SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

£	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
R	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended 31 March 2025
OR
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
£	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	Date of event requiring this shell company report
	For the transition period from      to

Commission file number: 001-14958

NATIONAL GRID PLC

(Exact name of Registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

1-3 Strand, London WC2N 5EH, England

(Address of principal executive offices)

Justine Campbell

011 44 20 7004 3000

Facsimile No. 011 44 20 7004 3004

Group General Counsel and Company Secretary

National Grid plc

1-3 Strand London WC2N 5EH, England

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares of 12 204/473 pence each	NG	The New York Stock Exchange*
American Depositary Shares, each representing five	NGG	The New York Stock Exchange
5.602% Notes due 2028	NGG28	The New York Stock Exchange
5.809% Notes due 2033	NGG33	The New York Stock Exchange
5.418% Notes due 2034	NGG34	The New York Stock Exchange

____________

*    Not for trading, but only in connection with the registration of American Depositary Shares representing Ordinary Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None.

Securities for which there is a reporting obligation pursuant to Section15(d) of the Securities Exchange Act of 1934: None.

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of 31 March 2025 was 5,132,617,708

Ordinary Shares of 12 204/473 pence each    

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes R No £

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes £ No R

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes R No £

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).: Yes R No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R Non-accelerated filer £  Accelerated filer £ Emerging growth company £

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. R

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP £

International Financial Reporting Standards as issued by the International Financial Reporting Standards R

Other £

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 £ Item 18 £

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No R

This constitutes the annual report on Form 20-F of National Grid plc (the “Company”) in accordance with the requirements of the US Securities and Exchange Commission (the “SEC”) for the year ended 31 March 2025 and is dated 29 May 2025. Details of events occurring subsequent to the approval of the annual report on 22 May 2024 are summarised in section “Further Information” which forms a part of this Form 20-F. The content of the Group’s website (www.nationalgrid.com/uk) should not be considered to form part of this annual report on Form 20-F.

Form 20-F Cross Reference Table

Item	Form 20-F caption	Location in the document	Pages(s)
1	Identity of directors, senior management and advisors	Not applicable	—
2	Offer statistics and expected timetable	Not applicable	—
3	Key Information
	3A [Reserved]		—
	3B Capitalization and indebtedness	Not applicable
	3C Reasons for the offer and use of proceeds	Not applicable	—
	3D Risk Factors	“Additional Information—Internal control and risk factors—Risk factors”	262-268
4	Information on the company
	4A History and development of the company	“Strategic Report—National Grid at a glance”	2-3
		“Strategic Report—Chair’s statement”	4
		“Strategic Report—Chief Executive’s review”	5-7
		“Strategic Report—Our business model”	8-10
		“Strategic Report—Our business environment”	11-13
		“Strategic Report—Our strategy”	14-15
		“Strategic Report—Succeeding with our strategy”	16-17
		“Strategic Report—Our key performance indicators (KPI)”	18-21
		“Strategic Report—Our business units “—UK Electricity Transmission (UK ET)”; “—UK Electricity System Operator (ESO)”; “—UK Electricity Distribution (UK ED)”; —New England”; —New York”; “—National Grid Ventures (NGV)”; “—Other activities”	25-33
		“Strategic Report—Financial review—Capital Investment and asset growth ”	86-87
		“Financial Statements—Notes to the consolidated financial statements—1. 1. Basis of preparation and recent accounting developments—(D) Disposal of the UK Electricity System Operator (ESO)”	169
		“Financial Statements—Notes to the consolidated financial statements—1. 1. Basis of preparation and recent accounting developments—(E) Disposal of the UK Gas Transmission business”	169
		“Financial Statements—Notes to the consolidated financial statements—2. Segmental analysis—(c) Capital investment”	174
		“Financial Statements—Notes to the consolidated financial statements—3. Revenue —(c) UK Electricity System Operator”	175
		“Financial Statements—Notes to the consolidated financial statements—10. Assets held for sale and discontinued operations”	192-194
		“Additional Information—The business in detail—UK Regulation”; “—US Regulation” and “—Summary of US price controls and rate plans”	256-261
		“Additional Information—Shareholder information—Articles of Association—General”	270
		“Additional Information—Shareholder Information— Documents on display”	271
		“Additional Information—Other disclosures—Property, plant, equipment and borrowings”	277-278
		“Additional Information—Other unaudited financial information—Alternative performance measures/non-IFRS reconciliations—Capital investment at constant currency”	286

i

		“Additional Information—Want more information or help?”	302
	4B Business overview	“Strategic Report—National Grid at a glance —Our businesses”	2
		“Strategic Report—Our Business Model”	8-10
		“Strategic Report—Our Business environment”	11-13
		“Strategic Report—Our Strategy”	14-15
		“Strategic Report—Succeeding with our strategy”	16-17
		“Strategic Report—Our business units “—UK Electricity Transmission (UK ET)”; “—UK Electricity System Operator (ESO)”; “—UK Electricity Distribution (UK ED)”; —New England”; —New York”; “—National Grid Ventures (NGV)”; “—Other activities”	25-33
		“Strategic Report—Task Force on Climate-related Financial Disclosures (TCFD)”	59-77
		“Strategic Report—Financial review—Segmental operating profit”	82-85
		“Financial Statements—Notes to the consolidated financial statements—2. Segmental analysis”	172-174
		“Financial Statements—Notes to the consolidated financial statements—3. Revenue”	175-178
		“Financial Statements—Notes to the consolidated financial statements—10. Assets held for sale and discontinued operations”	192-194
		“Financial Statements—Notes to the consolidated financial statements—17. Derivative financial instruments—(b) Commodity contract derivatives”	207-208
		“Additional Information—The business in detail—UK Regulation”; “—US Regulation” and “—Summary of US price controls and rate plans”	256-261
	4C Organizational structure	“Financial Statements—Notes to the consolidated financial statements—34. Subsidiary undertakings, joint ventures and associates”
	4D Property, plants and equipment	“National Grid at a glance—Our businesses”	2
		“Strategic Report—Task Force on Climate-related Financial Disclosures (TCFD)”	59-77
		“Strategic Report—Financial review—Capital Investment and asset growth”	86-87
		“Strategic Report—Financial review—Financial Position”	88
		“Financial Statements—Consolidated statement of financial position”	166
		“Financial Statements—Notes to the consolidated financial statements—5. Exceptional items and remeasurements—“—2024—Changes in environmental provisions”	183
		“Financial Statements—Notes to the consolidated financial statements—13. Property, plant and equipment”	199-201
		“Financial Statements—Notes to the consolidated financial statements—21. Borrowings”	211-212
		“Additional Information—Other disclosures—Property, plant, equipment and borrowings”	277-278
4A	Unresolved staff comments	“Additional Information—Other disclosures—Unresolved SEC staff comments”	277
5	Operating and financial review and prospects
	5A Operating results	“Strategic Report—Our business model”	8-10
		“Strategic Report—Our business environment”	11-13

ii

		“Strategic Report—Our business units “—UK Electricity Transmission (UK ET)”; “—UK Electricity System Operator (ESO)”; “—UK Electricity Distribution (UK ED)”; —New England”; —New York”; “—National Grid Ventures (NGV)”; “—Other activities”	25-33
		“Strategic Report—Task Force on Climate-related Financial Disclosures (TCFD)”	59-77
		“Strategic Report—Financial review”	79-92
		“Financial Statements—Notes to the consolidated financial statements—2. Segmental analysis”	172-174
		“Financial Statements—Notes to the consolidated financial statements—32. Financial risk management—(c) Currency risk”	232-233
		“Additional Information—The business in detail—UK Regulation”; “—US Regulation” and “—Summary of US price controls and rate plans”	256-261
		“Additional Information—Internal control and risk factors—Risk factors—Law, regulation and political and economic uncertainty”	263
		“Additional Information—Commentary on consolidated financial statements”	295-296
	5B Liquidity and capital resources	“Strategic Report—Financial review”	79-92
		“Financial Statements—Consolidated cash flow statement”	167
		“Financial Statements—Notes to the consolidated financial statements—1.A Going concern”	168
		“Financial Statements—Notes to the consolidated financial statements—17. Derivative financial instruments”	206-208
		“Financial Statements—Notes to the consolidated financial statements—20. Cash and cash equivalents”	210
		“Financial Statements—Notes to the consolidated financial statements—21. Borrowings”	211-212
		“Financial Statements—Notes to the consolidated financial statements—29. Net debt”	225-226
		“Financial Statements—Notes to the consolidated financial statements—30. Commitments and contingencies”	227
		“Financial Statements—Notes to the consolidated financial statements—32. Financial risk management”	228-240
		“Financial Statements—Notes to the consolidated financial statements—33. Borrowing facilities”	241
		“Additional Information—The business in detail—UK Regulation”; “—US Regulation” and “—Summary of US price controls and rate plans”	256-261
		“Additional Information—Internal control and risk factors—Risk factors—Financing and liquidity”	268
	5C Research and development, patents and licenses, etc.	“Additional Information—Other disclosures—Research, development and innovation activity”	278
	5D Trend information	“Strategic Report—Our business environment”	11-13
		“Strategic Report—Task Force on Climate-related Financial Disclosures (TCFD)”	59-77
		“Strategic Report—Financial review”	79-92
	5E Critical Accounting Estimates	Not applicable	—
6	Directors, senior management and employees
	6A Directors and senior management	“Corporate Governance Report—Our Board”	99-102
	6B Compensation	“Corporate Governance Report—Directors’ Remuneration report”	121-149

iii

		“Financial Statements—Notes to the consolidated financial statements—4. Other operating costs—(c) Key management compensation”	180
		“Financial Statements—Notes to the consolidated financial statements—25. Pensions and other post-retirement benefits”	214-220
	6C Board practices	“Corporate Governance Report—Our Board”	99-102
		“Corporate Governance Report—Corporate Governance overview”	98
		“Corporate Governance Report—Audit & Risk Committee report”	112-118
		“Corporate Governance Report—Directors’ Remuneration report”	121-149
		“Additional Information—Shareholder Information—Articles of Association—Directors”	270
	6D Employees	“Strategic Report—Our business model”	8-10
		“Strategic Report—Our People”	51-54, 277
		“Financial Statements—Notes to the consolidated financial statements—4. Other operating costs—(b) Number of employees”	179
	6E Share ownership	“Corporate Governance Report—Directors’ Remuneration report—Statement of implementation of policy in 2024/25 ”	128-137
		“Additional Information—Other disclosures—All-employee share plans”	275
		“Share ownership”	“Further Information”
	6F Disclosure of a registrant’s action to cover erroneously awarded compensation	Not applicable	—
7	Major shareholders and related party transactions
	7A Major shareholders	“Additional Information—Shareholder information—Material interests in shares”	272
		“Material interests in shares”; and “Material interest in American Depositary Shares”	“Further Information”
	7B Related party transactions	“Financial Statements—Notes to the consolidated financial statements—30. Commitments and contingencies”	227
		“Financial Statements—Notes to the consolidated financial statements—31. Related party transactions”	228
		“Material interests in shares”	“Further Information”
	7C Interests of experts and counsel	Not applicable	—
8	Financial information
	8A Consolidated statements and other financial information	“Strategic Report—Chair’s statement”	4
		“Strategic Report—Financial review”	79-92
		“Strategic Report—Corporate governance overview—Key Board Activities ”	104-105
		“Corporate Governance—Audit & Risk Committee report—Significant issues/judgments relating to the financial statements—Application of the Group’s exceptional items framework”	114
		Financial Statements—“Consolidated financial statements under IFRS-Primary Statements ”	162-247
		“Financial Statements—Notes to the consolidated financial statements—5. Exceptional items and remeasurements”	181-184
		“Financial Statements—Notes to the consolidated financial statements—9. Dividends”	191
		“Reports of Independent Registered Public Accounting Firm—Audit opinions for Form 20-F”	“Further Information”

iv

	8B Significant changes	“Strategic Report—Financial Review—Post balance sheet events”	92
		“Financial Statements—Notes to the consolidated financial statements—36. Post balance sheet events”	247
		“Additional Information—Shareholder Information—Events after the reporting period”	271
		“Subsequent Events”	“Further Information”
9	The offer and listing
	9A Offer and listing details	“Additional Information—Shareholder Information—Share information”	272
	9B Plan of distribution	Not applicable	—
	9C Markets	“Additional Information—Shareholder information—Share Information”	272
	9D Selling shareholders	Not applicable	—
	9E Dilution	Not applicable	—
	9F Expenses of the issue	Not applicable	—
10	Additional information
	10A Share capital	Not applicable	—
	10B Memorandum and articles of association	“Additional Information—Shareholder information—Articles of Association”	270-271
		“Additional Information—Shareholder information—Articles of Association; — Dividend Rights"	270
		“Additional Information—Other disclosures—Change of control provisions”	276
		“Additional Information—Other disclosures—Corporate governance practices: differences from NYSE listing standards”	276
	10C Material contracts	“Additional Information—Other disclosures—Material contracts”	278
	10D Exchange controls	“Additional Information—Shareholder information—Exchange controls”	271
	10E Taxation	“Additional Information——Shareholder information—Taxation”	274-275
	10F Dividends and paying agents	Not applicable	—
	10G Statement by experts	Not applicable	—
	10H Documents on display	“Additional Information—Shareholder information—Documents on display”	271
	10I Subsidiary information	“Financial Statements—Notes to the consolidated financial statements—34. Subsidiary undertakings, joint ventures and associates”	242-245
11	Quantitative and qualitative disclosures about market risk
	11(a) Quantitative information about market risk	“Financial Statements—Notes to the consolidated financial statements—17. Derivative financial instruments”	206-208
		“Financial Statements—Notes to the consolidated financial statements—32. Financial risk management”	228-240
		“Additional Information—Internal Control and Risk factors—Risk Factors”	262-268
	11(b) Qualitative information about market risk	“Financial Statements—Notes to the consolidated financial statements—35. Sensitivities”	246-247
	11(c) Interim Periods	Not Applicable	—
	11(d) Forward looking statement safe harbor	“Additional Information—Cautionary statement”	303
12	Description of securities other than equity securities
	12A Debt securities	Not applicable	—
	12B Warrants and rights	Not applicable	—

v

	12C Other securities	Not applicable	—–
	12D American depositary shares	“Additional Information—Shareholder information—Depositary payments to the Company”	271
		“Additional Information—Definitions and glossary of terms”	297-301
		“Material interest in American Depositary Shares”	“Further Information”
13	Defaults, dividend arrearages and delinquencies	Not applicable	—
14	Material modifications to the rights of security holders and use of proceeds	Not applicable
15	Controls and procedures
	15(a) Disclosure controls and procedures	“Additional information —Internal control and risk factors—Disclosure controls”	262
	15(b) Management’s annual report on internal control over financial reporting	“Additional Information—Internal control and risk factors——Internal control over financial reporting”	262
		“Corporate Governance Report—Audit & Risk Committee report”	112-118
	15(c) Attestation report of the registered public accounting firm	“Report of Independent Registered Public Accounting Firm—Audit opinions for Form 20-F”	“Further Information”
16	16A Audit committee financial expert	“Corporate Governance Report—Our Board”	99-102
		“Corporate Governance—Audit & Risk Committee report—Committee financial experience”	113
	16B Code of ethics	“Additional Information—Other disclosures—Code of Ethics”	276
	16C Principal accountant fees and services	“Corporate Governance Report—Audit & Risk Committee report—External audit—External auditors' fees”	118
		“Corporate Governance Report—Audit & Risk Committee report—External audit—Non-audit services”	118
		“Financial Statements—Notes to the consolidated financial statements—Note 4. Other operating costs—(e) Auditors’ remuneration”	180
	16D Exemptions from the listing standards for audit committees	Not applicable	—
	16E Purchases of equity securities by the issuer and affiliated purchasers	“Additional Information—Shareholder information—Material interests in shares—Authority to purchase shares”	272
	16F Change in registrant’s certifying accountant	Not applicable	—
	16G Corporate governance	“Additional Information—Other disclosures—Corporate governance practices: differences from NYSE listing standards”	276
	16H Mine safety disclosure	Not applicable	—
	16I Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	Not applicable	—
	16J Insider Trading Policies	“Insider Trading Policy”	“Further Information” and Exhibit 11(b)
	16K Cybersecurity Disclosures
	16K(b) Risk management and strategy	“Strategic Report—Our principal risks and uncertainties—Catastrophic Cyber security risk management and strategy”	41
		“Additional Information—Internal control and risk factors—Risk factors—Cyber or physical security breaches”	265
	16K(c) Governance	“Strategic Report—Our principal risks and uncertainties—Catastrophic cyber security incident”	38
		“Strategic Report—Cybersecurity governance”	41
17	Financial statements	Not applicable	—
18	Financial statements

vi

		Financial Statements—“Consolidated financial statements under IFRS-Primary Statements ”	162-247
		“Financial Statements—Reports of Independent Registered Public Accounting Firm—Audit opinions for Form 20-F”	“Further Information”
19	Exhibits	Filed with the SEC	—

vii

Building

our energy

future

National Grid plc Annual Report and Accounts 2024/25

At National Grid, we are

driven by our purpose:

to bring energy to life

Our aim is to be at the heart of a secure, affordable and clean energy future.

We work with the wider energy industry, governments, regulators,

and the customers and communities we serve to deliver this vision.

Demand for electricity is expected to increase significantly through the

electrification of heat and transport and the energy needs of advances

in technology such as artificial intelligence. Innovation in electricity

generation, including in renewables, storage and nuclear, is driving

significant change in where and how energy is produced. There is

significant innovation in the hardware and software we use to design,

build, operate and maintain the energy networks we own.

As National Grid, our role is to deliver the network infrastructure and

energy solutions required to meet the needs of our customers and

stakeholders with this transition.

Our residential and commercial customers want access to clean,

secure and affordable energy, delivered safely and reliably across

our networks.

Energy generators and storage operators rely on our networks to

move energy to the homes and businesses who need it.

Our governments and regulators expect us to deliver network

infrastructure safely, reliably and affordably. They want our networks

to support economic growth and emissions reduction targets.

Our investors expect us to deliver an attractive proposition,

generating shareholder value through dividends and asset growth.

Across the energy sector, governments, regulators, financiers, suppliers

and customers are all playing their part in delivering the changes

needed. We play an important role and we continue to strengthen our

relationships with key stakeholders. We engage local communities on

our projects, while working with governments, regulators and our

supply chain to deliver vital energy projects at pace.

This time last year we announced an unprecedented level of investment

in our networks in the UK and US – c.£60 billion over five years, nearly

doubling our investment from the previous period. Since then, we have

scaled up our operations to deliver this level of investment in ground-

breaking projects that will expand our networks. Delivery is well under

way with a record £9.85 billion in capital investment in the year.

But it’s not just about scale. It is about how we deliver too. We are

building a culture of innovation at National Grid to ensure we make

the best use of the networks we have and deliver new network

infrastructure faster and more efficiently. We are working with our

supply chain partners and leveraging the exciting new technologies

being developed and invested in directly by our corporate venture

capital arm, National Grid Partners.

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	1
2024/25 performance highlights

Statutory operating profit	Underlying operating profit
£4,934m	£5,357m
10% y-on-y  2023/24: £4,475m	12% y-on-y  2023/24: £4,773m
Statutory earnings per share	Underlying earnings per share
60.0p	73.3p
8% y-on-y  2023/24: 55.5p	2% y-on-y  2023/24: 72.1p
(rebased)	(rebased)
Capital investment	Asset growth
£9.85bn	9.0%
20% y-on-y  2023/24: £8.24bn	-0.7% y-on-y  2023/24: 9.7%
Dividend per share	Network reliability
46.7p	99.9%
3% y-on-y  2023/24: 45.26p	2023/24: 99.9%
(rebased)
Lost time injury frequency rate per 100,000 hours worked	Scope 1 and 2 GHG emissions thousand ktCO2e
0.10	7.4
25% y-on-y  2023/24: 0.08	8.3% y-on-y  2023/24: 6.9
Employee engagement
Our most recent overall employee engagement index in our twice annual Grid:Voice survey was 80%.

	Further reading
	Throughout this report you can find links to further detail within this document.
	Online report		Alternative performance measure
	The PDF of our Annual Report and Accounts 2024/25 includes a full search facility. You can find the document by visiting our website nationalgrid.com/ investors/resources/reports-plc or by scanning the QR code below the contents list.		In addition to International Financial Reporting Standards (IFRS) figures, management also uses a number of alternative measures to assess performance. Definitions and reconciliations to statutory financial information can be found on pages 279 – 284. These measures are highlighted with the symbol opposite.
	Online content		Reporting currency
	In this report there are QR codes you can scan to view further content online. Simply open the camera app on your smartphone to scan the code.		Our financial results are reported in sterling. We convert our US business results at the weighted average exchange rate during the year, which for 2024/25 was $1.27 to £1 (2023/24: $1.26 to £1).

Strategic Report
2024/25 performance highlights	1
National Grid at a glance	2
Chair’s statement	4
Chief Executive’s review	5
Our business model	8
Our business environment	11
Our strategy	14
Succeeding with our strategy	16
Key performance indicators	18
Our stakeholders and s.172	22
Our Business Units	25
Internal control and risk management	34
Our principal risks and uncertainties	36
Responsible Business review	42
TCFD	59
NFSI Statement	78
Financial review	79
Viability Statement	93
Corporate Governance
Chair’s statement	96
Corporate governance overview	98
Our Board	99
Group Executive Committee	103
Key Board activities	104
Culture and workforce engagement	106
Board evaluation	108
Directors’ induction, development and training	109
People & Governance Committee report	110
Audit & Risk Committee report	112
Safety & Sustainability Committee report	119
Finance Committee report	120
Directors’ Remuneration Report including the Directors’ Remuneration policy	121
Financial Statements
Statement of Directors’ responsibilities	152
Independent Auditor’s report	153
Consolidated financial statements	162
Company financial statements	248
Additional Information
The business in detail	256
Internal control and risk factors	262
Shareholder information	270
Other disclosures	276
Other unaudited financial information	279
Commentary on consolidated financial statements	295
Definitions and glossary of terms	297
Want more information?	302

Read this Annual Report online

2	National Grid plc  Annual Report and Accounts 2024/25
National Grid at a glance

A vital role in transforming energy systems
			UK
National Grid businesses play a vital role in energy systems, safely and reliably connecting millions of people to the energy they use, while investing for the future to power growth, resilience and the transition to a cleaner tomorrow.
Our businesses				UK Electricity Transmission (UK ET/NGET)	UK Electricity Distribution (UK ED/NGED)
	Read more Page 25
What we do Transmission networks transport energy over long distances at high voltage (in the case of electricity) and high pressure (in the case of gas) from where it is produced and onwards to distribution networks. Distribution networks take high-voltage electricity and high- pressure gas from transmission networks and deliver it at lower voltage and reduced pressure to homes, businesses and industrial infrastructure. Supply involves buying and then selling electricity and gas on to customers, with associated customer services. Generation is the production of electricity from renewable, nuclear and fossil fuel sources. Storage are technologies such as batteries and liquified natural gas that store energy.				We own and operate the high- voltage electricity transmission network in England and Wales. This includes connecting new customers and delivering the major strategic infrastructure to enable a clean power grid.	We own and operate the UK’s largest electricity distribution network, serving customers in the East Midlands, West Midlands, South West and South Wales. This includes a Distribution System Operator (DSO) which is overseen by an independent panel.
	Read more page 9
Business split
2024/25 Regulatory asset value (RAV), rate base and other assets (% of Group)				31%	18%
2024/25 Underlying operating profit (% of Group)				27%	22%
2024/25 Capital investment (£bn)				£3.0bn	£1.4bn
	Indicates an alternative performance measure

Strategic Report Corporate Governance Financial Statements Additional Information 3

US		International
New York (NY)	New England (NE)	National Grid Ventures (NGV)	Other activities
We own and operate electricity transmission and distribution networks across upstate New York. We also own and operate gas distribution networks in New York City and on Long Island.	We own and operate electricity transmission networks in Massachusetts, New Hampshire and Vermont. In Massachusetts, we also own and operate electricity and gas distribution networks.	We develop and operate large scale energy projects across the UK and US. They represent a broad mix of energy assets and businesses, including six electricity interconnectors between the UK and Europe, US competitive transmission, power generation, liquified natural gas (LNG) import and battery storage. National Grid Renewables and Grain LNG are classified as held for sale.	Primarily National Grid Partners, the corporate venture capital and innovation arm of National Grid, plus UK property, insurance and corporate activities.
27%	14%	7%	3%
27%	17%	7%	—%
£3.3bn	£1.8bn	£0.4bn	£—bn

4	National Grid plc  Annual Report and Accounts 2024/25
Chair’s statement

Evolving

landscape

Whole-system planning, deployment of

advanced technologies and strong controls

over our processes are key to running a

business fit for the future.

Dear fellow shareholder,

Power is essential to the modern world. But

throughout my four decades in the energy

industry, networks have been of little interest

to consumers. They were simply there when

we needed them, providing reliable service.

However, a confluence of events and policies

has now placed energy networks in the public

eye.

The UK Government’s bold mission to achieve

clean power by 2030 requires a once-in-a-

generation ‘rewiring’ of the country’s

infrastructure. The US, by contrast, is focused

on energy as a key enabler of economic

growth, with an emphasis on driving the AI

revolution and reshoring of manufacturing.

Both approaches will require substantial new

energy supplies and infrastructure. And, as

we’ve seen with recent global power

interruptions, it’s not surprising that energy

infrastructure is now a more visible part of the

public discourse.

The debate boils down to resiliency and

affordability.

Given all that’s at stake, it’s fair for the public

to ask how National Grid is going to ensure

continued high levels of reliability, particularly

as power systems have increasing proportions

of renewables in the mix. Understandably, as

customers experience escalating energy

costs, regulators want to be assured that

National Grid will invest cost-effectively in

modernising its systems. And, in the

boardroom, independent directors provide a

constructive challenge to our leadership as it

maps the path forward. Whole-system

planning, deployment of advanced

technologies and strong controls over our

processes are key to running a business fit for

the future.

National Grid’s talented global workforce of

more than 30,000 employees embraces the

opportunities that come with change.

For almost ten years, we have been wisely

guided by our CEO, John Pettigrew. On

1 May 2025, we announced that John will

retire later this year after 35 years of service.

I am grateful to have learned about National

Grid’s businesses through John’s eyes and

experience. He has been a wonderful

collaborator and an exceptional leader whose

impact will be felt for years to come. On

behalf of the Board, I extend to him

heartfelt appreciation.

Our Board succession planning process has

been well embedded. As such, on 1 May, we

also announced that Zoë Yujnovich, a global

executive at Shell plc, will assume the chief

executive role at National Grid on 17

November 2025. She comes with a diverse

background in energy and natural resources,

along with a proven record in capital delivery.

We have a transition plan in place for the

handover and the company will not miss

a beat.

The energy landscape is evolving, and so is

National Grid. I feel confident that our

committed workforce, inspired by John’s

example and newly led by Zoë, will serve our

shareholders, customers and communities

well in the times ahead. Thank you for your

continued support.

Sincerely,

Paula Rosput Reynolds

Chair

14 May 2025

Final dividend of

30.88p

per share proposed to be

paid on 17 July 2025

The 2025 Annual General Meeting (AGM) of National Grid plc

will be held as a hybrid event at 11.00am on Wednesday 9

July 2025. More details on the arrangements for this year’s

AGM, including how to attend virtually, can be found at

nationalgrid.com/investors

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	5
Chief Executive’s review

Resilient,

reliable

networks

With our strategic focus on energy networks,

we are delivering our £60 billion five-year plan

at pace, building the next generation of

infrastructure and solutions needed to meet

accelerating demand for secure, affordable

and clean energy.

Context in which we are operating

After 35 years at National Grid and nearly 10

years as CEO, I recently shared my decision to

retire from the Group. It has been an immense

honour for me to lead the company I joined as

a graduate, and when I step down later this

year, I will do so knowing that we are in a

position of great strength. I also have every

confidence that my successor, Zoë Yujnovich,

is the right person to lead National Grid on the

next stage of its journey.

We are living through a period of

unprecedented change in the world, but also

one of opportunity and growth. Resilient and

reliable networks capable of meeting demand

for secure, affordable and clean energy are

essential to future prosperity, helping to

create the industries and technologies of

tomorrow, drive economic growth and

support millions of jobs.

In the UK, the Government’s mission for

clean power by 2030 is an important part of

its growth plans and aims to achieve at least

95% renewable energy by the end of the

decade. This ambitious initiative includes

major industry reforms across energy

planning, connections, supply chains

and digitisation.

In the US, we have seen a shift at the federal

level from a focus on climate to economic

competitiveness and national security. At the

state level, there is increasing focus on energy

affordability and reliability, coupled with an

ongoing debate on how to best achieve the

transition to cleaner energy. At National Grid,

we believe that strengthening and

modernising our networks is the key to helping

our regions attract investment and bolster

security of supply, while continuing to reduce

carbon emissions.

I’m pleased to say we’ve seen good progress in

our push for policies that are essential for the

energy transition and attract the investment

needed to fund the networks of the future. This

will be critical to ensuring we build the capacity

and resilience needed in the energy system.

There is particular focus on this in the UK

following the fire at our North Hyde substation

and subsequent disruption at Heathrow Airport

and the surrounding area. While transmission

power was always available to Heathrow, we

are committed to working closely with the

National Energy System Operator and our other

stakeholders to ensure any lessons are learned

and that we prevent incidents like this from

happening again.

Business highlights from the year

Against this backdrop, I’m hugely proud of all

we’ve achieved over the past 12 months.

We’re leading the industry in delivering the

next generation of networks and energy

solutions that will be fit for the 21st century.

Personal highlights for me include the

progress we’ve made with our 17 ASTI

projects and our ambitious £35 billion plan

for the transmission network in England and

Wales, which we’ve now submitted to Ofgem.

We’ve also secured seven new delivery

partners through our £9 billion Great Grid

Partnership and 10 more suppliers in our

£59 billion high voltage direct current (HVDC)

framework. Together, these initiatives

represent the biggest upgrade of the UK

energy grid in a generation.

I’m also proud of the huge strides we’ve made

through our UK Distribution System Operator

in scaling up the benefits we’ve delivered for

our stakeholders, consumers and the energy

system in the last 12 months.

6	National Grid plc  Annual Report and Accounts 2024/25
Chief Executive’s review continued

£60bn

We’ve made excellent progress in the US as

well. Our $4 billion Upstate Upgrade in New

York is on track, and we’re delivering further

gas mains replacement and network

reinforcement across the state. In

Massachusetts, our $2 billion Electric Sector

Modernization Plan was approved by the

regulator, and we achieved an important

legislative milestone on permitting reform with

the passage of the Massachusetts climate bill.

We also agreed fair new rates for our

downstate New York gas and Massachusetts

electric businesses.

In our National Grid Ventures business, we’ve

made significant progress with our pioneering

LionLink interconnector. Once complete, it will

provide another connection between the

British and Dutch electricity grids, maximising

our renewable energy resources, reducing

reliance on fossil fuels, and reinforcing security

of supply for Britain.

As with LionLink, innovation runs through

everything we do, and National Grid Partners

is an important part of that, investing in

technologies that have game-changing

potential for the future of energy. We have

invested more than $500 million in startups to

date and committed an additional $100 million

for AI startups.

Finally, as part of our refocusing on networks,

we have announced the sale of National Grid

Renewables to Brookfield for $1.7 billion and

launched the sale of our LNG facility at the

Isle of Grain.

We have achieved all this while ensuring the

safety and security of our networks, and the

reliable flow of energy for millions of homes

and businesses.

Read more: Our business units pages 25 – 33

Investment and delivering for

shareholders

We successfully completed the £7 billion Rights

Issue last Spring, an important part of our plan

to invest around £60 billion. We are grateful for

the support you, our shareholders, have shown

as we undertake this historic investment.

Capital investment was a record £9.85 billion

over the past year, in line with our plan and

20% higher than last year. This reflects the

scale of activity across all our regulated

businesses. We’ve delivered a strong

performance, with underlying operating profit

increasing 12% to £5.4 billion at constant

currency, reflecting increased regulated

revenues and flat controllable costs, and

achieved through our focus on agreeing

the right regulatory frameworks and

efficient delivery.

Five-year financial framework

2024/25 – 2028/29 announced 23 May 2024

Capital investment	Group asset growth	Underlying EPS
	c.10% CAGR1	6–8% CAGR2
	Balance sheet and ratings	Dividend and equity
	Credit metrics maintained above current rating thresholds3	Aim to grow dividend per share in line with UK CPIH4
	Regulatory gearing at 61% at March 2025, then trending back towards the high-60% range by the end of RIIO-T3	Net Rights Issue proceeds of £6.8bn in 2024/25
c.£51bn Green, directly into the decarbonisation of energy networks, aligned to EU Taxonomy
	Use of hybrid debt	Continued use of scrip dividend
	1.Group asset compound annual growth rate from a 2023/24 baseline. Forward years based on assumed USD FX rate of 1.25 and long run UK CPIH and US CPI. Based on our continuing businesses, as defined by IFRS, which included the ESO until its disposal in October 2024 and includes Grain LNG and National Grid Renewables until their planned disposals. 2.EPS compound annual growth rate from a 2024/25 baseline. Forward years based on assumed USD FX rate of 1.25, long run UK CPIH, US CPI and interest rate assumptions and scrip uptake of 25%. Based on our continuing businesses, as defined by IFRS, which included the ESO until its disposal in October 2024 and includes Grain LNG and National Grid Renewables until their planned disposals. 3.Through to at least the end of the RIIO-T3 price control period. 4.2024/25 DPS increased by 3.21% following the rebase of the 2023/24 DPS from 58.52p to 45.26p after taking account of the new shares issued following the Rights Issue.

UK ET	c.£23bn
UK ED	c.£8bn
New England	c.£11bn
New York	c.£17bn
NGV	c.£1bn

Strategic Report Corporate Governance Financial Statements Additional Information 7

National Grid is now embarking on an exciting

new phase of growth with an attractive

investor proposition underpinned by high

quality asset growth, strong earnings growth,

and an inflation protected dividend.

Empowering colleagues,

customers and communities

We are working to balance the investment

required to deliver affordable energy for our

customers with the reality that many are

struggling with a high cost of living. To help,

we have announced a new £13.8 million Grid

for Good Energy Affordability Fund. This will

run for three years, with donations to charities

and organisations providing immediate

financial relief to families and communities in

need on both sides of the Atlantic.

In the US, we continue to improve the

reliability of our customer systems. We have

launched an updated mobile app, enhanced

outage communications, and made it easier

for customers to update their communication

preferences. These improvements, amongst

others, will help us to better connect

customers with ways to save energy, manage

their bills and easily access assistance.

Our deep commitment to local communities

includes our ongoing rapid response teams. In

September 2024, nearly 150 of our crews

travelled to storm-ravaged Tennessee, Virginia

and West Virginia to assist with safety and

recovery from Hurricane Helene. In December

2024, Storm Darragh brought major disruption

across the UK. It was one of the biggest

storms to impact our network in decades and

I’m proud of our teams who managed to get

95% of the over 700,000 customers impacted

back on supply within 48 hours.

Looking ahead

After another year of strong performance, we

have a solid platform to build on. We are now

squarely focused on delivering for our

customers and communities, building and

operating the infrastructure needed to meet

accelerating demand at the right speed and

scale for the lowest possible cost.

As my time with National Grid draws to a

close, we are well positioned to take

advantage of the significant growth

opportunities ahead. It has been the privilege

of my life to lead this company over the past

decade and I’m incredibly proud of all we’ve

achieved in that time. This is down to the

unwavering commitment of our 30,000

dedicated colleagues and their relentless

focus on delivering for our customers. It is our

people that make this organisation so special.

It is also our people who give me great

confidence that, when I hand the reins to my

successor Zoë in November, National Grid will

continue to go from strength-to-strength.

John Pettigrew

Chief Executive

14 May 2025

8	National Grid plc Annual Report and Accounts 2024/25
Our business model

Building our

energy future

We are playing a key role in delivering the energy systems

of the future, working alongside partners for the benefit of our 

customers, communities, and wider society.

Our resources
Physical assets		Efficient financial capital
Our network assets are critical infrastructure. They are large and built to last. We continuously invest to maintain and upgrade them to ensure safe and reliable service, integrate new sources of power, and meet new demand.		We fund our business through a combination of equity and debt. We maintain an appropriate mix of the two and manage financial risks prudently, committing to a strong overall investment grade credit rating.
Strategic and responsible leadership		Expert colleagues
Our strategy articulates our priorities clearly and positions our business to support growth and long-term economic benefits, and a cleaner future, in the places we operate. We have well-established governance structures and controls in place to manage risk.		We are immensely proud of our people. Together we have spent decades installing and managing critical networks and systems, forging relationships, and building a culture of ambitious, diligent and passionate service.
Strong partner relationships
Customers With our customers, including the electricity generators and gas suppliers who own the energy that flows through our networks.	Contractors With our contractors who have complementary skills, experience and resources to help us get the job done.	Governments and communities With national and regional governments and local communities who support us to deliver infrastructure that meets their needs.	Regulators and agencies With the regulators and agencies who agree the prices we can charge and the amounts we can invest, as well as the health, safety and environment standards we must meet.

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	9
The role we play in energy systems

Sources of power	Generation In the US, we own and operate fossil fuel electricity generation facilities on Long Island. We also operate modern solar and battery storage projects with NextEra Energy Resources on Long Island. We facilitate the connection of energy generation assets to our transmission systems.	Integrating clean energy sources Renewables and zero carbon sources play a critical and fast-growing role in our energy systems. Facilitating connections to a wide range of clean energy sources is a fundamental part of our work. We earn a regulated return on the assets we build when extending our network to connect new energy sources.
Networks and infrastructure
	Electricity interconnection Interconnectors are high-voltage cables used to connect the electricity systems of neighbouring countries to allow the trading of excess power and balance supply and demand to maintain security of supply. We operate six interconnectors linking the UK to France, Belgium, Norway, the Netherlands and Denmark. We sell capacity on our interconnectors to facilitate cross-border flow.	Transmission Our transmission networks transport energy over long distances, safely and efficiently from where it is produced to distribution networks. We charge generators and distributors for putting energy into and out of our networks, based on prices set by regulators.
Delivering for customers	Distribution and supply Our distribution networks take high-voltage electricity and high-pressure gas from the transmission networks, and deliver it at lower voltages and reduced pressures to homes and businesses, such that it can be used by consumers. In the UK and US, we deliver electricity. In the US, we also deliver gas and act as a supplier. Through our UK electricity distribution service operator, and in the US, we ensure that supply and demand are balanced. We earn revenue from transporting and distributing energy to businesses and homes.

How we create value
Engineering and asset management Investing in and maintaining assets across their life.	Safe and reliable operations Operating safely and acting quickly to fix issues.	Investing in our people and culture Creating jobs, building skills and strengthening our culture.
Innovation Embracing new ideas and ways of working and supporting emerging technologies.	Modelling and forecasting Planning for a transforming energy system.	Capital project delivery Effectively delivering complex projects.

10	National Grid plc  Annual Report and Accounts 2024/25
Our business model continued

Delivering value

for our stakeholders

	Customers		page 48		Investors		page 79
	Delivery of secure, affordable and reliable energy to customers in the communities we serve and provision of essential assets that connect power generators to our transmission networks.				A low-risk and dependable investment proposition, focused on generating shareholder value through dividends and asset growth.
	The value we create				The value we create
	99.9%	£9.85bn			73.3p	9.0%
	Network reliability	Capital investment			Underlying EPS	Group ROE
	2023/24: 99.9%	2023/24: £8.24 billion			2023/24: 72.1p (rebased)	2023/24: 10.5% (restated)
	Colleagues		page 51		Supply chain and delivery partners		page 24
	An inclusive and safe environment where colleagues can develop their skills and careers to reach their full potential.				Responsible and efficient supply and delivery chains with aligned interests.
	The value we create				The value we create
	0.10	39%			£9bn	92%
	Safety LTIFR per 100,000 hrs	Jobs filled internally			Great Grid Partnership announced	Suppliers paid to terms
	2023/24: 0.08	2023/24: 52%				2023/24: 90%
	Communities		page 48		Political and regulatory		page 256
	Creation of jobs, skills and employability pathways, alongside charitable community work and the long-term benefits of clean energy.				Trusted relationships with shared goals to deliver energy policies, growth and environmental commitments.
	The value we create				The value we create
	31,645	60,511			3,016 MW	£7,667m
	Employees	Volunteering hours			Renewable capacity connected in year	Green capital investment
	2023/24: 31,425	2023/24: 77,918			2023/24: 3,030 MW	2023/24: £5,992m

Indicates an alternative performance measure

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	11
Our business environment

Our business environment is shaped by governments’ drive to deliver

economic growth amid a major shift in how we produce and consume

energy. Against a backdrop of political and technological change, we are

delivering the energy infrastructure of the future, enabling the energy

transition and economic growth in our communities.

Energy transition

92%

Renewable percentage of added global

energy capacity in 2024

Growth in renewable and low carbon energy continues to be a

major driver of growth for our portfolio. Smarter and larger

networks are needed to connect these new sources of

generation and storage, at new locations, to customers.

Impact on our industry

•The energy supply mix in our areas of operation is continuing to

shift towards low carbon generation, renewables and storage, with

more generation connected to our distribution networks.

•Demand for electricity also continues to grow, driven partly by the

electrification of conventionally fossil fuel-based technologies.

Across the UK, we expect electricity demand to increase by almost

50% from 2024 levels by 2035, and in our US jurisdictions by

around 25% over the same period.

•Our networks will need to adapt and grow to facilitate these

changes.

•The UK Government has set out ambitious energy targets in the

Clean Power 2030 report, calling for 95% of Great Britain’s

generation to be produced by clean sources by 2030.

•In the US, New York and Massachusetts State Governments have set

ambitious targets for clean energy generation and offshore wind.

Progress against these targets has been mixed and we are committed

to working with the States we operate in on the right energy mixes to

help them deliver their climate goals over the long term.

How we are responding

•We are stepping up investment in our networks and have

announced a c.£60 billion plan to accelerate their expansion over

five years. This investment will allow our networks to connect new

clean energy sources and play our role in delivering our

jurisdictions’ clean energy and electrification objectives.

•Across our jurisdictions, we work with regulators and governments

to agree price controls (UK) and rate cases (US) that reflect the

energy generation sector’s growing demand for grid connections.

For example, last year we submitted our RIIO-T3 business plan to

Ofgem, which will enable an unprecedented amount of new power

to connect. In the US, Massachusetts Department of Public Utilities

approved our Electric Sector Modernization Plan (ESMP) as a

strategic roadmap, outlining the investment we plan to make in our

electric networks over the next five years to accommodate clean

energy goals.

•Across our own operations, we have worked with the Science

Based Targets initiative (SBTi) to align our near-term greenhouse

gas emissions reduction targets to their 1.5°C pathway.

12	National Grid plc  Annual Report and Accounts 2024/25
Our business environment continued

Affordability and economic development

#1

Voters consistently view the economy

as a top issue in our jurisdictions

Governments are focused on driving economic growth and

development in our jurisdictions. Some of our customers

continue to struggle with the cost of living.

Impact on our industry

•Energy affordability is a challenge for communities in all the areas

we serve. We are focused on ways to lower energy costs for our

customers and consumers.

•In both the UK and US, governments’ economic growth agendas

mean continued need for grid investments, as AI-enabling data

centres and other industrial infrastructure seek to connect or

electrify.

How we are responding

•We have announced a new £13.8 million Grid for Good Energy

Affordability Fund. Running for three years in the UK and Northeast

US, it will support organisations such as National Energy Action in

the UK who assist vulnerable households with energy advice,

emergency funding and energy efficiency measures.

