Trading Update

National Grid Group PLC
5 September 2000

        

National Grid Group trading update for the half year ending 30 September 2000

In conjunction with the announcement today of the proposed acquisition of
Niagara Mohawk, we are bringing forward our normal trading update.

Highlights
*    UK transmission in line with expectations
*    US electricity well ahead of expectations
     -    Strong volume growth
     -    Earnings enhancing after goodwill a year early
     -    Exceptional integration costs of £47 million
*    Brazil telecoms start up losses of £75 million
     -    Co-billing arrangements being introduced
     -    New tariffs from January 2001
     -    Peak operating losses in current year
     -    Sprint to resume active involvement
*    One-off impacts - £177 million benefit
     -    £17 million net interest benefit
     -    Release of £20 million tax provision
     -    £140 million exceptional tax credit
     
Electricity

National Grid's UK transmission business is trading in line with our
expectations.  RPI-x revenues for our UK transmission business are expected
to be slightly lower for the half year ending 30 September 2000 compared with
the same period last year, arising from the way in which Ofgem profiled the
current price control so that returns in this last year of the control are
lower than in earlier years.  In addition, the comparative period included
under-recovered revenues from prior years.

National Grid USA (which includes Eastern Utilities Associates (EUA) from 22
April) is performing significantly ahead of expectations and we now expect
the acquisitions of New England Electric System and EUA to be earnings
enhancing after goodwill amortisation, but before exceptional integration
costs, for the year ending 31 March 2001. This is a year earlier than we
expected at the time of announcing these acquisitions.   This performance
reflects higher than budgeted growth in volumes of electricity delivered for
the five months ended 31 August, despite a cooler summer.  The long-term rate
settlements in Massachusetts and Rhode Island allow us to benefit from this
volume growth.

The Group's electricity interests in Argentina and Zambia are performing
ahead of expectations.




Telecommunication start-ups

Our telecoms start-up joint ventures in Argentina, Chile and Poland are
performing broadly in line with our expectations.

Our share of losses of Intelig, our Brazilian telecoms joint venture, will be
significantly higher than previously expected at approximately £75 million
for the half year ending 30 September 2000, including some £6 million due to
the weakness of sterling.  The principal factor is a higher than anticipated
proportion of low margin off-peak calls, many of which have been uneconomic
for Intelig to bill.  Two of the three major regional telecoms operators have
now agreed to include Intelig's long distance call charges in their customer
bills.  Intelig is also able to introduce new tariffs from January next year.

It is expected that the current year will be the peak period of operating
losses for Intelig.

With Intelig having established its initial network and market position, and
with the rapid forecast growth in the Brazilian telecoms market, especially
in data, we maintain our considerable confidence in Intelig's potential.  The
position regarding Sprint's shareholding has now been resolved.  Sprint is
retaining its 25% stake and will resume active involvement in the management
of the venture.

Other items

The net interest charge in the current half year will include a £17 million
benefit from closing out sterling fixed-interest rate swaps originally
entered into as hedges for the Group's sterling borrowings.  These hedges are
no longer needed as a result of the reduction in our sterling borrowings due
to the partial disposal of Energis in February 2000.

The tax charge for the current half year will be reduced by the release of
£20 million of tax provisions in respect of prior year tax computations now
agreed with the Inland Revenue.

The results for the half year ending 30 September 2000 will include the
following exceptional items
* the costs associated with the integration of NEES and EUA amounting to
  some £47 million (£43 million after tax)
* a tax credit of £140 million arising from the realisation of a capital
  loss for tax purposes as a result of a Group restructuring.

Interim results

The results for the half year ending 30 September 2000 will be announced on
21 November 2000.



Contact

National Grid Group                                  44 207 312 5779
Stephen Box, Group Finance Director
Susan Stevens, Corporate Affairs        mobile         [phone]
Jill Sherratt, Investor Relations       mobile         [phone]
Diane Boddy, Investor Relations         mobile         [phone]

Citigate Dewe Rogerson                               44 207 638 9571
Anthony Carlisle                        mobile         [phone]
Duncan Murray