Utility Week

UTILITY Week 13th November 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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This week GDN sale to complete by 2017: National Grid Transmission operator confirms it is to sell a majority stake in its gas distribution businesses N ational Grid is to move ahead with the sale of a majority stake in its gas distribution businesses within the final months of this financial year, with a close by early 2017. The sale of the assets, said to be worth around £11 bil- lion, "will realise some of the value we have created for our shareholders", the company said in its first-half financial results on Tuesday. According to weekend reports, talks for the deal are at an early stage and no financial adviser has yet been appointed. But finance director Andrew Bonfield told Utility Week that pension funds and sovereign wealth funds are all possibilities. He said there could also be interest from existing networks companies. The sale, which will not include metering or transmis- sion assets, is expected to bolster the company's already strong asset base profile in a boon for shareholders. The transmission operator posted a 22 per cent increase in its earnings per share over the first half of this financial year. Jefferies analyst Peter Atherton said the better-than-expected result follows a £181 million year-on-year increase in the profitability of its "other activities". This was driven by a share exchange gain in the US of £49 million, lower US corporate costs of £67 million and increased UK property sales of £35 million. Overall, National Grid reported a 14 per cent increase in operating profit. Adjusted operating profit for the first half of 2015 was £1.83 billion, compared with £1.61 bil- lion in first half of 2014. JA WATER Super sewer to bring £13bn of benefits The Thames Tideway super sewer is set to bring benefits of almost £13 billion to the environ- ment, according to the govern- ment's latest estimates. Fresh analysis shows the benefits to London's natural environment, including prevent- ing millions of tonnes of sewage flowing into the river and improving water quality in the city, are likely to outweigh the £4.1 billion build costs. Environment minister Rory Stewart said: "This new research reveals the tunnel will bring up to £13 billion-worth of benefits to the capital's natural environ- ment. It will mean we will have cleaner water for all to enjoy and improved water quality to better protect the Thames' precious marine wildlife." WATER Yorkshire Water invests in telemetry Yorkshire Water is to invest £46 million in renewing and improv- ing telemetry equipment that helps control water distribution, quality and treatment through- out its region. The investment over the next five years will include the replacement of critical control systems that remotely manage much of Yorkshire's water infra- structure, such as the firm's 600 wastewater treatment works, 130 reservoirs and numerous storm water pumping stations. Nearly half of the money (£21 million) will be spent on updat- ing some 2,000 instruments that are used to measure water qual- ity and control water flow. A further £18 million will be spent on communication sys- tems, which relay performance data from infrastructure assets to the company's head office in Bradford, while £7 million will be invested in site automation. GAS Third Energy's shale gas plans delayed Gas developer Third Energy has suffered a setback as its application to frack its existing well in Kirby Misperton has been delayed. North Yorkshire County Council was due to make a deci- sion on the company's planning application to test for shale gas by 18 November. However, aer receiving further information from Third Energy, the council this week said it had launched a further 21-day consultation period, meaning planning offic- ers will miss this deadline. The planning authority said: "All formal responses from external organisations and our internal departments will be required by the closing date of 25 November." Gas distribution: sale of assets worth £11 billion Company focus REVENUE* £3.1bn £8.5bn £28.5bn 4,042 20,062 National Grid plans to sell its £11 billion gas distribution assets with all net proceeds to flow back to shareholders. In the previous financial year this part of the business accounted for almost 20 per cent of the operating profit. Finance & Investment UTILITY WEEK | 13TH - 19TH NOVEMBER 2015 | 15 £15.2bn total £3.9bn total £37.0bn total 24,104 total £13.4bn £0.8bn £1.8bn OPERATING PROFIT* REGULATED ASSETS* EMPLOYEES** Other NG operations UK gas distribution *Financial data taken from FY2014/15 results **Average, excluding contractors Source: National Grid

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