•In the UK, we have helped 21,000 customers to save a total of

£22 million through our fuel poverty programme.

•In the US, we are responsible for delivering energy through our

networks and providing billing and customer service to

approximately 6 million accounts. We are expanding energy

efficiency programmes with an increased focus on mitigating peak

period bills, and addressing the energy burden facing our most

vulnerable customers. We have expanded multicultural outreach

initiatives and language translation to ensure eligible customers

have access to available assistance programmes and protections,

including suspension of terminations during cold weather.

•To play our part in delivering affordable energy and enabling

economic growth, we are focused on delivering our critical

infrastructure projects as quickly and affordably as possible while

avoiding both premature investment and delays to critical projects.

We deploy innovative solutions like dynamic line rating to increase

the capacity and performance of our existing assets and find

alternatives to new builds where appropriate. Working alongside

governments and regulators, we ensure that prudent long-term

planning leads us to the best overall solution for the customer.

•We are also focused on helping jurisdictions meet their economic

growth goals to deliver broader societal economic benefits. We

work with governments and large commercial customers to play

our part in connecting growth-enabling industries to the energy

they need. For example, we are in the process of delivering a

multi-million-pound project to connect the largest EV battery

manufacturing facility in the UK to our grid. This factory will

contribute almost half of the projected battery manufacturing

capacity required for the UK automotive sector by the early 2030s,

and create around 4,000 new skilled green technology jobs.

Strategic Report Corporate Governance Financial Statements Additional Information 13

Technological change

> $300 billion

in estimated capital expenditure on

data centres globally in 2024

The past year has seen a rapid shift in the technology

landscape, impacting both energy supply and demand. The

most significant change has been the rapid rise of generative

and agentic AI, and the associated impact on data centre

development.

Impact on our industry

•The rise of AI and associated data centre infrastructure is likely

to be a significant driver of new energy demand. There is still

uncertainty around the scale of AI-driven demand growth, although

we believe efficiency gains could mitigate this impact.

•In response to this rapid growth in energy demand, we are seeing

a resurgence of interest in nuclear, particularly small modular

reactors (SMR), to provide firm emission-free generation.

•AI advancements also present deployment opportunities for the

energy industry to improve efficiency and resilience, including

through supply-demand balancing, infrastructure planning,

predictive maintenance and physical safety improvements.

•Customers are increasingly demanding the same smooth digital

experience provided by consumer technologies and online retail in

other areas of their life, including how they produce and consume

energy.

•They are seeking ways to optimise their energy bill, including

through flexible tariffs and, in some instances, compensated

demand reduction or the ability to sell energy back to the grid from

their own generation and storage.

•As more of our lives become digital, the importance of protecting

against cyber risk is increasing.

How we are responding

•In our regulated businesses, we work directly with data centres and

other large load customers to help them understand the value of

our electric networks, their connection options, and the process to

energisation. We are committed to finding a better way to serve our

residential customers in the US. At the beginning of last year we

expanded our customer’s payment options to include four new

options, Google Pay, Apple Pay, PayPal, and Venmo paired with

enabling single sign on, reducing complexity for customers and

enhancing the security of our customer systems.

•Through National Grid Partners, we are capitalising on the

opportunities created by technological change. Since 2018,

National Grid Partners has invested over $500 million in more than

50 start ups and strategic funds, including more than $150 million

in 18 AI startups. We are deploying many of these technologies

across our own networks, and continue to use our NextGrid

Alliance, a collaborative ecosystem of utilities, to enable faster

industry-wide innovation and share lessons learned.

•We continue to monitor cyber risks, and implement control

improvements recommended by government and private

intelligence to manage the increasing threat landscape.

Global uncertainty

>50%

of countries with a national election

in 2024 elected a new government

Today’s world is characterised by economic uncertainty

posing challenges to business planning. In the face of this

uncertainty, resilient and secure energy supplies have never

been more important.

Impact on our industry

•While energy supply chains have adjusted to the cessation of

Russian gas imports to Europe, geopolitical conflicts and trade

tensions pose an ongoing risk. Armed conflict is the biggest risk

identified in the World Economic Forum’s Global Risks 2025 report.

•The return to a more protectionist global economic order, with

focus on domestic economic growth and security, creates

challenges and opportunities for the energy sector. Supply chains

have been stressed since the pandemic, and may tighten further if

trade disagreements escalate. At the same time, there is renewed

focus on the importance of energy networks in delivering domestic

energy security and prosperity.

•For governments, organisations and communities, resilient and

secure energy supplies are crucial in adapting to disruptions in this

more uncertain world.

How we are responding

•We remain focused on delivering resilient and secure infrastructure,

playing our part to help the communities we serve avoid disruption

and adapt to a changing global environment.

•Across our business, we continue to innovate on supply chains to

ensure we can deliver infrastructure at pace even amid global

uncertainty. For example, our ET supply chain task force and our

Great Grid Partnership model ensure we can deliver infrastructure

on time by offering suppliers long-term commitments and a more

collaborative way of working.

•We build resilience into our operations, adapting our networks to

risks from increased extreme weather events and cyber threats.

•We are active participants in the broader energy sector ecosystem

across the US and the UK, working to establish policies that

increase the chance of a smooth energy transition. This

engagement helps us to evolve regulatory frameworks together and

to provide more certainty through price controls and rate cases that

reflect a healthy balance of risk, returns and incentives.

14	National Grid plc  Annual Report and Accounts 2024/25
Our strategy

We are

guided by

our five strategic

priorities

Enable the energy transition for all	Build the networks of  the future now	Deliver for customers
At National Grid, we are at the heart of a structural shift in how energy is produced and used. This will mean moving from centralised, fossil-fuel based systems to a more decentralised grid with higher renewable generation and storage. The areas we serve are at different points in this transition. Our goal is to build the networks needed in our jurisdictions, working with governments, regulators and communities to ensure the conditions for success are in place.	Our ambition is to deliver a once-in-a- generation increase in capacity on our  networks. We continue to invest in the safety and reliability of our electric and (in the US only) gas networks. This will ensure we can deliver for our customers while we prepare for growing demand and electric load growth, and cleaner generation technologies. To achieve this, we are growing our supply chain, capital delivery and network operations capabilities to deliver an unprecedented volume of capital investment. But our goal is not as simple as building more infrastructure. We are deploying better, more efficient technology to maximise the value of our existing and new assets, ensuring customers benefit from innovation on our networks and we maintain the affordability of our networks.	In today’s digital world, the benchmark for excellent customer experience is not necessarily within our sector. Customers are used to streamlined, digital service in almost all their daily activities, from online shopping to booking appointments. They expect rapid resolution of any problems. We know our customers expect the best possible experience from us, whether they are residential and commercial customers relying on our networks to transport energy to their homes and businesses, or industrial and generator customers seeking a connection to our grid. We are committed to meeting today’s needs and anticipating tomorrow’s.

Strategic Report Corporate Governance Financial Statements Additional Information 15

Operate safely and efficiently	Build tomorrow’s workforce today
Nothing is more important than the safety of our colleagues and the people in our communities. We want every person who works for National Grid to go home safely to their families each day. By embedding behavioural safety principles at all levels – across all business units and within our supply chain – we are shaping a proactive safety culture where everyone has the confidence, skills and environment to work safely every day. We also know efficiency is central for us in playing our part to keep energy bills down.	Ultimately, our people deliver our strategy. From apprentices to senior leaders, we are focused on attracting and developing a workforce equipped with the skills of the future. This helps us deliver our strategic priorities, but also ensures we’re creating high value employment opportunities and economic impact in the communities we serve.

…which are underpinned by our values

Do the right thing

•Stand up for safety every day

•Put our customers first

•Be inclusive, supporting and caring

for each other

•Speak up, challenge and act where

something doesn’t feel right

Find a better way

•Embrace the power and opportunity

of diversity

•Increase efficiency to help with

customer affordability

•Work with others to find solutions

for customers

•Commit to learning and new ideas

Make it happen

•Take personal ownership for

delivering results

•Be bold and act with passion

and purpose

•Focus on progress over perfection

•Follow the problem through to the end

16	National Grid plc  Annual Report and Accounts 2024/25
Succeeding with our strategy

We deployed our five updated strategic priorities across the organisation

in 2024/25

Our principal risks and uncertainties on pages 36–41

Enable the energy transition for all		Build the networks of the future now
What this means We have an important role in the energy transition across all sectors of the economy through our networks. We work with policymakers, regulators and the wider industry to shape policy and regulatory frameworks needed to reach shared energy objectives.		What this means We will scale a once-in-a-generation increase in network capacity to connect to, and transport electricity across, our networks. We will modernise our electricity networks to improve capacity, visibility, security and reliability. We will ensure the safety and reliability of our gas networks.
Business environment links: •Energy transition	KPI link: •Green capital investment •Climate change – Scope 1, 2 and 3 emissions	Business environment links: •Affordability and economic development •Technological change	KPI link: •Group capital investment •Asset growth
£7.7bn Group green investment across distribution and transmission		c.£60bn Planned investment in our networks from April 2024 to March 2029
2024/25 achievements •In UK ET, we submitted our RIIO-T3 business plan to Ofgem, which will nearly double the amount of power we can transfer across the country. •In UK ED, we submitted our ED3 Framework Consultation Open Letter, emphasising the need for a transformative approach to electricity distribution networks to meet the UK's net zero targets by 2050. •In NGV, we achieved a major milestone in late 2024, receiving approval from Ofgem for  LionLink, an offshore hybrid asset (OHA) project connecting the UK and the Netherlands. We have now agreed with Ofgem the final economic regulatory arrangements, which will allow us to progress to ordering long lead items. •In NY, we began upgrading 1,000 miles of New York’s grid to provide around four gigawatts of more resilient, clean, and secure energy across the State. •In NE, the Massachusetts Department of Public Utilities approved our Electric Sector Modernization Plan (ESMP), also referred to as our Future Grid Plan, as a strategic roadmap. The plan outlines around $2 billion in anticipatory investments in the electrical distribution system.		2024/25 achievements •Last May, we committed to invest c.£60 billion in our networks over five years. In the last financial year, we have delivered £9.85 billion. •In UK ET, we have commenced construction of six ASTI projects, including Eastern Green Link 1 and 2 comprising 700km of high voltage direct current (HVDC) subsea cables straddling the English and Scottish borders which has an estimated investment of over £4 billion. •In UK ED, we delivered record investment, with a 14% increase on the previous year. •In the US, we piloted the largest dynamic line rating in the US and the first in New York State. With proper targeting and design, dynamic line rating can increase the capacity of existing lines by up to 15-30%. •In NY, the Proactive Planning Proceeding now enables anticipatory investment for electrification of heat and transportation and economic development. We proposed a capex portfolio of ‘Urgent Upgrade Projects’ addressing transportation and building electrification that we will move forward with once we receive the Public Service Commission order in early 2025. •National Grid Partners surpassed $500 million in investments since 2018, focusing on modernising the grid and advancing utility innovation.

Strategic Report Corporate Governance Financial Statements Additional Information 17

Deliver for customers		Operate safely and efficiently		Build tomorrow’s workforce today
What this means We aspire to provide excellent service to all our customers, ensuring they can connect to the network in a timely fashion, that their energy provision is reliable and that we are easy to do business with.		What this means To deliver our part in a changing energy system, we are transforming our internal processes, strengthening our customer focus and sharpening our commercial edge. We are investing in the capabilities we will need in future and our ability to operate safely remains our top priority.		What this means Our colleagues shape the delivery of outcomes that exceed the expectations of all our stakeholders. By attracting high-quality talent and developing our people, we will ensure our colleagues are best placed to deliver our goals.
Business environment links: •Energy transition •Affordability and economic development •Technological change	KPI link: •Network reliability •Customer satisfaction	Business environment links: •Affordability and economic development •Technological change	KPI link: •Group LTIFR •Underlying EPS •Group RoE	Business environment links: •Energy transition •Affordability and economic development •Technological change •Global uncertainty	KPI link: •Employee Engagement Index
99.9% reliability maintained		0.10 Lost time injury frequency rate (LTIFR) (target: equal to or less than 0.10)		236 graduates welcomed in the US and UK
2024/25 achievements •In UK ET, we energised our first grid park at Sundon substation in Bedfordshire, allowing more renewable capacity to be connected in a cost- effective way. We have continued works to connect Dogger Bank, the world’s largest offshore wind farm, and connected the Greenlink interconnector between Ireland and Great Britain. •In UK ED, our Major Connections Strategy accelerated timelines for 2.9 GW of distributed energy resources by an average of 5.8 years in support of local net zero ambitions. •In the US, we launched the Sense app (alongside deployment of our industry-leading AMI smart meters) to provide real-time energy insights to all customers at the appliance level. •In NY, our electric operations successfully prepared for and responded to severe weather, including 16 major storm events. Where our service territories have been impacted by storm activity this year, we achieved an electricity restoration rate of 95% within 10 hours for impacted customers. •NGV’s interconnector fleet continued to play an integral role to GB energy security and delivered 38 TWh, the equivalent of powering over 14 million households.		2024/25 achievements •In UK ET, the volume of work delivered by contractors continues to increase. We are enhancing collaboration with our supply chain partners, and have seen an improvement in the safety performance of our contractors. •In UK ED, we designed and delivered a company- wide behavioural safety training programme with over 6,000 colleagues trained to date. •In NE, our bi-annual Safety Culture Survey placed us in the top quartile of our external industry benchmark, underscoring our ongoing commitment to safety excellence. •In NY, the Northeast Gas Association (NGA) gave us the Pipeline Safety Management System Recognition Award for demonstrating an outstanding commitment to safety. •NGV concluded the year without a single serious injury across the business unit.		2024/25 achievements •161 graduates joined our graduate scheme in the UK, with 75 joining our US programme, alongside 172 ‘Gridterns’ in the US over summer. •We saw 276 apprentices commencing programmes combining practical work and academic study in the UK across ET and ED. •We have proactively invested in our senior leaders who oversee major infrastructure projects, by creating a bespoke six-month global development programme in partnership with Saïd Business School, University of Oxford. Since September 2024, we have enrolled 46 delegates across two cohorts, spanning across our UK and US businesses, and our joint venture partners. •Currently, 39% of our jobs are filled by internal promotions and moves, demonstrating our commitment to developing our colleagues internally. •Our employee engagement index is 80%.

18	National Grid plc  Annual Report and Accounts 2024/25
Our key performance indicators (KPIs)

We use a range of metrics through which we measure Group performance.

In 2024/25, these metrics were aligned to our five strategic priorities.

Link to remuneration

Remuneration of our Executive Directors, and our employees, is aligned

to the successful delivery of our strategy. We use a number of our KPIs/

alternative performance measures as specific measures in determining

the Annual Performance Plan (APP) and Long-Term Performance Plan

(LTPP) outcomes for Executive Directors. These measures are either

specifically accounted for in remuneration targets or considered as part

of a review of wider business performance.

Read more in the Directors’ Remuneration Report on pages 121 – 149.

Link to strategy
	Enable the energy transition for all		Operate safely and efficiently		Indicates an alternative performance measure
	Build the networks of the future now		Build tomorrow’s workforce today
	Deliver for our customers

Financial measures
KPI and performance	Description	Progress in 2024/25
Underlying EPS (p)*	This is a measure of the Group’s profitability for the year attributable to equity shareholders of the Group. It excludes exceptional items, remeasurements, timing, impact of deferred tax in UK regulated businesses (NGET and NGED) and US major deferrable storms (net of in-year allowances and deductibles) if these exceed $100 million threshold in a year. As part of our five-year financial framework, we aim to grow Underlying EPS by 6-8% CAGR over the period to March 2029**	Underlying EPS grew by 2% year-on-year, driven by strong performance in New York, New England and UK ET coupled with lower finance costs more than exceeding the increase in share count driven by the Rights Issue. This is partly offset by lower profit from our non-regulated business and lower contribution from our share in joint ventures.
73.3p
Link to strategy

KPI and performance	Description	Progress in 2024/25
Group capital investment (£m)	This KPI measures our annual investment into property, plant and equipment, including capital prepayments, intangible assets and equity contributions to joint ventures and associates. Investing in our assets helps to increase our future revenue allowances. We expect to invest around £60 billion between April 2024 and March 2029	Group capital investment has increased by 20% on 2023/24 driven by a step up in critical energy infrastructure investment across our regulated businesses, including higher connections spend and early Accelerated Strategic Transmission Investment (ASTI) investment in UK ET and increased spend on new transmission projects in New York.
£9,847m
Link to strategy

*  Prior year comparatives restated to reflect the impact of the bonus element of the Rights Issue.

**  From a baseline of 2024/25 Underlying EPS.

Strategic Report Corporate Governance Financial Statements Additional Information 19

Financial measures
KPI and performance	Description	Progress in 2024/25
Green capital investment (£m)	In calculating green capital investment we measure the proportion of our capital investment that supports environmentally sustainable practices and contributes to the energy transition. Green capital investment excludes capital prepayments and equity investments in joint ventures and associates. We expect to invest around £51 billion in green capital investment between April 2024 and March 2029	In 2024/25, we delivered £7.7 billion of green capital investment aligned to the EU Taxonomy, a £1.7 billion increase on 2023/24. This consisted primarily of investment in key infrastructure projects to support the energy transition, driven by a 33% increase in electricity network investments and a 16% increase in leak-prone pipe replacements across our gas networks.
£7,667m
Link to strategy

KPI and performance	Description	Progress in 2024/25
Group RoE (%)*	In calculating Group RoE, we measure our performance in generating value for shareholders by dividing our regulated and non-regulated financial performance, after interest and tax, by our measure of equity investment in all our businesses, including our regulated businesses, NGV and other activities and joint ventures. Our aim is to achieve around 10% Group RoE each year	During 2024/25 we achieved Group RoE of 9.0% compared with the 10.5% achieved in the prior year. In 2024/25 the metric has been impacted by lower gearing (as a result of the Rights Issue) which, along with ongoing asset growth, has increased the metric denominator.
9.0%
Link to strategy

KPI and performance	Description	Progress in 2024/25
Asset growth (%)**	Maintaining efficient growth in our regulated and non-regulated assets ensures we are well positioned to provide consistently high levels of service to our customers and increases our future revenue allowances. This includes critical investment for a changing climate and increased demand. Our aim is to achieve c.10% CAGR asset growth April 2024 to March 2029 (from a March 2024 baseline)	Asset growth during the year was 9.0% compared with 9.7% in 2023/24 driven by £9.8 billion of Group capital investment. Asset growth is lower than in 2023/24 predominantly due to negative growth in our non-regulated businesses and reduced indexation on UK RAV due to lower inflation. Regulated asset growth is 10.5% compared with 9.1% in 2023/24 driven by a step-up in investment in UK ET and NY.
9.0%
Link to strategy

*  Prior year comparatives have been restated to reflect the change in our ‘Group RoE’ definition. Refer to page 294 for the updated definition and reason for methodology change.

** Normalised for the sale of UK ESO in the year.

20	National Grid plc  Annual Report and Accounts 2024/25
Our key performance indicators (KPIs) continued

Non-financial measures
KPI and performance	Description	Progress in 2024/25
GHG emissions	We are delivering new infrastructure to enable the digital, electrified economies of the future. Our biggest contribution to reducing greenhouse gas (GHG) emissions, both across society and in terms of our own emissions, is what we do to enable the transportation and distribution of clean energy in the regions where we operate. We understand the importance of partnership and are actively engaging with governments, regulators, and the energy industry to ensure the policy and regulatory frameworks required for future investments in decarbonising the energy sector, and reducing our emissions, are in place. Ultimately, we are helping to tackle climate change by enabling the energy transition for all and targeting net zero for our own emissions by 2050.	Scope 1 and 2 emissions for 2024/25 were 7,422 ktCO2e, outside of the range set out in our Climate Transition Plan, demonstrating the likely nonlinear trajectory of our emissions targets. This is a decrease of 4.4% against our 2018/19 baseline. The increase in emissions in 2024/25 is largely due to an exceptional year of increased combustion of oil and gas at National Grid Generation on Long Island, attributable to contractual obligations with the Long Island Power Authority (LIPA). Our Scope 3 emissions (excluding sold electricity) for 2024/25 as per our SBTi target were 25,566 ktCO2e, representing a 5.8% increase against our 2018/19 baseline caused by our increased capital investment in constructing new energy infrastructure. You can read more about our GHG emissions and environmental performance on pages 44 – 47. You can read more about the Task Force on Climate-related Financial Disclosures (TCFD) and our wider sustainability activities and performance on pages 59 – 77.
Scope 1 and 2 emissions (mtCO2e)
7.4
Scope 3 emissions (mtCO2e)
28.4
Figures are in million tonnes of CO2 equivalent.
Link to strategy

KPI and performance	Description	Progress in 2024/25
Group lost time injury frequency rate (LTIFR)	Every day we strive to do the right thing, find a better way, and make it happen. Safety is our highest priority for our employees and the public. One of our main safety indicators is LTIFR. This is the number of worker LTIs per 100,000 hours worked in a 12-month period (including fatalities) and includes our employee and contractor population. Our aim is to achieve 0.1 or below LTIs per 100,000 hours worked per year	Safety is an important factor within decision making for our Executive Directors’ remuneration, reflecting the expectation that safety is an integral part of how we work at National Grid. This year. we achieved a LTIFR of 0.10, compared to 0.08 in 2023/24, primarily driven by an increase in reporting of incidents such as trips, falls and manual handling injuries. This reflects our continued focus on encouraging good safety behaviours across the entire workforce. You can read more about our LTIFR performance in the Responsible Business review on page 56.
(LTIs per 100,000 hours worked)
0.10
Link to strategy

KPI and performance	Description	Progress in 2024/25
Employee engagement index (%)	This is a measure of how engaged our employees feel, based on the percentage of favourable responses to questions repeated annually in our employee engagement survey. Our aim is for our employee engagement metrics to remain at or above the high- performing norm (as benchmarked by our external survey provider)	We run an employee engagement survey, Grid:Voice, twice-yearly, to understand and act on colleague feedback. This allows us to build a culture that is purpose-led and results- driven, with a great colleague experience. As a result, we enjoy high engagement and strong advocacy, above external benchmarks. This year, 79% of colleagues took part in the survey (last year: 78%) and our employee engagement index score was 80% favourable. The score has remained consistent to prior years, however, three points below the high performing companies norm in the current year.
80%
Link to strategy

Strategic Report Corporate Governance Financial Statements Additional Information 21

Non-financial measures
Network reliability and interconnector availability				Customer satisfaction
We aim to deliver reliability by planning our capital investments to meet challenging demand and supply patterns, designing and building robust networks, and having risk-based maintenance and replacement programmes, and detailed and tested incident response plans. We measure network reliability separately for each of our business areas.				We measure customer and stakeholder satisfaction, while also maintaining engagement with these groups and improving service levels.
Network reliability %	2024/25	2023/24	2022/23		2024/25	2023/24	2022/23	Target
UK ET	99.99983	99.999998	99.99997	UK ET (/10)	6.5	7.2	7.2	7.7
UK ED	99.98294	99.99261	99.99453	UK ED (/10)	8.98	8.97	8.99	9.12
NE ET	99.98544	99.97549	99.95212	NE residential – Customer Trust Advice survey (%)*	53.9	57.5	59.3	—
NY ET	99.84345	99.97168	99.97189
NE ED	99.97724	99.94327	99.96824	NY residential – Customer Trust Advice survey (%)*	61.1	64.5	63.8	—
NY ED	99.94077	99.92823	99.92384
Interconnector availability
IFA interconnector	79.4	82.0	51.7
IFA2 interconnector	74.9	71.2	95.7
BritNed interconnector	75.6	98.0	99.9
Viking interconnector	91.7	N/A	N/A
NSL interconnector	95.0	95.9	86.7
Nemo Link interconnector	98.8	96.8	98.1
Link to strategy
In both the UK and US, we continued to maintain high levels of reliability on all our networks. Viking Link achieved its first full year of operation, achieving excellent 91.7% availability across the year.  IFA has seen decreased availability this year due to increased planned and short unplanned outages. BritNed has also seen decreased availability due to an extended planned outage and an unplanned outage due to a cable fault.				We are committed to efficiently connecting millions of people to the energy they use. In UK ET, we follow the Quality of Connections Incentive, for which it was a challenging year due to the rapidly growing connections pipeline and its impact on connection dates. We are working closely with others across the industry to address the challenges caused by the current connections pipeline. In UK ED, we investigate areas of good practice across our licence areas, developing actions to deliver year-on-year improvement toward our target. In the US, both regions faced high inflation and a long, unseasonably cold winter, causing impacts on affordability and negatively affecting our customers’ sense of value. Our teams are working on enhancing business processes, expanding our energy efficiency and outreach, as well as adopting the latest technologies and undergoing training to drive improvements. You can read more about our customer satisfaction scores in the Responsible Business review on pages 48 and 50.

*The current year data for the Customer Trust Advice survey includes both commercial and residential customers to provide a comprehensive view of our entire customer base. Previously,

only residential customer data was included. Therefore, prior year data has been recalculated to incorporate commercial customers for a consistent comparison.

22	National Grid plc  Annual Report and Accounts 2024/25
Our stakeholders

Effective stakeholder

engagement is key to

achieving our long-term

strategy

Section 172(1) Statement

The Board recognises its responsibilities to the Group’s stakeholders

and to wider society. The Directors strive to understand and consider

the interests and views of stakeholders and take these into account in

their decision-making. The Board is responsible for setting and

monitoring the Group’s culture and values, and these values guide the

Directors in their decision-making.

The Directors consider all stakeholders when making key decisions, but

recognise that not every decision will result in the preferred outcome for

each stakeholder. The Board therefore seeks to balance the diverse

and sometimes conflicting priorities and interests of the Group’s

stakeholders, ensuring that decisions support the long-term,

sustainable success of the business and uphold a standard of business

conduct aligned to our values and purpose.

Throughout the year, the Directors have acted in the way they

considered, in good faith, was most likely to promote the long-term

success of the Company for the benefit of its members as a whole, and

have had regard to the matters set out in section 172 of the Companies

Act 2006. Further information on how the Board has had regard to each

of the matters is set out below.

Section 172 factor	Disclosure	Page
The likely consequence of any decision in the long term	Our strategic priorities	14
	Our business model	8
The interests of the Company’s employees	Our stakeholders	22
	Responsible Business review	42
	Board workforce engagement	106
The need to foster the Company’s business relationships with suppliers, customers and others	Our stakeholders	22
	Responsible Business review	42
	Board stakeholder engagement	23
The impact of the Company’s operations on the community and the environment	Our stakeholders	22
	Responsible Business review	42
	TCFD	59
Maintaining a reputation for high standards of business conduct	Responsible Business review	42
	Corporate Governance overview	97
The need to act fairly as between members of the Company	Our stakeholders	22
	Responsible Business review	42
	Board stakeholder engagement	23

Delivery of the Group’s long-term strategy can only be achieved by working with our customers and stakeholders, so we ensure we

engage effectively with the right people at all levels of our organisation.

How we engage

Our stakeholder population continues to grow and diversify, and engagement with them is an integral part of our day-to-day business. Our

approach remains to engage effectively and in a timely manner on the topics and decisions which matter most to our stakeholders, with

engagement being led by the most appropriate colleagues. This involves everyone from our Board Directors, who regularly engage with key

stakeholders, to working-level engagements supporting our day-to-day work, and all roles in between. We use the outputs of this engagement

to inform the decisions we take to shape and deliver our strategy, with reporting mechanisms in place to enable a flow of information from our

stakeholders to the Board and its Committees, and to help us act on what we hear.

Strategic Report Corporate Governance Financial Statements Additional Information 23

Customers Customers are the heart of our business. Regular and effective engagement with our customers is key to us delivering what they need and expect from us.
Interests	Our engagement	Outcomes
Our customer base is broad, from those we have served for decades, to an increasing number of new customers. Their interests are wide-ranging but all expect efficient and reliable service, and transparency and fairness in how we work with them. We endeavour to understand their needs and challenges, and how our activities can impact their lives and businesses.	•Senior leaders, including Business Unit Presidents, regularly meet customers to understand their strategic priorities. •Teams across the business continue to engage with customers on a day-to-day basis regarding new and existing connections, bill-related matters and social obligations, through one-to-one meetings, customer panels and a range of other channels. This has included managers in the UK ED Customer Connections team collaborating with customers one-to-one regarding local distribution connections amid ongoing regulatory reforms, and holding Community Energy events to understand the challenges our customers are facing. •The Board receives regular updates on customer matters and undertook two customer deep dives during the year.	•Our customer engagement helps shape what we do both operationally and strategically. Understanding our customers means we can better meet their needs for new connections and ongoing account management and informs longer-term policy. •In the past year, our UK customers have played a key role in shaping our RIIO-T3 business plan, and their views have also informed our input into a parliamentary inquiry into community energy. •In the US, our work with consumer advocates helped enhance state law to make affordability programmes more accessible to our customers.
Investors We engage with equity and debt investors on strategy and performance. They play a vital role in enabling us to deliver the investment required for a secure, affordable and clean energy future.
Interests	Our engagement	Outcomes
Investors are interested in our financial and operational performance, which act as key indicators of our ability to provide attractive returns and credit worthiness. There is also increased interest in our Responsible Business commitments and reporting to provide assurance that investments are sustainable, ethical and responsible.	•During the year, the Chair, Chief Executive and Chief Financial Officer met with institutional investors in the UK and overseas as part of our comprehensive Investor Relations programme. •Meetings followed our full and half-year results and the announcement of our Rights Issue in May 2024. •The Board attended our 2024 AGM, a hybrid meeting allowing shareholders to participate in person or online. •The Chair of the Remuneration Committee led engagement with investors regarding a new Directors’ Remuneration Policy. •The Board receives regular updates on Investor Relations matters from the Director of Investor Relations, along with a monthly Investor Relations dashboard report.	•Through our engagement, investors understand our investment case and have visibility on our strategy, performance and financial strength. This engagement helped us to efficiently access new debt and equity funding during the period, including the £7 billion Rights Issue. •The Remuneration Committee considered feedback from its engagement with investors in relation to the Directors’ Remuneration Policy.
Colleagues We listen to and engage extensively with our colleagues, and with the bodies which represent them, through a number of channels and processes. This enables us to understand their needs and requirements and build a culture that will help to drive our performance, shape our plans and develop a skilled and motivated workforce.
Interests	Our engagement	Outcomes
Colleague interests are wide-ranging. They have an interest in Company performance and what this means for them individually, but also want to understand, and play a part, in shaping our role in the industry and the delivery of our strategic objectives.	•Over the past year, we continued our extensive programme of colleague engagement. This has included: –a series of live webcasts to all employees, hosted by our Chief Executive –regular all-hands calls hosted by members of the Group Executive Committee and senior management –operational site visits by senior management  •Members of our Senior Leadership Team engaged with employees via our internal communication and social media platforms, email and via our ERGs.  •The Chief Executive and Chief People Officer provided regular updates on employee matters to the Board, including the results of our twice-yearly employee engagement survey, Grid:Voice. •The Board engaged with colleagues with its ‘Full Board Employee Voice’ approach which included site visits, and formal and informal meetings with talent cohorts and the wider workforce. Further information on Board and workforce engagement can be found on page 106.	•79% of colleagues took part in our Grid:Voice survey, with an employee engagement index score of 80% favourable. The results and feedback helped to identify areas where we could do more to support employees.

24	National Grid plc  Annual Report and Accounts 2024/25
Our stakeholders continued

Supply chain and delivery partners Engaging with our supply chain and delivery partners, and working in partnership with them, helps us to find better and more innovative ways of delivering our commitments. We engage both strategically and tactically across a range of topics and projects.
Interests	Our engagement	Outcomes
In addition to day-to-day commercial interests, our supply chain and partners are interested in greater forward visibility and contractual commitments over a longer horizon to help them develop skills, build capacity and support innovation to meet our needs.	•Structured quarterly engagement takes place with strategic suppliers and contractors, complemented by Executive- sponsored senior-level engagement to foster collaboration and discuss strategic issues facing the sector.  •Over the past year, this included development of an Industry Skills & Workforce Planning Group, consisting of representatives from key external partners, to address the industry skills gap challenge through a focus on critical specialist workforce roles. •The Board receives updates on the Supplier Engagement Programme via business unit updates during the year. Group Executive members are each assigned as sponsor to a select number of suppliers and provide feedback on engagement to the Board as required.	•Sharing details of key priorities with our supply chain and gaining a better understanding of their business needs allows us to jointly manage continuity of supply in the shorter term and to shape our approach to future challenges, such as the acceleration of network investment required to connect new sources of energy.  •Alignment of UK Supply Chain Policy position has supported us in informing Government and Ofgem on changes required for connecting offshore wind. •We have signed up to the Prompt Payment Code and encourage our suppliers to adopt the principles of this code throughout their own supply chains.
Communities We engage extensively with the communities within which we work, and with their representatives, to understand their needs, mitigate the impact we have on them and ensure we support them in the appropriate ways.
Interests	Our engagement	Outcomes
Our communities need us to deliver energy securely, reliably and affordably, while minimising the impact our operations have on them and supporting those who need it most.	•We engage with community stakeholders and members of the public to understand their views and what they expect from us. •We engage extensively with impacted communities as part of our major projects planning consultations, and we use their feedback to inform the proposals we submit for development consent. •During the year, Board members visited operational sites and received management updates on community matters, including our strategic infrastructure projects and the RIIO-T3 business plan submission. •Further details of how we engage with our communities can be found in ‘Our customers and communities’ on pages 48-50.	•Our outreach programmes continue to play an important role in supporting economic growth and the upskilling of communities, especially in the most socio-economically disadvantaged areas. •In the US, our engagement has helped secure a requirement for a comprehensive needs assessment for electric vehicle (EV) charging along highway corridors, which helps enable  investment to meet the demands for the communities we serve. •In the UK, consultation with communities and residents living near our proposed new infrastructure projects is critical in helping shape our proposals and continues to be a key enabler for progression of new infrastructure projects.
Political and regulatory We engage with regulators, governments and other key political stakeholders to support the regulatory and policy frameworks required to deliver current and future energy needs. We work closely with our regulators on rate cases in the US and price controls in the UK.
Interests	Our engagement	Outcomes
The interests of our regulators and political stakeholders are based around a common theme – whether UK or US, state or federal – to protect the interests of customers and to deliver a secure, affordable and clean energy future.	The Board met with NESO and NYISO in November 2024 and received updates across the year on political and regulatory matters. Engagement included: •Our New York President updating the NYPSC Chair and Commissioners on strategy, performance, and how we support State policy goals. •Our New England President and leadership team engaging with the Massachusetts Department of Public Utilities (MADPU) Chair and Commissioners on innovation, grid resilience and affordability. •Our Federal Government Relations team engaging Congress and the Biden and Trump administrations on affordability, load growth, reliability, tax and permitting. •UK Executive and working-level colleagues engaging with Ofgem on the development of NGET’s RIIO-T3 business plan and the ED3 regulatory framework, and with the UK Government on its policy agenda, including the plan for Clean Power 2030.	Our engagement in the US has led to: •A Massachusetts Electric Rate Case order which provides five-year certainty for planned network investments and numerous performance incentive pathways. •Approval of the ESMP strategic roadmap. •Filing of a Joint Proposal with NYPSC for a three-year rate settlement at our Niagara Mohawk upstate New York electric and gas businesses. In the UK, our engagement has: •Supported the development of a new regime for grid connections as well as proposals for planning reforms. •Supported the creation of new Government guidance outlining ‘Community Funds for Transmission Infrastructure’, published in March 2025.

Read more about our business units on pages 256 – 261

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	25
Our Business Units

UK

UK Electricity Transmission

Highlights

National Grid Electricity Transmission is the

backbone of the UK energy system,

supporting the growth of British business and

acting as a critical enabler in meeting the

country’s Clean Power 2030 aspirations. In

2024/25 we continued to deliver safely for our

customers and stakeholders with strong

operational and financial performance. We

have delivered more network capacity,

connected more renewable energy, innovated

and improved on our excellent financial

performance compared to the previous year.

Our Strategic Infrastructure unit, set up in

2023 to focus on the ASTI projects, is now

well established to deliver those major

projects. Our Great Grid Upgrade is underway.

Enable the energy transition for all

In December, we submitted our five-year

business plan to Ofgem. This plan is the

largest overhaul of the UK electricity grid in

generations and will significantly reduce the

UK’s reliance on fossil fuels. The UK ET plan

sets out investment of up to £35 billion

between 2026 and 2031, around two and a

half times UK ET’s investment over the

previous period (RIIO-T2). This investment will

transform our network, nearly doubling the

amount of power we can transfer across the

country, providing twice as many customer

connections as in the last five years and

avoiding c.£12 billion of constraint costs,

where there is less capacity on the network

than unconstrained market positions would

seek to utilise.

Build the networks of the

future now

We have commenced construction of six ASTI

projects, including Eastern Green Link 1 and 2

comprising 700km of high voltage direct

current (HVDC) subsea cables straddling the

English and Scottish borders, which has an

estimated investment of over £4 billion. We

have secured primary delivery partners for eight

of the remaining 11 ASTI projects with the

remaining three projects in the final stages of

procurement. Construction will commence

once public consultations have completed and

consents granted. We are working to deliver a

number of other major infrastructure projects –

we are re-wiring the capital in the London

Power Tunnels project to improve network

resilience, connecting the Hinkley Point C

nuclear power station to help make net zero a

reality, and delivering visual improvement

projects in areas of natural beauty such as

Snowdonia. We have taken a site strategy

approach to consider multiple drivers for

investments, including customer, infrastructure

upgrade, asset failure risk and SF6 (sulphur

hexafluoride) emissions to identify substations

to be rebuilt or decommissioned in RIIO-T3.

Our supply chain task force is collaborating

closely across the industry and transforming

how we think about procurement. This is in

the context of competition for resource

creating global supply chain constraints, with

many countries upgrading their grids to

connect renewable energy. While there is

some inflationary risk around the evolving US

Government position on tariffs, the impact of

the US tariffs is not expected to be material

relative to our spend. Over the last 12 months,

we have launched three major initiatives to

improve how we work in partnership with our

supply chain – the Great Grid Upgrade, HVDC

partnerships and a regional delivery model.

We remain committed to reducing our SF6

emissions by 50% by 2030. To achieve this,

we have collaborated closely with suppliers

and universities, successfully trialling

innovative leak repair technology, enabling us

to avoid outages and keep electricity flowing

while we work. Increased availability of SF6

free technology will be critical to reducing

future emissions and meeting this target.

Deliver for customers

This year we have continued works to connect

the world’s largest offshore wind farm,

Dogger Bank, connected the UK’s largest

transmission-connected battery energy

storage unit (at the time of connection),

connected the Greenlink interconnector

between the UK and Ireland, and completed

our first grid park at Sundon substation in

Bedfordshire. Grid parks are a new and

innovative way to connect renewable energy to

the network, requiring fewer system outages

and less commissioning resource, enabling

more renewable energy to connect to the

electricity grid more quickly at a lower cost.

We have collaborated closely with stakeholders

across the industry to establish widespread

agreement on the principles of the reforms

needed to reduce connection timescales. The

reforms are set to go live in spring 2025 to

address a connections pipeline (in excess of

420 GW) that is more than three times the most

ambitious net zero scenario published by the

National Energy System Operator (NESO) and

rapidly growing demand for data centre

connections. Demand for data centre

connections now totals 13.5 MW, the equivalent

of connecting four Hinkley Point Cs to our

network. Our T3 proposals will allow us to meet

the increase in demand head on by ensuring

that there is flexibility to respond to evolving

customer requirements.

In May 2025, the NESO published its interim

report investigating the outage following the fire

at our North Hyde electrical substation in March

2025. The report establishes the timeline and

sequence of events, and outlines further steps

required ahead of the NESO delivering their final

report, expected in June 2025. These

investigations provide an opportunity to stand

back and look together at how we can increase

collaboration to ensure the resilience of

important national infrastructure.

Read more about our business units on pages 256 – 261

26	National Grid plc  Annual Report and Accounts 2024/25
Our Business Units continued

Operate safely and efficiently

Our Lost Time Injury Frequency Rate (LTIFR)

was 0.07 for our contractors and 0.07 for

employees against the world-class safety

standard of 0.10. This is an improvement in

the safety performance of our contractors and

follows a concerted effort on contractor

safety, including embedding minimum

contractor training standards in contracts.

Over the course of 2024/25 we delivered £32

million of totex synergies from integration with

Electricity Distribution and over £14 million of

enduring opex savings.

Build tomorrow’s workforce today

Our RIIO-T3 plans are a step-change in how

we invest in our people and plan our

workforce. To deliver our commitments, we will

expand our workforce, retain our experienced

colleagues and upskill our people with the skills

needed for the energy sector of tomorrow. We

will continue to build a high-performance

culture that has safety at its core. We have

already embarked on this journey, expanding

our workforce by over 600 employees to end

the year close to 4,000 employees.

Looking ahead

The decisions we make in the next five years

will shape the energy system, our economy

and our society for generations to come. By

the end of RIIO-T3, we will have nearly

doubled the power that can flow across the

country, reorienting the UK’s once coal and

gas reliant legacy system into one based on

renewable energy and delivering the energy

infrastructure needed for a digital economy.

2025/26 and RIIO-T3 will see Electricity

Transmission power the country through

change, supporting economic growth and

decarbonisation as we deliver the grid of

tomorrow, today.

UK Electricity Distribution

Highlights

UKED plays a vital role as the region's engine

for growth. Every day we support 20 million

customers across 8 million homes and

businesses, delivering reliable electricity and

connecting people to the electricity they need

to power their lives.

Over the last year, UK ED has recorded strong

operational and financial performance as we

expanded our network, connected new

demand and generation customers, and

provided a safe and reliable service across

four licence areas. We continue to provide an

excellent service for our customers, with an

average satisfaction score of around 9/10.

With a change of government and an ever-

increasing focus on the future role of

networks, we are shaping policy that impacts

our sector and our region. The results of our

extensive engagement effort can be seen in

the publication of the National Infrastructure

Commission’s report into electricity networks,

and in our early engagement on the ED3

regulatory framework.

We are hard at work building the electricity

network of tomorrow, today.

Enable the energy transition for all

Throughout 2024/25, we have continued to

focus on customer affordability and are proud

of the support provided to our most vulnerable

customers. Our first Customer Vulnerability

Report in 2024/25 sets out how we helped

21,000 customers to save a total of £22 million

through our fuel poverty programmes, as well

as how we have continued to grow our Priority

Services Register. We have also delivered a

step change in our external engagement,

shaping national and regional policy and

ensuring we are supporting stakeholders with

their growth and net zero agendas.

Over 4,500 stakeholder interactions took place

through the year, making sure National Grid’s

voice is heard on the issues that matter, such

as the future development of electricity

networks, the ongoing development of

Regional Energy System Planners, Local Area

Energy Plans, and Connections Reform.

During the year, we awarded nearly £1 million

to 247 grassroots organisations through our

Community Matters Fund and our new

colleague volunteering programme enabled

our people to volunteer over 10,000 hours to

support local causes. We won the Corporate

Community Local Involvement Award for

impactful partnerships at the Charity Times

Awards. Through our Solar for Schools

initiative, we installed solar panels on five

schools, and we launched new safety

education resources for 4,953 schools,

educating over 85,000 children on electrical

safety.

Build the networks of the

future now

In 2024/25, we powered growth across the

Midlands, South West and South Wales,

connecting new homes and businesses, over

40,000 electric vehicle charge points, 40,000

domestic solar PV installations and 16,000

heat pumps. In addition, we connected 595

MW of clean, renewable electricity to the grid,

and through our Major Connections Strategy

accelerated timelines for 2.9 GW of distributed

energy resources by an average of 5.8 years in

support of local net zero ambitions. This

included the award-winning Horsey Levels

solar farm in Somerset.

