National Grid £3.6 Billion Profits Are “Shameful” In Week That Company Announce 300 Job Losses In Transmission Business
Energy prices are soaring, customers are struggling to heat and light their homes, workers are under attack but the top bosses and the shareholders are stuffing their mouths with gold says GMB
GMB, the union for workers in the energy sector, commented on the financial results for National Grid for 2012/13. See notes to editors for National Grid financial summary released on 16th May
Gary Smith GMB National Secretary for Energy, said "The company announce earnings per share up 12% in the week they announced nearly 300 job losses in their transmission business after a huge outsourcing of logistics and of first line managers jobs.
These results are on the back of many job losses of National Grid former staff now being made by the contractors they were transferred too.
The company are looking to reduce terms and conditions of employment as well as attack pensions. Then they announce these astronomical profits up 4% to £3.6bn.
Energy prices are soaring, customers are struggling to heat and light their homes, workers are under attack but the top bosses and the shareholders are stuffing their mouths with gold. It is shameful.”
Contact: Gary Smith, GMB National Secretary on 07710 618 909 or 0208 947 3131 or GMB Press Office 07921 289 880
Notes to editors
National Grid summary 16th May
Good financial results led by solid operational performance in 2012/13
Operating profit up 4% before currency movements, timing and major US storms
Profit before tax up 6%
Earnings per share up 12% to 56.1p, up 13% excluding timing and major storm impacts
Continued strong UK performance. Improved US regulated return on equity: up 40bp to 9.2%
Recommended full year dividend up 4% to 40.85p in line with one year policy
Significant strategic and regulatory progress
Agreed new eight year UK price controls covering nearly £24bn of regulated assets
Finalised four US rate cases with two others settled, pending approval: covering around 55% of US rate base
Capital investment of £3.7bn, contributing to £2.7bn growth in regulated assets
Strong financial position: issued £2bn of very competitively priced hybrid bonds
Safety and Reliability
Safety remains an essential focus
National Grid’s employee lost time injury frequency rate improved in 2012/13.
UK: Gas Distribution again met all of its reliability standards of service and Transmission delivered strong reliability during a year of record investment.
US: Teams battled exceptional weather conditions, particularly after ‘Superstorm’ Sandy, to keep customers connected to the energy they need.
We have made significant progress over the year, successfully completing a £2bn hybrid debt transaction at very competitive rates and raising £3bn of further long-term funding.
Growth and investment update
Capital investment for the year was £3.7bn, £291m higher than 2011/12 at constant currency reflecting increased expenditure in the UK Electricity Transmission business in particular.
This capital expenditure helped to grow the Group’s combined UK and US regulated assets by more than £2.7bn over the course of 2012/13.
National Grid’s UK regulated transmission and distribution businesses are expecting to invest between £2bn and £3bn p.a. over the next five years and grow the regulated asset value by around 7% p.a. Under the new UK regulatory arrangements National Grid can benefit by delivering outputs associated with this capital programme efficiently and in innovative ways, providing significant opportunities for enhancing returns.
In the US, a number of new rate plans have been agreed that include new, higher, capital expenditure plans. This investment is expected to contribute to further rate base growth of around 4-5% p.a.
Regulatory developments in UK
On 28 February 2013 National Grid agreed all of the UK RIIO (Revenue=Incentives + Innovation + Outputs) price control arrangements proposed by Ofgem in December 2012. These regulatory arrangements cover the UK Transmission and Gas Distribution businesses for the eight year RIIO period from April 2013 through to March 2021.
The Energy Bill, including Electricity Market Reform, continues its passage through Parliament. Further detail on the proposed capacity mechanism is expected in May.
Regulatory developments in US
New York: New York Public Service Commission (NYPSC) approved rate case settlements for National Grid’s Niagara Mohawk electric and gas utility businesses. The new rate plans include a three year rate period, a 9.3% allowed return on equity, a 48% equity portion in the assumed capital structure and increased operating cost allowances compared to the previous rate plans. The new rates became effective on 1 April 2013.
In October 2012: National Grid and the Long Island Power Authority ("LIPA") announced an agreement to modify and extend the existing Power Supply Agreement for at least another 12 years beyond its expiry date in May 2013. Handover of the current LIPA Management Services Agreement continues and National Grid’s involvement in the contract is scheduled to end on 31 December 2013.
In May 2013 the Massachusetts Department of Public Utilities approved collection of an additional $40m p.a. of revenue for the next three years in order to replenish the Massachusetts storm fund covering both Massachusetts Electric and Nantucket Electric. This follows a series of storms over the period 2010 to February 2013, including the recent Nemo snow storm of February 2013, the October 2011 snow storm, Hurricane Irene and Superstorm Sandy.
In December 2012, the Rhode Island Public Utilities Commission approved settlements in the 2012 Narragansett Gas and Electric rate cases which came into effect from 1 February 2013. The new rates include a 9.5% allowed return on equity, a 49% equity portion in the assumed capital structure, pension trackers and increased operating cost allowances compared to the previous rate plans.
Over the past two years, National Grid’s strategic priorities focused on delivering a step-change in US performance and agreeing a number of important regulatory arrangements in both the UK and US. As a result, National Grid’s strategic priorities for 2013/14 are:
Delivering the Group’s investment programme to create maximum value;
Driving performance against the new UK regulatory framework; and
Building upon new US rate plans and new system and process implementation to enhance customer service and efficiencies in operations.