties, please see National Grid's filings with the United States
Securities and Exchange Commission (and, in particular, the 'Risk Factors' and
'Operating and Financial Review' sections in its most recent annual report on
Form 20F). Recipients are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of publication of
this announcement. National Grid does not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of publication of this announcement.



Contacts

National Grid Group

Stephen Box, Group Finance Director

Investors

Marcy Reed         [phone] [phone](m)

Terry McCormick    [phone] [phone](m)

Louise Clamp       [phone] [phone](m)

Bob Seega          508-389-2598 (US)

Media

Clive Hawkins      [phone] [phone](m)

Citigate Dewe Rogerson: [phone]

Anthony Carlisle   [phone](m)


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