Read more about our business units on pages 256 – 261

Strategic Report Corporate Governance Financial Statements Additional Information 27

Our new Connections team has been a

leading voice in connections reform, forming

strategic partnerships with customers,

including Octopus Energy and RWE. We held

our first ever ‘Connections Hackathon’ event

(in partnership with Octopus Energy), to

facilitate collaboration in the development of

solutions to enhance the overall connections

process. We championed the phrase ‘first

ready, first needed, first connected’ which has

been adopted by NESO and now used widely

in industry materials.

Our new ClearView products, ClearView

Connect and ClearView Charge, are designed

to increase transparency of data and

information for customers ahead of the

connection pre-application stage. 

During the year, we launched our DSO

strategy and continued to drive participation in

energy flexibility programmes to better utilise

network capacity and make room for growth.

Our independent DSO Panel, comprising

industry experts representing a broad range of

stakeholder views, is adding strategic value by

scrutinising DSO outputs. We have seen a

strong performance in DSO incentives.

Deliver for customers

In the period we scored an impressive 8.98

out of 10 for Combined Broad Measure

Customer Satisfaction and maintained high

network reliability of 99.98294%.

Our network successfully navigated a difficult

storm period. This included responding to

Storm Darragh, the largest storm faced by the

region in decades, with 96 mph winds and two

red weather warnings. We recorded over

4,000 incidents during Darragh, with around

750,000 customers impacted, three times

more than during Storm Arwen in 2021.

Responding to the storm required a full scale

response from the whole business and,

through prompt deployment of colleagues and

contractors and a fleet of five helicopters, we

were able to restore power to 95% of

customers within 48 hours. We also took

proactive measures to keep customers

informed through 22 broadcast media

interviews, with additional interviews carried

out in Welsh for Welsh-speaking customers.

We are also proud to have provided support

to other DNOs in Ireland, Northern Ireland and

Scotland in the form of field crews and

helicopters during Storm Éowyn.

We were successful in securing funding

through the Storm Arwen Reopener, which will

further enhance network resilience through

undergrounding high voltage overhead lines in

wooded areas and introducing pre-fix

technology.

Operate safely and efficiently

We are committed to ensuring the safety of

every colleague. In 2024/25 we designed and

delivered a company-wide behavioural safety

training programme and have trained over

6,000 colleagues to date. Our Lost Time Injury

Frequency Rate increased to 0.18 against the

world-class safety target of less than 0.10, but

the severity of recorded incidents has fallen.

We have exceeded our 2024/25 synergy

target across National Grid Group, delivering

£88 million of cumulative benefit since

acquisition, with high confidence to exceed

the £100 million target by the end of 2025/26.

Build tomorrow’s workforce today

We continue to invest in our workforce, hiring

over 670 people in 2024/25 boosting our

workforce to over 7,000 people working to

ensure a safe, reliable, and growing regional

network. It's not just our direct workforce, but

our work also supports thousands more jobs

throughout the supply chain.

We have continued to enhance our workforce

capability by focusing on developing effective

leadership through targeted development

interventions and implementing a strategic

workforce plan that provides a clear and

forward-looking view of our future needs. We

have also continued to hire a significant

number of apprentices and promote social

inclusion through our entry level Craft

Attendant role, which is reducing barriers to

talent entering our sector.

Looking ahead

In January 2025, we submitted our ED3

Framework Consultation Open Letter, setting

out our thoughts on the approach to the next

regulatory price control. The response

emphasises the need for a transformative

approach to electricity distribution networks to

meet the UK's net zero targets by 2050. We

also fed into the National Infrastructure

Commission study helping to shape the future

of distribution networks.

We will continue with engagement to influence

and shape Ofgem’s Sector Specific

Methodology Consultation for RIIO-3

alongside the Energy Networks Association

which is expected in Q3 2025.

US

Read more about our business units on pages 256 – 261

28	National Grid plc  Annual Report and Accounts 2024/25
Our Business Units continued

New England

US

Highlights

New England is focusing on business

fundamentals, prioritising key initiatives that

drive results and executing consistently to

deliver our five strategic priorities. We connect

our customers to the energy they need, while

delivering strong operational and financial

performance. We invested over $2 billion in

our networks in 2024/25 while maintaining our

focus on safety. With a new Rate Case Order

for the Massachusetts electric business

(MECO) and an approved Electric Sector

Modernization Plan (ESMP), we are well

positioned to deliver the infrastructure

required to help meet energy demand,

improve the customer experience and enable

economic growth in our region.

Enable the energy transition for all

Our ESMP, or Future Grid Plan, was approved

as a strategic roadmap by the Massachusetts

Department of Public Utilities (MADPU). The

five-year plan, designed to help Massachusetts

meet its clean energy goals, outlines c.$2

billion in anticipatory investments in the NE

electrical network which are foundational to

meeting future energy demand, projected to

more than double by 2050.

We received the MECO rate case order to

fund the investments needed to maintain and

improve reliability to support increased load

growth on the distribution network with timely

cost recovery. The approval of the capital

recovery mechanism will enable us to invest at

the pace required to meet customer needs

and is a shift toward forward-looking

ratemaking by the regulator. The core rate

case can fund increasing capital requirements

that are incremental to the ESMP. The order

also favourably addresses the affordability and

equity needs of our customers through multi-

tiered low-income discount rates and provides

performance incentive mechanisms aligned

with increasing distributed energy resource

interconnections and enrolment in low-income

assistance programmes.

This year we concluded a five-year project

across our southeastern Massachusetts and

Rhode Island transmission network to improve

asset conditions and reliability, the largest ever

project completed by our internal Transmission

Line Services team. This extended the life of

345 kv circuits across four transmission lines,

replaced over 750 poles and towers, and

added over 100 miles of optical ground wire.

In addition, we connected over 197 MW of

distributed energy resources, reduced lead

times for those connections, and enabled the

installation of 19.2 MW of EV charging

infrastructure.

Build the networks of the

future now

To more efficiently deliver our electric capital

project portfolio, we built new capability,

transformed how we secure long-term

resources, and developed demand forecasts

for key materials in categories with the highest

market risk and criticality to 2030.

The implementation of our Future Grid Plan

will be supported by a streamlined siting and

permitting process codified in comprehensive

climate legislation signed into law in

November 2024.

We continued to expand our fault location

isolation and service restoration (FLISR)

capability that enables self-healing networks

and improved reliability. In 2024/25 NE had 

c.70 successful FLISR operations which

restored power to 86,000 customers within a

minute and avoided 14 million minutes of

customer outages. Currently, 24% of our

customers are covered by a FLISR scheme

and we continue to deploy it across the state.

In our gas business we replaced 134 miles

(216 kilometres) of older leak-prone metal pipe 

to improve network safety and reduce

methane emissions. We also continued to

scale the use of low-dig technology to seal

over 800 joints. As part of the DPU’s

requirement to evaluate non-pipeline

alternatives, we are now progressing

geothermal pilot activities in Boston and

integrated energy planning to learn more

about the practical realities of transitioning

customers from gas to electric.

Deliver for customers

Significant steps were taken to improve the

customer experience and deepen customer-

centricity across all of our operations by

focusing on foundational processes and

evolving the structure and systems required

for the future. We established an Account

Management Team to better serve and

connect our largest customers and continued

to enhance our digital platforms to make it

easier for customers to do business with us.

We also successfully completed a billing

system conversion, putting all six million of our

US customers onto one platform. While the

migration was successful, there were some

issues leading to bill delays for some gas

customers that arose over the winter, and

which were subject to remediation following

an order from the DPU.

Our Advanced Metering Infrastructure (AMI)

programme is underway, installing the first

17,000 smart meters this year towards our

over one million meter goal. AMI infrastructure

will provide real-time energy insights to

customers and provide opportunities for

energy efficiency.

We have managed several storms, continuing

to be recognised for exemplary performance

in our service territory and in support of peers

in the aftermaths of hurricanes Helene and

Milton, including emergency response awards

from the Edison Electric Institute.

Read more about our business units on pages 256 – 261

Strategic Report Corporate Governance Financial Statements Additional Information 29

Operate safely and efficiently

Our LTIFR in the year was 0.08 which is

consistent with the prior year. We are

committed to serious injury and fatality

reduction initiatives and to ensuring that all

colleagues are engaged with safety matters

and safety excellence. In our bi-annual Safety

Culture Survey engagement rose significantly

with results placing us in the top quartile of

industry peers. The gas team received a

recognition award for incident reduction and

safety culture from the Northeast Gas

Association.

Our business achieved operational efficiencies

of $30 million this year through various

actions, including enhanced reliability

management in our electric business, higher

utilisation of customer self-service tools and

reduced leak work load.

Build tomorrow’s workforce today

Our Strategic Workforce Development

Programme partners with academic,

community-based and training organisations

to provide trainees with career exposure,

mentoring, intern and employment

opportunities within National Grid. Nearly 100

graduates from our Clean Energy Academy

programme have been hired into roles across

the business.

Looking ahead

We are committed to delivering the capital

projects that our customers and communities

are counting on, from physical infrastructure to

innovative enabling technologies. And we will

coordinate all efforts to achieve the regulatory

and policy outcomes critical to our business,

including the implementation of our MECO

Rate Case and ESMP while keeping

affordability a core component of our mission

to provide safe, reliable energy.

New York

Highlights

New York continues to perform well across

our 26,400 square mile service territory. As we

progress toward a smarter, stronger, cleaner

energy system, decarbonising our networks

remains a priority. In August 2024, we

received approval from the New York Public

Service Commission (PSC) for a three-year

rate settlement for our down state gas

distribution businesses, KEDNY and KEDLI. In

May 2024, Niagara Mohawk filed a joint

proposal with the PSC to enhance system

reliability and advance New York’s clean

energy goals.

Enable the energy transition for all

The KEDNY and KEDLI rate case agreement

includes approximately $5bn in capital

investments to ensure the reliable and safe

operation of the network. Additionally, the

agreement provides funding for programmes

to promote energy efficiency and reduce

emissions, and initiatives to assist vulnerabile

customers.

Niagara Mohawk’s filing proposes resetting

electricity and natural gas delivery prices and

focusing on maintaining critical infrastructure,

improving customer service, with additional

assistance to vulnerable customers, promoting

economic growth, and preparing electricity and

gas networks for the energy transition. The PSC

Board’s decision is expected in summer 2025.

The NY Proactive Planning Proceeding enables

anticipatory investment for economic

development and to electrify heat and

transportation. We proposed a capex portfolio

of urgent upgrade projects, which we will move

forward with on receipt of the PSC order.

Build the networks of the

future now

Our Upstate Upgrade is a $4 billion investment

to transform the electricity delivery system and

propel economic growth across upstate New

York. The multi-year initiative includes

replacing and rebuilding transmission lines,

building and reconfiguring substations,

deploying state-of-the-art technologies to

improve resiliency and reliability, and

connecting clean energy produced locally. The

projects will improve service to our 1.7 million

customers, benefit the regional economy, and

support the goals of New York’s Climate

Leadership and Community Protection Act

(CLCPA).

Today, our New York Future of Electric

Networks plan has enabled over 5,000

charging ports and connected 2,100MW of

distributed energy resource (DER). To support

the increase of renewables coming online, we

have streamlined the connection process,

achieving faster connections to our large scale

renewables, DERs, and EV customers.

To boost network efficiency and grid

management, we completed installation of

over 775,000 smart meters, covering more

than a quarter of our customers, with a goal of

100% in four years. In parallel, we launched

the Sense app for customers. It provides real-

time energy insights at the appliance level to

drive behavioural shifts.

Read more about our business units on pages 256 – 261

30	National Grid plc  Annual Report and Accounts 2024/25
Our Business Units continued

We commissioned the largest dynamic line

rating (DLR) project in the US using 26

LineVision sensors on four 115kV lines in

Western New York. This allows us to reduce

curtailment of renewable energy and

congestion in constrained areas, limiting

unnecessary transmission upgrades and new

builds. Additionally, we commissioned our first

digital substation in Oswego. We are exploring

the benefits that digitising can bring in

reducing construction, operation and

maintenance costs while improving safety

and reliability.

We continue to deploy FLISR technology. In

2024/25, we have avoided more than 28,000

service interruptions and more than 5 million

minutes of customer downtime.

Our downstate New York rate case approved

funding for the connection of four renewable

natural gas (RNG) facilities. These projects will

convert food waste and/or wastewater sludge

to produce approximately 1.15 million

dekatherms per year of RNG. This is

equivalent to annual natural gas demand from

approximately 9,200 homes, avoiding

approximately 590,000 metric tonnes of CO2

emissions per year.

Our strategy aims to leverage innovation to

future proof our business. Examples include

the EV Charge Smart Plan, which helps makes

electric vehicle charging at home affordable,

flexible and environmentally friendly with

nearly 2,000 customers; and a collaboration

with ULC Robotics to pilot a robotics tool to

repair large numbers of leaking or leak prone

gas joints.

We filed our long-term gas plan with the PSC,

outlining our vision for the future of gas and

the steps needed to put New York on track to

achieve the CLCPA’s emissions goals. We

continue to engage with PSC and other

stakeholders while awaiting feedback

and direction.

Deliver for customers

Our electric operations successfully prepared

for and responded to severe weather,

including 16 major storm events. We achieved

an electricity restoration rate of 95% within 10

hours for impacted customers.

We won six awards from Edison Electric

Institute (EEI) this year for our restoration and

assistance efforts after severe weather. Our

crews were recognised for handling tornadoes

in Western New York, thunderstorms and

tornadoes in Central and Eastern New York,

and strong winds, rains, and flooding from

Hurricane Debby in Central and Eastern New

York. Separately, our crews assisted in

restoration in Central Hudson from severe

thunderstorms in June 2024. We also

deployed 98 crews to Tennessee, Virginia, and

West Virginia in response to Hurricane Helene,

and then deployed many of them to Florida to

repair damage from Hurricane Milton.

In May 2024 we completed consolidation of

our two US customer billing systems. This

change will deliver improved customer

experience and satisfaction, while addressing

the high cost of change by eliminating manual

processes. We have also enhanced our digital

platforms, with increased capability for self-

service, go paperless, and click-to-pay text.

Our mobile app has biometric authentication,

creating an improved log-in experience.

Our Project C initiative continues to deliver

community benefits. During the annual Day of

Service, over 2,200 colleagues volunteered at

38 events across New York. Since its launch

four years ago, Project C has supported more

than 1,700 community partnerships, planted

or donated over 2,000 trees, trained 6,400

workers to grow the clean energy workforce,

overall volunteering over 49,000 hours, making

a lasting difference in our communities.

We awarded over $11 million in economic

development funds for projects, including an

electric infrastructure upgrade for a new $500

million food manufacturing facility in

Franklinville, which will create and retain more

than 400 jobs. We additionally awarded five

agribusiness customers funds to install

renewable energy systems on their farms.

Operate safely and efficiently

We continue to stand firm in our commitment

to keep our colleagues, contractors,

customers and the public safe. We ended

2024/25 with an LTIFR of 0.11, above our

target. We continue to be laser focused on

preventing serious injuries and fatalities and

increasing safety engagement at all levels.

The Northeast Gas Association (NGA) gave us

the Pipeline Safety Management System

Recognition Award for outstanding

commitment to safety and operational

excellence. We received the award for

demonstrating Operational Excellence in

pipeline safety for our work leveraging

technology and Intent Based Leadership, a

Read more about our business units on pages 256 – 261

Strategic Report Corporate Governance Financial Statements Additional Information 31

framework that helps organisations create

leaders at all levels to drive safety

improvements.

We continue to focus on operating efficiently

and effectively for our customers. Our

business achieved operational efficiencies

amounting to $59 million in 2024/25.

Build tomorrow’s workforce today

To support business growth and proactively

mitigate labour constraints, we have strategic

workforce planning initiatives underway that

will enable us to identify and forecast resource

needs and plan our workforce for the next 10

years. We identified a need for over 500

additional employees to support growth in the

New York electric business over the next 10

years (a 20% increase in workforce), including

over 350 new roles in the next three years. We

have enhanced recruitment and retention

strategies for difficult-to-hire and niche roles

to close capability and headcount gaps

through early career, graduate development

and Gridtern programmes.

Looking ahead

We will continue to focus on scaling

operations to meet electric growth

opportunities, including increased loads,

electrification of heat and transport, and

renewable energy expansion.

We will concentrate on the long-term role of

the gas network, alongside electrification, in

the New York economy by using lower carbon

fuels and enhancing energy efficiency,

reducing emissions and maintaining a safe

and affordable network.

We will continue our efforts to improve

customer experience by simplifying business

interactions, helping manage energy use, and

supporting the adoption of clean energy

technologies.

International

National Grid Ventures

Highlights

National Grid Ventures develops, constructs,

operates and invests in energy assets and

businesses across the UK and US which

deliver revenue through stable, long-term

regulated frameworks and contracts. The

business prioritises asset performance and

safety to ensure reliable delivery of energy to

customers while developing opportunities

for growth.

We operate six interconnectors with a total

capacity of 7.8 GW, connecting the UK to

France, Belgium, the Netherlands, Denmark

and Norway. We have seen good availability

across our interconnector fleet. Viking Link

reached 92% availability, strong performance

for a new asset. IFA2 experienced unplanned

outages during the year which, together with

outages at BritNed, contributed to an overall

interconnector availability of 86% across the

year.

Half of our interconnectors operate within cap

and floor regimes, with revenues over the cap

going back to UK consumers every five years.

The continued strong performance of our

interconnectors has enabled the return of an

additional £89 million to customers in the

current year. This is part of £277 million in

returns to customers over the past two years,

with a further £149 million forecast to be

returned over the next two years resulting in a

total return to customers of £426 million. IFA2,

one of our two interconnectors operated

jointly with French TSO RTE, experienced an

unplanned outage in September 2024 due to

technical issues in its UK converter station.

The NGV team worked quickly to identify a

solution and returned the asset to service

within 66 days.

Our NGV US business continued developing

and operating electricity transmission,

generation, battery storage and LNG storage

assets. Our electricity transmission joint

venture, NY Transco, continued construction

on its Dover project to improve grid flexibility

and resiliency in New York and optimise

interconnection to New England. NY Transco

is also progressing Propel NY Energy, a 90-

mile electricity transmission project that would

improve Long Island's links to the state's grid

and boost overall system reliability to ensure

uninterrupted delivery of energy to high

demand areas. Our East Hampton battery

storage facility returned to service in July 2024

after the project experienced a fire in 2023.

Enable the energy transition for all

In May 2024, National Grid announced the

planned divestment of National Grid

Renewables and Grain LNG. In February 2025,

NGV announced the sale of National Grid

Renewables to Brookfield Asset Management

with completion expected in the first half of

2025/26. We are progressing the planned sale

of Grain LNG and expect to announce a buyer

later this fiscal year.

During 2024/25, in light of developments in the

US, we paused our development of

Community Offshore Wind (COSW), a joint

venture with RWE. Management subsequently

assessed that the investment currently has

negligible value and a £303 million impairment

has been recognised as an exceptional item.

Read more about our business units on pages 256 – 261

32	National Grid plc  Annual Report and Accounts 2024/25
Our Business Units continued

Build the networks of the

future now

In the UK we continued to progress the

development of the next generation of

interconnectors. These offshore hybrid assets

(OHA) will connect offshore wind farms to

multiple countries via HVDC subsea cables.

We achieved a major milestone in late 2024,

receiving approval from Ofgem for an OHA

pilot project: LionLink to the Netherlands, a

joint venture with Dutch TSO TenneT. We have

now agreed with Ofgem the final economic

regulatory arrangements for the project,

allowing us to order long lead items.

In the US, we are identifying attractive

competitive transmission investment

opportunities in the Northeast as well as in

the Midwest and mid-Atlantic interconnection

areas.

Grain LNG saw significant progress on the

Cap 25 capacity expansion project, which is

due to be completed in 2025/26. Once online,

this will increase Grain LNG’s storage capacity

to 1.2 million m3 and its throughput to meet

33% of GB gas demand.

Deliver for customers

NGV achieved a high customer satisfaction

score of 87% across all business units.

In 2024/25, our interconnector portfolio

continued to play an integral role in the UK’s

energy security by delivering 38 TWh, the

equivalent of powering over 14 million

households.

Our NGV US business progressed how it

engages with its local communities and

understanding of public sentiment. During

2025, we launched Doorstep, a community

engagement platform to enable those most

personally impacted by our projects to

communicate their thoughts, providing us with

real-time insights into local views.

Strategic Report Corporate Governance Financial Statements Additional Information 33

Operate safely and efficiently

We have a renewed strategy to drive

meaningful improvements in how we report on

and build safety culture, emphasising leading

indicators and a proactive safety environment.

In NGV, we were able to achieve an LTIFR in

line with the Group’s 0.10 target, and a

Serious Injury and Fatality Frequency rate

(SIFFR) of 0.00 this year, concluding the year

without a single serious injury across the

business unit.

The NGV US business has been celebrated as

a leader in process safety excellence, with

National Grid Generation ranking no. 2 out of

316 sites in a third-party safety audit of

organisations worldwide. The business was

also able to provide excellent availability and

run time, meeting peak summer demands

during a hotter-than-average summer season.

Our operational and safety performance

contributed to successful financial

performance.

Build tomorrow’s workforce today

We strive to be an enjoyable and inclusive

place to work. In this year’s Grid:Voice

employee engagement survey, 81% of NGV

employees said they felt NGV was a safe

place to say what they think, and that we are

driving a culture of safety and innovation.

Looking ahead

Going forward, NGV will focus on

interconnectors, including offshore hybrid

assets, in the UK, and competitive electricity

transmission projects in the US. Projects will

be assessed for an acceptable risk-return

balance and against the capital requirements

of the wider Group.

Other activities

Highlights

Other activities primarily relate to National Grid

Partners, the corporate venture capital and

innovation arm of National Grid, as well as UK

property, insurance and corporate activities.

In 2024/25, National Grid Partners invested

more than $50 million in start-ups, including

three new portfolio companies and 13 follow-

on rounds. It now invests in 50 companies and

five limited partner investments in strategic

venture funds.

Looking ahead, we will continue to innovate

and invest in the latest technologies to

support the Group.

34	National Grid plc  Annual Report and Accounts 2024/25
Internal control and risk management

The Board is committed to effective risk management in delivering our

strategy, protecting our reputation and assets, and safeguarding the

interests of our stakeholders.

Our ERM framework

National Grid is exposed to a variety of uncertainties that could have a

material adverse effect on the Group’s financial position, our

operational results, our reputation and stakeholder interests;

represented by our Principal Risks. These uncertainties are managed

through our Enterprise Risk Management (ERM) Framework which

includes our approach to internal control. It supports the delivery of our

vision and strategy as described on the inside front cover and page 14.

We formally assess the effectiveness of our framework annually and

carry out continuous monitoring and maintenance. This is supported by

the results of the Certificate of Assurance (CoA) process as described

on page 116.

The Board has confirmed the effectiveness of National Grid’s system of

risk management and internal control.

Governance and oversight

The Board is accountable for the Group’s risk management and internal

controls systems with oversight responsibilities carried out by the Audit

& Risk Committee (see pages 112–118). The Board sets and monitors

the amount of risk the Group is prepared to accept in delivering our

strategic priorities and Principal Risks (our risk appetite).

Governance: Board and Audit & Risk Committee, Management Oversight Committees
Establishes the vision, values and strategic objectives of the business, and provides governance and oversight of the risk management framework and reporting. The Board sets risk appetite for the organisation.
First Line: Business	Second Line: Risk and Compliance Functions
Applies the business practices, processes and controls to achieve business objectives and manage risk appropriately in line with risk appetite.	The Chief Risk Officer establishes National Grid’s ERM framework. Second Line teams embedded in the business and functions provide advice, monitoring and assurance, and reporting for effective application of the framework.
Third Line: Corporate Audit
Provides independent assurance on the Company’s system of risk management and internal control through delivery of the audit plan and other assurance work. External assurance providers support Second and Third Line work where appropriate to provide independent perspectives, provide specialist expertise and ensure an efficient approach to risk and assurance work.

The business then develops appropriate risk responses and mitigations

to ensure risks are managed within appetite.

We deploy the ‘Three Lines’ model to deliver our risk management and

internal control activities (see diagram below).

All Principal Risks are reviewed by the Group Executive Ethics, Risk &

Compliance Committee and the Board at least twice annually.

Strategic Report Corporate Governance Financial Statements Additional Information 35

Risk is an inherent part of doing business and our risk management

process aims to provide reasonable assurance that we understand,

monitor and manage the main uncertainties that we face in delivering

our strategic priorities.

The ERM framework applies to all risks of reasonable magnitude.

Our Principal Risks and a summary of actions taken by management are

provided in the table below. The Board reviewed the risks as part of the

bi-annual Group risk review, which incorporates feedback and

recommendations from relevant Board committees. Further information

can be found on page 116.

We have provided an overview of the key inherent risks on pages 36 –

41, and specifically our key financial risks, which are incorporated within

note 32 to the consolidated financial statements. Risk outlooks reported

below consider the changing risk landscape, our risk response, including

controls and any additional mitigation actions, and may be influenced by

internal or external developments.

Read more on internal control and risk factors on pages 262 – 268

Group Principal Risks

There have been no changes to our Principal Risks, and we continue to assess, monitor and manage our risk exposure as described below.

Strategic Principal Risks		Operational Principal Risks
Strategic risks are risks, both internal and external, associated with the business model, corporate strategy and long-term planning.		Operational risks arise from our core business practices, which rely on our systems, equipment, processes and people.
	Satisfactory regulatory outcomes		Catastrophic cyber security incident
	Climate change mitigation		Significant disruption of energy
	Political and societal expectations		Upstream supply
	People capability and capacity		Significant safety or environmental event
			Major capital programmes
Financial Principal Risks		Compliance Risks
Financial risks are risks associated with National Grid’s ability to raise capital, maintain access to capital and deliver profitable growth.		Compliance risks relate to compliance with laws and regulations, industry standards, contract requirements and internal policy.
	Financing our business		Legal and regulatory compliance frameworks operate at a jurisdictional level (i.e. UK, US federal, New York and Massachusetts) and therefore apply across all relevant National Grid businesses

36	National Grid plc  Annual Report and Accounts 2024/25
Our principal risks and uncertainties

Link to strategy				Risk outlook
	Enable the energy transition for all		Operate safely and efficiently		Increasing
	Build the networks of the future now		Build tomorrow’s workforce today		Decreasing
	Deliver for our customers				No change

Strategic Principal Risks
	Satisfactory regulatory outcomes
Description		Actions taken by management
There is a risk that we fail to influence future energy policies and secure satisfactory regulatory agreements because of lack of insight or unsuccessful negotiations leading to poor regulatory outcomes, energy policies that negatively impact our operations, impacts on market prices, reduced financial performance, fines/ penalties, increased costs to remain compliant and/or reputational damage.		The scale of change required to enable the energy transition is unprecedented, so we are focused on having the appropriate plans, relationships and levels of engagement to proactively shape price controls and rate case filings with clear positions and engagement/advocacy plans. There are also particular challenges in balancing affordability and reliability with necessary funding and investments alongside pressure to reduce customer bills. We are developing a clear vision of how regulatory frameworks need to evolve and maintaining active dialogue and positioning with our regulators. This has resulted in: •Strong progress on the ASTI framework and approvals. •Successful sale of the ESO to the UK Government. •Working with Ofgem and DESNZ to realign networks and connections reform with Net Zero 2030 targets. •Progressive RIIO-T3 Business Plan (BP) submitted to Ofgem, including a more investable financial framework. •Progressive response and engagement on the ED3 framework consultation promoting a major shift back to incentive and output-based regulation. •Positive settlements on recent US rate cases and upcoming rate cases progressing well. •Working with Corporate Affairs to adjust and position our external policy advocacy to support our regulatory objectives. •Active monitoring of concurrent regulatory reforms being pursued by respective regulators.
Impact on strategy:
Risk outlook: Outlook remains unchanged
Outlook is unchanged

Strategic Principal Risks
	Climate change mitigation
Description		Actions taken by management
There is a risk that we fail to identify and/or deliver upon the actions necessary to meet our climate change targets and enable the wider energy transition because of poor monitoring and response to external developments associated with mitigating climate change, leading to legal risks or reputational impacts of not meeting our climate change targets and in the longer term reaching net zero by 2050.		We continue to monitor the actual and potential impacts of climate change and implement risk management strategies to mitigate these risks as part of the energy transition, including: •Setting near-term climate targets to align with the SBTi’s 1.5ºC pathway. •Governance processes aligned with the aim of ensuring that emissions reduction strategy, policy, advocacy and external messaging is integrated throughout our business, and embedded into financial planning processes and performance management. •Updated our Climate Transition Plan to include revised pathways and details on the dependencies, policies and regulation that are key to achieving our targets. •Reporting on progress against our targets, including how we are addressing dependencies and policy and regulation to support progress. •Changes to our sustainability operating model to help embed sustainability resources and capabilities in our business and provide greater clarity on roles and responsibilities.
Impact on strategy:
Risk outlook:
Outlook is unchanged

Strategic Report Corporate Governance Financial Statements Additional Information 37

Strategic Principal Risks
	Political and societal expectations
Description		Actions taken by management
There is a risk that we do not position ourselves appropriately to political and societal expectations because of a failure to proactively monitor the landscape or to anticipate and respond to changes leading to reputational damage, political intervention, threats to the Group’s licences to operate and our ability to achieve our objectives.		To address continued rapid change in the external political and policy environments, horizon scanning processes have been implemented to monitor and positively influence perceptions of our business and our reputation. Other mitigations include: •Ensuring our operating model is positioned to support the business and deliver on requirements. •Instituted a robust stakeholder engagement strategy. •Considered a range of outcomes through scenario planning to ensure flexibility in our response processes aligned to the ever-changing external environment. •Defined policy priorities aligned to the strategic priorities of the company. •Developed a social impact framework to ensure strategic allocation of funding to advance our vision. •Monitoring of media, social and political activities on a daily, weekly and monthly basis, and take appropriate action to ensure National Grid is able to engage ahead of the need to respond to the environment we operate in and serve the needs of customers, communities and stakeholders. •Horizon scanning improvements have brought a global lens to cross-business impacts within our operating regions. •Growth of our campaigns and communications across our operating regions to amplify our brand’s vision and establish our brand as an innovative leader for energy networks.
Impact on strategy:
Risk outlook:
Risk outlook increasing due to continued rapid change in external political and policy environments.

Strategic Principal Risks
	People capability and capacity
Description		Actions taken by management
There is a risk that we do not have, across our workforce and within our leadership, the capability or capacity necessary to deliver on existing or future commitments because of ineffective planning for future people needs, insufficient development of people and failure to attract and retain people in a competitive market for skills and talent, leading to failure to deliver on our business goals, strategic priorities and vision.		We are involved in several initiatives to help secure the future engineering talent we require, including: •Introducing a consistent method of strategic workforce planning, with a dynamic 10-year look ahead, to enable better understanding of future workforce needs and enable graduate training programmes, attraction and retention strategies to be aligned to forecast workforce needs. •Expanding apprenticeships, graduate development programmes and industrial placements. •Building our reputation, brand and employee value proposition to enable National Grid to be seen as a place to work for those wanting to be involved in the energy transition. •Strengthening our recruitment capabilities and embedding key resource where they can understand customer needs. •Aligning our operating model to improve connectivity across our People function. •Continued rigorous development of our succession planning and development planning processes, particularly at senior levels.
Impact on strategy:
Risk outlook:
Outlook is unchanged

38	National Grid plc  Annual Report and Accounts 2024/25
Our principal risks and uncertainties continued

Operational Principal Risks
	Catastrophic cyber security incident
Description		Actions taken by management
There is a risk that we are unable to adequately anticipate and manage disruptive forces on our systems because of a cyber-attack, poor recovery of critical systems or malicious external or internal parties resulting in an inability to operate the network, damage to assets, loss of confidentiality, integrity and/or availability of systems.		We employ technical, administrative and physical cyber security controls for both information technology (IT) and operational technology (OT) that align to the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) v1.1, as well as all applicable laws and regulations. Controls are verified and validated through internal and external audits and risk assessments, penetration tests, adversary simulation, incident response exercises, compromise assessments, continuous control measurements and other assessment methods, including: •National Institute of Standard Cybersecurity Framework (First-Line Assessment); •IT Control Set Effectiveness (Second-Line Testing); and •Corporate Audit and Third-Party Inspections/Assessments. In addition, this period we note that we have continued to focus on our IT and OT security improvements and human factors. Notably, we have focused on control improvements recommended by government and private intelligence associated with the increasing threat landscape. This has resulted in strengthened controls for ‘perimeter’ (internet facing) infrastructure and fundamental improvements in identity account access (especially around privileged accounts) and credential hygiene. Additional resilience exercises have been conducted with the Group Executive (‘live play’ event), with plans to extend these exercises more widely throughout the business.
Impact on strategy:
Risk outlook:
Outlook is unchanged

Operational principal risks
	Significant disruption of energy
Description		Actions taken by management
There is a risk of failure to predict and respond adequately to significant energy disruption events to our assets resulting from asset failure (including third party interactions e.g. control systems protection etc.), climate change, storms, attacks or other emergency events leading to significant customer harm, lasting reputational damage with customers, regulators and politicians, material financial losses, loss of franchise or significant damage to investor confidence. (See page 25 for information on the outage at North Hyde)		National Grid continues to prioritise preventative measures and response plans to address the risk of significant disruption of energy. The organisation is actively engaged in climate adaptation work, conducting Group-wide assessments and planning for multi-decade adaptation to bolster resilience. These strategic actions, including various proactive preventative measures, climate adaptation plans and multi-decade adaptation, reflect the commitment to maintain a robust energy supply system and proactively responding to the challenges posed by evolving climate patterns and emergency events. Further actions include: •Acceleration of proactive maintenance and asset checks ahead of winter to maximise network availability with an emphasis on system reliability assets, sub-sea cable monitoring and ongoing year-round maintenance. •Collaboration with energy suppliers, regulators and government departments to explore industry mitigations aimed at maximising supply, managing demand and enhancing storage. •Enhancement of flood contingency plans and robust preparedness for winter and summer, including scenario planning, and testing response plans with proactive communication strategies. •Implementation of gas mains replacement programmes and a storm-hardening programme, along with outage planning to ensure swift response and recovery. •Group-wide assessment of climate vulnerabilities and initiation of multi-decade climate adaptation plans for future rate cases, complemented by existing resilience investments to ensure long-term preparedness. •Development of emergency response plans covering wildfire and cyber scenarios, along with asset risk assessment and integrity management plans.
Impact on strategy:
Risk trend:
Outlook is unchanged

Strategic Report Corporate Governance Financial Statements Additional Information 39

Operational Principal Risks
	Upstream supply
Description		Actions taken by management
There is a risk of failure to prepare and respond adequately to disruptions in energy supply that are outside our control because of third party asset failure, system imbalances, and customer demand outstripping capacity, with potential adverse impacts on our customers, reputational damage, cost increases and regulatory consequences.		The organisation remains vigilant to potential upstream supply issues, recognising the need for continued monitoring and adaptation should a significant issue arise. The organisation is actively monitoring extreme weather and natural hazards, geopolitical impacts on energy security, regulatory shifts and stability of our key suppliers. These strategic actions, including various proactive preventative measures, reflect our commitment to maintain a robust energy supply system and proactively responding to the challenges posed by evolving climate patterns and emergency events. Current actions include: •Lessons learned from winter storms. •Proactive engagement with third-party suppliers and external stakeholders to foster better understanding and preparedness. •Intervention in rate cases for improved communication and reliability reporting and to gain a more thorough understanding of their modernisation programmes. •Operationally standing up compressed natural gas (CNG) facilities with onsite trailer storage and portable LNG facilities to mitigate outages at temperatures above 15°F. •Building the capability to reduce gas demand if needed through testing of emergency preparedness.
Impact on strategy:
Risk outlook:
Outlook is unchanged

Operational Principal Risks
	Significant safety or environmental event (asset failure)
Description		Actions taken by management
There is a risk of a catastrophic asset failure because of failure of a critical asset or system, substandard operational performance or inadequate maintenance, third-party damage and undetected system anomalies leading to a significant public or employee safety and/or environmental event.		National Grid takes a holistic approach to managing this risk and focuses on proactive preventative measures including inspection and maintenance of assets. The focus is on emphasising preventative mitigating actions to maintain operational readiness of our assets and ensuring we have effective response plans should an issue occur. Key mitigations assessed include those in the following categories: •Ensuring operation of an effective Process Safety Management System. •Maintaining robust asset management data and records. •Timely maintenance and condition assessments to ensure asset health. •Enacting defects management to effectively and timely address defects. •Ongoing leak-prone pipe replacement.
Impact on strategy:
Risk outlook:
Outlook is unchanged

40	National Grid plc  Annual Report and Accounts 2024/25
Our principal risks and uncertainties continued

Operational Principal Risks
	Major capital programmes
Description		Actions taken by management
There is a risk that we are unable to deliver on our major capital project programme within the agreed cost and schedule baselines because of misalignment or lack of clarity with regulatory expectations, unclear financial frameworks to incentivise investment, complex planning requirements, external impacts on supply chain or a failure to demonstrate clear, long-term economic benefits to communities leading to increased costs, compromised quality, reputational damage and detrimentally impacting our ability to deliver our clean energy transition strategy.		The organisation has conducted extensive reviews of the management of major projects and initiated Group-wide development of our common standards enabling a consistent control framework to keep pace with our growing capital portfolio, including: •Establishment of the company-wide Portfolio Management Office as a core function to manage and oversee all project risks, safety, management of change and project management processes. •Definition and establishment of minimum core processes and controls expected for each business unit in developing and delivering major projects. •Conducting a maturity assessment of major projects against standards and identified gaps and priority action lists for targeted improvement. •Securing the regulatory framework with Ofgem and agreement of funding for the next set of ASTI projects and clarifications on change controls for delay events. •Engagement of all individual Project Management Offices and key stakeholders together to align best practices and risk management efforts and provide peer-to-peer review opportunities.
Impact on strategy:
Risk trend:
Outlook is unchanged

Financial Principal Risks
	Financing our business
Description		Actions taken by management
There is a risk that we are unable to fund our business efficiently as a result of a lack of access to a wide pool of equity and debt investors, market volatility, unsatisfactory regulatory outcomes or unsatisfactory financial or operational performance of the business, leading to a lack of access to capital, impacting our ability to achieve our strategic objectives, including our proposed capital investment programme.		We introduced a more focused strategy in 2024/25, a new five-year framework including c.£60 billion of capital expenditure, and a comprehensive financing plan. Key actions include: •Reviewed the financing outlook, including differing scenarios. •Launched a successful £7 billion Rights Issue (with high take up from investors), together with an alteration to our dividend. •Regularly reviewing different pools of debt capital. •Announced our progressed sale of certain non-core assets. •Engagement with our credit rating agencies which affirmed a stable outlook, although one agency lowered its threshold, citing long-term exposure to gas. The financing plan includes continued use of senior debt, an intention to issue hybrid debt later in the five-year plan period, and retention of proceeds from certain asset disposals.
Impact on strategy:
Risk trend:
Outlook is unchanged

Strategic Report Corporate Governance Financial Statements Additional Information 41

Cyber security risk management and strategy

Cyber security risk is visible to and continuously monitored by our

Group Executive and Board of Directors. We employ the NIST cyber

security framework as the basis for identifying, assessing, measuring,

monitoring, controlling and responding to cyber security risks. Our risk

management process, aligned to National Grid’s ERM framework,

covers all IT and Operational Technology (OT) assets, including

systems and data, whether these assets belong to the Company or

third parties. Risk is assessed at multiple levels within the Company,

including first line business assessment, second line assurance

(including controls testing) and third line independent reviews. In

addition to comprehensive internal assessment and audit programmes,

we engage various external third parties and cyber security firms in

support of our cyber security risk management. This combination

provides verification and validation of our approach, as well as

specialised expertise for specific regulatory requirements and

technologies. Further assurance is provided through risk assessments,

penetration tests, adversary simulation, incident response exercises,

and compromise assessments. We also maintain an independent

Supply Chain Risk Management (SCRM) function responsible for

identifying and overseeing cyber security risks associated with threats

from our use of third-party service providers. Controls implemented by

SCRM are designed specifically to help mitigate the risk profile of the

supplier and includes consideration of their degree of access to

National Grid’s systems, and the classification of data they process for

National Grid. To date, there have been no cyber security incidents that

have materially affected the Company’s business strategy, results of

operations or financial condition. We acknowledge that the global cyber

security risk environment for critical infrastructure providers is

extremely challenging and dynamic.

Cyber security governance

The Board prioritises the mitigation of cyber security risk through

National Grid’s ERM framework. Responsibility for oversight lies with

the Board and is delegated to the Audit & Risk Committee. Governance

includes regular reviews and approvals of the status of the risk and

provides oversight of National Grid’s cyber security risk management

practices, including disclosure of material cyber security incidents, as

well as the general obligation to ensure the proper risk oversight

structure of cyber.

National Grid’s Chief Information and Digital Officer (CIDO) and Chief

Information Security Officer (CISO) regularly provides reports to the

Audit & Risk Committee and hold additional briefings to the Board at

least once per year. The Audit & Risk Committee and Board work

collaboratively to ensure oversight with the proper focus of each

respective Board Committee.

Cyber risk reporting includes, among other things, current and

emerging cyber security threats to National Grid and relevant sectors,

the status of key risk indicators, controls, the results of any relevant

internal or external assessments, any key incidents escalated to

management during the prior and current reporting period and the

status of cyber security improvement programmes. At the executive

and management level, the CIDO is the owner of the cyber security

Principal Risk, and the CISO has primary responsibility for the

development, operation and maintenance of National Grid’s cyber

security programme. Under the CISO’s oversight, National Grid’s cyber

security team implements and provides governance and functional

oversight for cyber security services, controls and processes. Cyber

security processes include escalation of certain risks and incidents,

including those that originate or occur at third parties, to legal and other

executive leaders as appropriate, based on the severity of any such risk

or incident.

Emerging risks

We consider emerging risks throughout the year to ensure we understand potential future material impacts on our risk profile and implement

appropriate monitoring and responses accordingly. They are assessed in terms of potential impact and timeframe.

Emerging risk reviews are reported at least bi-annually to the Group Executive Ethics, Risk and Compliance Committee, Audit & Risk Committee,

and the Board.

Our top three emerging risks at the time of reporting are:

Emerging risk	Impact on strategy	Velocity
		Immediate < 3 years	Short term 3–5 years*	Medium term 5–10 years
Geopolitical tensions (business or supply chain disruption)
Artificial intelligence (strategic opportunities or disruption)
Affordability (customer affordability issues)

*  We continuously monitor our short-term emerging risks to ensure we respond to changes in our risk assessments appropriately.

42	National Grid plc Annual Report and Accounts 2024/25
Responsible Business review

Delivering our

Our environment p44

Our customers and communities p48

Responsible

Business Charter

This year, we have made good progress on

the emissions reductions where we have full

control, ensuring our workforce feels

welcome and empowered, and health and

safety. We have exceeded our target on

developing skills in the communities we

serve. There has been limited progress on

emissions reductions where we have less

control, partly due to our increased

investment in energy infrastructure,

although this will ultimately reduce future

emissions in our jurisdictions. Our support

to help vulnerable households manage

energy costs continues; however, we

recognise we can do more to meet the

needs of our customers.

For the first time, we are integrating our annual progress update against

our Responsible Business Charter (RBC) commitments into our Annual

Report and Accounts.

Our RBC details our approach to being a responsible business and the

commitments we have made. It focuses on three core pillars: our

environment, our customers and communities, and our people. This is

supported by our Responsible Business fundamentals to ensure we’re

operating responsibly.

This progress update is supported by further content on our website,

where there are more details on our Responsible Business activities

and stories from across our business.

All 2024/25 Responsible Business metrics can be found in the

Responsible Business data tables on our website.

Responsible Business: website	Responsible Business: data tables	Responsible Business: Charter

Strategic Report Corporate Governance Financial Statements Additional Information 43

A review of our Responsible

Our people p51

Business progress in 2024/25

Responsible Business is important to us and

all of our stakeholders, including our

shareholders. We have an important role to

play so that our networks serving our

customers and communities deliver clean,

secure and affordable energy. It’s the right

thing to do for our people and business, our

customers and the future of the planet.

Over the past year, we have had to navigate a

complex landscape driven by significant

geopolitical and macroeconomic challenges.

The importance of energy security and

affordability have come into sharper focus. We

have maintained our attention on being a

responsible business while delivering for our

customers, communities, colleagues,

regulators and investors.

The biggest impact we have on the

environment is investing in our networks so

they can transport cleaner forms of energy

safely and reliably to homes and businesses,

reducing emissions across the UK and the

US Northeast.

We plan to invest c.£60 billion in our networks

in the five-year period from April 2024 to

March 2029, of which 85% is expected to be

classified as green investment1. This will

deliver significant increases in network

capacity to connect much more low carbon

power generation and storage, support load

growth and the electrification of heat

and transport.

We continue to work on reducing our own

direct impact on the environment. This year,

we have reduced SF6 emissions from our

assets, increased the number of EVs in our

light duty fleet and continued to reduce the

operational emissions from our gas

distribution networks in the US Northeast.

Despite this activity, our Scope 1 and 2 GHG

emissions have increased in the past year by

8%. We signalled in our second Climate

Transition Plan (CTP), published in May 2024,

that progress would not be linear.

This increase is due to increased generation

from our Long Island generation facilities that

burn oil and gas. These units are contracted to

the Long Island Power Authority (LIPA) and

they control when and how much they run to

maintain reliable and secure supplies. These

assets experienced an increase in generation

this year and National Grid fulfilled a

temporary surge in demand. This was due to

unplanned maintenance outages at other

power plants and the reduced availability of

third party transmission lines, both of which

are out of our control.

Our Scope 3 GHG emissions have also

increased by 4% in 2024/25. Emissions from

the use of sold gas we deliver to customers

has increased. Our increased investment in

energy infrastructure requires greater

procurement of goods and services and this

increases our Scope 3 emissions. We will

continue to identify opportunities to reduce

supply chain emissions and decouple our

growth in spend from this growth in emissions.

As we look ahead, we are seeing increasing

Our Responsible Business fundamentals p55

energy demand and growing concern about

affordability and security of supply. There is

also slower progress on the policies and

regulatory frameworks needed to meet our

emissions reduction targets. It is a growing

risk that balancing these challenges will slow

down the pace of decarbonisation in places

where we operate and reduce the likelihood of

meeting our targets on time.

We will continue to build the networks of the

future across the UK and in the US Northeast.

We will work closely with policymakers and

regulators to shape policies that support our

targets and with our supply chain to help

achieve emissions reduction targets in our

construction projects.

To enable the energy transition, we know we

need to manage our impact on our customers

and communities and support them where we

can. This year, we have launched a £13.8

million Grid for Good energy affordability fund.

The fund will run for three years to financially

support charities and organisations to assist

vulnerable households with energy costs.

Safety is paramount at National Grid; we

continue to make strong progress under our

Stand Up For Safety campaign, as project

work scales up to deliver against our

investments. Our Group safety reporting

system is driving continuous improvements

and data insights.

To deliver on our commitments we need to

build tomorrow’s workforce today. We are

committed to creating a work environment

where people are treated fairly and where

everyone feels respected, valued and

empowered to reach their full potential. Our

Grid:Voice survey shows an 80% employee

engagement and 71% of colleagues feel ‘Safe

to Say’.

The following sections highlight the progress

made in the last year against our RBC and

where there is more to do. We believe that, by

working with our stakeholders, we can

continue to make progress towards delivering

a secure, affordable and clean energy future.

1.Aligned to EU Taxonomy, directly invested into the

decarbonisation of energy networks.

44	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued

Our environment

UN Sustainable Development Goals

Taking action on

our environmental

impact

We are delivering new network infrastructure and upgrading our existing networks

to help deliver a secure, affordable and clean energy future for our customers and

communities while working hard to reduce our impact on the environment.

We have set Group science-based targets (SBTs),

validated by the Science-Based Targets initiative (SBTi),

to hold ourselves to account for reducing our emissions.

Our second CTP, published in May 2024, outlines our

roadmap to achieve net zero by 2050.

In the last year, our emissions have risen, often due to

factors outside of our direct control and despite our

efforts to reduce emissions where we have control. We

did not expect a linear trajectory, as explained in our

CTP, and rely heavily on technical dependencies as well

as policy and regulatory frameworks to support our

emission reduction plans and targets.

	More details on the dependencies we are facing, as well as activities and stories from across our business can be found on our website nationalgrid.com/ responsibility
	2024/25 Responsible Business metrics can be found in the Responsible Business data tables on our website
	Read our Climate Transition Plan (CTP) on our website

On nature, in the UK we have restored 10% of the

natural environment on our managed land and will

continue to make improvements, in the US we have

made progress protecting the natural environment.

We remain committed to using resources responsibly,

with asset refurbishment centres in the UK and our

investment recovery centre in the US minimising waste.

Strategic Report Corporate Governance Financial Statements Additional Information 45

We committed to

Achieve net zero by

2050 for Scope 1, 2

and 3 GHG emissions

We have continued to play our part reducing

emissions, as outlined in our CTP, but have

seen a rise in GHG emissions over the past

year.

Scope 1 and 2 GHG emissions for

2024/25 were 7,422 ktCO2e,

outside of our range set out in the

CTP, a decrease of 4.4% against

our 2018/19 baseline.

Progress to target1,2 %	Target: 2030/31
4.4	60

This year has been an exceptional year for

emissions from our fossil fuel generation

plants. These assets have operated more than

expected to meet increased demand

requirements on Long Island. This is due to

unplanned outages at third-party generators

and transmission lines, outside of National

Grid’s control. This contractual obligation with

LIPA has led to the increase in our Scope 1

emissions, outside of the upper range set out

in our CTP, demonstrating the non-linear

trajectory of meeting our emissions targets.

Scope 1 emissions where we have greater

direct control (i.e. excluding emissions from

generation) have fallen from the baseline year.

This is supported by our leak-prone pipe

replacements, interventions to reduce SF6

leakage and replacing our vehicles with EVs.

Our Scope 2 emissions have increased this

year. These emissions are primarily made up

of electricity line losses which are calculated

using the average carbon intensity of

electricity in the regions where we operate, as

published by the UK Government and the US

Environmental Protection Agency (EPA). We

know that electricity carbon intensity in the UK

is reducing and 72% of our overall Scope 2

emissions are in the UK. In the US, we have

deployed dynamic line rating technology to

improve the efficiency of our power lines in

New York.

However, looking ahead, emissions from line

losses are impacted by external factors such

as demand growth and the amount of

renewables connected to the network. If the

economies where we operate see a slowdown

in the pace of decarbonisation this will in turn

slow the pace of emissions reductions from

line losses. More detail can be found in

our CTP.

Below is an update on our near-term GHG

emissions reduction sub-targets for Scope 1

and 21,2, from a 2018/19 baseline, as required

by SBTi.

•Reduce the carbon intensity of our power

generation (Scope 1 GHG emissions) per

MWh by 90% by 2030/31, and by 92% by

2033/34 : (37)%

•Reduce absolute Scope 1 and 2 GHG

emissions (excluding generation) by 50% by

2030/31 : (15)%

22% of our light-duty vehicles are

EVs.

Progress to target %	Target: 2030/31
22	100

We are making progress against our EV target

to move to a 100% electric fleet for our light-

duty vehicles. This year, we have added 476

EVs to our commercial fleets, bringing our

total to 1016 EVs, 22% of our total number of

light-duty vehicles.

We continue to ramp up our efforts to electrify

our light-duty vehicles; however, this is

vulnerable to supply chain disruptions and

delays regarding the availability of EVs, as well

as the implementation of charging

infrastructure.

We have reduced SF6 emissions

from our operations by 36%.

Progress to target %		Target: 2030/31
	36	50

Work continues on reducing SF6 emissions

caused by emerging leaks, resulting in the

significant progress of 15% emission

reductions, 36% against our 2018/19 baseline.

The majority (~80%) of the SF6 we use on our

networks is in UK ET.

We are also continuing our work with partners

on innovation projects to develop alternative

gases to SF6. UK ET were recently awarded

£8.5 million by Ofgem's Strategic Innovation

Fund to develop a long-term strategy to

reduce SF6 dependency, in consultation with

industry partners.

We have reduced absolute energy

consumption in our flagship

offices by 38%.

Progress to target %
Target: 2030/31
	20	38

We have reduced energy consumption in our

flagship offices by 38% against our 2019/20

baseline, exceeding our 20% target.

We adapt to the changing uses of our

workspaces, while optimising heating,

ventilation, air conditioning and lighting

systems to continue to meet the needs of

our colleagues.

Our Scope 3 emissions (excluding

sold electricity) for 2024/25 were

25,566 ktCO2e, representing a

5.8% increase against our 2018/19

baseline.

Progress to target3 %	Target: 2033/34
(5.8)	37.5

The majority, 72%, of our Scope 3 emissions

(excluding sold electricity) are from the use of

sold gas we deliver to our customers. We

have seen an increase in these emissions due

to colder temperatures when compared to last

year. As we look ahead, New York and

Massachusetts remain focused on their

ambitious climate targets but are having to

balance these with increasing public concern

about affordability and reliability. There is a

growing risk that finding the correct balance

slows down the pace of policy and regulatory

changes we need to enable us to make the

necessary investments to reduce emissions

from the gas we sell.

Emissions within our supply chain represent

18% of our Scope 3 emissions (excluding sold

electricity) and this is principally where we

have seen a rise. This is driven by increased

spend on goods and services (including

capital expenditure) associated with the

construction of new energy infrastructure as a

result of our increased capital investment.

The scale and scope of our construction

activities pose challenges for reducing our

Scope 3 emissions from purchased goods

and services. This is because substantial

quantities of construction materials we use

have significant carbon footprints, such as

steel and concrete. Due to limited availability,

higher costs and potential regulatory barriers,

it is difficult to source more sustainable

alternatives or implement low-carbon

construction methods. We’ll continue to

identify opportunities to reduce supply chain

emissions and decouple spend growth from

emissions growth.

Below is an update on our near-term GHG

emissions reduction sub-targets for Scope 3,

from a 2018/19 baseline, as required by SBTi.

•Reduce the carbon intensity of power

generation and sold electricity (Scope 1 and

Scope 3 GHG emissions) by 86% by

2033/342 : (18)%

•Reduce absolute GHG emissions from gas

sold by third parties by 37.5% by

2033/343,4 : (11)%

1.Includes Scope 2 location-based emissions only.

2.Near-term targets approved by Science Based Targets initiative (SBTi) and aligned to the Paris Agreement and a 1.5ºC pathway.

3.Near-term targets approved by SBTi and aligned to a well below 2ºC pathway.

4. Third party sold gas, a US-only emission, are downstream emissions associated with the combustion of natural gas delivered through our network but sold by a company other than

National Grid. This differs from Scope 3 Cat. 11 GHG Protocol guidance, which otherwise advises to consider only the end use of goods sold by the reporting company itself.

46	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued
Our environment

We continue to engage with our

suppliers. 56% of our UK

suppliers1 have committed to set

SBTs. 43% of our US suppliers1

have established a plan for setting

SBTs.

Progress to target %                                Target: 2025/26                                   

	56		80
		43	50

We continue to collaborate with key suppliers

who contribute significantly to the emissions

associated with the goods and services we

procure. We are pleased with our progress

against these ambitious targets, despite not

meeting our target to date. This target is

currently under review.

We are reporting progress against an updated

list of carbon strategic suppliers as a result of

a change in our methodology for calculating

emissions of our purchased goods

and services.

Our SBT engagement strategy focuses on

communication channels, monitoring and

reporting, governance, assurance, and

building skills and capabilities. We are using

the accredited resources and training materials

available through our partnership with the

Supply Chain Sustainability School to enhance

our global suppliers' sustainability skills.

We recognise that, similar to ourselves, our

suppliers have many dependencies that are

outside of their control, such as a lack of SBT

pathways for certain sectors. We will continue

to work closely with these suppliers and report

transparently on any challenges impacting our

RBC targets.

We have reduced air travel

emissions by 18% from our

2019/20 baseline.

Progress to target %	Target: 2025/26
18	50

This year, absolute emissions from business

air travel are consistent with the previous year

at 9 ktCO2e, a 18% reduction from our

baseline. As a transatlantic business it will be

challenging to meet our ambitious target. We

try to balance the need for our teams to meet

and collaborate with the use of technology to

enable virtual meetings where possible.

In this specific area, through our travel partner,

Agiito, we participate in the Trees4Travel

programme investing in tree planting initiatives

to responsibly offset our air travel emissions.

Further details on offsetting can be found on

page 75.

We are committed to

Protecting our natural

environment

In the UK we are committed to restoring the

land we manage. We use a natural capital

approach to measure the impact of

improvements we make on the non-

operational land at our own sites based on

financial value estimations. Due to significant

differences in the conditions of habitats and

levels of biodiversity present in the landscape,

in the US, our efforts focus more on the

preservation of the natural lands that we own.

In the UK we have restored the

natural environment by 10% on the

land we manage.

Progress to target %
	10	10.1

A natural capital approach allows us to

demonstrate gains for the environment

through ecosystem service benefits, to help

measure changes to land management or

biodiversity. This is only driven by activities in

our UK ET business.

Our partnership agreements deliver

enhancements to the land we manage such as

restoring ancient woodlands and wetlands,

planting trees and hedgerows, and creating

wildflower meadows, as well as enabling local

communities to access nature.

We have continued our ongoing support to

our UK environmental education centres at

Bishops Wood, Skelton Grange, West Boldon,

Amersham and Iver. Environmental charity

organisations at these centres provide

educational activities to visitors, showing

how nature can thrive alongside critical

national infrastructure.

In UK ED, our nature focus is primarily on

improving our operational sites to provide

biodiversity uplift. We have supported 700

acres of woodland management in our West

Midlands license area through the Heart of

England Forest Partnership.

In the US we have preserved

20,358 hectares on the land we

manage.

Our preservation efforts focus on our

integrated vegetation management (IVM)

programmes, which promotes desirable,

stable, low-growing plant communities that

will resist invasion by tall-growing tree species

along our transmission lines. Our IVM

programmes improve the environment by

reducing the need for excessive tree cutting,

reducing the risk of forest fires, decreasing

populations of invasive species and increasing

diversity of natural species.

As a part of our nature strategy, we aim to

ensure that our infrastructure projects protect

critical habitats. We have undertaken several

initiatives in the US to preserve habitats and

landscapes, including rare, threatened and

endangered species protection.

1.Weighted by GHG emissions.

Strategic Report Corporate Governance Financial Statements Additional Information 47

We are

Investing in the

decarbonisation of the

future of energy

We invested £7.7 billion in green

infrastructure and projects.

Progress to target %	Target: 2028/29
£7.7bn	£51bn

We understand the role we need to play in

enabling and accelerating the move to a

cleaner energy future. Network investment is

vital for connecting the new low carbon power

generation and storage needed in the coming

decade to accommodate the expected rises in

electricity demand by 2035, almost 50%

across the UK and 25% in our US

jurisdictions. We expect to invest

approximately £51 billion in green

infrastructure and projects in the five-year

period from April 2024 to March 2029.

As we delivered another record year of capital

investment, we also reached a higher proportion

of green capital expenditure, aligning with EU

Taxonomy principles for sustainable investment.

In 2024/25 around 81% (£7.7 billion) of our

Group’s capex aligned to the principles,

compared with 78% (£6.0 billion) in the previous

year. Where investment is not classed as green

we are maintaining our network assets to deliver

for our customers.

Under our new Green Financing Framework

2025, National Grid plc and its subsidiaries are

able to issue Green Financing Instruments to

fund our efforts towards a cleaner energy

system. See our latest Green Financing Report

on our website, which details the issuance of

green bonds totalling €1.5 billion in 2024/25,

along with the allocation of proceeds and their

environmental impact.

We continue to make good progress on our

early ASTI investments in the UK. Construction

has commenced on six projects, as well as

procurement and mobilisation of supply chain

partnerships and public engagement and

consultations. In the US, progress on the

‘Upstate Upgrade’ in New York has continued,

delivering a modernised, stronger and cleaner

energy network and generating new jobs.

These infrastructure investments support our

network jurisdictions in achieving net zero

goals. In 2024/25, we connected 3,016 MW of

renewable capacity to our networks across

the UK and US.

We are committed to

Using resources

responsibly

We manage our environmental

impact with a focus on pollution,

waste and water use.

We have various projects that create waste,

such as cleaning up former gas plant sites,

retiring old fossil assets and leak-prone

equipment, building grid infrastructure and

supporting various renewable energy projects.

We endeavour to ensure that our waste is

correctly disposed of with appropriate

environmental permits and compliant with

regulatory standards in the applicable regions.

The different categories of waste are

summarised in our data tables, linked on page

42. Some waste produced is classed as

‘hazardous waste’. This arises from the removal

of contaminated land during commercial

property activity and the disposal of oil and

polychlorinated biphenyl (PCB) or lead-

contaminated materials.

Alongside managing our waste responsibly,

we also recycle, refurbish and reuse materials

at asset refurbishment and investment

recovery facilities in the UK and US.

Our water use relates almost entirely to water

used for generation cooling purposes.

Abstracted water is not altered other than

being slightly warmed by the process. Water

discharge temperatures are closely monitored

and follow applicable regulations. This year,

1,134 million cubic metres were withdrawn. Of

this total, over 99% relates to the use of

seawater for cooling generation assets in the

US. All this abstracted water is returned to the

sea at the permitted temperature limit.

We are

Adapting to a

changing climate

We take action on our climate

change risks and opportunities

and our investment in climate

change adaptation activities.

Most climate hazards are projected to

increase in frequency in the future, with high

temperatures and coastal and river flooding of

particular concern to the areas in which we

operate. Our approach to climate resilience,

and addressing risks arising from global

warming impacts, is outlined in our Task Force

on Climate-related Financial Disclosures

(TCFD) report on pages 59 – 77. In addition,

our EU Taxonomy report details our climate

change adaptation expenditure.

81%

2024/25 green capital

expenditure

Aligned to EU Taxonomy, directly

invested into the decarbonisation of

energy networks.

3,016 MW

renewable capacity

connected in 2024/25

48	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued

Our customer and communities

UN Sustainable Development Goals

Meeting the needs

of our customers

and communities

We are focused on building the necessary infrastructure across the UK and

US Northeast while assisting our customers on affordability and building skills

in our communities.

We continue to provide assistance to our customers

and communities to help manage the costs of the

energy transition.

Our skills development programmes are providing

people from disadvantaged communities access to

training and employment opportunities to help develop

the workforce of tomorrow.

	More details on our Responsible Business activities and the stories from across our business can be found on our website  nationalgrid.com/responsibility
	2024/25 Responsible Business metrics can be found in the Responsible Business data tables on our website

Our colleagues are directly helping the communities we

serve through volunteering events and projects to inspire

positive change, create positive local impact, strengthen

communities, and make a difference.

We acknowledge the need for further support to

our customers, particularly in the UK and US for

customers facing higher energy bills and for UK

customers experiencing delays connecting

to our networks.

Strategic Report Corporate Governance Financial Statements Additional Information 49

We are committed to

Supporting an affordable

energy transition

We have established the Grid for

Good Energy Affordability Fund for

future assistance.

Our communities still need our help. National

Grid remains committed to ongoing support

for those that cannot meet energy costs and

has established the new £13.8 million Grid for

Good Energy Affordability Fund for future

assistance.

This continues our community support in the

way that our previous three-year energy

support fund had, in assisting some of the

most vulnerable households and businesses

struggling with energy costs. We worked with

key charity partners in the UK and US to help

provide emergency financial relief, fund energy

efficiency measures, provide advisory services

for households, support energy bill assistance,

and emergency food support programmes for

low-to-moderate-income customers. This

support fund benefited 259,884 households

across our UK footprint alone.

The Grid for Good Energy Affordability Fund

will run for three years in the UK and US in

order to continue financial support to charities

and organisations who assist vulnerable

households with energy advice, emergency

funding and energy efficiency measures.

More details on how our funding is supporting

charities and organisations to provide relief to

vulnerable households can be found on

our website.

In the last year, the increased cost of gas as

£13.8m

2025 Grid for Good Energy

Affordability Fund

29,654

people positively impacted

with meaningful skills

development in 2024/25

part of overall global increases has driven up

customer bills, particularly in our US

jurisdictions. Looking forward, we remain

focused on the ambitious climate targets in

New York and Massachusetts, but we

acknowledge that there is more we can do to

support our customers in relation to bills, in

addition to our financial community support.

We committed to

Accelerate social

mobility in the

communities we serve

We have provided 29,654 people

with meaningful skills

development.

Progress to target (people)
	Target: 2030/31
	45,000	60,384

We continue to contribute to the acceleration

of social mobility in the communities we serve

by developing new and long-standing

partnerships with registered charities, not-for-

profit organisations, social enterprises,

educators and our supply chain.

With these organisations, we have created

skills and employability pathways. Our work is

focused on two primary objectives: to provide

upskilling and to create employment

opportunities across our sector.

This year, 29,654 people have been positively

impacted, made up of 5,132 in the UK and

24,522 in the US. Since 2021, we have

positively impacted the lives of 60,384 people,

exceeding our commitment of 45,000 people.

94 people have secured employment in

National Grid alone this year.

We ranked 42nd out of the top 75 employers

in the 2024 UK Social Mobility Index (SMI),

demonstrating our commitment in employer-

led social mobility. We continue to focus on

progression culture and data collection as a

result of feedback from this index.

We are

Engaging directly in our

communities through

volunteering

Across the UK and US we have

delivered 60,511 volunteering

hours to support our communities.

Progress to target (hours)	Target: 2030/31
239,991	500,000

We have helped more colleagues across the

UK and US to feel directly connected to our

communities, giving them an opportunity to

make a difference. We work with many partner

organisations to identify and manage

opportunities for colleagues to volunteer their

time in local communities.

Across the US, we recorded 35,274

volunteering hours. In the UK, we recorded

25,237 volunteering hours.

Colleagues this year have volunteered their

time, helping to deliver community events and

logged 60,511 volunteering hours, bringing our

total to 239,991 volunteering hours since 2021.

Case studies on our volunteering engagement

can be found on our website.

50	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued
Our customers and communities

We act

On the feedback we

receive from our

customers on the

service we provide

Across the UK and US we serve millions of

households and partner with thousands of

businesses. We are committed to delivering

secure and clean energy as affordably as

possible, maximising the capacity of our

assets and ensuring our customers benefit

from an efficient and reliable network.

We recognise the limited progress across the

business, especially in the US, on customer

satisfaction due to bill increases as well as

delays in connecting to our network. We are

listening to feedback and taking steps to

address these issues where possible.

US customer satisfaction

In 2024/25, 58.4% of our residential and

commercial customers trust us to provide the

advice needed to make good energy

decisions. Perceptions are higher in New York,

61.1%, than New England, 53.9%, but

customers in both regions faced high inflation

and a long, unseasonably cold winter, causing

impacts on affordability and negatively

affecting our customers’ sense of value.

We recognise that we need to do more and

we are committed to raising awareness of

financial assistance and other services that

help manage and save on energy bills. We are

expanding our energy efficiency and outreach

programmes with an increased focus on

mitigating peak period bills, and addressing

the energy burden facing our most vulnerable

customers. We are doing this with expanded

language translation.

This year, following customer feedback, we

have updated our customer-facing mobile app

to improve the way customers can self-serve

and manage their account. Our teams are

dedicated to enhancing business processes,

adopting the latest technology and

undergoing training to drive improvements.

We hope this will make it easier for our

customers to interact with us, and in turn will

help to improve satisfaction and trust.

We have also started to deploy Advanced

Metering Infrastructure (AMI) technology

across New York and Massachusetts, giving

customers greater visibility of their energy use.

Specifically in Massachusetts, 40% of funding

from the new statewide 2025 three-year

energy efficiency plan will focus on

programming, the opt-in implementation of a

residential heat pump rate with lower charges,

deferring recovery of some gas delivery

charges. Further, in September 2025

implementing larger rate discounts for low-

income electric customers.

In New York, we are providing energy bill

credits and funding an initiative to help

overcome barriers that prevent the installation

of energy efficiency improvements. Our latest

multi-year rate plans will be implemented on a

levelised basis to reduce rate volatility to

customers over the duration of the plan.

UK ED customer satisfaction

In UK ED, we have delivered a high level of

customer satisfaction for 2024/25 with a score

of 8.98 out of 10.

We investigate areas of good practice across

our licence areas with the aim of providing

solutions that can be applied across the

business. We continue to undertake customer

service training. We have customer

engagement group forums and have

established mechanisms to learn from the

activities of other distribution network

operators, to help ensure we are making the

right decisions for our customers. We are

confident that these actions will result in year-

on-year improvements and achievement of

our target.

UK ET customer satisfaction

In UK ET, our customer satisfaction score in

2024/25 is 6.5 out of 10. We follow the Quality

of Connections Incentive, which we

anticipated to be challenging this year due to

the rapidly growing connections pipeline and

its impact on connection dates. Despite this

being largely outside of UK ET's direct control,

we have seen an impact in our overall score as

expected. We are working closely with others

across the industry to address the challenges

caused by the current connections pipeline.

As this measure of customer satisfaction

consists of elements, including regulatory

rules, which are outside of our control, we are

also focusing our efforts on where we can

drive value for our customers. For example,

we have looked at how we are servicing the

needs of customers who have established

projects that are delivering against agreed

milestones and are in the development or

delivery stages of work.

As well as focusing on driving value for our

customers, we are enabling broader societal

economic benefits. For example, we are in the

process of delivering a project to connect the

largest EV battery manufacturing facility in the

UK, contributing to almost half of the

projected battery manufacturing capacity

required for the UK automotive sector by the

early 2030s and creating thousands of jobs.

NGV customer satisfaction

NGV has conducted customer satisfaction

surveys (CSAT) across its business units for

the second year, 2024/25, achieving good

scores overall.

Our UK subsea electricity interconnectors

have scored the following: IFA, IFA2 and

Viking, 86%, BritNed, 87% and Nemo, 92%,

while Grain LNG has scored 86%. The US

Northeast scored 8 out of 10, with feedback of

solid communication and cooperative,

competent teams and points of contact.

Strategic Report Corporate Governance Financial Statements Additional Information 51

Our people

UN Sustainable Development Goals

Investing in a

workforce where

all can thrive

Our 31,645 colleagues across the UK and US are the driving

force behind our business. We invest in attracting and retaining

a workforce where all feel welcome and able to do their best work.

We support and empower our colleagues so we can play

a pivotal role in delivering net zero while living our values.

We know that to achieve our ambition to deliver net zero,

we need to attract, develop and retain a competent

workforce, which requires comprehensive training

programmes. The physical and mental health of our

workforce is central to everything we do, we aim to

empower our colleagues to prioritise their health and

wellbeing. We will continue to focus on ensuring fair pay

across all our colleagues.

	More details on our Responsible Business activities and the stories from across our business can be found on our website nationalgrid.com/responsibility
	2024/25 Responsible Business metrics can be found in the Responsible Business data tables on our website

52	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued
Our people

We are

Investing in our people

and building the skills

needed to deliver the

clean energy future

Our new talent programmes

continue to grow.

As our workforce increases, we need to

consider the skills needed to deliver on our

clean energy future and help our colleagues

learn and grow with us to tackle the

challenges ahead. Attracting, developing and

retaining a qualified and competent workforce

requires training programmes that are robust,

comprehensive, in line with local regulations

and that create a career path built on safety

and competence.

Our UK graduate scheme follows three

distinct pathways aimed at enhancing

graduates’ capabilities while emphasising

leadership development for our graduate

population. This year we welcomed 161

UK graduates.

In the US, 75 graduates joined our

comprehensive 12-month development

programme which includes a four-week

orientation travelling around our principal

operating locations learning about our

business. The new coaching mechanism we

use called EZRA Focus supports graduates as

they complete their development programmes

and make the key career transition into their

first role.

This is part of our commitment to progress

and retain our early careers talent pipeline. In

the US, we continue to have a strong Gridtern

Programme, welcoming 172 Gridterns on

summer internships in 2024.

Across ET and ED in the UK, our

apprenticeship programme is crucial in

building the country’s workforce of the future,

with young people driving innovation and

progress. This year we have had 276

apprentices start programmes to develop

their skills through practical work and

academic study.

Further details on our development

programmes can be found on our

careers website.

In addition to developing new talent, we offer

development solutions to our colleagues via

external providers such as:

•LinkedIn Learning, with over 9,300 on-

demand development courses available;

•MindGym, an external learning provider

specialising in psychology and behavioural

science;

•Team Effectiveness sessions designed to

foster cohesion and positive collaboration

among teams;

•We have partnered with EZRA which has

built executive coaching for the digital age

– with EZRAx. This virtual coaching

programme empowers our senior leaders

to learn, develop and grow; and

•Digital coaching through BetterUp to

empower growth.

We have also expanded our coaching offer to

include specialist coaching. All leaders and

colleagues have the opportunity to access a

select pool of coaches skilled in supporting

individuals to recognise their unique

contributions and navigate their development,

while at the same time having access to the

wealth of additional resources and support

that BetterUp offers.

We aim to actively identify and develop our

future senior leaders through a variety of

programmes designed specifically for this

purpose:

•Future Leaders Programme

•Managerial Supervisory Training

•Enterprise Leadership Advantage Programme

•Next Generation.

We know that if we are to achieve our

ambition to deliver net zero, we need to

attract, hire and retain people from a wide

array of backgrounds, who have different

experiences and perspectives. We owe it to

our colleagues, customers and stakeholders

to be clear on our stance against

discrimination. Our policy ensures that

individuals identifying as having a disability

receive fair consideration for all vacancies,

with reasonable accommodations and

additional resources provided whenever

feasible. We are dedicated to equal

opportunities in recruitment, training,

promotion and career development for all our

colleagues, including those with disabilities.

We have streamlined our recruitment

processes, investing in HR technology and

implementing a strategic sourcing structure to

drive proactive sourcing, creating a best-in-

industry candidate experience and creating

recruitment practices aimed at helping us

build a strong future workforce.

Currently, 39% of our jobs are filled by internal

promotions and moves, demonstrating our

commitment to growing our colleagues

internally. To deliver the energy transition, we

also need new skills and capabilities, which

means increasing external hiring. We aim to

understand the skills, experience and roles we

will need in the future by using workforce

planning data to map our requirements. We

are working to design strategies that focus on

sourcing and engaging with relevant talent to

search for the right colleagues before we need

them.

Strategic Report Corporate Governance Financial Statements Additional Information 53

We are committed to

A workplace where all

colleagues can thrive

We are continuing to make

progress in providing an inclusive

culture for our colleagues.

We believe strong business results are

enabled by having a workforce with multiple

perspectives and skills, and a culture where

everyone can do their best work. We aspire to

do our part in ensuring that, one day, everyone

sees their place in shaping the energy future in

equal measure.

This year, 16.8% of our management

population are ethnically diverse, a decrease

of 0.8% from 2023/24. Women now comprise

35.5% of our management population.

We have seen year-on-year growth in female

and ethnically diverse new talent. The number

of female hires in new talent programmes has

increased to 32.2%% in 2024/25, from 31.6%

in 2023/24. In addition, ethnically diverse new

talent has risen to 41.2% in 2024/25, from

32.3% in 2023/24.

Gender demographic as at 31 March 20251

Our Board2
11
Male 7	Female 4
Male
Female

Senior management3
158
Male 95	Female 63
Male
Female

Whole company3
31,645
Male 23,932	Female 7,713
Male
Female

1.Companies Act 2006 disclosure. We have included information relating to subsidiary directors, in accordance with the Companies Act 2006 (Strategic Report and Directors’ Report)

Regulations 2013. ‘Senior management’ is defined as those managers who are at the same level as, or one level below, the Group Executive Committee. It also includes those who are

Directors of subsidiaries where we have a majority interest, or who have responsibility for planning, directing or controlling the activities of the Group, or a strategically significant part of the

Group, and are employees of the Group.

2.‘Board’ refers to members as defined on the Company website.

3.In scope are active, permanent employees. Out of scope are non-employees, temporary staff and interns.

We are committed to

Creating an inclusive

culture, where it is safe

to speak up and where

our colleagues’ voices

are heard and

understood by our Group

Executive and Board

Creating an inclusive culture

through awareness and education

remains a priority, particularly

through partnering with our

leadership who are fundamental in

driving our culture.

Our global learning curriculum proactively

invites all people managers to participate in

inclusive educational opportunities.

Our Employee Resource Groups (ERGs) play a

vital role at National Grid. They are open to all

employees, not just those with a particular

characteristic. We are proud that 31% of our

workforce, around 9,725 colleagues, are

members of at least one ERG. ERGs create a

sense of community and promote a culture of

belonging by offering support and

development opportunities to colleagues. We

believe this in turn promotes employee

engagement and performance.

We carry out two annual engagement surveys

to provide the Group Executive and Board

with further insight and understanding of our

culture and engagement.

Throughout the year we were recognised for

numerous industry best practices, including

being named in Times Top 50 Employers for

Gender Equality, Top 25 Organisations driving

Ethnicity Inclusion, 42nd out of the top 75

employers in the 2024 UK Social Mobility

Index (SMI), The Equality 100 Award: Leader in

LGBTQ+ Workplace Equality Distinction by

the Human Rights Campaign Foundation. In

2024 National Grid took part in the Workforce

Disclosure Initiative for the seventh

consecutive year.

We were awarded a disclosure score of 85%

compared to the sector average of 62% with a

special mention for workforce action and value

chain data.

Further details on our culture can be found on

our website.

80%

Employee engagement

index in 2024/25

71%

‘Safe to say’ in Grid:Voice

in 2024/25

54	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued
Our people

We are committed to

Leading the industry on

colleague health and

wellbeing

Our employee wellbeing index is

77%.

Progress to target %		Target: 2030/31
	77		81

The physical and mental health of our

workforce is central to everything we do, from

our wellbeing champions to mental health

support. We aim to empower our colleagues

to prioritise their health and wellbeing through

healthy habits and by accessing available

resources when needed through our intranet

site, print communications and presentations.

By doing so, we aim to foster an environment

where everyone can thrive together.

In 2024, we continued to carry out our Thriving

Together health and wellness ambition. We

introduced ‘behavioural aspirations’ to

empower colleagues and leaders to build a

thriving workplace culture. These aspirations

include awareness and utilisation of

supportive resources, role modelling healthy

behaviours, and proactive management of

team health and wellbeing. The Health &

Wellbeing Business Management System

standard has been updated to enhance our

wellness culture. To support our business

units, a standard for musculoskeletal injury

risk management was developed.

Mean gender pay gap 2023/24
	1.3%		4.8%
	2022/23 1.8%		2022/23 3.6%
Mean ethnicity pay gap 2023/24
	-2.9%		3.6%
	2022/23 -2.2%		2022/23 2.0%
Mean gender incentive gap 2023/24
	-14.4%		-24.4%
	2022/23 -1.3%		2022/23 -29.4%
Mean ethnicity incentive gap 2023/24
	51.7%		-3.4%
	2022/23 55.7%		2022/23 -2.2%

In the US, we experienced increases in Virgin

Pulse wellbeing platform enrolment by

management and union colleagues, by 2%

and 1%, respectively. Enrolment and

engagement foster healthy habits and improve

health. Also in the US, Employee Assistance

Program (EAP) utilisation increased by 16%

since 2023. In the UK, we see a 35% increase

in our Thrive platform engagement, and a 5%

increase in EAP.

We are committed to

Ensuring all colleagues

receive fair and

equitable pay

We are continuing to make

progress on our gender and

ethnicity pay gap.

In the UK, we remain an accredited Living

Wage Foundation employer, which

demonstrates that we go beyond the Living

Wage requirements, voluntarily paying our

trainees the Living Wage. We undertake a

Living Wage review each year to ensure

continued alignment. Our commitment to our

direct colleagues extends to our contractors,

whom we commit to also pay at least

these rates.

In addition to fair pay, we provide a range of

competitive benefits to our colleagues that go

beyond statutory minimums.

In the US, colleagues are paid above the

statutory minimum.

When making remuneration decisions for our

Executive Directors and other senior leaders,

our Remuneration Committee takes account

of the remuneration arrangements and

outcomes for the wider workforce.

We review gender and ethnicity pay gaps

annually and these are reported one year in

arrears in accordance with UK legal

requirements on gender pay gap reporting.

With sustained focus over many years, our

UK base gender pay gap continues to be

minimal and we have also shown progress

with pay and incentive gaps for ethnically

diverse colleagues.

We will continue to focus on ensuring fair pay

across all our colleagues.

Our gender pay gap disclosure can be found

+35%

Thrive Mental Health

website engagement

in the UK

+16%

EAP utilisation in the US

on our website.

Strategic Report Corporate Governance Financial Statements Additional Information 55

Responsible Business fundamentals

UN Sustainable Development Goals

Operating a

responsible

business

Every day, we safely, securely and reliably connect millions of

people to energy, prioritise resilience and operate responsibly.

We aim to continue to deliver on what is expected of us

and to be a compliant and ethical business in everything

we do. We seek to do this by ensuring safe and reliable

operations, living our values, while influencing and

expecting the same of our partners and supply chain.

We invest in technology and governance, monitor

security and risks and advocate for responsible

business practices.

	More details on our policies, Responsible Business activities and the stories from across our business can be found on our website  nationalgrid.com/responsibility
	2024/25 Responsible Business metrics can be found in the Responsible Business data tables on our website

Our Responsible Business fundamentals are the

foundation of our RBC pillars. Within this section,

we cover activities that are essential to operating

our business the right way.

56	National Grid plc  Annual Report and Accounts 2024/25
Responsible Business review continued
Responsible Business fundamentals

We are committed to

Safely, reliably and

efficiently connecting

millions of people to the

energy they use

Health and safety

The health and safety of all our colleagues

remains paramount. We require our people to

Stand up for Safety and demonstrate the

company-wide principles of Safe to Say, Safe

Choices, Safe to Stop and Safe to Learn.

We endeavour to mitigate risks and eradicate

injuries to our workforce, supported by our

safety management processes and Group

safety reporting system.

There have been no fatalities in 2024/25.

Lost time injuries (LTIs)

We have recorded a Group lost time injury

frequency rate (LTIFR) of 0.10 this year,

compared to 0.08 in the prior year against our

Group target of 0.10 or less, per 100,000

hours worked (this includes contractors

working on behalf of National Grid). Despite

meeting our Group target, we have seen an

overall increase over the year, primarily driven

by an increase in incidents such as trips, falls

and manual handling injuries.

Injuries to members of the public

This year, there have been two incidents

resulting in injuries to members of the public

which are attributable to our assets, people or

work. These occurred in UK ED and UK ET.

Reliability and resilience

Despite major weather events over the past

year, we have maintained reliability at over

99.9% across our networks. Details per

business unit can be found on page 21.

We are committed to building resilience

through our business continuity programme.

The recent fire at our UK ET North Hyde

substation is currently under investigation,

further details can be found on pages 5

and 25.

Further detail on resilience in our strategy can

be found in our TCFD disclosure on page 59.

Efficiency for our customers

We provide support through initiatives to our

customers to help them to take control,

conserve energy and save on their bills.

In the UK, our transmission network cost

decreased from £24.49 in 2023/24 to £19.23

in 2024/25 (excluding ESO). The contribution

of distribution costs increased from £104.01

to £132.18.

In the US, our total average electric customer

bill across our jurisdictions in 2024/25 has

increased since last year to $1,975.38,

$1,396.68 for low income customers.

Our total average gas customer bill across our

jurisdictions in 2024/25 has also increased to

$1,663.34, $954.49 for low income customers.

We recognise the need for further support in

the US, particularly for customers facing

higher energy bills and are raising awareness

of financial assistance and services to help

manage and save on energy bills, more of

which are detailed on page 50.

Further information on how we operate safely

and efficiently can be found on page 17.

We are committed to

Influencing our supply

chain to operate

responsibly

Suppliers must adhere to our Supplier Code of

Conduct which includes commitments to the

real Living Wage, compliance with the Conflict

Minerals Rule and the establishment of

environmental strategies and targets.

We are providing greater transparency and

accessibility in our sourcing system through

our new procurement sustainability tool.

Aligned to the Global Industry Classification

Standards (GICS) and National Grid’s

Category Tree, the tool triggers a sustainability

heatmap by pulling out bespoke questions to

embed into sourcing events.

We are a partner of the Supply Chain

Sustainability School in both the UK and US,

enhancing the skills of our priority suppliers.

We have also partnered with the Sustainable

Supply Chain Alliance (SSCA), which consists

of utilities and suppliers and aims to promote

sustainability best practices.

We are

Fair to our suppliers and

are committed to paying

them promptly

We recognise that timely payment is crucial

for the financial health and operational stability

of our suppliers. We adhere to the agreed

payment terms set out in contracts or

purchase orders and our finance team works

diligently to ensure that all invoices are

processed efficiently.

In the UK, we are a signatory of the Prompt

Payment Code and we also encourage our

suppliers to adopt the principles of this code.

We are committed to

Delivering against our

Human Rights Policy

Human rights are integral to our Code of

Ethics. This maintains our reputation as an

ethical company that stakeholders want to do

business with and colleagues want to

work for.

We have a separate Human Rights Policy to

hold ourselves accountable to respect the

rights of our workforce, our value chain and

those impacted by our operations while

providing a safe, secure and inclusive work

environment. We also publish an annual

Modern Slavery Statement, outlining our

approach to mitigating the risk of modern

slavery in our business and supply chain.

Further details of our human rights and

modern slavery disclosures can be found on

page 277. Details of these policies can be

found in our Responsible Business reporting

centre on our website.

We are committed to

Being a compliant and

ethical business in

everything we do

We are committed to maintaining high

standards of compliance and ethical conduct.

We have established rigorous internal incident

categories and associated reporting to drive

the right behaviour, identify and monitor

themes and trends, and facilitate learning.

A breach of the Code of Ethics can have

different outcomes depending on the severity

and detrimental impact to people and our

organisation and may result in disciplinary

actions up to and including dismissal, in line

with our disciplinary procedures.

Following the implementation of the Workers

Protection Act 2024, we have reviewed and

updated our Respect at Work policy,

Grievance policy, Code of Ethics and Supplier

Code of Conduct to ensure sexual harassment

in the workplace is included. Communications

across the business have taken place to

highlight our expectations and how colleagues

can ‘speak up’ and report concerns.

We have a communication and training

programme which aims to promote a strong

ethical culture and is backed by mandatory

e-learning for colleagues to understand and

apply our Code of Ethics. We have a

zero-tolerance stance on fraud, bribery and

corruption of any kind and we regard the

potential for bribery and corruption as a

significant risk to the business. We have

established policies and governance in place

that set and monitor our approach to

preventing financial crimes, fraud, bribery and

corruption, including our Code of Ethics.

Strategic Report Corporate Governance Financial Statements Additional Information 57

To ensure compliance with the UK Bribery Act

2010 and other relevant legislation, we

undertake a fraud and bribery risk assessment

across the Company on an annual basis. This

identifies higher-risk areas such as system

access controls, supplier fraud and potential

conflicts of interest. We make sure adequate

policies – such as our Anti-Financial Crimes

Policy, which applies to all colleagues and

those working on our behalf – and procedures

are in place to address them.

Ethics, compliance and business conduct is

discussed quarterly at the Ethics, Risk &

Compliance Committee (ERCC) and twice a

year at Audit & Risk Committee. Serious

issues that meet our escalation criteria are

reported in line with our escalation process

through the Chief Legal Officer & Chief

Compliance Officer, Audit & Risk Committee

and the Board as appropriate. All cases are

investigated promptly and, where appropriate,

acted upon, including ensuring any lessons

learnt are communicated across the business.

Whistleblowing

We operate confidential internal and external

‘Speak-up’ helplines that are always available,

in all the regions where we operate for

individuals to raise concerns about breaches

of the Code of Ethics. This is supported by our

‘Speak-up’ policy which sets out how we will

protect anonymity, support and protect

whistleblowers and our zero-tolerance

approach towards any form of retaliation.

Whistleblowing is regularly discussed in the

ERCC locally and at the Audit & Risk

Committee at Group level, as per page 112.

Artificial intelligence

We use artificial intelligence (AI) to solve

problems and gain insights for ourselves, our

customers, society, and the environment. We

recognise the importance of developing and

using AI in a responsible manner. Our BMS

Data Standard is reinforced by dedicated

Responsible AI policy and controls, due

diligence assessments of both ourselves and

external partners, and an AI Governance

Council. We continually review and update our

approach in line with regulatory, sustainability,

and technological advancements.

We are committed to

Investing in developing

technologies and

innovations

National Grid Partners (NGP) has invested

c. $500 million in new technology companies

since its creation in 2018.

This year, investments have ranged from

carbon capture technology, dynamic line

rating technology and superconducting power

lines, to AI systems and design software.

Further details on technological change can

be found on page 13.

Find out more about our innovative projects

and investments on our NGP website

ngpartners.com/portfolio.

We continue to

Ensure we have

appropriate governance

in place to deliver on our

Responsible Business

commitments

With the support of our Board and five sub-

committees we are provided with strategic

direction and structure to deliver sustainable

shareholder value.

For further information on the Board and

Committees please refer to pages 98 – 120.

We are

Ensuring security and

risks, cyber and physical,

are appropriately

monitored

We are prioritising cyber security, data

protection and responsible AI through the

implementation of effective solutions which

manage vulnerabilities, ensure compliance

with regulatory requirements, and fulfil

reporting obligations. We enforce data

protection controls to comply with relevant

privacy laws and standards, such as use of

strong passwords, regular software updates

and providing colleague training on

best practices.

To minimise security incidents, protect

customer data and ensure the ethical use of

AI, we keep up to date with the latest trends

and technologies, collaborate with industry

and government, and share information and

best practices.

Please see our Operational Principal Risk on

page 38 for further information.

We are committed to

Working with

stakeholders and the

wider industry to

promote Responsible

Business topics and

advocate for action

Details on stakeholder engagement at

National Grid can be found on pages 22 – 24.

International engagement

At COP29 in November 2024, we partnered

with the UK Government, We Mean Business

Coalition and Climate Action, among other

UK, US and international organisations, to

participate in 64 organised events and

countless discussions regarding the

energy transition.

Our focus was on sharing knowledge and

ideas to develop reliable and clean power

systems, discussing challenges and

opportunities on supply chains, and

demonstrating the important role innovation

can play in optimising our infrastructure.

As part of our wider international engagement

this year, we shared our expertise in managing

energy networks with intermittent renewable

energy and collaborated with other countries

through initiatives such as the Green Grids

Initiative, the Energy Transition Council and

Mission Innovation. Over the last year we have

shared knowledge and experiences directly

with 10 countries, including China, Vietnam

and Singapore, to support the energy

transition internationally. This year, we were

also a major participant in New York Climate

Week and London Climate Action Week.

Responsible political lobbying

National Grid is committed to responsible

lobbying and engagement with our elected

leaders across all jurisdictions in which we

operate. We engage in a manner appropriate

to the jurisdiction, despite variations in

lobbying definitions across these geographies.

Our lobbying and engagement is aligned with

the 1.5ºC global warming ambition of the

Paris Agreement.

We have global corporate policies on political

contributions, responsible political lobbying,

employment of former public officials and

secondment of employees into public bodies,

all accessible on our website. Our guidelines

include clear principles, an integrated

management approach and Board

accountability and oversight.

Full details of our political donations and

expenditure can be found on page 278.

Trade associations

We are a member of various trade

associations where we share our knowledge,

expertise and insight to inform the work of

respective bodies.

We conducted a trade association review in

March 2024 where we reviewed the alignment

of our 35 trade associations across the UK,

US and Europe with key criteria, as well as

setting out National Grid’s involvement and

relationship with each organisation.

Full details on our trade association review

can be found on our website.

58	National Grid plc  Annual Report and Accounts 2024/25
Responsible business review continued

Transparent

reporting

Transparent and public reporting is an integral

part of being a responsible business. We

remain committed to reporting our activities,

commitments, and performance in a

transparent manner, including our

sustainability data and performance.

Our approach

To determine which responsible business

issues are important to our business and

essential for us to embed in our strategy, we

undertook a double materiality assessment in

2022. We identified six topics that encompass

the most significant aspects for our business

and align with the concerns of our

stakeholders. These focus areas represent

opportunities for us to make a positive impact

on pressing societal challenges, including

those outlined in the UN Sustainable

Development Goals (UN SDGs). There are four

key SDGs that link to our commitments; SDG

5, 7, 8 and 13.

Further details on our material topics and most

recent double materiality assessment, as well

as our work against the UN SDGs can be

found on our website.

We recognise the need to adapt to changes

and remain proactive in addressing emerging

challenges and opportunities. We are

committed to continuously evolving our

approach and striving for improvement to

maintain robust performance on

Responsible Business.

How we assess performance

Responsible Business is conducted in

accordance with widely recognised standards

and frameworks.

Our performance and disclosures undergo

evaluation by reputable sustainability indices

and external organisations. This external

evaluation provides valuable insights and helps

us assess our sustainability performance

against industry benchmarks and expectations.

2024/25 Responsible Business

performance rating

The Directors are responsible for reporting our

Responsible Business (RB) data as at 31

March 2025, in accordance with the reporting

criteria as set out in Our Reporting

Methodology document. Our key RBC and

performance metrics are detailed in this

section, while the complete set of metrics

can be found in our Responsible Business

data tables.

Scope of Responsible Business

reporting

Our Responsible Business reporting covers

our Group. Our businesses report in line with

the financial year (1 April – 31 March), and our

Responsible Business metrics have been

calculated on this basis, unless stated

otherwise. All metrics include the results of the

Company and its wholly owned subsidiaries.

Joint ventures that do not fall under National

Grid’s operational control have been excluded

from this report. The main changes to our

operations over the past two years include:

•Viking Link (VL), our subsea interconnector

linking the electricity systems of the UK and

Denmark, became operational in December

2023. We included VL in our 'Interconnector

capacity' metric for 2023/24, as it was

operational by 31 March. It was not

included in some other RB metrics in

2023/24 due to it being non-operational for

the majority of the period; however, 2024/25

will be the first period in which VL will

be included in all relevant RB

performance metrics.

•On 1 October 2024, the National Energy

System Operator (NESO), was launched

under UK Government ownership following

separation of ESO and National Grid. For

2024/25 full year reporting, ESO RB data is

excluded as per our reporting methodology.

•In May 2024 we announced our intention to

sell our National Grid Renewables and Grain

LNG businesses. In line with our RB

reporting methodology for disposals, these

operations continue to be included within

our RB metrics and will be removed from

our reporting from the start of the reporting

year that they leave the Group.

For further details please refer to our Our

Reporting Methodology document.

Reporting centre

Beyond our Responsible Business review and

TCFD statement in this report we also

produce supplementary reports aligning to

established sustainability reporting standards:

•Responsible Business data tables

•EU Taxonomy

•Green Financing Report

•SASB

•GRI

Our Responsible Business reporting centre

consolidates our suite of documents, policies

and our commitment to reporting.

For more information visit our

Responsible Business Reporting

Centre at nationalgrid.com/

responsibility

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	59
Task Force on Climate-related Financial Disclosures (TCFD)

Understanding

the potential

impacts of climate

change

At National Grid, we recognise that addressing climate change is

the defining challenge of the 21st century and the energy transition

is accelerating at pace. Our networks and operations are crucial

to transforming the energy system in the jurisdictions where we

operate. We are supportive of the Paris Agreement’s long-term

goal to keep the rise in global average temperature by 2100 to well

below 2ºC above pre-industrial levels, and to pursue efforts to limit

the increase to 1.5ºC.

We have supported the recommendations of the TCFD since its initial

publication. The framework helps us understand the impact of climate

change on our operations and has benefited us directly by: shaping

our governance structure to effectively oversee risks and opportunities;

aligning our business strategy to identify and seize transitional

opportunities, including our significant step up in asset growth;

developing values of sustainability in our corporate culture; and

embedding climate change into our risk management framework,

which has engaged our lines of defence to manage the

associated risks.

We fully comply with FCA Listing Rule 6.6.6(8)R and align our climate-

related financial disclosures with the TCFD's four pillars - governance,

strategy, risk management, and metrics and targets, with 11

recommended disclosures under these pillars. Additionally, we meet

the climate-related financial disclosure requirements outlined in

sections 414CA and 414CB of the Companies Act 2006.

We published our second CTP in May 2024, which sets

out the strategic action plans and mechanisms to

realise our net zero commitments.

60	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

01 Governance

The Board sets and leads the Group’s climate-related strategy and

goals and has oversight of the climate-related risks and opportunities.

National Grid has five strategic priorities, as set out on pages 14-15,

one of which is to enable the energy transition for all. Responding to

climate change and the transition to net zero is therefore at the heart of

our strategy. The Board delegates elements of its responsibility to its

various Committees, although retains ultimate responsibility in setting

the Group’s climate-related strategy and goals.

Members of the Board bring a variety of skills and experience, including

expertise in delivering sustainability and climate change strategies. Its

members have the requisite expertise in climate change and

sustainability to effectively support the Group's strategy. This

determination is based on an evaluation of their background and

experience, particularly in the energy sector, executive roles, and

expertise in sustainability and climate change, including related risks

and opportunities. Specifically, several Board members, including

Martha Wyrsch and Earl Shipp, have relevant experience in these

areas. Martha brings extensive knowledge and experience around

climate-related issues through her previous experience as CEO of a

major international gas transmission business and in leading the growth

and development of the renewable energy business of Vestas in the

US. Earl Shipp, Chair of the Safety & Sustainability Committee, through

his extensive career in the chemicals industry and his experience as a

member of the U.S. Federal Reserves Energy Advisory Committee,

brings to the Board knowledge of environmental, sustainability and

climate-related issues. Other Board members including Jonathan Silver

and Anne Robinson bring additional climate-related experience from

previous roles. See pages 99-102 for information on the individual

experience of Board members and page 111 for the specific skills

attributed to the Board, including sustainability and climate change.

The Board received four updates from the Chair of the Safety &

Sustainability Committee in the year to provide an overview of matters

discussed at its Committee meetings, including progress against goals

and targets addressing climate-related issues. The Board receives a

Chief Executive and business update report at each meeting which

includes quarterly reporting of climate change metrics such as GHG

emission performance versus targets.

The Safety & Sustainability Committee met four times during the

financial year where it discussed climate-related risks and

opportunities. In addition to these formal meetings, a regular dialogue

was maintained between the members of the Committee and senior

management to enact the Group’s climate-related strategy.

For more details visit our

Climate Transition plan

In 2023/24 the Safety & Sustainability Committee took into

consideration the adoption of 1.5°C aligned near-term science-based

targets and the 2040 net zero target date recommended by the SBTi,

considering the potential effect of the targets on near and long-term

strategy and all stakeholders. After taking into consideration the lack of

a SBTi gas sector specific pathway and the requirement for companies

classed as electric utilities to be net zero by 2040, it was agreed that

the Group was unable to align to the SBTi long-term net zero standard.

The Committee agreed the updated near-term science-based targets

and a longer-term target to reach net zero by 2050, these targets were

reflected in the Group’s second CTP which was recommended to the

Board and approved by 99% of shareholders at the July 2024 AGM.

In July 2024, a workforce engagement session with members of the

sustainability team took place where they discussed the Group’s

climate transition plan and external reporting approach.

In September 2024, the Safety & Sustainability Committee and the

Audit & Risk Committee held a joint session to review progress on the

Group’s sustainability reporting and disclosure strategy, including plans

for future reasonable assurance of Scope 1 and 2 GHG emissions

reporting.

The Board considered climate-related themes across several sessions

at its strategy focused offsite in February 2025, including considering

the Group scenarios which looked at the Groups’s pathway to

achieving its strategic priorities and consideration of the pathway to net

zero and associated climate-related targets. The People & Governance

Committee reviewed the composition of the Board and its committees

in the year, applying a Board skills matrix to ensure there is an

appropriate balance of skills and competencies, including climate

change matters (see page 111).

In February 2025, the Audit & Risk Committee, in carrying out its risk

oversight duties, undertook a risk deep dive session on climate change

mitigation to understand its impact on the Group’s strategy.

The remit of the Board and its Committees under our governance

framework, as well as the number of times they meet and the climate-

related issues that were discussed through the year, are set out on

pages 96-121. Terms of Reference for the Board and its Committees

are available on our website nationalgrid.com/about-us/corporate-

information/corporate-governance.

Strategic Report Corporate Governance Financial Statements Additional Information 61

Board level
Safety & Sustainability Committee (four scheduled meetings in 2024/25)	Audit & Risk Committee (five scheduled meetings in 2024/25)	Remuneration Committee (four scheduled meetings in 2024/25)	People & Governance Committee (three scheduled meetings in 2024/25)	Finance Committee (three scheduled meetings in 2024/25)
Responsible for assessing and monitoring our environmental sustainability strategy and performance, overseeing progress against our net zero aims and considering potential climate change risks and opportunities.	Oversight of our Responsible Business performance reporting, TCFD disclosures and reporting in line with leading ESG frameworks and the progress of our ESG control and assurance framework.	Considers and approves whether and how ESG targets, including reductions in the Group’s direct Scope 1 emissions and the enablement of a net zero transition (Scope 2 and 3 emissions and strategic initiatives) are incorporated into our incentive arrangements.	Is updated on the leadership skills and capabilities needed in the business to deliver our net zero ambitions and set the strategy for attraction and retention.	Considers the financial impact of climate factors on our credit metrics and relevant considerations with regards to debt and equity investors, pension and insurance strategy.
	Informing		Reporting
Executive level
Safety, Health & Sustainability Committee	Reputation & Stakeholder Management Executive Committee	Ethics, Risk & Compliance Committee	Policy & Regulation Committee	Investment Committee
Reviews and manages Group-wide environment tracking/monitoring and the related decisions.	Assesses the broader external context and provides strategic oversight for external engagement, including climate.	Oversees the implementation of the Group’s risk management and compliance framework and assessment of climate- related principal risks.	Agrees and provides strategic oversight of the Group’s climate-related public policy priorities and positions.	Has delegated authority to improve investment decisions, including and not limited to those related to ASTI and NY upstate upgrades and acquisition and divestment decisions.
	Informing		Reporting
Management level
Sustainability Steering Group	ESG Steering Group	Sustainability Implementation Group	Business unit Green Financing Committees	Finance ESG and Group Sustainability teams
Provides oversight of the integration of Responsible Business into National Grid.	Provides strategic oversight and alignment on ESG activities, including climate.	Ensures that our RBC commitments and principles are executed and implemented consistently across the Group.	Provides governance of green financing.	These teams develop the Group's sustainability reporting strategy, ensuring credible and reliable data, including TCFD disclosures.
	Informing		Reporting
Business unit level
Supports the implementation of the Group’s Responsible Business Charter, our CTP and climate change risks and opportunities.

62	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

Management’s role

The Board delegates to management the responsibility for asset

investment and maintenance planning, implementation of the net zero

strategy and overseeing the development and achievement of

commitments and targets in the RBC, including targets related to

delivering our CTP. Management is also responsible on a day-to-day

basis for the management of climate-related risks and opportunities

faced by the Group and for delivering the roadmaps to achieve the net

zero strategy set by the Board.

Sustainability-focused roles are embedded across the Group to ensure

that in addition to the top-down focus, there is also a bottom-up

approach to addressing climate-related issues.

Our Chief Sustainability Officer heads a team of subject matter experts

who lead the implementation of the RBC across the Group by working

closely with business units to ensure their strategy and operations align

with our decarbonisation and climate resilience targets. The

Sustainability and Strategy team sets the Group’s sustainability

strategy, modelling potential climate scenarios and developing

glidepaths that align to GHG emission reduction targets. In addition,

they refreshed and published the Group’s second CTP in 2024 which

incorporates the Group’s SBTi targets and seeks to better align with the

framework prescribed by the UK’s Transition Plan Taskforce (TPT)

published in October 2023 and the sector guidance published in

November 2023.

Additionally, the team leads the Supply Chain Climate Strategy Steering

Group, which brings together SMEs across the business units,

Procurement and Finance to provide oversight and progress against

our sustainable supply chain objectives, including reporting

improvements, decarbonisation levers and supplier engagement. 

Climate adaption and mitigation activities to address our physical risks

are embedded into our core business processes. The Chief Engineer’s

Office leads the development of climate adaptation frameworks across

the Group to ensure there is a consistent approach to assess the

vulnerability of our energy assets and to guide strategic investment

planning to ensure network resilience. Further delegation is given to our

core operational businesses, including business unit Presidents who

are accountable for delivering the net zero roadmaps for their

businesses. Corporate Affairs, Group Finance, Sustainability, Safety &

Health and People teams support the businesses in achieving their net

zero pathways.

The Group Finance function continues to build out its sustainability

capabilities through its ESG Centre of Excellence (CoE), Investor

Relations and Group Treasury teams. The ESG CoE team are

responsible for setting the Group sustainability voluntary and

mandatory reporting strategy and ensuring credible and reliable internal

and external reporting of sustainability data, tracking the Group’s GHG

metrics against our targets, developing controls for Scope 1 and 2

GHG emissions, managing external assurance and coordinating ESG

rating agency submissions.

The Investor Relations and Treasury teams are responsible for

attracting green investment and engaging with debt and equity

investors to articulate our climate strategy and how we are managing

our climate-related risks and opportunities and engaging with, and

supporting, suppliers on their decarbonisation journey. In June, we

successfully completed the £7 billion equity raise, one of the largest

ever Rights Issues by a UK listed company, underpinning our

commitment to deliver our five-year, c.£60 billion investment plan

at pace.

How management is informed about

climate-related issues

Climate-related issues are flagged via the Enterprise Risk Management

(ERM) process described in the Risk section and as set out on pages

34-41. Through our Enterprise Performance Management (EPM)

framework, we complete monthly business review processes where

more granular targets are embedded in business unit performance

contracts. In addition, we engage in regular discussions with regulators,

policymakers and other key stakeholders, which helps inform

management on key horizon risks.

Other relevant forums

We outline the key Group Executive Committees responsible for

monitoring and driving our sustainability performance and managing

climate-specific risks and opportunities. Our key management

committees are described in more detail below.

The Sustainability Steering Group, chaired by the Chief Sustainability

Officer, provides oversight of the integration of Responsible Business

into National Grid, including the development of climate targets and

future strategy.

The ESG Steering Group brings together senior leaders from Group

Finance, Sustainability, Corporate Affairs and Group Legal to provide

strategic oversight and alignment on ESG activities including climate,

particularly ahead of formal governance meetings, and to discuss

insights on latest external ESG trends and potential strategic

implications for the Group.

The Sustainability Implementation Group, led by our Responsible

Business team, brings together the Sustainability team and

representatives from each business unit to ensure that the

commitments and principles in our RBC are executed and implemented

consistently across the Group. The Sustainability Implementation

Group monitors progress against the agreed Responsible Business

commitments, including GHG emission reduction commitments, and

ensures related topics and issues are reviewed and, where necessary,

escalated to the Sustainability Steering Committee.

The business unit Green Financing Committees, chaired by the Group

Treasurer, provide governance over our Green Financing Programme

that aims to attract funding for the capital investments required to

deliver our transition plan. They also approve the publication of our

Green Financing Report, which provides an analysis of how we utilised

the proceeds from our portfolio of green bonds and their environmental

impact. This year the Group issued a ~€1.5 billion green bond and has

published a revised Green Financing Framework to incorporate the

latest best practice and standards.

Engaging on policy interventions

Advocating for policy changes to enable the energy transition is crucial

in fulfilling our net zero commitment, as it establishes the necessary

structures and circumstances for reducing emissions and enabling

more ambitious action towards a secure, affordable and clean energy

future. Over the course of the year we have worked closely with

policymakers to navigate the energy transition and leveraged our

expertise in energy delivery systems to engage on the goals and

political interventions of the jurisdictions in which we operate. A key

part of making this a fair transition is the role we play in facilitating the

wider decarbonisation of the economy. We believe the role of energy

networks is vital to enable the transition to a clean energy future. For

more details see our Principles for a Fair Transition document on our

website.

See page 57 for more details on international engagement, responsible political lobbying and trade associations

Strategic Report Corporate Governance Financial Statements Additional Information 63

02 Strategy

Our efforts to understand climate-related risks and opportunities inform our

strategic decisions, including our announcement last year to refocus on

energy networks and drive unprecedented levels of investment.

We are well positioned to take advantage of the significant growth

opportunities from the transition to net zero, by enabling the

transportation and distribution of clean energy to homes and

businesses in the regions where we operate. This requires a

fundamental upgrade of our electricity and gas networks at a pace and

scale not seen for several decades. We are delivering these upgrades

today across all our jurisdictions.

We are also well prepared to mitigate the physical and transition risks

associated with climate change. We use scenario planning to explore

distinct possible futures, illuminating the opportunities and risks for us

in each. This allows us to test the robustness of our business strategy

to a range of potential outcomes and prepare for likely impacts on

our business.

In this section, we summarise how we are capitalising on the main

climate-related opportunity facing our business: the growth in electricity

networks required to support the transition to net zero. We then outline

how we use scenario modelling to assess climate-related risks and

opportunities, providing a summary of our core scenarios. In the

following section, we take a more detailed look at our risks and

opportunities.

Investing to enable the transition to net zero

We continue to focus our business on electricity, with nearly 80% of

Group assets expected to be electric by 2029. In September 2024,

we completed the sale of the remaining 20% equity interest in UK Gas

Transmission and Metering business, and in October 2024 we

completed the sale of the UK Electricity System Operator to

the Government.

In May 2024 we announced our intention to sell Grain LNG, our UK

LNG asset, and in February 2025 we announced the sale of National

Grid Renewables, our US onshore renewables business, to streamline

our focus on networks. The National Grid Renewables sale is expected

to finalise in the first half of the financial year ending 31 March 2026,

subject to required consents and regulatory approvals.

Our five-year financial framework, forecasts c.£60 billion of investment

across our energy networks and adjacent businesses in both the UK

and US. Of this, £51 billion is directly linked to the decarbonisation of

energy networks and is aligned with the principles of the EU Taxonomy

for climate change adaptation and mitigation. Our investment across

the Group is expecting to grow our asset base by around 10% per year

through to 2028/29, focused in our regulated businesses.

In the UK we are leading the largest overhaul of the electricity grid in a

generation. We submitted our Electricity Transmission business plan for

the RIIO-T3 period from 2026 to 2031 in December 2024. This includes

up to £35 billion of investment in expanding network capacity,

connecting customers, and ensuring the health and resilience of the

network. Our plan is also designed to adapt to an accelerated pathway

in line with the Government’s Clean Power 2030 ambition. We are clear

that success will be dependent on Government and Ofgem taking bold

action on community acceptance and planning consent, reform of

customer connections and development of supply chain skills.

Our UK ED business is investing £6.7 billion during the ED2 period from

2023 to 2028 to ensure the readiness of the electricity network to

unlock the potential for them to decarbonise further and faster.

This includes asset replacement, network reinforcement, new

connections, facilitating infrastructure for heat pumps, electric vehicles

and generation.

In the US, well-developed energy transition scenarios have enabled us

to submit credible rate case filings outlining the investments needed to

deliver the energy transition. In New England, we submitted our Electric

Sector Modernization Plan, outlining the critical investments needed in

the electricity distribution system over the next five years of $2 billion.

The proposed investments in the Future Grid Plan align with feedback

from customers and communities as part of an extensive engagement

process in advance of this submission.

As part of our five-year capital investment framework to 2028/29 we

expect to invest around £17 billion and £11 billion in our New York and

New England regulated businesses respectively. In New York, we are

making significant progress on the $4 billion upstate upgrade

programme, which includes modernising the grid to meet the

increasing demand for more reliable and renewable energy sources.

We are also building support for the use of alternatives to geological

natural gas in our gas network. These activities further enhance our role

in delivering the energy transition, while helping to ensure energy

security and sustainable affordability in the regions we operate in.

Our NGV business has planned capital investment of around £1 billion

out to 2028/29, including the necessary maintenance investment

across our operational interconnectors. In December 2023, our newest

interconnector, Viking Link, became operational. This addition brings

our total portfolio of six interconnectors to 7.8 GW of capacity,

representing approximately 80% of the UK interconnector market.

In seeking to achieve our net zero target and support decarbonisation,

we will leverage our strong financial position and investment-grade

credit ratings to finance key investments for net zero energy

distribution. Following the successful £7 billion Rights Issue in 2024/25,

our balance sheet, backed by valuable assets and strong credit ratings,

is flexible and well positioned for growth. We secure funding through

borrowing and shareholder investments, adhering to regulatory rules,

and closely monitor the financial health of our UK and US operations to

maintain appropriate gearing ratios.

As we embark on a new growth phase, we have refined our strategy to

focus on networks that will enable economic growth and the transition

to net zero. Our updated strategic priorities support our CTP. Within our

CTP we have identified necessary policy and regulatory support for

future investments aimed at decarbonising the energy sector and

reducing our emissions. Achieving our emissions reduction goals will

be challenging without backing from policymakers and regulators. For

our performance details against the CTP (refer to pages 44-47).

64	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

Scenario modelling

We use transition and physical scenario modelling to test how robust

our Group strategy is to a range of possible futures out to 2050. We

also look at the implications of our Group scenarios for our approach to

sustainability and our climate target commitments. In relation to our

climate targets, our CTP aligns to a 1.5°C scenario.

Transition scenario modelling

Our transition scenarios are tailored to the business environments in the

UK and the US. They encompass a range of energy transition

outcomes to 2050. Our ‘Delayed’ scenario represents a world with

higher warming levels, where governments, industry and consumers do

not pursue the transition at pace. Our ‘Balanced Pathway’ scenario

sees approximately 2°C of warming, with the energy transition

progressing at pace but supply chain, policy and cost challenges

preventing our jurisdictions from hitting targets.

Our ‘Electric Net Zero’ scenario sees governments and industry

prioritise achieving decarbonisation goals through supportive policies

and regulatory reforms, achieving net zero by 2050. The main change

from last year is the inclusion of the 'Balanced Pathway 2°C' instead of

a second 1.5°C pathway. The 2024 UNEP Emissions Gap Report,

which concludes that current Nationally Determined Contributions will

lead to a 2.6-2.8°C rise this century, underscores our belief that a 2°C

pathway is becoming more likely.

We continually monitor changes in the external environment and

update the scenarios as part of our normal risk management process.

There are limitations to the scope of our modelling, for example,

available data across other sectors. We use a wide range of resources

and compare our results with external scenarios to mitigate this. While

our scenarios are not intended to be predictions of likely future events,

they inform our understanding of possible risks and opportunities

arising from climate change.

These scenarios, along with our strategic planning and risk

management approaches, guide us in the identification of material

climate-related risks and opportunities as set out on pages 70 – 74.

Transition scenario descriptions, assumptions and inputs (Climate change by 2100 vs. pre-industrial levels (approximate))

	Delayed 2-4°C	Balanced Pathway 2°C	Electric Net Zero 1.5°C
Description	•Represents a world where governments, industry and consumers do not pursue the transition at pace, meaning our jurisdictions miss climate targets.	•Energy transition drives forward at pace, but ongoing supply chain challenges, policy implementation delays, and short-term financial concerns mean our jurisdictions narrowly miss targets.	•Governments prioritise the achievement of decarbonisation goals through supportive policies and regulatory reforms, new load is met through clean power sources.
UK assumptions	•Decarbonisation progresses but is insufficient to meet net zero in 2050. •Resource nationalism disrupts established trade flows. •Supply chain disruptions and higher material prices. •Policy delays. •Wind and solar deployment continue very slowly with difficult supply chains and limited Government support. •Gas heating dominates, with low uptake of heat pumps as policies have limited impact. •Electric vehicle (EV) uptake stagnates due to cost. •Load growth is met by thermal generation staying online longer. •Reduced opportunities for further interconnection growth beyond what is in the pipeline.	•Decarbonisation progresses but just falls short of 2030 and 2035 targets. •Total energy consumption reduces 25% by 2050. •Electricity demand doubles by 2050, mainly because of electrification of heat and transport, green hydrogen production and data centre expansion. •Wind capacity targets missed by five years. •Heat pump growth restricted to new build houses. Current houses converting off gas heating continues at current rates. •EVs continues to grow at the current rate with the Zero Emissions Vehicles mandate in place. •Gas for power sector still has a role to play in the 2030s beyond the maximum 5% of power generation targeted in CP2030. •Interconnector projects progress at pace.	•Achieves net zero power system by 2035 and economy-wide net zero by 2050. •Energy consumption reduces >30% by 2050, as more efficient electric technology replaces combustion technology. •Electricity demand increases 2.2x fold by 2050. •Near-complete electrification of demand sectors such as heat and transport supported by strong renewable expansion with distributed flexibility, storage, interconnection and some abated gas capacity providing dispatchable supply. •Heat pumps mandated in existing homes as well as sufficient subsidy to support wide- spread adoption. •Widespread EV adoption as policies achieve targets. •Increased collaboration and coordination results in faster adoption of offshore hybrid assets and overall increased interconnectors.
US assumptions	•Achieves ~60% reduction in energy sector emission from 1990 levels. •State subsidies are scaled back, resulting in low uptake of heat pumps. •EV adoption stagnates in the near term driven by fewer federal incentives, although picks up based on cost in the 2030s. •No offshore wind added beyond what is fully permitted and currently under construction. •Some large onshore renewables are added each decade as states continue to pursue renewable targets but a delayed pace.	•Achieves ~70% reduction in energy emission sector vs 95% reduction target by 2050. •Heat pump adoption increases steadily as costs fall, capturing 50% of heat demand by 2050. •Slow adoption of EVs through the 2030s after Federal incentives end in 2025, with full competitiveness and growth upswing by 2035. •No new fossil units or major enhancements to existing plant. •Offshore wind stalls through 2035, then existing lease areas are gradually built out driven by energy needs, given no politically viable alternatives. •Onshore renewables deployment increases steadily but roughly 10 years behind stated policy goals.	•Core energy sectors including road transport, buildings and electricity achieve ~96% reduction in line with state targets. •Nearly complete electrification of heat demand. •Widespread EV adoption in line with policy targets. •Offshore wind picks up in the 2030s becoming the leading source of electricity generation in the region. •Onshore renewables deployment continues to meet the net zero goals.

Strategic Report Corporate Governance Financial Statements Additional Information 65

Transition scenario outputs

		UK	US NY	US MA
Annual electricity demand, TWh	Delayed 2-4°C
	Balanced pathway 2°C
	Electric Net Zero 1.5°C
Number of residential heat pumps, millions	Delayed 2-4°C
	Balanced pathway 2°C
	Electric Net Zero 1.5°C

2024 2035 2050 Note: NY refers to New York State, MA to Massachusetts. 2023 numbers added for heat pumps in NY as 2024 data is not yet available.

		US NY			US MA
		2024	2035	2050	2024	2035	2050
Annual natural gas demand, MMBTU	Delayed 2–4°C	826m	842m (+1.9%)	761m (-7.9%)	270m	284m (+5.2%)	288m (+6.7%)
	Balanced Pathway 2°C	826m	820m (-0.7%)	504m (-39.0%)	270m	276m (+2.2%)	176m (-38.8%)
	Electric Net Zero 1.5°C	826m	477m (-42.3%)	44m (-94.7%)	270m	157m (-41.9%)	23m (-91.5%)

Note: Using 2023 data to estimate 2024 natural gas demand in New York and Massachusetts, as 2024 data is not yet available. Percentages shown depict the percentage change in demand vs

2024.

		UK (2024: 4% of car fleet)	US NY (2024: 2% of car fleet)	US MA (2024: 2% of car fleet)
Number of passenger EVs, millions	Delayed 2–4°C
		93% of car fleet by 2050	73% of car fleet by 2050	73% of car fleet by 2050
	Balanced Pathway 2°C
		99% of car fleet by 2050	73% of car fleet by 2050	73% of car fleet by 2050
	Electric Net Zero 1.5°C
		100% of car fleet by 2050	99% of car fleet by 2050	99% of car fleet by 2050

2024 2035 2050

		UK	US NY	US MA
Total renewable generation, TWh	Delayed 2–4°C
	Balanced Pathway 2°C
	Electric Net Zero 1.5°C

2024 2035 2050

66	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

Changes since last year

This year, we have replaced our ‘Hybrid Net Zero’ scenario (a 1.5°C and

net zero by 2050-aligned pathway, alongside Electric Net Zero), with

our ‘Balanced Pathway’, where the energy transition progresses but

falls short of government targets and net zero by 2050.

We now see a 1.5°C trajectory as less likely than in previous years.

Our updated set of scenarios present a wider range of energy transition

outcomes. They reflect governments in the areas we serve seeing

economic growth and affordability as key priorities. In some cases

they must manage tensions or trade-offs with the short-term costs of

the transition.

We have retained our ‘Delayed’ and ‘Electric Net Zero’ Scenarios,

updating them with new inputs to reflect the latest market, technology

and policy trends and settings.

Transition scenario insights

We test the resilience of our business strategy against our transition

scenarios, focusing our transition risks on the scenarios associated with

lower temperature rises. The transition impact on the Group is most

significant in scenarios resulting in a lower degree of warming given the

increased action required. The following five transition insights are

therefore most relevant to a 1.5°C scenario. As expected, these remain

largely consistent with our headline insights from the previous year:

1. Achieving energy transition targets depends on effective

reforms to drive clean power deployment and policies that

incentivise consumer uptake of low carbon technologies

Policy settings and interventions will be a key enabler of the transition.

Our ability to meet our own net zero commitments relies on these.

Without adequate policy supports, for example sufficient Contract for

Difference (CfD) budgets for renewables or consumer incentives for heat

pump uptake, there is a risk our jurisdictions will fall short of policy targets.

Successful implementation of key enabling policies like connections and

planning reforms in the UK, and permitting reform in the US, will be a

necessary precondition for our jurisdictions to accelerate in line

with targets.

2. Electricity use and share of final demand will increase driven by

consumer electrification and large load growth (e.g. data centres)

In the UK, we expect electricity demand to increase almost 50% by

2035 and more than double by 2050. In our states in the US, we expect

an increase of around 25% by 2035 and approximately 50% by 2050.

The demand increase arises from the electrification of heat, transport,

and large loads such as data centres.

The role of data centres is rapidly changing, and we are updating our

modelling capability to improve our understanding of this area and the

extent to which energy efficiency may mitigate the sharp increases

expected in some scenarios. Overall, the share of final demand will

drive additional growth and investment in our electricity network while

resulting in lower demand for our gas network.

3. Energy supply structure will continue to shift

There will be a global shift to power generation from renewable and low

carbon sources. We are seeing a resurgence of interest in nuclear,

including next generation technologies like small modular reactors,

although they are not yet cost competitive.

4. Pathways will adapt to global and local realities

Both the UK and US elected new governments in 2024, leading to

energy policy changes. The US Federal Government is focused on

achieving economic growth and security through energy abundance,

with a focus on natural gas and energy infrastructure, and has paused

offshore wind leasing, while our States continue to pursue climate

targets and policies.

In the UK, the Government is pursuing an accelerated power sector

decarbonisation agenda, with an ambitious role for offshore wind

(including a target of 50 GW by 2030). We expect different energy

transition pathways in different jurisdictions.

5. CTP achievement will be challenging in slower scenarios

Each scenario is different, and in some we will not be able to meet our

targets. It is important to recognise that the non-delivery of, or delay in,

policy, regulation and other dependencies on which achieving our

targets are contingent, will impact our capability to achieve our targets.

None of the transition scenarios tested threaten the Group's resilience, and we are well positioned to adapt our portfolio to maximise the

opportunities of the energy transition, with no significant risk of a material adjustment to the carrying amounts of assets and liabilities in the next

annual reporting period.

Further detail on the transition risks and opportunities identified in our scenario analysis, including estimated qualitative and quantitative impacts where applicable, can be found on pages 70 – 74.

Strategic Report Corporate Governance Financial Statements Additional Information 67

Physical scenario modelling

We use Group-wide climate scenarios to directly assess our

vulnerability to climate change. These scenarios consider society’s

progress toward limiting global temperature increases against pre-

industrial levels, benchmarking against an average increase of 1.5°C, in

keeping with the Paris Agreement. We have modelled the way in which

our business could be directly impacted as a result of increasing

physical climate impacts, including extreme weather events and

chronic changes in weather patterns. For physical risks, we review

climate hazards which we believe would have the most significant

impact and are most likely to occur within our territories.

Descriptions, assumption and inputs

The climate hazard data is sourced from the relevant national climate

assessments in the US (CMIP5) and in the UK (UKCP18). Scenario data

is modelled using the IPCC’s Representative Concentration Pathway

(RCP) scenarios of RCP8.5 (4°C) and RCP4.5 (2°C). The modelling

covers decade timeframes; 2030s, 2040s, 2050s and 2070s, with

comparison to a baseline of 1981–2010 in the UK and 1976–2005 in

the US.

Climate projections are inherently uncertain and are not meant to be

construed as predictions of future climate. These uncertainties arise

from incomplete understanding of earth's systems, natural variability,

model limitations, and observational errors. Despite these uncertainties,

this should not delay actions to mitigate or adapt to climate change.

Physical insights

Outputs

Most hazards are projected to increase in frequency in the future, with

high temperatures and coastal and river flooding of particular concern

across consistent areas of our operations. In most cases the level of

risk is greater in a 4°C scenario than a 2°C scenario.

We have progressed our physical risk analysis and asset vulnerability to

inform our strategic planning and investment choices. Our internal

Climate Change Risk Tool (CCRT), which has a dedicated geospatial

capability, is enabling us to create bespoke physical risk assessments

for each business based on the specific asset and hazard data that is

material to their operations, while still retaining a Group strategic view

of our overall business.

Our risk assessment shows the risk to most of our existing asset

portfolio although the CCRT does not currently include NGED and NGV

UK’s assets. We continue to align this with data relating to our new

infrastructure investments and our material acquisitions and disposals

so that our cumulative picture of risk will begin to change. The outputs

are used in the Group-level Climate Vulnerability Assessment (CVA).

Wildfires have been an impactful climate hazard in areas around the world

such as the western United States. While the risk of major wildfires

spreading is lower in National Grid’s service territory, we have taken steps

to improve situational awareness and refine operating procedures in the

event of a wildfire in our territories in the UK and US. Additional

assessments are planned and underway to better understand potential

vulnerabilities and develop mitigations.

The climate hazards most significant to us are summarised below.

Flooding		Warm weather
Definition Coastal flooding River flooding	Vulnerability Risk of power failure, accelerated asset corrosion, debris damage, equipment submersion and water infiltration, soil erosion	Definition High temperatures Heatwaves	Vulnerability Risk of power failure, equipment overheating, warmer air temperatures contributing toward accelerated ageing, reduced capacity of transmission and distribution lines
Cold weather		High winds
Definition Low temperatures Freeze thaws	Vulnerability Ice accretion overloading overhead lines, structural failure	Definition High winds	Vulnerability Structural failure to overhead lines due to extreme wind exceeding design standard and vegetation contact

68	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

Climate Vulnerability Assessment (CVA)

Using the CCRT outputs and insights, we also conduct a Group-wide

CVA which considers the impacts of climate change on our assets over

the next several decades. Understanding changing climate conditions

and the risk to our assets ensures appropriate mitigation efforts are

considered to protect existing assets and build climate resiliency into

future assets.

The typical lifespan of our assets is often 50 years or more, so future

climate hazards need to be considered during the planning process to

avoid premature asset repair or replacement. For example, the location

of a proposed new substation may not be in a coastal flood prone area

today, but climate model projections may indicate that it will be in 10

years. Understanding the future climate hazards allows us to make

informed design decisions and update hardening programmes to

protect our Group’s assets and improve reliability for customers.

Our CVA began in December 2022, led by a steering group of senior

leaders from each of our businesses, and a working group with

business representatives from our engineering, resilience and policy

teams. We use the outputs of the CCRT as a basis for this assessment

where possible.

It is a phased programme of activity which will deliver an adaptation

plan to address assets with the highest resilience risk. Sharing best

practice with other energy utilities informs our approach and the

ongoing development of our industry-leading CCRT. Our tool was

recognised by the Centre for Climate and Energy Solution (C2ES) for

climate change innovation.

Our CVA is a risk-based approach where each business unit identifies

critical assets which are physically vulnerable to climate hazards. The

process accounts for existing adaptation plans such as storm

hardening programmes and leverages the latest climate science.

Adaptations will be local and developed by each business unit to inform

standard updates, future capital investments and industry alignment.

The actions taken by the Group in order to ensure we predict and

respond to a significant disruption of energy supply because of climate

change and storms are described further on page 38.

In addition to the Group-wide assessment, each business unit

conducts climate resilience or adaptation assessments per their

regulatory requirements, which are discussed further on page 74.

CVA process methodology and outputs

Process
Phase 1 Scope	Phase 2 Assess vulnerability
Validate scope including climate science, hazards and assets		Climate vulnerability risk = exposure x potential x hazard
Phase 4 Adaptation	Phase 3 Assess resilience
Develop adaptation plan to address assets with the highest resilience risk		Assess climate resilience assets at risk, accounting for those with adaptation efforts in place

Outputs
Business-specific vulnerability assessment reports To support future regulatory submissions	Equipment specification updates To identify where changes are needed	External engineering standards To influence, change and establish industry resilience standards	Asset policy changes To deliver climate resilient assets at least cost	Discrete investment projects To address immediate vulnerability risks not captured in existing investment plans	CCRT development To continuously improve our CCRT through application

Strategic Report Corporate Governance Financial Statements Additional Information 69

03 Risk management

Climate change has been integrated into our Enterprise Risk

Management (ERM) processes for several years

Climate change and ERM

Climate change is a key risk factor for the Group and we have

integrated it into our ERM process. Our ERM framework and process

consider the physical and transition risks associated with climate

change, as well as the potential impact of these risks on our business

operations, financial performance, and reputation. For more information

on our ERM framework and process, which remains consistent with the

prior year (refer to page 34).

For our climate change Group Principal Risks (GPRs) there are two

distinct elements:

1. Climate change (mitigation GPR): The standalone mitigation risk is

aligned to our strategic objective ‘Enable the energy transition for all’,

with a focus on delivering clean, decarbonised energy to meet our net

zero goals (refer to page 36).

2. Significant disruption of energy (adaptation GPR): The adaptation,

or physical risk activity, absorbed within the control framework

associated with the ‘Significant disruption of energy’ risk, has helped

ensure we continue to deliver energy reliably for our customers, with a

focus on resilience (refer to page 38).

This allows us to have greater oversight, focus and adoption of two

distinct and proportionate control frameworks in line with the new

Group risk appetite – mitigating downside risk, and maximising

opportunities, where applicable.

In addition to the two main GPRs above, other GPRs influenced by

climate-related transition and physical risks include ‘Upstream supply’

and ‘Major capital programmes’ which are more pronounced in a 1.5°C

scenario and require proactive measures. The risk of a ‘Significant

safety or environmental event’ is partly linked to physical climate risks,

necessitating strict safety and environmental practices. Acute physical

risks are currently occurring and are anticipated to increase in

frequency and severity, with significant risks projected over a longer

horizon, particularly in a 4°C scenario.

We continue to develop our risk and opportunity horizon scanning to

assess critical trends in the energy transition. With input from our senior

stakeholders and external risk experts, key indicators and metrics are

measured monthly against thresholds and analysed against our current

strategy and business plans. Emerging risks are managed under our

risk management framework with results reviewed by senior leadership

(refer to page 41).

Integration of the climate risk management process

into our overall risk management framework

Consistent with the Group’s overall approach to risk management and

internal control, climate change risk management activities take place

through all levels of our organisation. We deploy an industry good

practice ‘Three Lines’ model to deliver our risk management and

internal control activities which is described further on page 34.

Group’s Risk Taxonomy

The Group’s Risk Taxonomy supports all levels of the business to

categorise any climate change risk into one of our four taxonomy

groups: strategic, operational, financial, and compliance. Sub-

categories beneath these four groups allow the business to select a

more granular taxonomy grouping with an assigned risk appetite. All

GPRs are considered the most important risks and we do not prioritise.

Despite external risk pressures, our risk exposure specific to our

climate-related risks is largely unchanged with the majority of our risks

operating within risk appetite. The climate-related risks align directly

with two primary risk categories – strategic and operational.

How we manage and monitor our climate-related

risks

As part of our risk management process, we have assigned key

controls to manage both our climate change mitigation and adaptation

risks. The controls for our climate change mitigation GPR are in line

with our strategy and regulatory frameworks and are also reflected

throughout other relevant risks, for example: regulatory outcomes;

political and societal expectations; and significant disruption of energy.

The key overarching mitigation controls involve tracking progress

against targets, identifying changes that could trigger additional

transition risks, and implementing procedures and proposed solutions

to overcome them. Our key climate change adaptation controls include

the following:

•Fit for Future of Electricity Strategy: A corporate strategy that

considers the steps to ensure our business remains resilient in the

future, such as enhancing design standards, and investments on

asset hardening and flood protection.

•Engineers Governance forums: Group Chief Engineer and

engineering duty holders sharing guidance and data on key topics

such as resilience.

•Resilience and Asset Management Business Management

Standard (BMS): Sets out minimum requirements and a framework

for resilience capability and managing asset risk to ensure each

business unit is prepared for the next disruptive event.

•Establishment of the Business Resilience and Crisis

Management organisation: Reporting to the Group Risk Officer and

Group Legal, this team is focused on building resilience to all threats

and hazards. This includes the development of crisis management

and business continuity plans, training, and exercises to help align

and coordinate our response to severe weather and other crisis

events; while also leveraging innovative technologies to improve our

intelligence, looking strategically at evolving risks associated with

climate change. We are also expanding our network of external

stakeholders to identify and leverage industry thought leadership and

play an active role in shaping new policies and regulations.

Assessing our Climate-related financial risks and

opportunities

Our Group risks are rated on a scale of 1 to 5 across three categories:

financial, reputation and likelihood. The financial ratings correlate to

financial bandings from low to high and our reputational impact

categories scale from ‘internal’ to ‘international’. This approach is

consistent with our Group Principal Risks and the Principal Risk stress

testing conducted as part of our Viability Statement on page 93. Then

the overall indicative risk score is calculated by multiplying likelihood

(see below for scaling details) by the greater of financial or reputational

impact score. For our TCFD disclosures we then expand on this internal

analysis of impact, timeframe and likelihood for each risk and

opportunity to overlay additional market data and input from subject

matter experts across the Group.

70	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

Our material climate-related risks and opportunities

Time horizons and probability	Time horizons
Guided by our scenario modelling, strategic planning, and risk management approaches articulated above, the climate- related risks and opportunities that pose a financially material impact to the Group are detailed below, along with our basis of measuring and responding strategically to each. We have only reported risks and opportunities that are financially material.	The timeframes we have used to assess the climate-related risks and opportunities are:
	Short up to one year In line with our annual planning and shorter-term budget processes.	Medium from two to ten years Reflects our strategic business planning process period.	Long ten years plus Aligns with our longer-term emerging risk assessment timelines, up to the date of our net zero commitment.
	These time horizons largely align with our planning and forecasting processes timelines, with some buffers to reflect the regularity of updating scenarios.

Likelihood
Our ‘likelihood’ assessment is an indicative estimate of the probability for material financial impacts with reference to the following categorisation:
Very low	Low	Moderate	High	Very high
We use our ERM risk assessment scoring scale to categorise the likelihood of our climate change risks and opportunities.

1. Transition Risk
	Demand for natural gas is expected to reduce in the long term
	Risk/opportunity	Potential impact	Our response
	Policy and Legal There is an important future role for gas in our US jurisdictions, including the gas assets we own and operate today. In the long term, our energy networks will need to decarbonise to achieve net zero targets. The future role of gas will depend on economic, technological, legal, policy, and regulatory developments. Over the next decade, demand for natural gas in our US jurisdictions will remain strong, driven by affordability and economic development priorities of our stakeholders and customers. In the longer term, pathways toward net zero targets assume significant electrification, including heating, which would increase electric load and reduce gas demand. This has a bearing on the useful economic lives (UELs) and elements of our gas network assets.	Heat pump adoption is a good indicator of electrification trends, and therefore likely future demand for gas. In September 2024, National Grid reviewed heat pump adoption. We found that it lags state targets and is driven almost entirely by subsidies. Massachusetts has installed 90,384 heat pumps towards a 2030 target of 500,000, while New York has installed around 58,937 against a target of one to two million homes. Frequent cold weather events in parts of NY and MA are also driving continued use of the gas network. For example, in January 2025, MA experienced a cold snap during which demand for gas heating was so high that multiple peak-serving LNG storage assets were needed. This spike in demand brought high heating bills and affordability concerns, particularly for low-income customers, into sharp focus.  In response, the MA Department of Environmental Protection directed the programme administrators to cut $500m from the three year budget for the statewide plan to accelerate the pace of heat pump adoption. As extreme cold weather events are likely to reoccur in the future, continued use of the gas network is more likely as some customers adopt partial heat pumps and retain gas connections as backup. Besides heat pump adoption, substantial investments into the electric network would be required to reduce gas reliance. In New York, scenarios meeting 2050 emission targets project residential bill increases significantly, while in Massachusetts, peak electric load is expected to rise from 4.9 GW today to 10.7 GW by 2050 if state electrification goals are achieved. Full electrification scenarios appear unlikely due to high costs, customers opting for gas, and existing challenges on the electric infrastructure to support increasing load in the short term. We have performed sensitivity analysis to assess the impact on our Group financial results of shortening the UELs of our gas business assets, which for 2050 illustrates an unlikely worst-case scenario. Please refer to note 13 Property Plant and Equipment on page 199 – 201 for more details.	In assessing the UELs of our gas network assets, we consider a range of different pathways for the future of gas demand. These account for customer behaviour, fuel decarbonisation options, and feasibility and affordability of electrification, as well as the net zero ambitions and our jurisdictions’ targets. Although NY and MA’s preferred pathways to achieve net zero is focused on large scale full electrification, safety and reliability of the gas network remains a key priority for National Grid and its regulators, as demonstrated by increased investment in our gas infrastructure and allowed recovery of these investments. While New York’s Climate Leadership and Community Protection Act (CLCPA) and Massachusetts’ Clean Energy and Climate Plan (CECP) call for fossil free energy by 2050, we note challenges meeting interim targets. As stated in the recent KEDNY and KEDLI Rate Order, the NY Public Service Commission has acknowledged that “it is impossible at this time to accurately predict the nature of the Companies’ gas business in 2050 and whether any continuing use will be made of the Companies’ gas distribution system.” Alternative pathways proposed in regulatory proceedings exist, which if taken, would suggest a continued use for gas assets, whether as a backup source during the coldest winter days or a significant heating source using alternative low carbon fuels. Based on our latest assessment, we continue to believe that these assets retain a crucial role in maintaining security, reliability and affordability of energy beyond 2026.
	Business units potentially affected: NY and NE Asset group(s) potentially affected: Gas Distribution and Generation
	Measurement indicators: •Gas UEL sensitivities •GHG emissions •CTP

Strategic Report Corporate Governance Financial Statements Additional Information 71

2. Transition Risk
	Uncertainty in the extent of electricity demand growth
	Risk/opportunity	Potential impact	Our response
	Market, Policy and Legal While we expect electric demand growth in all scenarios, there is uncertainty about the scale of electricity demand growth in the face of potential political (including regulatory and legal mechanisms), technological or societal trends. For example, the recent boom in interest in generative AI has generated forecasts of significantly increased electric load growth. The uncertainty about the extent of efficiency improvements limits our ability to predict the exact impact on our networks.	If we underestimate demand, there is a risk that the transmission and distribution networks we operate in the UK and US may not be adequately prepared to handle the substantial growth in electricity demand necessary to achieve net zero. This shortfall could hinder our ability to meet future energy needs, potentially compromising our sustainability goals and the reliability of our services. If we overestimate demand, there is a risk that we build surplus assets. This excess can lead to inefficiencies and misallocated resources, ultimately undermining the trust and confidence of both consumers and regulators. Such a scenario could result in negative perceptions of our ability to accurately forecast and manage demand, potentially damaging our reputation and credibility in the market. Given this risk would likely materialise over the medium to long term, it is not possible to reliably quantify this risk at this time.	Clear policy commitments and pathways mitigate uncertainty by providing a focal point for the industry. We maintain close stakeholder relationships across wider industry and government to anticipate the extent of electric demand growth, and influence enabling policy. We also have internal analytics teams to model different futures with varying electric demand growth. We use this proprietary analysis, combined with decades of experience in energy infrastructure development, to plan for the future. Where possible, we include flexibility in our plans to allow us to respond to changing needs. To mitigate the risk of under or overbuild, we work closely with regulators and system planners. In the UK, we have been pushing for a framework for anticipatory investment to ensure we are able to meet new connections and electrification on time and efficiently. Ofgem accepted this in its ED3 framework decision document, and we will now work together on the details. In both the UK and US, we are making no-regret anticipatory investment to meet the demand for connections. To mitigate overbuild, in UK ED, the DSO governance panel is charged with ensuring all distribution network build is essential and that all other options for deferral (such as flexibility) have been considered first. In ET, our RIIO-T3 regulatory plan to Ofgem will enable us to respond to changing need. In the US, we prioritise investment based on current system performance, engineering planning needs, and execution strategy, while continuing to identify and pursue ways to efficiently deliver a secure, affordable and clean energy future, including through the use of energy efficiency, demand response, and other forms of non-wires alternatives. We regularly measure and report our network reliability across the transmission, distribution and interconnection network (refer to page 21).
	Business units potentially affected: All Asset group(s) potentially affected: Electrical Distribution and Transmission
	Measurement indicators: •Network reliability •UK and US power networks •IFRS 8 capital investments

72	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

3. Transition Risk
	There are several factors which affect our ability to deliver our commitments, including supply chain, talent and finance
	Risk/opportunity	Potential impact	Our response
	Reputation and Market Delivering an unprecedented transformation of the energy system comes with delivery risk. We rely on supply chains, talent, and finance to play our part in this transformation. If we are unable to deliver the energy networks of the future where they are needed, when they are needed, wider societal decarbonisation goals are jeopardised. There is also a risk that we fall short of our own stretching GHG emissions targets and commitments. Missing our own targets and commitments risks the credibility we have with our investors, regulators and other stakeholders.	Our businesses in the US and UK both depend on, and compete in, a global market for green finance, supply chains and talent. If we are unable to compete effectively for talent, or purchase equipment in the right timeframes, we could also fail to deliver the major network reinforcement needed. It is also crucial that we have investable regulatory frameworks with the right return on and of capital.  Failure to attract investors could undermine our ability to deliver the necessary investments and result in materially lower financial performance. Our share price and EPS projections could be impacted due to loss of incentives or incurrence of penalties. It is not possible to reliably measure the impact currently. It could also damage our relationships with our trusted stakeholders, including our investors, regulators and customers, and potentially position National Grid as an obstacle rather than an enabler in the energy transition. Every sector of the economy, as well as our customers, rely on the energy sector to enable their decarbonisation plans. The ability to connect to our transmission and distribution networks in a timely manner is critical. Given this risk would likely materialise over the medium to long term, it is not possible to reliably quantify this risk at this time.	We are focused on working with regulators to get investable frameworks in place in all our jurisdictions. We embed climate-related targets into our business unit performance management processes with internal reporting of performance against targets. Emissions reduction targets are also embedded into the incentive arrangements and plans for Executive Directors and the Senior Leadership Group (refer to pages 121 to 149). The Group CTP sets out our revised roadmap to a vision of reaching net zero. We continue to work closely with stakeholders, including regulators, to ensure policy and regulatory frameworks enable and facilitate our net zero plans. We have a strategic priority to ‘build tomorrow’s workforce today’ to ensure we have the talent we need to deliver the transition. Our focus areas include strong entry level programmes, including graduates, interns and apprentices, as well as development programmes for our senior leaders. In UK ET, our supply chain task force, launched in April 2024, ensures we are able to deliver infrastructure at pace, and has taken major steps to transform the way we think about our supply chain. Recently, we launched a new regional supply chain model for substations offering suppliers long-term commitments in a more collaborative way of working. This is in addition to our Great Grid Partnership, a collaborative £9bn supply chain framework with seven partners, enabling us to pool resources, skills, insights and experience to deliver our ASTI programme efficiently in this tight supply chain environment. Ofgem also introduced a £4bn Advanced Procurement Mechanism (APM), enabling us to secure critical equipment and services. We also engage with our top suppliers by emissions to establish action plans and commitments towards a SBT (refer to page 46).
	Business units potentially affected: All Asset group(s) potentially affected: Electrical Distribution and Transmission. Gas Distribution.
	Measurement indicators: •GHG emissions •Network reliability •Renewable capacity additions •Proportion of renewables in energy mix •EU Taxonomy-aligned capital expenditure •Customer satisfaction (US) •Cumulative green bonds on issue •IFRS 8 capital investments •Supply chain engagement

Strategic Report Corporate Governance Financial Statements Additional Information 73

4. Transition Opportunity
	Increased demand for electricity, even in our slowest decarbonising scenarios
	Risk/opportunity	Potential impact	Our response
	Market National Grid is well positioned to capitalise on the significant growth opportunities associated with the increased demand for electricity in the UK and US. As electricity supply grows to meet increasing demand, we will have a central role to play in connecting new sources of energy to end users via our networks. Products/Services This transformational period in the energy sector presents a significant opportunity to invest in innovative solutions to decarbonise our network and reap the rewards of those investments as these technologies scale.	While the pace and scale of electrification growth depends on a range of factors, the positive trajectory is clear, and so is the corresponding need for growth in electricity networks. In the UK, the Government has announced its Clean Power 2030 (CP2030) Plan, which will see clean power sources produce at least as much power as Great Britain consumes over the whole year, and at least 95% of Great Britain’s generation in 2030. In the US, our states have established targets for clean energy supply and consumer electrification, and our networks will play a key role in facilitating these plans.  Leveraging these opportunities for the Group will significantly enhance capital investment and growth, thereby increasing Group profit and EPS. This is the key driver of our five-year financial framework, forecasting a 6-8% CAGR in underlying EPS to 2028/29, from a 2024/25 baseline. Within this, NGV has the potential to benefit from significant investment opportunities in both the UK and US, including interconnectors and competitive transmission to transport increasing levels of electricity. In particular, National Grid is a leader in developing electricity interconnector projects to connect Great Britain with other European countries. By enablling cross-border electricity trade, interconnectors can displace fossil fuel generation in favour of renewable energy, reducing the CO2e intensity of the energy mix, while generating revenue for National Grid. In addition, interconnection to countries like Norway with flexible controllable generation, enables more effective integration of intermittent renewable generation in GB. The UK Government’s CP2030 plan assumes c.12 GW of interconnector capacity will be required, up from just under 10 GW today.	To maximise these opportunities we are evolving our strategy to focus on networks and streamlining our business. In May 2024, we announced our intention to sell Grain LNG, our UK LNG business, and National Grid Renewables, our US onshore renewables business. We plan to invest around £60 billion from April 2024 to March 2029, including an ambitious £51 billion 'Green Capex' ambition1, making us one of the FTSE's biggest investors in net zero delivery. This will be split broadly evenly across the UK and US Northeast, with around 80% of the investment expected to be in electricity networks over the five years, continuing the Group’s shift towards electric, with nearly 80% of Group assets expected to be electric by 2029. In ET, we submitted a business plan to Ofgem that will deliver the most significant advancement in the UK's transmission network in a generation. In ED, our January ED3 Framework Consultation Open Letter emphasised the need for a transformative approach to electricity distribution networks to achieve the UK's climate targets. In New England, the Massachusetts Department of Public Utilities approved our Electric Sector Modernization Plan (ESMP) as a ‘strategic plan’, which outlines around $2 billion in anticipatory investments in the electrical distribution system. In New York, we began upgrading 1,000 miles of grid to help deliver over 4 GW of more resilient, clean and secure energy. In NGV, we received regulatory approval for the LionLink (1.8 GW) offshore hybrid asset (OHA), marking a major milestone in connecting the national electricity transmission system and offshore wind farms based in Dutch waters. Through our corporate venture capital arm, National Grid Partners, we capitalise on this transition opportunity, investing in and helping develop startups at the intersection of energy and emerging technology, allowing National Grid to benefit operationally and strategically as we scale them across our business and industry. Since its 2018 founding, National Grid Partners has invested more than $500 million in over 50 startups and strategic funds, with seven successful exits. More than 80% of the startups in the National Grid Partners portfolio are strategically engaged with National Grid business units to help solve today’s challenges and create tomorrow’s energy systems. For example, in New York and Wales, we have deployed dynamic line rating (DLR) technology on our transmission lines in collaboration with our portfolio company, LineVision. The technology provides condition-specific line ratings to our transmission control room, allowing us to maximise the power transmitted on our lines without compromising safety.
	Business units potentially affected: All Asset group(s) potentially affected: Electrical Distribution and Transmission, NGV Interconnectors and NGP investments
	Measurement indicators: •Network efficiency and reliability •Renewable capacity additions •Proportion of renewables in energy mix •EU Taxonomy green capex ratio •Investment in research and development •National Grid Partners investment

1. Aligned to principles of EU Taxonomy, directly invested into the decarbonisation of energy networks.

74	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

5. Physical Risk
	Increased frequency of extreme weather incidents and changing long-term climate trends
	Risk/opportunity	Potential impact	Our response
	Acute Our assets are at risk of physical impacts from increased frequency of extreme weather events such as storms and flooding, leading to asset damage and operational risks. Chronic Our assets are at risk of physical impacts from changing climate trends in the longer term, including increased frequency and severity of coastal flooding, high temperature, extreme wind, wildfires and low temperature, exposing us to asset damage and operational risks.	Under our US regulatory frameworks and agreements, major storm costs become recoverable in future years once the deferrable criteria are met. This year, we incurred costs due to asset damage and operational interruptions from major storms, totalling £87 million (2023/24: £226 million). More details on our major storm costs can be found on pages 280 - 290 in the ‘Other unaudited financial information’ section. Allowances for recovering costs from other US weather events are included within the base rates determined at the outset of each rate filing period. In the UK we can recover storm costs over a predetermined threshold through re-opener mechanisms in our price control frameworks, allowing adjustments to allowed revenues to cover unexpected expenses from severe weather events. At the end of 2023, Niagara Mohawk Power Corporation submitted its Climate Change Resilience Plan (CCRP) to the NYPSC, which assessed the vulnerability of the Company’s electric infrastructure to climate-related risks. The plan was approved by the NYPSC in December 2024. The study identified a capital investment of approximately $243 million in resilience programmes over a five-year period (2026-2030), with cumulative investments projected to reach about $566 million by the tenth year (2026-2035) and $1.39 billion by the twentieth year (2026-2045). The revenue requirements for these resilience investments are expected to result in total bill increases of 0.02% in 2025/26 to 0.66% in 2029/30 compared to current rates across all service classes. In Massachusetts, the Department of Public Utilities (DPU) has requested businesses to submit climate mitigation and adaptation plans outlining their responses to climate change. In response, our Massachusetts Electricity Distribution business published a CVA in February 2025, which will serve as the foundation for a comprehensive resilience plan. In 2025, all our business units with UK operations have submitted a climate change adaptation report under DEFRA’s Adaptation Reporting Power 4. Insurance premiums could also increase in order to cover such events. These incidents are likely to increase in line with the increasing likelihoods illustrated by the IPCC, and associated costs are expected to grow accordingly, unless climate adaptation is appropriately implemented.	Our Climate Vulnerability Steering Committee and working groups conducted a Group-wide CVA for energy-carrying assets. This programme is leveraging our CCRT analysis to identify long-term climate hazard risks to our energy infrastructure. We are utilising our findings to develop tailored climate change adaptation plans across our business, outlining solutions for our high-risk assets and confirming the strategic approach to managing those risks. From October, the new five-year rate case plan for our Massachusetts electric business took effect, which includes an annual increase of $41.6 million in storm cost recovery within base rates, as well as an additional $18 million through the Storm Fund Replenishment Factor. In the UK, we have commenced a set of innovation projects to understand the impacts of climate change hazards on our asset performance. As part of our UK ET T3 business plan, we have committed to implementing a new resilience modelling approach and publishing a Climate Adaptation Strategy by 2026. We continue to invest in climate adaptation across the Group in the form of storm hardening and flood defences, with a further £57 million (2023/24: £30 million) invested in the year. Such investments should increase our ability to withstand disruptive events, and improve our organisational capability to reduce the magnitude and/or duration of such events.
	Business units potentially affected: All Asset group(s) potentially affected: Electrical Distribution and Transmission. Gas Distribution.
	Measurement indicators: •Network reliability •Major storm costs •CCRT outputs •Research outputs from innovation projects •EU Taxonomy climate adaptation capex

Net impact

On balance of the different pathways and even under the worst-case scenarios considered, none of the risks identified threaten the resilience of

the Group and we are in a strong position to adapt our portfolio to maximise the opportunities of the energy transition. The momentum behind

decarbonisation targets makes growth of electrification certain, even in our most pessimistic scenarios, but there are still a wide range of

possibilities for the future. We must influence to reduce uncertainty and build in resilience to weather the risks we cannot control.

Strategic Report Corporate Governance Financial Statements Additional Information 75

04 Metrics and targets

As part of our Responsible Business reporting and disclosures, we track and

manage our GHG emissions performance and metrics related to material

climate change risks and opportunities.

Our overall climate commitment is to become a net zero business

across Scope 1, 2 and 3 GHG emissions by 2050, as established in our

CTP. Our near-term targets are based on the latest climate science and

aligned with our regions' emissions goals. They are approved by the

SBTi as aligned to their 1.5°C pathway and the ambition of the Paris

Agreement. We believe our long-term net zero target aligns with the key

principles of the SBTi’s corporate net zero standard; however, we

cannot formally validate this due to the absence of a sector pathway

for heat and the power sector guidance not accounting for the

necessary infrastructure growth for electricity decarbonisation. Having

engaged with the SBTi to discuss these issues, we look forward to

supporting the standard's future development and will submit our

feedback on the SBTi Corporate Net-Zero Standard Version 2.0 Initial

Consultation Draft.

The table on page 77 outlines our GHG emission reduction targets,

along with an index of the key quantitative measurement indicators

used to manage our climate-related financial risks and opportunities.

For further information and insights on our performance in reducing our

GHG emission, please refer to page 45. We are clear in our CTP that

we did not expect emissions reductions to be a linear trajectory and a

significant portion of our emissions are outside of our direct control.

This section also expands on how achieving our emission reduction

targets is dependent on the development and evolution of policy,

regulatory frameworks and planning systems which support the

decarbonisation of the wider energy sector.

We continually monitor our climate-related metrics and targets to

ensure that the data we measure is meaningful, aligns with our strategy,

and provides the necessary information for effective performance

monitoring and progress demonstration. By integrating these metrics

into our financial Enterprise Performance Management (EPM)

processes, it allows us to assess GHG reduction performance in the

context of wider enterprise performance. Our annual Financial Strategy

and Strategic Business Planning cycle includes mechanisms to track

business units' plans against our SBTi glidepaths. Our monitoring and

reporting processes incorporate internal controls and a team of

technical consultants reviewed our CTP publication for accuracy,

consistency and any material discrepancies.

All of our GHG emissions are reported on a gross basis. While our

focus is on decarbonising our business in line with a 1.5˚C reduction

pathway, we do not plan to use carbon offsetting to meet our near-term

SBTs. However, we do use limited carbon offsets to help our emission

reduction efforts. We follow SBTi guidelines and buy high quality

carbon credits to offset GHG emissions we cannot reduce further, as

per our internal carbon offsetting policy. We use a mix of nature-based,

technological and hybrid offsetting projects, ensuring they are

permanent and where possible verified by a third party. In 2024, NGET

established a cross-functional carbon compensation steering

committee to oversee the purchase of high quality carbon credits to

meet our regulatory commitment for construction emissions.

The 2022 Long-Term Performance Plan (LTPP), covering the period

ending 31 March 2025, is our first to incorporate emissions and energy

transformation metrics. These elements of the 2022 LTPP outturned at

89.5% of maximum, driven by achievement of 100% of maximum for

Scope 1 emissions and 79.0% of maximum for enablement of energy

transformation, both weighted equally. The Scope 1 emissions outturn

at maximum was driven by SF6 emission reductions, vehicle fleet

emissions and Grain operation emissions reduction. The strong

enablement of energy transformation performance was driven by

energy efficiency programmes and distribution connections. The 2023,

2024 and 2025 LTPP awards will be measured over their respective

three year performance periods and include a 20% weighting on energy

transformation measures that includes the reduction of Scope 1

emissions and strategic initiative on energy transformation enablement.

For further details on our LTPP awards, please refer to the Directors’

Remuneration Report on pages 121 to 149.

In addition to metrics laid out in the following page, we have disclosed

the proportion of IFRS revenue, operating expenditure and capital

expenditure that align with the principles of the climate change

mitigation and adaptation objectives of the EU Taxonomy. Given the

climate change mitigation objective’s alignment to the principles of the

Paris Agreement, the disclosures provide a transparent view of the

Group’s compatibility with the net zero goals of the jurisdictions we

served during the year ended 31 March 2025. For further details see

our EU Taxonomy report and Responsible Business data tables on our

website.

A significant proportion of our Scope 1 GHG emissions are subject to a

traded market carbon price or non-traded cost of carbon through our

regulatory price controls. In the UK, Scope 1 GHG emissions at Grain

LNG terminal are subject to the UK Emissions Trading Scheme and in

the US GHG emissions from our Long Island Power Generation plant

are subject to the Regional Greenhouse Gas Initiative. We have a

regulatory incentive to reduce SF6 leaks from our electric equipment, a

key component of our Scope 1 GHG emissions in the UK, that utilise a

non-traded cost of carbon as part of the incentive calculation.

While we have found the practice useful in terms of increasing our

understanding of the carbon impact of the decisions we make, it has

not had a significant impact on decision-making to date. Carbon pricing

is only one of the tools that we are using to reduce the carbon impact

of our business’ investment decisions, alongside policy drivers,

commitments and carbon reduction methodologies such as the use

of a carbon weighting in the competitive tender process for

construction projects.

On the next page we include our GHG emissions footprint, a key

indicator against our climate-related risks and opportunities.

	EU Taxonomy report
	Responsible Business data tables

76	National Grid plc  Annual Report and Accounts 2024/25
Task Force on Climate-related Financial Disclosures (TCFD) continued

Our 2024/25 GHG emissions footprint across direct and indirect sources was 35,857 ktCO2e

Scope 1 GHG emissions are direct emissions from sources owned by National Grid. Scope 2 and 3 GHG emissions are indirect and result from

National grid activities from sources we do not own or control.

Upstream Scope 3	Supply chain and other upstream emissions
	6,964kt
	19% of total footprint
	•Construction and maintenance of energy infrastructure •Equipment and components •Well-to-tank emissions for generation and transportation of electricity
Scope 1 and 2	Power generation	Operations	Administration
	3,295kt	3,813kt	314kt
	9% of total footprint	11% of total footprint	0.8% of total footprint
	•Electricity generation from fossil fuels	•Line losses from our electricity transmission and distribution networks •SF6 leaks from electrical equipment •LNG venting and fuel •Leaks and venting from our gas network	•Building energy consumption •Company cars
Downstream Scope 3	Administration	Retail Energy
	84kt	21,387kt
	0.2% of total footprint	60% of total footprint
	•Business travel •Employee commuting •Waste	•Emissions from the electricity and gas that we sell to our customers

Strategic Report Corporate Governance Financial Statements Additional Information 77

Index of climate-related quantitative measurement indicators1

In the last year our emissions have risen, due to factors outside of our control and despite our efforts to reduce emissions where we have control.

Refer to pages 44-47 for further details.

	2024/25	2023/24	2022/23
SBTi validated GHG emissions reduction targets
Reduce absolute Scope 1 and 2 GHG emissions by 60% by 20302,3	(4.4)%	(11.8)%
Reduce absolute Scope 1 and 2 GHG emissions excluding generation by 50% by 20302,3	(14.7)%	(14.4)%
Reduce the carbon intensity of our power generation (Scope 1 GHG emissions) by 90% by 2030, and by 92% by 20333	(36.7)%	(34.7)%
Reduce the carbon intensity of our power generation and sold electricity (Scope 1 and Scope 3 GHG emissions) by 86% by 20333	(18.3)%	(15.4)%
Reduce absolute GHG emissions for all Scope 3, excluding sold electricity, by 37.5% by 20334	5.8%	0.8%
Reduce absolute GHG emissions from gas sold by third-parties by 37.5% by 20334,5	(10.5)%	(17.6)%
Key climate-related metrics
Scope 1 GHG emissions (ktCO2e)	4,467	3,988	4,408
Scope 2 GHG emissions (ktCO2e, location based)	2,955	2,864	2,876
Total Scope 1 and 2 GHG emissions2 (ktCO2e)	7,422	6,852	7,284
Scope 3 GHG emissions (ktCO2e)	28,435	27,384	27,867
Total Scope 1, 2 and 3 GHG emissions2 (full value chain) (ktCO2e)	35,857	34,236	35,151
Intensity ratio: Scope 1 and 2 GHG emissions per million of revenue2 (tCO2e/£m)	427	345	337
Climate change adaptation capex (EU Taxonomy aligned activities, £m)	57	30	31
Climate change mitigation capex (EU Taxonomy aligned activities, £m)	7,610	5,962	5,526
Group energy consumption from fossil fuel generation (GWh)	17,390	14,375	15,892
Group energy consumption from electricity systems line losses (GWh)	15,514	14,519	15,746
Group energy consumption excluding fossil fuel generation and electricity systems line losses (GWh)	1,916	2,547	2,835
Total Group energy consumption (GWh)	34,820	31,441	34,473
UK energy consumption from electricity systems line losses (GWh)	10,413	10,046	10,392
UK energy consumption excluding electricity systems losses (GWh)	790	1,297	1,770
Total UK energy consumption (GWh)	11,203	11,343	12,162
UK Scope 1 GHG emissions (ktCO2e)	278	377	398
UK Scope 2 GHG emissions2 (ktCO2e)	2,137	2,113	2,094
Total UK Scope 1 and 2 GHG emissions2 (ktCO2e)	2,415	2,490	2,492

1.Refer to our Responsible Business Reporting Methodology on our website for calculation details. Target year 20Yn indicates that the performance will be reported in the financial year that

aligns with the year 20Yn/Yn+1. Our methodology outlines the application of the operational control principle from the GHG Protocol across all emissions and environmental metrics. Newly

sold or disposed operations will be excluded from our reporting starting from the year they exit the Group. Consequently, National Grid ESO is excluded from our reported GHG emissions

boundary. Please refer to note 1. Basis of preparation and recent accounting developments, part D ‘Disposal of the UK Electricity System Operator (ESO)’ within our notes to the

consolidated financial statements for details of our ESO related accounting policies and judgements.

2.Includes Scope 2 location-based emissions only as line losses make up the vast majority of these emissions and we have limited renewable electricity certificates and other contractual

instruments in place. 2024/25 excludes National Grid ESO.

3.Near-term target approved by Science Based Targets initiative (SBTi) and aligned to the Paris Agreement and a 1.5°C pathway. GHG targets are against a financial year 2018/19 baseline.

4.Near-term target approved by SBTi and aligned to a well below 2°C pathway. GHG targets are against a financial year 2018/19 baseline.

5.Third-Party Sold Gas, a US-only emission, are downstream emissions associated with the combustion of natural gas delivered through our network but sold by a company other than

National Grid. This differs from Scope 3 Cat. 11 GHG Protocol guidance, which otherwise advises to consider only the end use of goods sold by the reporting company itself.

Note: The above data together with our ‘Climate change – Scope 1, 2 and 3 emissions’ KPIs on page 45 is responsive to the UK Government’s Streamlined Energy and Carbon Reporting (SECR)

requirements. We have split out our Group energy consumption into constituent parts for greater transparency. Fuels consumed for power generation on behalf of LIPA, the contracting body is

shown separately because energy consumption related to power generation can vary greatly year-on-year and is determined by LIPA. Amounts are presented in GWh, with 1 GWh=1,000,000 kWh.

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	78
Non-financial and sustainability information statement

This page contains disclosures in compliance with sections 414CA and

414CB of the Companies Act 2006.

The information listed below is incorporated by cross-reference.

In addition, other information describing the business relationships,

products and services which are likely to cause adverse impacts in

relation to the matters above can be found as follows:

Environmental matters		44 – 47	Business model		8 – 10
		59 – 77
			KPIs		18 – 21
Our employees		18 – 21
		51 – 54	Our stakeholders		22 – 24
		106 – 107
Social matters		48 – 50	People & Governance Committee report		110 – 111
Human rights		56	TCFD		59 – 77
		277
			Risks		34 – 41
Anti-corruption and anti-bribery		56 - 57

Further reading	Environment	Social matters and employees	Anti-corruption and bribery	Human rights
Our policies and due diligence	11 – 17 and 36	11 – 17 and 37	56 - 57	56
Outcomes	18 – 21 and 25 – 33	18 – 21 and 25 – 33

	CA 2006 requirement	TCFD recommendation		CA 2006 requirement	TCFD recommendation
Governance	Section 414CB (2A)(a)	a) Describe the Board’s oversight of climate-related risks and opportunities: pages 60 – 61	Strategy	Section 414CB (2A)(d)	a) We describe the climate-related risks  and opportunities the organisation has identified over the short, medium and long term: pages 70 – 74
		b) Describe management’s role in assessing and managing climate- related risks and opportunities: pages 61 – 62		Section 414CB (2A)(e)	b) We describe the impact of climate- related risks and opportunities on the organisation's businesses, strategy and financial planning: pages 70 – 74
				Section 414CB (2A)(f)	c) We describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2oC or lower scenario: pages 63 – 68
Risk Management	Section 414CB (2A)(b)	a) We describe the organisation's processes for identifying and assessing climate-related risks: page 69	Metrics & Targets	Section 414CB (2A)(h)	a) Our metrics used to assess climate- related risks and opportunities in line with our strategy and risk management processes: page 75
		b) We describe the organisation's processes for managing climate related risks: page 69		N/A	b) Our Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions and the related risks: pages 45, 75 – 77
	Section 414CB (2A)(c)	c) We describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation's overall risk management: pages 69 – 74		Section 414CB (2A)(g)	c) Our targets used to manage climate- related risks and opportunities and performance against targets: pages 75 and 77

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	79
Financial review

A year of strong

and consistent

performance

Revenue	Profit and cash flows	Investment
The vast majority of our revenues are set in accordance with our regulatory agreements (see pages 256 – 261) and are calculated based on a number of factors, including investment in network assets, performance on incentives, allowed returns on equity and cost of debt, and customer satisfaction.	Our ability to convert revenue to profit and cash is important. By managing our operations efficiently, safely and for the long term, we generate substantial operating cash flows. Coupled with long-term debt financing, as well as additional capital generated through the Rights Issue and take-up of the shareholder scrip dividend option during periods of higher investment, we are able to invest in growing our asset base and fund our dividends.	We invest efficiently in our networks to achieve strong and sustainable growth in our regulated asset base over the long term. We also invest in assets in our non-regulated businesses. We continually assess, monitor and challenge investment decisions so we can continue to run safe, reliable and cost- effective networks.
Statutory revenue (%)	Statutory operating profit (%)	Capital investment (%)
Underlying net revenue1 (%)	Underlying operating profit1 (%)	Total assets (used for asset growth) (%)

n
	UK Electricity Transmission (UK ET)	31%
n
	UK Electricity Distribution (UK ED)	18%
n
	UK Electricity System Operator (ESO)	—%
n
	New England	14%
n
	New York	27%
n
	National Grid Ventures (NGV)	7%
n
	Other activities	3%

n
	UK Electricity Transmission (UK ET)	27%
n
	UK Electricity Distribution (UK ED)	22%
n
	UK Electricity System Operator (ESO)	2%
n
	New England	17%
n
	New York	27%
n
	National Grid Ventures (NGV)	7%
n
	Other activities	(2)%

n
	UK Electricity Transmission (UK ET)	18%
n
	UK Electricity Distribution (UK ED)	14%
n
	UK Electricity System Operator (ESO)	2%
n
	New England	20%
n
	New York	35%
n
	National Grid Ventures (NGV)	11%
n
	Other activities	—%

n
	UK Electricity Transmission (UK ET)	14%
n
	UK Electricity Distribution (UK ED)	13%
n
	UK Electricity System Operator (ESO)	6%
n
	New England	23%
n
	New York	36%
n
	National Grid Ventures (NGV)	7%
n
	Other activities	1%

n
	UK Electricity Transmission (UK ET)	26%
n
	UK Electricity Distribution (UK ED)	32%
n
	UK Electricity System Operator (ESO)	(4)%
n
	New England	20%
n
	New York	26%
n
	National Grid Ventures (NGV)	—%
n
	Other activities	—%

n
	UK Electricity Transmission (UK ET)	30%
n
	UK Electricity Distribution (UK ED)	14%
n
	UK Electricity System Operator (ESO)	—%
n
	New England	18%
n
	New York	33%
n
	National Grid Ventures (NGV)	4%
n
	Other activities	1%

£18.4bn

£4.9bn

£9.8bn

£12.9bn

£5.4bn

£67.5bn

1.Non-GAAP alternative performance measures (APMs). For further details and reconciliation to equivalent GAAP measures see ‘Other unaudited financial information’ on pages 279 – 294.

80	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

Summary of Group financial performance for the year ended 31 March 2025

Statutory EPS1	Underlying EPS1	Group RoE2	Asset growth
60.0p	73.3p	9.0%	9.0%

1.From continuing operations. Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue

2.Group RoE calculation methodology updated in 2024/25 (see page 295 for further details). Comparative amounts have been restated accordingly.

Financial summary for continuing operations

£m	2024/25	2023/24	Change
Accounting profit
Gross revenue	18,378	19,850	(7%)
Other operating income	—	12	(100%)
Operating costs	(13,444)	(15,387)	13%
Statutory operating profit	4,934	4,475	10%
Net finance costs	(1,357)	(1,464)	7%
Share of joint ventures and associates	73	37	97%
Tax	(821)	(831)	1%
Non-controlling interest	(3)	(1)	(200%)
Statutory earnings	2,826	2,216	28%
Exceptional items and remeasurements	(171)	1,036	n/m
Tax on exceptional items and remeasurements	(40)	(152)	74%
Adjusted earnings	2,615	3,100	(16%)
Timing and major storm costs1	592	(689)	n/m
Tax on timing and major storm costs1	(156)	166	n/m
Deferred tax on underlying profits in NGET and NGED1	401	302	33%
Underlying earnings1	3,452	2,879	20%
Statutory EPS2	60.0p	55.5p	8%
Adjusted EPS2	55.6p	77.7p	(28%)
Underlying EPS1,2	73.3p	72.1p	2%
Dividend per share ‘rebased’1,3	46.72p	45.26p	3%
Dividend cover – underlying1	1.6x	1.2x	27%
Economic profit
Group financial performance after interest and tax (Group RoE numerator)1	2,602	2,336	11%
Group RoE1,4	9.0%	10.5%	-150bps
Capital investment and asset growth
Capital investment	9,847	8,235	20%
Regulated asset growth1	10.5%	9.1%	140bps
Asset growth1	9.0%	9.7%	-70bps
Balance sheet strength
RCF/adjusted net debt (Moody’s)1	9.8%	9.2%	60bps
Net debt (note 29 to the financial statements)	41,371	43,607	(5%)
Add: held for sale net debt	(55)	(23)	n/m
Net debt (including held for sale)1	41,316	43,584	(5%)
Group regulatory gearing1	61%	69%	-800bps

1.Non-GAAP alternative performance measures (APMs) and/or regulatory performance measures (RPMs). For further details see ‘Other unaudited financial information’ on pages 279 – 294.

2.Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue

3.Dividend per share (rebased) calculated by dividing the total dividend paid by the total number of shares in issue following the Rights Issue. The actual dividend per share paid to

shareholders in respect of 2023/24 profits was 58.52p (an interim dividend per share of 19.40p and a final dividend per share of 39.12p).

4.Our calculation methodology for Group RoE changed in 2024/25. Comparative amounts have been restated accordingly. See page 291 for details.

Strategic Report Corporate Governance Financial Statements Additional Information 81

Performance management framework

In managing the business, we focus on various non-IFRS alternative

performance measures (APMs) and regulatory performance measures

(RPMs) which provide meaningful comparisons of performance

between years, monitor the strength of the Group’s balance sheet

and ensure profitability reflects the Group’s regulatory economic

arrangements. Such APMs and RPMs are supplementary to, and

should not be regarded as a substitute for, IFRS measures, which

we refer to as statutory results.

Our business performance as set out in our regulatory agreements can

differ from accounting under IFRS, principally because our regulators

allow for regulatory deferral accounting. Our allowed revenues are

set in accordance with our regulatory price controls or rate plans.

Statutory IFRS does not allow us to recognise regulatory assets or

liabilities (for the difference between collected and allowed regulatory

revenues). As a result we use a suite of APMs (defined by us) to help

measure and monitor our underlying regulated business performance.

We explain the basis of these measures and, where practicable,

reconcile these to statutory IFRS results (i.e. GAAP) in Other unaudited

financial information on pages 279 – 294. Our RPMs have been

calculated for the total Group (or individual entities where relevant)

and these are not based on IFRS measures.

Specifically, we measure the financial performance of the Group

from different perspectives:

•Accounting profit: In addition to statutory IFRS measures

we report adjusted results (i.e. before exceptional items and

remeasurements), and underlying results, which further

take account of: (i) volumetric and other revenue timing differences

arising from our regulatory contracts; (ii) major storm costs (net

of in-year allowances and deductibles) which are recoverable in

future periods when they exceed a $100 million threshold; and

(iii) deferred tax in our UK regulated businesses (NGET and NGED).

In doing so, we intend to make the impact of such items clear to

users of the financial information in this Annual Report.

•Economic profit: Group Return on Equity (RoE) takes account

of the regulated value of our assets and of our regulatory

economic arrangements to show the returns on shareholder equity.

•Capital investment and asset growth: Capital investment comprises

our additions to PP&E and intangible assets (excluding acquisitions),

equity investments in joint ventures and associates, along with net

movements in capex prepayments. Asset growth represents the year-

on-year increase in RAV and US rate base in our regulated businesses

(referred to as ‘regulated asset growth’), plus the increase in net assets

(excluding certain balances such as pensions, net debt and deferred

taxes) in our non-regulated businesses, but excluding the impact of

currency movements.

•Balance sheet strength: Maintaining a strong investment grade

credit rating allows us to finance our growth ambitions at a

competitive rate. Hence, we monitor credit metrics used by the

major rating agencies to ensure we are generating sufficient cash

flow to service our debts. Group regulatory gearing measures our

Group net debt as a proportion of the Group’s assets that are used

to measure asset growth. This includes balances for businesses

classified as held for sale under IFRS.

This balanced range of measures of financial wellbeing informs our

dividend policy which, after the rebasing of the 2023/24 dividend per

share (DPS) following the Rights Issue, aims to grow annual DPS in

line with UK CPIH, thus maintaining the DPS in real terms.

Financial summary for continuing operations

Accounting profit: Statutory IFRS earnings were £2,826 million in

2024/25, £610 million (28%) higher than the prior year. Statutory

earnings benefited from pre-tax net exceptional credits of £42 million

and pre-tax remeasurement gains of £129 million (2024: pre-tax net

exceptional charges of £1,011 million and pre-tax remeasurement

losses of £25 million). For details on exceptional items refer to note 5

to the financial statements. Timing swings were £1,420 million adverse

year-on-year, with a £505 million net under-recovery in 2024/25 (2024:

£915 million net over-recovery), partly offset by £139 million lower

major storms. These factors, the net impact of tax on these items and

an improvement in underlying business performance meant that

statutory EPS for continuing operations of 60.0p was 4.5p higher than

the prior year.

Our ‘adjusted’ results exclude the impacts from exceptional items

and remeasurements as explained on page 86. In 2024/25, adjusted

earnings from continuing operations were £2,615 million, down

£485 million (16%) from the prior year. Adjusted earnings in 2024/25

included a timing net under-recovery after tax of £372 million (2024:

£688 million net over-recovery) and major storm costs (after tax) which

are excluded from underlying results, of £64 million (2024: £165 million).

As a result, adjusted operating profit of £4,765 million was down

£697 million (2024: £5,462 million). Adjusted net finance costs of

£1,361 million were £118 million lower, benefiting from the Rights Issue

proceeds received in June 2024. Share of profits from joint ventures

and associates of £75 million were down £26 million due to higher

interconnector profits in the prior year. Adjusted tax of £861 million

was £122 million lower, driven by lower profits, including in our

UK Electricity System Operator business.

Underlying operating profit was up 12% driven by improved

performance in: New York (KEDNY and KEDLI and NIMO rate

increases and lower environmental costs), New England (higher rates

and capital tracker revenues) along with higher allowed revenues in

UK Electricity Transmission and UK Electricity Distribution. National

Grid Ventures was down from 2023/24, driven by lower revenues

on our legacy interconnector fleet, partly offset by a full year of our

new Viking interconnector. Other activities were lower principally as

a result of fair value movements in NG Partners. Our joint ventures

and associates’ contribution reduced primarily due to lower auction

revenues in BritNed compared with 2023/24. Regulated controllable

costs were only 1% higher, with inflation and workload increases being

mostly offset by efficiency savings. Depreciation and amortisation were

higher than the prior year due to our growing asset base. Net financing

costs were lower, benefiting from the Rights Issue proceeds in June

2024. Other interest was favourable year on year driven by higher

capitalised interest. Underlying profit after tax increased by 20% and

resulted in a 2% increase in underlying EPS to 73.3p.

Economic profit: Our Group RoE for 2024/25 was 9.0%, 150bps lower

than the 10.5% achieved in the prior year, impacted by lower gearing

(as a result of the Rights Issue) which along with ongoing asset growth

has increased the metric denominator.

Capital investment and asset growth: Capital investment of

£9,847 million was £1,612 million (20%) higher than 2023/24, driven

by increased ASTI and customer connections investment in UK

Electricity Transmission, increased capital expenditure in New York,

New England and UK Electricity Distribution, partly offset by lower

investment in National Grid Ventures. Higher capital investment is

partly offset by reduced year-on-year RAV indexation from lower

inflation resulting in asset growth of 9.0% (2024: 9.7%).

Balance sheet strength: Net debt decreased from £43.6 billion

at March 2024 to £41.4 billion at March 2025, primarily due to the

£6.8 billion Rights Issue net proceeds which helped to fund £9.6 billion

of investing cash outflows. Regulatory gearing was consequently lower

at 61% (2024: 69%) and our calculation of Moody’s RCF/adjusted net

debt credit metric was 9.8%, an improvement of 60bps compared with

2023/24 and remains above the current rating threshold of 7.0%.

Dividend

The recommended full-year dividend per share of 46.72p is in line

with our policy of increasing the prior year dividend (after rebasing this

following the Rights Issue) in line with UK CPIH inflation and is covered

1.6 times by underlying EPS.

82	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

Profitability and earnings

In calculating adjusted profit measures, where we consider it is in the interests of users of the financial statements to do so we exclude certain

discrete items of income or expense that we consider to be exceptional in nature. The table below reconciles our statutory profit measures for

continuing operations, at actual exchange rates, to adjusted and underlying versions. Further information on exceptional items and

remeasurements is provided in notes 2, 5 and 6 to the financial statements.

Reconciliation of profit and earnings from continuing operations

	Operating profit			Profit after tax			Earnings per share
£m	2024/25	2023/24	Change	2024/25	2023/24	Change	2024/25	2023/24	Change
Statutory results	4,934	4,475	10%	2,829	2,217	28%	60.0p	55.5p	8%
Exceptional items	(42)	1,011	n/m	(118)	852	n/m	(2.4p)	21.4p	n/m
Remeasurements	(127)	(24)	n/m	(93)	32	n/m	(2.0p)	0.8p	n/m
Adjusted results	4,765	5,462	(13%)	2,618	3,101	(16%)	55.6p	77.7p	(28%)
Timing	505	(915)	n/m	372	(688)	n/m	7.9p	(18.2p)	n/m
Major storm costs	87	226	(62%)	64	165	(61%)	1.3p	4.4p	(70%)
Deferred tax in NGET and NGED	—	—	—%	401	302	33%	8.5p	8.2p	4%
Underlying results	5,357	4,773	12%	3,455	2,880	20%	73.3p	72.1p	2%

Timing over/(under)-recoveries

In calculating underlying profit, we exclude regulatory revenue timing

over- and under-recoveries, major storm costs (defined below) and

deferred tax on underlying results of our UK regulated business

(NGET and NGED), also defined below. Under the Group’s regulatory

frameworks, most of the revenues we are allowed to collect each year

are governed by regulatory price controls in the UK and rate plans in

the US. If more than this allowed level of revenue is collected, an

adjustment will be made to future prices to reflect this over-recovery;

likewise, if less than this level of revenue is collected, an adjustment

will be made to future prices in respect of the under-recovery. These

variances between allowed and collected revenues and timing of

revenue collections for pass-through costs give rise to ‘timing’ over-

and under-recoveries.

The following table summarises management’s estimates of such

amounts for the two years ended 31 March 2025 and 31 March 2024

for continuing operations. All amounts are shown on a pre-tax basis

and, where appropriate, opening balances are restated for exchange

adjustments and to correspond with subsequent regulatory filings and

calculations, and are translated at the 2024/25 average exchange rate

of $1.266:£1.

£m	2024/25	2023/241
Balance at start of year (restated)	1,029	39
UK Electricity Transmission	(151)	363
UK Electricity Distribution	407	(159)
UK Electricity System Operator	(479)	800
New England	61	(69)
New York	(343)	(20)
In-year (under)/over-recovery (continuing)	(505)	915
Disposal of UK Electricity System Operator	(462)	—
Balance at end of year	62	954

1.March 2024 balances restated to correspond with 2023/24 regulatory filings

and calculations.

In 2024/25, we experienced timing under-recoveries of £151 million

in UK Electricity Transmission, over-recoveries of £407 million in UK

Electricity Distribution and the return of prior period over-recoveries of

£479 million in UK Electricity System Operator (up to 1 October 2024,

the disposal date of that business). During 2023/24, BSUoS collected

revenues in UK Electricity System Operator were significantly more

than system balancing costs, resulting in a £800 million over-recovery

in that year. In our US regulated businesses we experienced over-

recoveries of £61 million in New England, and under-recoveries of

£343 million in New York. In calculating the post-tax effect of these

timing recoveries, we impute a tax rate based on the regional marginal

tax rates, consistent with the relative mix of UK and US balances.

Major storm costs (US)

We exclude the impact of major storm costs in the US where the

aggregate amount is sufficiently material in any given year. Such

costs (net of in-year allowances and deductibles) are recoverable under

our rate plans but are expensed as incurred under IFRS. Accordingly,

where the aggregate total US major storm costs incurred (net of in-year

allowances and deductibles) exceeds $100 million in any given year,

we exclude the net costs from underlying earnings. In 2024/25,

we incurred deferrable storm costs, which are eligible for future

recovery of $110 million (2024: $285 million).

Deferred tax in UK regulated businesses

We exclude deferred tax in our UK regulated businesses (NGET and

NGED) in our underlying earnings measure. Tax is generally considered

to be a pass-through cost by our UK regulator, with revenue tax

allowances linked to the level of cash tax expected to be paid in the

year. The UK Government allows ‘full expensing’ tax relief for qualifying

capital expenditure to encourage greater levels of investment from

businesses. This results in these businesses paying lower levels of cash

tax. IFRS requires us to recognise a total tax charge on current year

profits, including deferred tax that will be paid in future periods. To

represent underlying profitability more closely aligned to our regulatory

agreements we report underlying earnings and underlying EPS

excluding the impact of deferred tax in our UK regulated businesses

(NGET and NGED).

In 2024/25, we excluded £401 million (2024: £302 million) of deferred

tax charges from our underlying results.

Segmental operating profit

The tables below set out operating profit on statutory, adjusted, and

underlying bases.

Statutory operating profit

£m	2024/25	2023/24	Change
UK Electricity Transmission	1,277	1,674	(24%)
UK Electricity Distribution	1,598	975	64%
UK Electricity System Operator	(213)	382	(156%)
New England	1,008	641	57%
New York	1,269	362	251%
National Grid Ventures	5	558	(99%)
Other activities	(10)	(117)	91%
Continuing operations	4,934	4,475	10%
Discontinued	—	—	—%
Total	4,934	4,475	10%

Strategic Report Corporate Governance Financial Statements Additional Information 83

The notation ‘n/m’ is used throughout this section where the year-on-

year percentage change is deemed to be ‘not meaningful’.

Statutory operating profit increased in the year, primarily as a result

of the non-recurrence of exceptional net charges of £1,011 million

in 2023/24 compared with exceptional net gains of £42 million in

2024/25. For details on exceptional items refer to note 5 to the financial

statements. This was partly offset by £1,420 million adverse year-on-

year movements in timing net over-recoveries, £154 million favourable

year‑on-year movements in commodity derivative remeasurements,

improved underlying performance in UK Electricity Transmission,

New York and New England, partially offset by a shorter period of

ownership of UK Electricity System Operator, along with lower profits

in National Grid Ventures and ‘Other activities’ than 2023/24.

Adjusted operating profit

£m	2024/25	2023/24	Change
UK Electricity Transmission	1,277	1,677	(24%)
UK Electricity Distribution	1,610	993	62%
UK Electricity System Operator	(364)	880	(141%)
New England	982	643	53%
New York	1,023	860	19%
National Grid Ventures	380	469	(19%)
Other activities	(143)	(60)	(138%)
Continuing operations	4,765	5,462	(13%)

Underlying operating profit (a non-GAAP measure)

£m	2024/25	2023/24	Change
UK Electricity Transmission	1,428	1,314	9%
UK Electricity Distribution	1,203	1,152	4%
UK Electricity System Operator	115	80	44%
New England	924	802	15%
New York	1,450	1,016	43%
National Grid Ventures	380	469	(19%)
Other activities	(143)	(60)	(138%)
Continuing operations	5,357	4,773	12%

The reasons for the movements in underlying operating profit are

described in the segmental commentaries below. Unless otherwise

stated, the discussion of performance in the remainder of this

Financial review focuses on underlying results.

UK Electricity Transmission

£m	2024/25	2023/24	Change
Revenue	2,619	2,735	(4%)
Operating costs	(1,342)	(1,061)	(26%)
Statutory operating profit	1,277	1,674	(24%)
Exceptional items	—	3	(100%)
Adjusted operating profit	1,277	1,677	(24%)
Timing	151	(363)	n/m
Underlying operating profit	1,428	1,314	9%
Analysed as follows:
Net revenue	2,164	2,510	(14%)
Regulated controllable costs	(238)	(248)	4%
Post-retirement benefits	(55)	(38)	(45%)
Other operating costs	(54)	(26)	(108%)
Depreciation and amortisation	(540)	(521)	(4%)
Adjusted operating profit	1,277	1,677	(24%)
Timing	151	(363)	n/m
Underlying operating profit	1,428	1,314	9%

UK Electricity Transmission statutory operating profit was £397 million

lower in the year. Timing under-recoveries were £151 million in 2024/25

compared with £363 million over-recoveries in 2023/24. This year-on-

year swing is mainly the return of prior period balances (primarily tax

allowances), a lower inflation true-up and a lower in-year recovery on

volumes and pass-through costs than 2023/24. In the prior year, there

were £2 million of exceptional costs related to our cost-efficiency

programme and integration costs of £1 million.

UK Electricity Transmission underlying operating profit increased by

9%. Underlying net revenues were £168 million (9%) higher principally

from higher totex allowances (including fast money on ASTI spend) and

inflationary increases and the non-repeat of the beneficial tax allowance

true-up in 2023/24.

Regulated controllable costs including pensions were £7 million (3%)

higher from the impact of inflationary and workload increases mostly

offset by efficiency savings. Other costs were higher, mainly relating

to increased provision for project delivery risk and increased network

innovation allowance costs.

The higher depreciation and amortisation principally reflects a higher

asset base as a result of continued investment.

UK Electricity Distribution

£m	2024/25	2023/24	Change
Revenue	2,424	1,795	35%
Operating costs	(826)	(820)	(1%)
Statutory operating profit	1,598	975	64%
Exceptional items	12	18	(33%)
Adjusted operating profit	1,610	993	62%
Timing	(407)	159	n/m
Underlying operating profit	1,203	1,152	4%
Analysed as follows:
Net revenue	2,239	1,562	43%
Regulated controllable costs	(281)	(270)	(4%)
Post-retirement benefits	(21)	(20)	(5%)
Other operating costs	(78)	(56)	(39%)
Depreciation and amortisation	(249)	(223)	(12%)
Adjusted operating profit	1,610	993	62%
Timing	(407)	159	n/m
Underlying operating profit	1,203	1,152	4%

UK Electricity Distribution statutory operating profit was £623 million

higher in the year, reflecting the impact of £566 million favourable year-

on-year timing movements. Timing over-recoveries of £407 million in

2024/25 were mainly due to inflation true-ups and the recovery of prior

period balances. This compares with a timing under-recovery of

£159 million in the prior year.

In 2024/25 there were £12 million of exceptional costs related to our

major transformation programme compared with £18 million of

exceptional integration costs in 2023/24.

UK Electricity Distribution underlying operating profit increased by

£51 million (4%). Underlying net revenues were £111 million higher

than the prior year due to the impact of higher inflation and higher

engineering recharges and incentive revenues.

Regulated controllable costs including pensions were £12 million

(4%) higher than the prior year from the impact of workload increases,

combined with investment in capability build and inflationary increases,

partly offset by efficiencies achieved. Other costs were £22 million

higher as a result of the disruption from Storm Darragh (categorised

as a 1 in 20 years storm event) and increased engineering recharges.

Depreciation and amortisation increased compared with the prior year

due to the increasing asset base.

84	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

UK Electricity System Operator

£m	2024/25	2023/24	Change
Revenue	1,029	3,788	(73%)
Operating costs	(1,242)	(3,406)	64%
Statutory operating (loss)/profit	(213)	382	(156%)
Exceptional items	(151)	498	n/m
Adjusted operating (loss)/profit	(364)	880	(141%)
Timing	479	(800)	n/m
Underlying operating profit	115	80	44%
Analysed as follows:
Net revenue	(188)	1,183	(116%)
Controllable costs	(159)	(212)	25%
Post-retirement benefits	(10)	(21)	52%
Other operating costs	(7)	(9)	22%
Depreciation and amortisation	—	(61)	100%
Adjusted operating (loss)/profit	(364)	880	(141%)
Timing	479	(800)	n/m
Underlying operating profit	115	80	44%

UK Electricity System Operator was purchased by the UK Government

on 1 October 2024 and had been classified as ‘held for sale’ since

October 2023. Based on the scale and pass-through nature of the

UK Electricity System Operator, it was not considered to be a separate

major line of business and hence, did not meet the definition of a

discontinued operation under IFRS 5. The year-on-year performance is

driven by two significant factors: (i) a net £800 million over-collection of

revenues during 2023/24 (and the consequential partial return of these

over-recovered balances during 2024/25); and (ii) a shorter ownership

period, with only six months’ contribution in 2024/25.

UK Electricity System Operator statutory operating profit decreased

by £595 million in the year as a result of adverse year-on-year timing

swings (net of provisions for regulatory liabilities recognised under

IFRS). In 2023/24 a £498 million exceptional provision was made

for the return of the estimated remaining balance of over-collected

revenues at the expected date of disposal (at that time, expected to be

June 2024). This provision was partially reversed in 2024/25 generating

an exceptional credit of £151 million in the current year. Under IFRS

a regulatory liability is not usually recognised on balance sheet for the

return of such over-recoveries, however due to the intended disposal

of this business during 2024/25, a liability was recognised given these

amounts were expected to be settled through the planned sale process

as opposed to reduced future revenues. The remaining £347 million

exceptional provision at the disposal date was reflected in the reported

gain on disposal of this business.

During 2024/25, UK Electricity System Operator had a timing under-

recovery of £479 million arising from the return of prior period balances

(2024: £800 million net over-recovery). The 2023/24 over-recovery was

the result of higher revenues collected through the BSUoS fixed price

charges compared with total system balancing costs incurred during

that year. At the disposal date, the impact of the residual net over-

recovered position was assessed when calculating the overall net

disposal proceeds.

UK Electricity System Operator underlying operating profit increased

by £35 million. Underlying net revenue was £92 million lower, partly

offset by lower costs mainly driven by the shorter ownership period

in 2024/25. Depreciation and amortisation was £61 million lower,

representing depreciation being charged for only the first seven

months of the prior year, prior to classification as ‘held for sale’.

New England

£m	2024/25	2023/24	Change
Revenue	4,306	3,948	9%
Operating costs	(3,298)	(3,307)	—%
Statutory operating profit	1,008	641	57%
Exceptional items	3	17	n/m
Remeasurements	(29)	(15)	n/m
Adjusted operating profit	982	643	53%
Timing	(61)	69	n/m
Major storm costs	3	90	(97%)
Underlying operating profit	924	802	15%
Analysed as follows:
Net revenue	2,648	2,295	15%
Regulated controllable costs	(706)	(701)	(1%)
Post-retirement benefits	(21)	(7)	(200%)
Bad debt expense	(62)	(79)	22%
Other operating costs	(408)	(445)	8%
Depreciation and amortisation	(469)	(420)	(12%)
Adjusted operating profit	982	643	53%
Timing	(61)	69	n/m
Major storm costs	3	90	(97%)
Underlying operating profit	924	802	15%

New England’s statutory operating profit increased by £367 million,

principally as a result of improved underlying operating profit and lower

major storm costs, along with the impact of £130 million favourable

year-on-year timing movements. Timing over-recoveries of £61 million

in 2024/25 are mainly due to phasing of energy efficiency programme

spend and the collection of previous under-recovery of commodity

costs. This compares with a timing under-recovery of £69 million in the

prior year. Exceptional items included £7 million of charges related to

our major transformation programme and a £4 million gain related to

environmental provision movements. In 2023/24, there were £11 million

of exceptional items related to the disposal of the Narragansett Electric

Company and £6 million related to our cost efficiency programme.

Commodity remeasurements were £14 million favourable to the

prior year.

New England’s underlying operating profit increased by £122 million

(15%) or £124 million (16%) on a constant currency basis. Underlying

net revenue was £223 million higher driven by the benefits of rate

case increases in Massachusetts Gas and Massachusetts Electric,

higher capital tracker revenue and higher wholesale network revenues.

New England controllable costs increased by £5 million as a result

of additional workload and inflation, which were largely offset by

efficiency savings. Bad debt expense decreased by £17 million as

a result of higher accounts receivable cash recoveries. Depreciation

and amortisation increased as a result of higher investment. Other

costs (on an underlying basis) were higher due to higher investment-

related expenses and higher property taxes, both driven by the

growth in asset base.

Strategic Report Corporate Governance Financial Statements Additional Information 85

New York

£m	2024/25	2023/24	Change
Revenue	6,689	6,094	10%
Operating costs	(5,420)	(5,732)	5%
Statutory operating profit	1,269	362	251%
Exceptional items	(133)	506	n/m
Remeasurements	(113)	(8)	n/m
Adjusted operating profit	1,023	860	19%
Timing	343	20	n/m
Major storm costs	84	136	(38%)
Underlying operating profit	1,450	1,016	43%
Analysed as follows:
Net revenue	4,202	4,037	4%
Regulated controllable costs	(1,049)	(1,057)	1%
Post-retirement benefits	(33)	(21)	n/m
Bad debt expense	(141)	(96)	(47%)
Other operating costs	(1,225)	(1,345)	9%
Depreciation and amortisation	(731)	(658)	(11%)
Adjusted operating profit	1,023	860	19%
Timing	343	20	n/m
Major storm costs	84	136	(38%)
Underlying operating profit	1,450	1,016	43%

New York statutory operating profit increased by £907 million,

principally as a result of £434 million higher underlying operating

profit, £52 million lower major storms costs, £105 million higher

commodity remeasurements gains and £639 million lower exceptional

charges. Exceptional items included £9 million of charges related to

our major transformation programme and a £142 million credit related

to environmental provision movements (2024: £496 million cost).

In 2023/24 we incurred £10 million of exceptional charges as part

of our cost efficiency programme. These factors were partly offset

by timing under-recoveries of £343 million in 2024/25 compared

with timing under-recoveries of £20 million in 2023/24. The change in

timing was primarily driven by lower auction sale prices on transmission

wheeling, the return of prior period transmission wheeling over-

collections, greater commodity under-recovery due to weather-driven

gas bill volumes and KEDNY and KEDLI rates levelisation relating to

new rates in 2024/25. These were partly offset by an over-recovery of

energy efficiency programme costs in 2024/25.

New York underlying operating profit increased by £434 million

(43%), driven by higher net underlying revenues which increased

by £488 million (12%) principally driven by increased rates in KEDNY

and KEDLI under the new rate plan along with higher NIMO revenues

related to a capex tracker for incremental investment. Regulated

controllable costs were £8 million lower year-on-year, with increased

workload and the impact of inflation being offset by efficiency

savings. Bad debt expense increased by £45 million driven by

increased receivables, in line with revenue increases. Depreciation

and amortisation increased due to the growth in assets. Other costs

(on an underlying basis) decreased due to lower environmental costs

(net benefit in 2024/25 compared with net charge in 2023/24 related

to inflation impacts across multiple sites), partially offset by higher

property taxes, driven by increasing asset base.

National Grid Ventures

£m	2024/25	2023/24	Change
Revenue	1,397	1,389	1%
Operating costs	(1,220)	(665)	(83%)
Depreciation and amortisation	(173)	(166)	(4%)
Statutory operating profit	5	558	(99%)
Exceptional items	360	(89)	n/m
Remeasurements	15	—	n/a
Adjusted/underlying operating profit	380	469	(19%)

National Grid Ventures’ statutory operating profit reduced by

£553 million, principally as a result of a £303 million impairment of

Community Offshore Wind (COSW) investment, along with £57 million

of exceptional transaction and separation costs for the planned

disposal of National Grid Renewables and £15 million of commodity

remeasurement losses all recognised in 2024/25. This compared

with £89 million of net exceptional gains in 2023/24, consisting of

£92 million of property damage insurance proceeds for the IFA1 fire,

net of £3 million of exceptional charges related to our prior cost

efficiency programme.

National Grid Ventures’ underlying operating profit was £89 million

lower than 2023/24. In the UK, interconnector profits decreased

versus the prior year primarily as a result of lower interconnector

revenues as market spreads returned to more historically normal

conditions. On 30 September 2024, our Grain LNG business in the

UK and our National Grid Renewables business in the US were

reclassified as ‘held for sale’ with depreciation ceasing from that date

onwards. In the US, profit was lower, primarily as a consequence of

fewer renewable projects being sold to our Emerald joint venture.

Other activities

£m	2024/25	2023/24	Change
Statutory operating (loss)/profit	(10)	(117)	92%
Exceptional items	(133)	57	n/m
Adjusted operating (loss)/profit	(143)	(60)	(138%)
Analysed as follows:
Property	54	30	80%
Corporate and Other activities	(197)	(90)	(119%)
Adjusted operating (loss)/profit	(143)	(60)	(138%)

Other activities’ statutory operating loss of £10 million (2024:

£117 million loss) includes a net exceptional gain of £133 million,

consisting of a £187 million exceptional gain on disposal of the

UK Electricity System Operator, net of £46 million of exceptional

charges related to our major transformation programme and £8 million

of exceptional transaction and separation costs incurred by our

corporate function related to the planned disposal of our Grain LNG

business. The prior year included £11 million of exceptional transaction,

separation and integration costs related to the separation and disposal

of UK Gas Transmission and the integration of National Grid Electricity

Distribution and £46 million of exceptional charges as part of our cost

efficiency programme.

Other activities’ underlying operating loss was £143 million (including

corporate costs) in 2024/25 compared with £60 million loss in 2023/24.

This increase mainly relates to £69 million higher fair value losses within

our NG Partners portfolio, £24 million lower insurance captive profits

combined with £12 million higher corporate centre costs, partially offset

by higher UK property sales in the year.

86	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

Exceptional items and remeasurements in operating

profit – continuing

In 2024/25, we classified a number of items as exceptional, which

has the net impact of increasing our statutory operating profit by

£42 million (2024: £1,011 million decrease) compared with our adjusted

and underlying operating profit measures. These items comprise of an

exceptional credit of £146 million in 2024/25 related to a decrease in

our environmental provisions (2024: £496 million charge); a £151 million

provision release (2024: £498 million provision charge) in UK Electricity

System Operator for estimated timing over-recoveries returned prior to

its disposal on 1 October 2024; a gain of £187 million on the disposal

of the UK Electricity System Operator; a £303 million impairment

of our investment in COSW; transaction, separation and integration

costs of £65 million (2024: £44 million) and no insurance recoveries

in the current year (2024: £92 million). Our ‘Evolution’ cost efficiency

programme was completed in 2023/24 with £65m of exceptional costs

in that year. For further details see note 5 to the financial statements.

In 2024/25, we embarked on a new four-year major transformation

programme designed to implement our ‘pureplay networks business’

strategy, incurring £74 million of exceptional costs. The expected future

costs for this programme are anticipated to be around £200 million.

We also exclude certain unrealised gains and losses on mark-to-market

financial instruments (‘remeasurements’) from adjusted and underlying

profit. In 2024/25, net remeasurement gains on commodity contract

derivatives (i.e. ‘mark-to-market’ movements on derivatives used to

hedge the cost of buying wholesale gas and electricity on behalf of

US customers and derivatives in our UK interconnectors business)

were £127 million, compared with net remeasurement losses of

£24 million in 2023/24.

Financing costs and taxation – continuing 

Net finance costs 

Statutory net finance costs of £1,357 million were down from

£1,464 million in 2023/24 and included derivative remeasurement

gains of £4 million (2024: £15 million gains). Underlying net finance

costs for the year were 8% lower than last year at £1,361 million.

The Rights Issue raised net proceeds of £6.8 billion in June 2024,

resulting in lower average net debt than the prior year. The beneficial

impact of this was partly offset by outflows for higher levels of capital

investment and higher interest rates on new borrowings resulting

in a net £80 million reduction in net debt related finance costs.

Other interest was favourable year on year reflecting higher capitalised

interest partly offset by higher discount unwind on provisions. The

effective interest rate for continuing operations of 4.1% is 10bps lower

than the prior year rate.

Joint ventures and associates 

The Group’s share of net profits from joint ventures and associates

on a statutory basis increased to £73 million (2024: £37 million).

This was net of derivative remeasurement losses of £2 million (2024:

£64 million) in our NG Renewables joint venture. This investment was

reclassified to held for sale on 30 September 2024, with no profits

being recognised from that date onwards. On an adjusted basis, the

share of net profits from joint ventures and associates decreased by

£26 million compared with 2023/24, mostly reflecting lower BritNed

revenues driven by lower auction prices.

Tax

The statutory tax charge for continuing operations was £821 million

(2024: £831 million) including the impact of tax on exceptional items

and remeasurements of £40 million credit (2024: £152 million credit).

The adjusted tax charge for continuing operations was £861 million

(2024: £983 million), resulting in an adjusted effective tax rate for

continuing operations (excluding profits from joint ventures and

associates) of 25.3% (2024: 24.7%).

The underlying tax charge for the year (a non-GAAP measure) was

£616 million (2024: £515 million). The underlying effective tax rate

(excluding joint ventures and associates) of 15.4% was 20bps lower

than last year (2024: 15.6%). This is mainly due to increased investment

in NGET leading to a lower underlying tax charge, partly offset by the

change in geographic profit mix. The Group’s tax strategy is detailed

later in this review.

Discontinued operations 

On 26 September 2024, we completed the sale of our residual 20%

interest in National Gas Transmission for proceeds of £686 million,

resulting in a gain on disposal after transaction costs of £25 million.

The Group has not applied equity accounting in relation to this

asset held for sale since 31 January 2023 (the date of sale of our

60% interest) resulting in no profits being recognised from that

date onwards.

Capital investment and asset growth

Capital investment

Capital investment comprises capital expenditure in critical energy infrastructure, equity investments, equity funding contributions to joint ventures

and associates, and net movements in capital expenditure-related prepayments to secure delivery of future capital investment projects.

	At actual exchange rates			At constant currency
£m	2024/25	2023/24	Change	2024/25	2023/24	Change
UK Electricity Transmission	2,999	1,912	57%	2,999	1,912	57%
UK Electricity Distribution	1,426	1,247	14%	1,426	1,247	14%
UK Electricity System Operator	—	85	(100%)	—	85	(100%)
New England	1,751	1,673	5%	1,751	1,668	5%
New York	3,289	2,654	24%	3,289	2,645	24%
National Grid Ventures	378	662	(43)%	378	661	(43)%
Other activities	4	2	100%	4	2	100%
Total Group	9,847	8,235	20%	9,847	8,220	20%

UK Electricity Transmission investment increased by £1,087 million

compared with 2023/24 due to increased expenditure on ASTI

projects (including EGL1, EGL2, Yorkshire GREEN and North London

reinforcement projects) and additional spend in customer connections,

increased overhead line work, asset operations investment and

IT‑related capital projects.

UK Electricity Distribution increased by £179 million primarily due to

additional asset replacement and refurbishment, growth in connections

and higher reinforcement works.

New England, capital investment increased by £78 million primarily

due to higher electric capital investment driven by asset conditioning

and Advanced Metering Infrastructure (AMI) spend.

New York, capital investment was £635 million higher primarily due

to a step up in gas capital investment in KEDNY and KEDLI following

increases approved in the rate case (mains replacement and other

mandated works) and along with higher electric investment in NIMO

driven by the Climate Leadership and Community Protection Act

programme spend, in addition to higher AMI investment.

Strategic Report Corporate Governance Financial Statements Additional Information 87

Capital investment in National Grid Ventures was £284 million

lower after completing the build of Viking Link in 2023/24 and with

lower contributions from NG Renewables and Grain LNG (spend

post reclassification to ‘held for sale’ is not included within

capital investment).

UK Electricity System Operator has no reported capital investment

since being classified as held for sale during 2023/24.

Asset growth and regulated asset growth

(non‑GAAP measures)

A key part of our investor proposition is growth in our regulated asset

base. The regulated asset base is a regulatory construct, representing

the invested capital on which we are authorised to earn a cash return.

By investing efficiently in our networks, we add to our regulatory asset

base over the long term and this in turn contributes to delivering

shareholder value. Our regulated asset base comprises our regulatory

asset value (RAV) in the UK, plus our rate base in the US (our regulated

asset growth). We also invest in related activities that are not subject

to network regulation and this further contributes to asset growth.

In total, asset growth in 2024/25 was 9.0% (2024: 9.7%). Asset growth

tracks the overall increase in assets (excluding foreign exchange

movements and the impact of significant increases or decreases from

business acquisition or disposal transactions) using a combination

of UK RAV and US rate base for our regulated businesses, and IFRS

balances for our non-regulated businesses. Asset growth excludes

the impact of the reduction in RAV as a result of the disposal of our

UK Electricity System Operator business during 2024/25. A detailed

calculation of asset growth is provided on pages 294.

In terms of asset growth by business sector, UK RAV growth was 9.8%

(2024: 7.3%) driven by increased ‘slow money’ additions, partly offset

by lower RAV indexation (lower year end CPIH inflation), along with

higher RAV depreciation. US rate base grew strongly by 11.5% (2024:

11.5%), with continued high levels of capital expenditure (as measured

under US GAAP) and more assets coming into service during the year

resulting in increased rate base at 31 March 2025. On a combined

basis, the increase in our UK RAV and US rate base (at constant

currency) produced ‘regulated asset growth’ of 10.5% (2024: 9.1%).

Non-regulated businesses’ growth was (2.1)% (2024: 14.4%) mainly as

a result of lower ongoing investment in National Grid Ventures and the

impact of asset write-downs.

Cash flow, net debt and funding 

Net debt is the aggregate of cash and cash equivalents, borrowings,

current financial and other investments and derivatives (excluding

commodity contract derivatives) as disclosed in note 29 to the financial

statements. ‘Adjusted net debt’ used for the RCF/adjusted net debt

calculation is principally adjusted for pension deficits and hybrid debt

instruments. For a full reconciliation see page 287. The following table

summarises the Group’s cash flow for the year, reconciling this to the

change in net debt.

Summary cash flow statement

£m	2024/25	2023/24	Change
Cash generated from continuing operations	6,991	7,281	(4%)
Purchase of intangibles, PP&E, investments in JVs and acquisition of financial investments (net of disposals)1	(9,713)	(7,588)	(28%)
Dividends from JVs and associates	126	176	(28%)
Business net cash outflow from continuing operations	(2,596)	(131)	n/m
Net interest paid	(1,588)	(1,479)	(7%)
Net tax paid	(183)	(342)	46%
Cash dividends paid	(1,529)	(1,718)	11%
Other cash movements	11	16	(31%)
Net cash outflow (continuing)	(5,885)	(3,654)	(61%)
Disposals of subsidiaries and associates2	1,263	681	85%
Discontinued operations	22	102	(78%)
Rights Issue (net of costs)	6,839	—	n/m
Other, including net financing raised/(repaid) in year	(1,474)	3,298	n/m
Increase/(decrease) in cash and cash equivalents	765	427	79%
Reconciliation to movement in net debt
Increase/(decrease) in cash and cash equivalents	765	427	79%
Less: other net cash flows from investing and financing transactions	1,474	(3,298)	n/m
Net debt reclassified to held for sale	(55)	(23)	n/m
Impact of foreign exchange movements on opening net debt	528	466	13%
Other non-cash movements	(476)	(206)	n/m
(Increase)/decrease in net debt	2,236	(2,634)	n/m
Net debt at start of year	(43,607)	(40,973)	(6%)
Net debt at end of year	(41,371)	(43,607)	5%

1.Net of disposals and also net of £143 million exceptional insurance recoveries in 2023/24.

2.Cash proceeds of £577 million for ESO (which is net of the balance of cash and cash

equivalents disposed) and £686 million (2024: £681 million) for our 20% remaining interest

in National Gas Transmission. The total consideration received for the disposal of ESO

was £673 million.

Cash flow generated from continuing operations was £7.0 billion,

£290 million lower than last year, mainly due to adverse timing

movements (primarily in UK Electricity System Operator related to

the return of BSUoS revenue over-recoveries which occurred in

2023/24). This impact was substantially offset by higher revenues

in our retained regulated businesses compared with 2023/24, along

with lower provisions and exceptional outflows. Cash expended on

investment activities increased as a result of continued growth in our

regulated businesses including a significant step-up of cash capital

investment in UK Electricity Transmission which was £1.0 billion

higher than the prior year, along with higher investment in New York,

New England and UK Electricity Distribution. The £9.7 billion

outflow in 2024/25 includes ongoing cash investment in Grain LNG,

UK Electricity System Operator and National Grid Renewables,

subsequent to these businesses being reclassified as held for sale.

The prior year £7.6 billion outflow is net of insurance recoveries

related to the rebuild of the IFA1 interconnector in the UK.

88	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

Net interest paid increased mainly as a result of the timing of cash

interest payments (accrued interest movements), partly offset by

a lower average level of net debt which benefited from a net £6.8 billion

inflow from the Rights Issue proceeds (net of transaction costs). The

Group made net tax payments of £183 million (2024: £342 million) for

continuing operations during 2024/25. This decrease mainly related to

lower taxable profits driven by over-recovered revenues in the prior

year in the UK Electricity System Operator business.

The lower cash dividend reflected the higher weighted average scrip

uptake of 31% in the current year (2024: 18%), partly offset by the

annual inflationary increase on a dividend per share basis (after

rebasing for the impact of the Rights Issue).

In 2024/25, we completed the sale of our UK Electricity System

Operator business to the UK Government for proceeds of £673 million

(including £45 million from completion adjustments received after

31 March 2025). We also sold our final 20% interest in National Gas

Transmission for proceeds of £686 million. In 2023/24 we reduced

our interest in National Gas Transmission from 40% to 20% interest

for proceeds of £681 million and received a dividend payment of

£102 million in discontinued operations.

During the year we raised net £6.8 billion (net of transaction costs)

of equity financing by means of a Rights Issue. This helped reduce

overall Group regulatory gearing and will help finance capital

investment across the Group during future years. In addition, we also

raised £3.2 billion of new long-term senior debt to refinance maturing

debt and to fund a portion of our significant capital programme.

Other cash movements principally relate to net financing inflows or

outflows to maintain our cash balances at an appropriate level in

accordance with the Group liquidity policy, but do not have an impact

on the Group’s net debt. Other non-cash movements which do impact

net debt, primarily reflect changes in the sterling–dollar exchange rate,

accretions on index-linked debt, lease additions and other derivative

fair value movements, offset by the amortisation of fair value

adjustments on acquired debt.

As at 14 May 2025, we have £7.8 billion of undrawn committed facilities

available for general corporate purposes, all of which have expiry dates

beyond May 2026. National Grid’s balance sheet remains robust, with

strong overall investment grade ratings from Moody’s, Standard

& Poor’s (S&P) and Fitch.

The Board has considered the Group’s ability to finance normal

operations as well as funding a significant capital programme. This

includes stress testing of the Group’s finances under a ‘reasonable

worst-case’ scenario, assessing the timing of the sale of businesses

held for sale and the further levers at the Board’s discretion to ensure

our businesses are adequately financed. As a result, the Board has

concluded that the Group will have adequate resources to do so.

Financial position 

The following table sets out a condensed version of the Group’s IFRS

balance sheet. 

Summary balance sheet 

£m	31 March 2025	31 March 2024	Change
Goodwill and intangibles	13,096	13,160	—%
Property, plant and equipment	74,091	68,907	8%
Assets and liabilities held for sale	2,194	349	529%
Other net liabilities	(805)	106	(859%)
Tax balances	(8,246)	(7,728)	(7%)
Net pension assets	1,916	1,814	6%
Provisions	(3,049)	(3,109)	2%
Net debt	(41,371)	(43,607)	5%
Net assets	37,826	29,892	27%

Goodwill and intangibles reduced mainly as a result of changes

in exchange rates and reclassifications to held for sale. Property, plant

and equipment increased mainly as a result of the continuing capital

investment programme offset by exchange rate movements and

reclassifications to held for sale. Assets held for sale at 31 March 2025

comprised our UK Grain LNG business and our US National Grid

Renewables business and at 31 March 2024 comprised the retained 20%

minority interest in National Gas Transmission and all of the UK Electricity

System Operator business, both of which were fully divested during

2024/25. Tax balances increased principally from accelerated tax

depreciation due to ongoing capital investment, movements in other net

temporary differences and the impact of exchange rate movements. Net

pension assets increased as a result of increased employer contributions

into other post-retirement benefit schemes, a decrease in liabilities

primarily from higher discount rates and exchange rate movements.

Provisions were reduced principally as a result of decreases in US

environmental charges and the impact of the discount unwind. Other

movements are largely explained by net working capital inflows and

changes in the sterling–dollar exchange rate.

Regulatory gearing (a non-GAAP measure), is calculated as net debt as

a proportion of total regulatory asset value and other business invested

capital, reduced significantly in the year to 61% as at 31 March 2025.

This was lower than the previous year-end level of 69% with benefits

from the £6.8 billion Rights Issue net proceeds, £1.3 billion of proceeds

from sales of businesses (UK Electricity System Operator and the final

20% interest in National Gas Transmission), partly offset with a

£1.4 billion adverse swing in timing under/over-recoveries. Taking into

account the benefit of our hybrid debt, adjusted gearing as at 31 March

2025 was 61% (2024: 67%), with the current overall Group credit rating

of BBB+/Baa1 (S&P/Moody’s).

Retained cash flow as a proportion of adjusted net debt was 9.8%,

up 60bps from 2023/24 and above the long-term average level of

7.0% indicated by Moody’s, as consistent with maintaining our

current Group rating.

Off-balance sheet items

There were no significant off-balance sheet items other than

the commitments and contingencies detailed in note 30 to the

financial statements. In accordance with IFRS, regulatory assets and

regulatory liabilities are not recognised on the balance sheet. Further

information in respect of certain of the Group’s energy purchase

contracts and commodity price risk is disclosed in note 32(f) to the

financial statements.

Strategic Report Corporate Governance Financial Statements Additional Information 89

Economic returns (non-GAAP measures)

A principal way in which we measure our performance in generating

value for shareholders is to divide regulated financial performance by

regulatory equity, to produce RoE.

As explained on page 288, regulated financial performance adjusts

reported operating profit to reflect the impact of the Group’s various

regulatory economic arrangements in the UK and US. In order to

show underlying performance, we calculate RoE measures excluding

exceptional items of income or expenditure.

Group RoE is used to measure our performance in generating value

for our shareholders by dividing regulated and non-regulated financial

performance, after interest and tax, by our measure of equity

investment in all our businesses, including the regulated businesses,

NGV and other activities and joint ventures. This metric’s calculation

methodology was updated during 2024/25 with comparative amounts

restated accordingly. For further details please see page 291.

Regulated businesses’ RoEs are measures of how the businesses are

performing compared with the assumptions and allowances set by our

regulators. US jurisdictional and UK entity regulated returns are

calculated using the capital structure assumed within their respective

regulatory arrangements and, in the case of the UK, assuming inflation

of 2% CPIH under RIIO-2. As these assumptions differ between the UK

and the US, RoE measures are not directly comparable between the

two geographies. In our performance measures, we compare achieved

RoEs to the level assumed when setting base rate and revenue

allowances in each jurisdiction. 

Return on Equity ‘RoE’ (non-GAAP measures)

%	2024/25	2023/24	Change
UK Electricity Transmission	8.3%	8.0%	30bps
UK Electricity Distribution	7.9%	8.5%	-60bps
New England	9.1%	9.2%	-10bps
New York	8.7%	8.5%	20bps
Group RoE1	9.0%	10.5%	-150bps

1.Our calculation methodology for Group RoE changed in 2024/25. Comparative amounts

have been restated accordingly. See page 291 for details.

In 2024/25, UK Electricity Transmission achieved operational returns

of 8.3%, delivering 100bps of outperformance under RIIO-T2, mainly

from totex performance related to savings on capital delivery (2024:

8.0% achieved return, or 100bps above the allowed base return).

UK Electricity Distribution achieved an operational return of 7.9%

in 2024/25, including 20bps outperformance, mostly consisting of

non‑totex performance incentives. Outperformance was impacted

by the costs associated with Storm Darragh and the adverse impact

of the RIIO‑ED2 Real Price Effect (RPE) mechanism, where lower than

anticipated allowances due to reductions in commodity indices have

not tracked actual costs incurred (2024: 8.5% achieved return, or

110bps above the allowed base return).

New England’s achieved return of 9.1% was 92% of the allowed return

in 2024/25 compared with an achieved return of 9.2% in 2023/24. New

York’s achieved return of 8.7% was 94% of the allowed return in

2024/25 compared with an achieved return of 8.5% in 2023/24. The

quoted returns for New England and New York represent the weighted

average return across operating companies within each jurisdiction.

Overall Group RoE, which incorporates NGV, property, corporate

and other activities, and financing and tax performance, was

9.0% in 2024/25 compared with 10.5% achieved in 2023/24.

This decrease was principally due to the impact of the Rights Issue

proceeds increasing the equity denominator by means of reducing

Group gearing.

Tax transparency

As a responsible taxpayer, we have voluntarily included additional tax

disclosures, which we believe are of significant interest to many of

our stakeholders. For information on the Company’s activities, please

see page 2, and for a definition of discontinued operations, please

see note 10 to the financial statements.

Tax strategy

National Grid is a responsible taxpayer. Our approach to tax is

consistent with the Group’s broader commitments to doing business

responsibly and upholding the highest ethical standards. This includes

managing our tax affairs, as we recognise that our tax contribution

supports public services and the wider economy. We endeavour to

manage our tax affairs so that we pay and collect the right amount

of tax, at the right time, in accordance with the tax laws in all the

territories in which we operate. We will claim valid tax reliefs and

incentives where these are applicable to our business operations,

but only where they are widely accepted through the relevant tax

legislation such as those established by government to promote

investment, employment and economic growth. We do not

have operations in tax havens or low-tax jurisdictions without

commercial purpose.

We have a strong governance framework and our internal control and

risk management framework helps us manage risks, including tax risk,

appropriately. We take a conservative approach to tax risk. However,

there is no prescriptive level or pre-defined limit to the amount of

acceptable tax risk.

Our financial statements have been audited. The figures in the tax

transparency disclosures in the Annual Report and Accounts have

been taken from our financial systems, which are subject to our

internal control framework.

We act with openness and honesty when engaging with relevant tax

authorities and seek to work with tax authorities on a real-time basis.

We engage proactively in developments of external tax policy and

engage with relevant bodies where appropriate. Ultimate responsibility

and oversight of our tax strategy and governance rests with the

Finance Committee, with executive management delegated to our

Chief Financial Officer who oversees and approves the tax strategy

on an annual basis. For more detailed information, please refer to

our published tax strategy on our website. 

90	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

Country-by-country reporting summary

We have disclosed in the table below data showing the scale of

our activities in each of the countries we operate in. This allows our

stakeholders to see the profits earned, taxes paid and the context

of those payments. The Group’s entities are tax resident in their

jurisdiction of incorporation other than where indicated in the footnotes

to note 34 to the financial statements.

2024/25	Revenue			Profit/ (loss) before income tax3 £m	Income tax accrued – current year4 £m	Tangible assets/ (liabilities) other than cash and cash equivalents5 £m
Tax jurisdiction	Unrelated party1 £m	Related party2 £m	Total £m
United Kingdom	6,707	241	6,948	2,703	67	34,680
United States	11,671	58	11,729	947	47	39,411
Isle of Man	—	51	51	51	—	—
Luxembourg	—	—	—	—	—	—
Belgium	—	—	—	1	—	—
Total	18,378	350	18,728	3,702	114	74,091

2023/24	Revenue			Profit/ (loss) before income tax3 £m	Income tax accrued – current year4 £m	Tangible assets/ (liabilities) other than cash and cash equivalents5 £m
Tax jurisdiction	Unrelated party1 £m	Related party2 £m	Total £m
United Kingdom	9,063	128	9,191	2,890	411	32,189
United States	10,787	68	10,855	181	82	36,718
Isle of Man	—	44	44	56	—	—
Luxembourg	—	—	—	—	—	—
Belgium	—	—	—	—	—	—
Total	19,850	240	20,090	3,127	493	68,907

1.Unrelated party revenue comprises revenue from continuing operations of £18,378 million

(2024: £19,850 million) (see consolidated income statement) and revenue from

discontinued operations of £nil (2024: £nil) (see note 10 to the financial statements).

2.Related party revenue only includes cross-border transactions and comprises

related party revenue from continuing operations of £350 million (2024: £240 million)

and related party revenue from discontinued operations of £nil (2024: £nil).

3.Profit/(loss) before income tax (PBT) from operations after exceptionals comprises

continuing operations PBT of £3,650 million (2024: £3,048 million) (see consolidated

income statement) and discontinued operations PBT of £52 million (2024: £79 million)

(see note 10 to the financial statements).

4.Current year income tax accrued comprises current year income tax from continuing

operations of £113 million (2024: £492 million) (see note 7 to the financial statements)

and current year income tax from discontinued operations of £1 million (2024: £1 million).

See the tax charge to tax paid reconciliation below for further information.

5.Tangible assets comprises property, plant and equipment (see consolidated statement

of financial position) and excludes tangible fixed assets for businesses classified as

‘held for sale’ or disposed of during the year of £1,359 million (UK Electricity System

Operator (ESO) £121 million, National Grid Renewables £340 million, Grain LNG

£898 million) (2024: UK Electricity System Operator (ESO) £113 million) (see note 10

to the financial statements).

Our Isle of Man company is a captive insurance company which is

treated as a controlled foreign company for UK tax purposes and,

as such, UK corporation tax is paid on its profits.

Our presence in Luxembourg is to address a nationalisation risk which

arose from a Labour Party proposal in 2019 to nationalise nearly all of

National Grid’s UK assets.

Transfer pricing is not a significant issue for the Group given the nature

of our core businesses and the number of jurisdictions we operate in.

Where there are related party transactions, these are taxed on an

arm’s length basis in accordance with the Organisation for Economic

Co-operation and Development (OECD) principles.

Group’s total tax charge to tax paid

The total tax charge for the year disclosed in the financial statements in

accordance with accounting standards and the equivalent total

corporate income tax paid during the year will differ.

The principal differences between these two measures are as follows:

Reconciliation of Group’s total tax charge to tax paid

£m	2024/25	2023/24
Total Group tax charge1	822	832
Adjustment for Group non-cash deferred tax	(783)	(465)
Adjustments for Group current tax (charge)/credit in respect of prior years	75	126
Group current tax charge	114	493
Group tax charge not payable in the current year	(46)	(63)
Group tax instalment payments (repayable)/ payable in respect of the prior year	25	2
Tax instalment payments over/(under) paid in the current year	(27)	(22)
Tax recoverable offset against current tax payments due	—	(72)
Tax instalment payments over/(under) paid due in the following year	—	—
Group tax payment/(refunds) in respect of prior years paid in the current year	—	3
Tax balance included with Other liabilities in note 10	117	1
Group tax paid	183	342
Profit before income tax2	3,702	3,127
	%	%
Effective cash tax rate	4.9	10.9
Effective tax rate3	22.2	26.6

1.Total Group tax charge from operations after exceptionals is comprised of tax charge

of continuing operations of £821 million (2024: £831 million) and discontinued operations

of £1 million (2024: £1 million).

2.Profit/(loss) before income tax (PBT) from continuing operations after exceptionals is

comprised of continuing operations PBT of £3,702 million (2024: £3,048 million) and

discontinued operations PBT of £52 million (2024: £79 million).

3.Effective tax rate for continuing operations after exceptionals is 22.5% (2024: 27.3%)

and discontinued operations is 2.1% (2024: 1.3%).

Effective cash tax rate

The effective cash tax rate for the total Group is 4.9%. The difference

between this and the accounting effective rate of 22.2% is primarily

due to the following factors.

National Grid is a capital-intensive business, across both the UK and

the US, and as such invests significant sums each year in its networks.

In 2024/25 the Group’s total capital expenditure was £9,847 million.

To promote investment, tax legislation allows a deduction for qualifying

capital expenditure at a faster rate than the associated depreciation

in the statutory accounts. The impact of this is to defer cash tax

payments into future years. As the Group’s qualifying capital

expenditure has increased from the prior year, the resulting available

tax deductions have further reduced the effective cash tax rate.

The sale of the ESO in the year gave rise to a non-taxable gain as

it met the conditions of the UK Substantial Shareholding Exemption.

This also reduced the effective cash tax rate for the year.

The Group continued to make payments into the UK defined benefit

pension schemes, National Grid Electricity Group section of the

Electricity Supply Pension Scheme and the Western Power Pension

Scheme during the course of the year. These payments have further

reduced the overall cash tax paid in the UK.

Strategic Report Corporate Governance Financial Statements Additional Information 91

Group’s total tax contribution 

The total amount of taxes we pay and collect globally year-on-year is

significantly more than just the tax which we pay on our global profits.

To provide a full picture, we have disclosed the Group’s global total

tax contribution which includes contributions from both continuing

and discontinued businesses.

Group’s total tax contribution 2024/25 (taxes borne/collected)

Taxes borneTaxes collected

£1.9bn

£1.6bn

Key:		£m
n	People	274
n	Product	215
n	Profit	183
n	Property	1,237
n	Miscellaneous	33
	Total	1,942

Key:		£m
n	People	865
n	Product	780
n	Miscellaneous	1
	Total	1,646

Taxes borne are a cost to the Group. Taxes collected are taxes

generated by the operations of the Group which we are obliged to

administer on behalf of the government (e.g. income tax under PAYE,

employees’ national insurance contributions).

2024/25	Tax contribution
Tax jurisdiction	Income tax paid/ (repaid) on cash basis1 £m	Property taxes £m	Other taxes borne2 £m	Taxes collected £m	Total tax contribution £m	Number of employees3 as at 31 March 2025
United Kingdom	156	247	140	858	1,401	13,477
United States	27	990	382	788	2,187	18,177
Ireland	—	—	—	—	—	—
Isle of Man	—	—	—	—	—	—
Luxembourg	—	—	—	—	—	—
Netherlands	—	—	—	—	—	—
Total	183	1,237	522	1,646	3,588	31,654

2023/24	Tax contribution
Tax jurisdiction	Income tax paid/ (repaid) on cash basis1 £m	Property taxes £m	Other taxes borne2 £m	Taxes collected £m	Total tax contribution £m	Number of employees3 as at 31 March 2024
United Kingdom	341	227	151	1,102	1,821	13,956
United States	1	956	338	710	2,005	17,469
Ireland	—	—	—	—	—	—
Isle of Man	—	—	—	—	—	—
Luxembourg	—	—	—	—	—	—
Netherlands	—	—	—	—	—	—
Total	342	1,183	489	1,812	3,826	31,425

1.See the tax charge to tax paid reconciliation above for further information.

2.Other taxes borne is made up of People, Product and Miscellaneous taxes.

3.Number of employees is calculated as the total National Grid workforce across all parts of

the business, including Non-executive Directors and Executive Directors and employees of

the discontinued operations. All are active, permanent employees as well as both full-time

and part-time employees.

For 2024/25, our total tax contribution was £3,588 million

(2023/24: £3,826 million), taxes borne were £1,942 million (2023/24:

£2,014 million) and taxes collected were £1,646 million (2023/24:

£1,812 million). Our total tax contribution has decreased in the year

primarily due to a reduction in product taxes collected (e.g. UK VAT)

and profit taxes. This is principally as a result of the sale of the ESO

part way through the year.

Two thirds of the tax borne by the Group continues to be in relation

to property taxes, of which £990 million are paid in the US across over

1,200 cities and towns in Massachusetts, New Hampshire, New York

and Vermont. These taxes are the municipalities principal source of

revenue to fund school districts, police and fire departments, road

construction and other local services.

In the UK, we participate in the 100 Group’s Total Tax Contribution

Survey. The survey ranks the UK’s biggest listed companies in terms

of their contribution to the total UK Government’s tax receipts. The

most recent result of the survey for 2023/24 ranks National Grid as

the 15th highest contributor of UK taxes (2022/23: 13th), the 12th

highest in respect of taxes borne (2022/23: 11th) and third (2022/23:

1st) in respect of capital expenditure of £3,052 million (2022/23:

£3,057 million) on fixed assets. Our ranking in the survey is

proportionate to the size of our business and capitalisation relative

to the other contributors to the survey.

However, National Grid’s contribution to the UK and US economies is

broader than just the taxes it pays over to and collects on behalf of the

tax authorities.

Both in the UK and the US we employ thousands of individuals directly.

We also support jobs in the construction industry through our capital

expenditure, which in 2024/25 was £9,847 million, as well as

supporting a significant number of jobs in our supply chain.

Furthermore, as a utility we provide a core essential service which

allows the infrastructure of the country/states we operate in to run

smoothly. This enables individuals and businesses to flourish and

contribute to the economy and society.

Development of future tax policy 

We believe that the continued development of a coherent and

transparent tax policy across the Group is critical to help drive

growth in the economy.

We continue to engage on consultations with policymakers where

the subject matter impacts taxes borne or collected by our business,

with the aim of openly contributing to the debate and development

of tax legislation for the benefit of all our stakeholders.

To ensure that the needs of our stakeholders are considered in the

development of tax policy we are a member of a number of industry

groups which participate in the development of future tax policy,

such as the Electricity Tax Forum, together with the 100 Group in

the UK, which represents the views of Finance Directors of FTSE 100

companies and several other large UK companies. We undertake

similar activities in the US, where the Group is an active member

in the Edison Electric Institute, the American Gas Association, the

Global Business Alliance, the American Clean Power Association,

the Business Council for Sustainable Energy and the Solar Energy

Industries Association.

Feedback from these groups, such as the results of the 100 Group

Total Tax Contribution survey helps to ensure that we consider the

needs of our stakeholders and are engaged at the earliest opportunity

on tax issues which affect our business.

92	National Grid plc  Annual Report and Accounts 2024/25
Financial review continued

Pensions 

In 2024/25, defined contribution pensions, defined benefit pensions and other post-employment benefit operating costs were slightly higher

than prior year at £305 million (2024: £273 million).

During the year, our pensions and other post-retirement benefit plans increased from a net surplus position of £1,814 million at 31 March 2024

to a net surplus of £1,916 million at 31 March 2025.

This was principally the result of actuarial losses on plan assets of £1,204 million (lower investment returns) and actuarial gains on plan liabilities

of £1,175 million (higher discount rates from corporate bond yields and lower long-term RPI inflation expectations). Employer contributions during

the year were £282 million (2024: £165 million), including £12 million (2024: £23 million) of deficit contributions. As at 31 March 2025, the total

UK and US assets and liabilities and the overall net IAS 19 (revised) accounting surplus (2024: surplus) is shown below. Further information can

be found in note 25 to the financial statements.

Net defined benefit asset

	UK pensions		US pensions		US other post-retirement benefits		Total
	2025	2024	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m	£m	£m
Liabilities	(51)	(56)	(196)	(210)	(326)	(327)	(573)	(593)
Assets	1,179	1,317	672	618	638	472	2,489	2,407
Net defined benefit asset	1,128	1,261	476	408	312	145	1,916	1,814

Dividend

The Board has recommended a final dividend to 30.88p per ordinary

share ($2.0545 per American Depository Share), which will be paid on

17 July 2025 to shareholders on the register of members as at 30 May

2025. If approved, this will bring the full-year dividend to 46.72p per

ordinary share, representing an increase of 3% to the 45.26p ‘rebased’

dividend per share (as explained below) for 2023/24. This is in line with

the increase in average UK CPIH inflation for the year ended 31 March

2025 as set out in our dividend policy.

As part of the Rights Issue, the Board announced that the overall

cash dividend level would be maintained, with the additional shares

from the Rights Issue resulting in a reduction to calculated dividend

per share. The total dividend to shareholders (cash plus scrip) in

respect of the financial year to 31 March 2024 was £2,167 million

(58.52p per share). This total dividend of £2,167 million spread across

a higher number of shares adjusted for the Rights Issue equated to

a ‘rebased’ dividend per share in respect of 2023/24 of 45.26p

(see calculation on page 295).

The Board aims to grow annual dividend per share (DPS) in line with

UK CPIH, thus maintaining the DPS in real terms. The Board will review

this policy regularly, taking into account a range of factors including

expected business performance and regulatory developments.

At 31 March 2025, National Grid plc had £18.0 billion of distributable

reserves, which is sufficient to cover more than five years of forecast

Group dividends. If approved, the final dividend will absorb

approximately £1,512 million of shareholders’ funds. The 2024/25

full dividend is covered approximately 1.6x by underlying earnings.

The Directors consider the Group’s capital structure at least twice

a year when proposing an interim and final dividend and aim to

maintain distributable reserves that provide adequate cover for

dividend payments.

A scrip dividend alternative will again be offered in respect of the

2024/25 final dividend.

New accounting standards

We did not adopt any new accounting standards in 2024/25.

Amendments to certain existing accounting standards were adopted

during the year, but these had no material impact on the Group’s

results or financial statement disclosures.

Post balance sheet events

For further details, see note 36 to the financial statements.

	Strategic Report		Corporate Governance	Financial Statements	Additional Information	93
Viability Statement

The Board’s consideration of the longer-term viability of the Group is an extension of

our business planning process.

The process includes financial forecasting, risk

assessment, regular budget reviews as well as

scenario planning incorporating industry

trends, considering any emerging issues and

economic conditions. Our business strategy

aims to enhance our long-term prospects by

making sure our operations and finances

are sustainable.

As required by provision 31 of the 2018 UK

Corporate Governance Code, the Board has

formally assessed the prospects of the Group,

and this assessment has been made over the

next five financial years in line with the

Company’s Strategic Business Plan. The

assessment includes the potential impact

(financial and reputational) of different stress

testing scenarios on our Group Principal Risks

which are severe but plausible and could

impact the longer-term viability of the

Company, our solvency and liquidity.

We also consider Emerging Risks and select a

cluster scenario to assess the potential impact

of several of our Group Principal Risks

crystallising at the same time.

Risk cluster

The impact of a cluster of the Group Principal

Risks crystallising over the assessment period

was considered by analysing risk

interconnectivities to select a risk cluster and

stress testing scenario that could pose the

most significant threat to our viability. Our

cluster scenarios modelled the financial

impact of a significant cyber-attack, resulting

in a significant data breach, a catastrophic

asset failure in the US gas business, energy

disruption, and impact on our New York gas

operating licences (gas specifically due to the

potentially higher risk of catastrophic failure by

nature of the assets).

While the cluster scenarios would lead to

significant impacts, management would have

mitigation strategies available to ensure the

Company remains viable over the five-year

assessment period. National Grid operates in

stable markets and the robust financial

position of the Group, including the ability to

sell assets, raise capital and suspend or

reduce the payment of dividends, provides a

range of options to secure viability in addition

to ensuring we would have a sound

operational response.

Viability

The Directors are satisfied that they have

sufficient information to judge the viability of

the Company and, based on the assessment

described above and on pages 34–41, have a

reasonable expectation that the Company will

be able to continue operating and meet its

liabilities as they fall due in the period to

May 2030.

Principal Risk stress testing

Each Group Principal Risk was considered and, where appropriate, a stress testing scenario was identified to assess impacts on reputation and

financial performance over the five-year assessment period as detailed below. All scenarios are considered low probability events.

High						GPR	Stress testing scenarios
						Catastrophic cyber security incident*	A significant successful cyber attack.
						Significant disruption of energy*	Significant energy disruption event due to an extreme weather event across the US, UK and interconnectors, impacting a large number of customers.
						Upstream supply	Severe gas supply disruptions in the US impacting a large number of customers.
						Significant safety or environmental event (asset failure)*	A catastrophic failure of the US gas system, leading to a major safety breach or environmental spill.
Financial impact						Major capital programmes	Inability to either successfully secure appropriate incentive mechanisms and/or deliver our major capital projects
						Satisfactory regulatory outcomes	Poor outcome of future US rate case filings, and low performance under RIIO-T3 in the UK.
						Climate change mitigation	Inability to meet net zero targets.
						Political and societal expectations	Challenges in NY/MA to meet increasing demand due to infrastructure constraints alongside diminishing acceptance of the energy transition
						People capability and capacity	n/a
Low						Financing our Business*	Financing a significant capital investment programme driven by energy transition targets in the UK and US, amid higher interest rates, inflation and concerns about cash flow sufficiency and market risk.
	Internal	Reputational impact	International		* included as part of risk cluster

94	National Grid plc  Annual Report and Accounts 2024/25
Corporate Governance

Effective

governance

Corporate Governance
Chair’s statement	96
Corporate Governance overview	98
Our Board	99
Group Executive Committee	103
Key Board activities	104
Culture and workforce engagement	106
Board evaluation	108
Directors’ induction, development and training	109
People & Governance Committee report	110
Audit & Risk Committee report	112
Safety & Sustainability Committee report	119
Finance Committee report	120
Directors’ Remuneration report	121
Directors’ Remuneration Policy	138

Strategic Report Corporate Governance Financial Statements Additional Information 95

96	National Grid plc  Annual Report and Accounts 2024/25
Chair’s statement

Dear Shareholders,

I am pleased to present the 2024/25 Corporate Governance Report

which provides an overview of how our Board operates for the benefit

of shareholders and other stakeholders. This year will be our final year

of reporting against the 2018 UK Corporate Governance Code (the

‘Code’), with which we are fully compliant. During the year, we have

looked at our governance practices alongside the UK Corporate

Governance Code 2024 (the ‘2024 Code’), to both ensure that we are

compliant from 1 April 2025 and that we are aligned with the spirit of

the Code in promoting good governance. We were pleased to note that

we are already compliant with the updated provisions of the 2024 Code

which we are required to report on next year.

Year in review

The Board has engaged with several key topics during the year. We

carefully reviewed all elements of the 2024 Rights Issue, which

concluded successfully. All of the representations regarding the

Company and its strategy were scrutinised, including operations and

future commitments. Leading up to the offering, our diligence included

consideration of the delivery of our capital plans, disposals of non-core

businesses, and regulatory matters. We periodically undertake ‘deep-

dives’ into topics that require the devotion of extra time, often over

several meetings or in off-cycle enrichment sessions. Among the topics

under review during the year were: customer service strategy; adoption

of, and investment in, technology; AI-related demand; connections

policy; and the net zero policies of our various jurisdictions.

We also undertook an internally-facilitated evaluation of the Board’s

effectiveness, following three years in which we utilised independent

external advice. The key observations from this review can be found on

page 108.

Board composition and changes

Since our refreshment process began in 2021, seven new Board

members have been inducted, including me. The service of only four

current Board members pre-dates 2021, two of whom are Executive

Directors. With this much change in expertise and outlook, Board

members agreed that continuing to develop deeper expertise and

collaboration was more important than further refreshment. As noted

elsewhere in this Annual Report, a substantial amount of time was

focused on succession and talent development. This responsibility is

best undertaken by a board that has had some time to have contact

with key managers and leaders in the organisation.

We had one notable change to the overall operation of the Board in the

year under review. Julian Baddeley joined as Group Company

Secretary in July 2024 following the creation of a standalone Group

Company Secretary role, reflecting the wider remit and responsibilities

of the new Chief Legal Officer role held by Justine Campbell. On 1 May

2025, we announced that Zoë Yujnovich will become our next Chief

Executive upon the retirement of John Pettigrew. Zoë will join the

Board on 1 September 2025, when she begins her employment as

CEO Designate.

Employee engagement

We have continued with our programme of employee engagement

through the year. This has included engaging with our employee

resource groups, meeting high potential colleagues, and inviting

leaders across the business to join the Board for informal discussions.

Our Directors, and the Board as a whole, have also undertaken site

visits across the business. These visits allow the Board to assess the

ethos and culture of our business units and encourage open and

honest communication.

In November 2024, the Board considered our alternative Board

workforce engagement arrangement of ‘Full Board Employee Voice’

and determined that it continues to provide meaningful engagement

across the business. Further information on the Board’s interactions

with employees and site visits can be found on pages 106 and 107.

Engagement with other stakeholders

As Chair, I engaged with investors across the year, particularly as part

of the 2024 Rights Issue. As part of our Directors’ Remuneration Policy

review, Martha Wyrsch, Remuneration Committee Chair, reached out to

large shareholders and investor bodies to seek constructive dialogue

on the changes being proposed to Directors’ remuneration.

All of our Committee Chairs make themselves available to meet with

investors and investor bodies to discuss areas within the remit of their

Committees. The Board also met with various external stakeholders

during the year, including the Chair and CEO of the National Energy

System Operator and the CEO of the New York Independent System

Operator, so that we can understand matters and issues of concern

first-hand.

Further information on our engagement with key stakeholders can be

found in the ‘Our stakeholders’ section on pages 22 to 24.

AGM

I look forward to welcoming shareholders to our AGM on 9 July 2025,

which will again be held in Warwickshire as a hybrid meeting, providing

the opportunity for shareholders to join online or in person. Further details

can be found in the Notice of AGM, which is available on our website.

Paula Rosput Reynolds

Chair

14 May 2025

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	97
Governance at a glance

UK Corporate Governance Code (the ‘Code’) – 2024/25 Compliance Statement

The Company is subject to the Principles and Provisions of the Code, published by the Financial Reporting Council in July 2018 (available at

frc.org.uk). For the year ended 31 March 2025, the Board considers that the Company has complied in full with the Provisions of the Code. This

Corporate Governance Report, taken as a whole, explains how the Company has applied the Principles and complied with the Provisions of the

Code. The table below provides a guide to where the most relevant explanations are given:

Principles of the Code
1	Board leadership and company purpose
A.	The role of the Board and long-term sustainable success	4, 98
B.	Purpose, values, strategy and culture	2 – 3, 8 – 10, 14 – 17, 51 – 54, 106
C.	Resources and prudent and effective controls	34 – 41
D.	Shareholder and stakeholder engagement	22 – 24, 104 – 107
E.	Workforce policies and practices	23, 51 – 54, 107
2	Division of responsibilities
F.	Chair’s leadership	4, 96 – 98
G.	Board composition and division of responsibilities	99 – 102
H.	Time commitment and role of Non-executive Directors	99 – 102, 109
I.	Policies, processes, information and resources	96 – 98, 107, 276

3	Composition, succession and evaluation
J.	Board appointments and succession planning	110 – 111
K.	Board and Committee skills, experience, knowledge and tenure	99 – 102, 110 – 111
L.	Board evaluation	108
4	Audit, risk and internal controls
M.	Independence and effectiveness of internal and external audit functions	117
N.	Fair, balanced and understandable assessment	113
O.	Risk management, internal control and determining the nature and extent of principal risks	34 – 41, 116
5	Remuneration
P.	Remuneration policies and practices	121 – 149
Q.	Director and senior management remuneration	121 – 149
R.	Independent judgement and discretion in remuneration outcomes	121 – 125

Details on information required for our US Securities and Exchange

Commission (SEC) filing and the Form 20-F can be found on page 271.

Meeting attendance
The table below sets out Directors’ attendance at the seven scheduled Board meetings also held during the year ended 31 March 2025. Two ad hoc meetings were held in the year.
Directors	Committee Chair	Board	People & Governance Committee	Audit & Risk Committee	Safety & Sustainability Committee	Finance Committee	Remuneration Committee
Paula Rosput Reynolds		7/7	3/3	–	–	–	–
John Pettigrew		7/7	–	–	–	3/3	–
Andy Agg		7/7	–	–	–	3/3	–
Ian Livingston		7/7	–	5/5	–	–	4/4
Jacqui Ferguson1		6/7	–	5/5	2/2	–	–
Iain Mackay2		6/7	–	5/5	–	3/3	4/4
Anne Robinson3		6/7	–	–	3/4	–	4/4
Earl Shipp		7/7	3/3	–	4/4	–	–
Jonathan Silver4		7/7	3/3	1/1	–	3/3	–
Tony Wood		7/7	3/3	–	4/4	–	–
Martha Wyrsch		7/7	–	–	4/4	–	4/4

1.Jacqui Ferguson was unable to attend the July 2024 Board meeting due to illness. Jacqui received all Board papers and had the opportunity to provide comments to the Board prior to the meeting.

Jacqui Ferguson joined the Safety & Sustainability Committee on 5 July 2024 and attended all meetings held after her appointment.

2.Iain Mackay was unable to attend the May 2024 Board meeting due to a pre-existing commitment. Iain received all Board papers and had the opportunity to provide comments to the Board prior to

the meeting.

3.Anne Robinson was unable to attend the July 2024 Board and the March 2025 Safety & Sustainability Committee meetings due to pre-existing commitments. Anne received all Board and Committee

papers and had the opportunity to provide comments prior to the meetings.

4. Jonathan Silver stepped down from the Audit & Risk Committee effective 5 July 2024.

Committee
	Audit & Risk Committee		People & Governance Committee		Safety & Sustainability Committee
	Finance Committee		Remuneration Committee		Group Executive Committee

98	National Grid plc  Annual Report and Accounts 2024/25
Corporate governance overview

We have a high-functioning and balanced Board. Our governance framework

ensures that the Board is effective in its decision making and in its oversight

of the Group’s activities, complementing our values of do the right thing, find a

better way and make it happen.

Governance structure

The schedule of matters reserved for the Board and the Terms of Reference for each of our Board Committees are available in our Board

Governance document which can be found on our website.

Our governance framework

Board of Directors
The Board is responsible for the effective oversight of the Group. It determines the Group’s strategic direction and objectives, business plan, dividend policy, viability and governance structure to help achieve long-term success and deliver sustainable shareholder value. It is also responsible for establishing the Company’s strategy, purpose, values and culture. The Board considers key stakeholders in its decision making and, in doing so, ensures that Directors comply with their duty under section 172 of the Companies Act 2006 (see page 22).			To operate efficiently and maintain appropriate oversight and consideration over relevant matters, the Board delegates certain responsibilities to the Board Committees. The Chair of each Committee reports to the Board on their respective Committee’s activities, and Committee papers and minutes are available to all Directors unless there is an actual or perceived conflict of interest.
Board Committees
People & Governance Committee •Composition of the Board and its Committees •Succession planning •Corporate governance Framework •Board workforce engagement strategy	Audit & Risk Committee •Financial reporting •Internal control and risk management framework •Compliance •Internal and external audit •Whistleblowing •Responsible Business disclosures and assurance	Safety & Sustainability Committee •Safety, including occupational, public and process safety •Sustainability, including the impact of the Group’s operations on stakeholders		Finance Committee •Treasury •Tax •Pensions and post- retirement plans •Insurance •Commodities	Remuneration Committee •Remuneration framework for the Chair, Executive Directors and Group Executive Committee members •Remuneration practices and policies for the wider workforce
pages 110 – 111	pages 112 – 118	page 119		page 120	pages 121 – 125

Board composition and roles

As at the date of this report, the Board comprises a Non-executive Chair (independent on appointment), two Executive Directors (Chief Executive

and Chief Financial Officer) and eight independent Non-executive Directors. Biographies for each of our Directors can be found on pages 99 to 102.

There is a clear division of responsibilities between the Chair, the Chief Executive and the Senior Independent Director. The key responsibilities of

each role are set out in our Board Governance document which can be found on our website.

Group Executive Committee and other management committees
The Group Executive Committee oversees the safety, operational and financial performance of the Company. It is responsible for making the day-to-day management and operational decisions it considers necessary to safeguard the interests of the Company and to execute the strategy, business objectives and targets established by the Board. Biographies for the Group Executive Committee members can be found on our website. The Group Executive Committee is supported by management committees, including:
Safety, Health & Sustainability Committee Provides oversight and strategic guidance on Group-wide safety, health and sustainability matters affecting the Company and its stakeholders.	Reputation & Stakeholder Management Executive Committee Assesses the broader external context in which the Company operates and provides strategic oversight for external engagement.	Ethics, Risk & Compliance Committee Oversees the implementation of the Group’s risk management and compliance framework and assessment of the Group’s principal risks.	Policy & Regulation Committee Agrees and provides strategic oversight of Group public policy priorities and positions.	Investment Committee Has delegated authority to approve investment decisions across the Group.

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	99
Our Board

Paula Rosput Reynolds Chair	John Pettigrew Chief Executive	Andy Agg Chief Financial Officer
Appointed: Independent Non-executive Director on 1 January 2021 and Chair on 31 May 2021 Age: 68 Skills and competencies: Paula brings a wealth of board-level experience to National Grid, having led global companies in the energy and financial sectors. She has over 20 years’ experience as a Non-executive Director in both the UK and US across multiple sectors and businesses, and has brought a strategic and regulatory lens on issues to the Board. During her career, Paula has played a vital role with several company- wide transformations and mergers. She is recognised for having transformed AGL Resources from a local utility into a multi- state energy and telecommunications company, and for materially enhancing the operating and financial performance of Safeco Corp, a US insurance company that was ultimately acquired by Liberty Mutual.	Appointed: Executive Director on 1 April 2014 and Chief Executive on 1 April 2016 Age: 56 Skills and competencies: John has extensive experience in the utility sector. He joined National Grid as a graduate in 1991 and has progressed through many senior management roles. As Chief Executive, John is responsible for executive leadership and day-to-day management of the Group, bringing significant know-how and commerciality to ensure delivery of the strategy. He has delivered transformational organisational and portfolio change, positioning National Grid strongly for the energy transition. John engages widely with governments, policy makers and other stakeholders, helping to shape energy policy. He is a Fellow of the Energy Institute and of the Institution of Energy and Technology.	Appointed: 1 January 2019 Age: 55 Skills and competencies: Andy trained and qualified as a Chartered Accountant with PricewaterhouseCoopers and is a member of the Institute of Chartered Accountants in England and Wales. Joining National Grid in 2008, Andy has significant financial experience and commercial acumen, having held a number of senior finance leadership roles across the Group, including Group Financial Controller, UK Chief Financial Officer and Group Tax and Treasury Director. Andy has in-depth knowledge of National Grid, in both the UK and the US, and has broad experience across operational and corporate finance roles, including a proven track record of leading and delivering value-creating strategies, significant transformation programmes, and significant transactional experience. Andy is also a member of the 100 Group Main Committee contributing to domestic and international finance and regulatory matters.
External appointments: •Non-executive Director of GE Vernova and Chair of the Safety & Sustainability Committee •Non-executive Director of Linde plc	External appointments: •Senior Independent Director of Rentokil Initial plc	External appointments: •Non-executive Director of The Weir Group plc
Committee membership:	Committee membership:	Committee membership:

Committee membership
	Audit & Risk Committee		People & Governance Committee		Safety & Sustainability Committee		Committee Chair
	Finance Committee		Remuneration Committee		Group Executive Committee		Biographies, tenure and age as at 14 May 2025

100	National Grid plc  Annual Report and Accounts 2024/25
Our Board continued

Ian Livingston Senior Independent Non-executive Director	Jacqui Ferguson Independent Non-executive Director	Iain Mackay Independent Non-executive Director
Appointed: 1 August 2021 Age: 60 Skills and competencies: Ian brings a wealth of experience to National Grid, having been both CEO and CFO of BT Group plc, and CFO of Dixons Group. In addition to a highly successful executive career, he has also had extensive non-executive experience in large UK and US public companies as board, audit and remuneration committee chair. Ian also has significant experience of large, regulated companies operating in both the UK and internationally. He is a member of the House of Lords and has also previously served in the UK Government as Minister of State for Trade and Investment. He is a qualified Chartered Accountant.	Appointed: 1 January 2024 Age: 54 Skills and competencies: Jacqui has significant non-executive experience in complex science and technology-centric businesses and in her executive career as a divisional CEO in the technology industry. She has global broad business experience, including in mergers and acquisitions, and has worked across numerous international and emerging markets. Jacqui has expertise in leading technology-enabled transformations, digital, cyber security, technology and business process solutions. Jacqui has formerly held various senior positions with Hewlett Packard (HP), including Chief of Staff to the Chairman and CEO, Senior Vice President HP Enterprise Services, Electronic Data Systems (which was acquired by HP) and KPMG.	Appointed: 11 July 2022 Age: 63 Skills and competencies: Iain has significant financial experience, gained in a range of sectors and operating in regulated environments globally. He was most recently Chief Financial Officer at GSK plc, where he was responsible for several of its key global functions, including Finance, Investor Relations and Technology. Prior to this, Iain was Group Finance Director at HSBC Holdings plc for eight years, working across Asia, the US and Europe, and previously worked at General Electric, Dowell Schlumberger and Price Waterhouse. Iain’s extensive background knowledge and financial expertise allow him to effectively chair the Audit & Risk Committee. Iain is a member of the Institute of Chartered Accountants of Scotland, holds an MA in Business Studies and Accounting, and received an Honorary Doctorate from Aberdeen University in Scotland.
External appointments: •Chair of S&P Global Inc. •Chair of BGF Group plc •Member of the House of Lords	External appointments: •Senior Independent Director and Remuneration Committee Chair of Croda International plc •Senior Independent Director at Softcat plc	External appointments: •Non-executive Director of Schroders plc •Non-executive Director of UK Government Investments Ltd •Non-executive Director of O-I Glass, Inc.
Committee membership:	Committee membership:	Committee membership:

Committee membership
	Audit & Risk Committee		People & Governance Committee		Safety & Sustainability Committee		Committee Chair
	Finance Committee		Remuneration Committee		Group Executive Committee		Biographies, tenure and age as at 14 May 2025

Strategic Report Corporate Governance Financial Statements Additional Information 101

Anne Robinson Independent Non-executive Director	Earl Shipp Independent Non-executive Director	Jonathan Silver Independent Non-executive Director
Appointed: 19 January 2022 Age: 54 Skills and competencies: Anne has over 20 years’ legal experience in the financial services industry, where she has counselled senior executives on a wide range of legal, regulatory and business issues. She currently serves as Senior Vice President and Chief Legal Officer at IBM. Anne brings to the Board expansive and varied legal experience in the financial services and consulting fields as well as experience of working closely with boards and investors on a broad range of ESG issues. Anne earned a BS from Hampton University and a JD from Columbia University Law School, and is an advocate for sponsorship and mentorship of other women in the legal profession.	Appointed: 1 January 2019 Age: 67 Skills and competencies: Earl has substantial experience in the global industrial and energy sectors as an Executive and Non-executive Director. With a career of over 40 years in the chemical industry, he has a track record of successfully leading transformative growth projects and driving pioneering technology innovation. Earl is a former chair of the US Federal Reserve Bank of New Orleans and was a member of the Federal Reserves Energy Advisory Committee for several years. He has an enhanced knowledge of cyber risk having graduated from the Carnegie Mellon University Cyber-Risk Oversight Program for Corporate Directors.	Appointed: 16 May 2019 Age: 67 Skills and competencies: Jonathan has considerable knowledge of the US-regulated energy environment, and experience and understanding of integrating public policy and technology into a utility. Jonathan’s previous work in the US Department of Energy included leading the Federal Government’s $40 billion clean energy investment fund and a $20 billion fund focused on electric vehicles. Jonathan’s strong background in finance and Government policy, along with his long career at the intersection of policy, technology, finance and energy, brings innovative insight to the Board’s policy discussions and to its interaction with management. Jonathan’s former roles include consultant at McKinsey in the Financial Institutions practice, COO of Tiger Management, Senior Advisor to Guggenheim Securities and Senior Policy Advisor to the US Secretary of Commerce and the US Secretary of the Interior.
External appointments: •Senior Vice President and Chief Legal Officer at IBM	External appointments: •Non-executive Director of Olin Corporation •Non-executive Director of Great Lakes Dredge and Dock Co.	External appointments: •Advisor at Apollo Global Management, Inc. •Chair of Terram Lab
		c
Committee membership:	Committee membership:	Committee membership:

Committee membership
	Audit & Risk Committee		People & Governance Committee		Safety & Sustainability Committee		Committee Chair
	Finance Committee		Remuneration Committee		Group Executive Committee		Biographies, tenure and age as at 14 May 2025

102	National Grid plc  Annual Report and Accounts 2024/25
Our Board continued

Tony Wood Independent Non-executive Director	Martha Wyrsch Independent Non-executive Director	Julian Baddeley Group Company Secretary
Appointed: 1 September 2021 Age: 59 Skills and competencies: Tony has proven business leadership credentials as an experienced Chief Executive and brings to the Board significant engineering experience. Tony is also a Fellow of the Royal Aeronautical Society. He was most recently Chief Executive of Meggitt plc and led the operational and cultural transformation of the company, transitioning from an industrial holding structure to a focused and customer-led business, leveraging technology investment. Tony was formerly President of the Aerospace division of Rolls Royce plc and developed a strong reputation as an operator, turning around and growing several challenging business units and internationalising the company’s footprint.	Appointed: 1 September 2021 Age: 67 Skills and competencies: Martha has held a number of senior positions in the energy industry and has significant experience of the US market. She has served as General Counsel of energy and utility companies and was CEO of the divisions of major energy companies, including a major international gas transmission business, as well as leading the growth and development of the renewables business of Vestas in the US. As an accomplished Director for publicly listed companies in both the UK and the US, Martha brings to the Board relevant experience across the renewable energy sector, as well as a strong understanding of the US regulatory environment, having previously held leadership roles in large US- regulated utility businesses.	Appointed: 1 July 2024 Age: 44 Skills and competencies: Julian is a Chartered Company Secretary and corporate lawyer. Prior to joining National Grid, Julian served as Group Company Secretary of abrdn plc, previously known as Standard Life Aberdeen. He has extensive Board, C-suite, transactional and regulatory experience in, or advising, large FTSE100 organisations from his former roles at Aviva, Clifford Chance, Friends Life and Cadbury plc. Julian is responsible for guiding the Board in governance matters and leading the Company Secretariat function.
External appointments: •Non-executive Director of Airbus SE •Chair of Chemring Group plc	External appointments: •Director of Quanta Services, Inc. •Director of First American Financial Corp  •Advisor to Summit Carbon Solutions	External appointments: •Independent Director/Trustee of ShareGift and Chair of the Audit Committee
Committee membership:	Committee membership:	Committee membership: None

Committee membership
	Audit & Risk Committee		People & Governance Committee		Safety & Sustainability Committee		Committee Chair
	Finance Committee		Remuneration Committee		Group Executive Committee		Biographies, tenure and age as at 14 May 2025

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	103
Group Executive Committee

John Pettigrew Chief Executive	Andy Agg Chief Financial Officer	Justine Campbell Chief Legal Officer
Alice Delahunty President, UK Electricity Transmission	Courtney Geduldig Chief Corporate Affairs Officer	Sally Librera President, National Grid New York
Talvis Love Chief Information and Digital Officer	Cordi O’Hara President, UK Electricity Distribution	Will Serle Chief People Officer
Steve Smith Chief Strategy and Regulation Officer	Carl Trowell President, UK Strategic Infrastructure	Lisa Wieland President, National Grid New England
Ben Wilson President, National Grid Ventures

104	National Grid plc  Annual Report and Accounts 2024/25
Key Board activities

Board meeting agendas are agreed in advance by the Chair, Chief Executive

and Group Company Secretary, and are structured to ensure that key

standing items are considered across the year, while providing time for deep-

dives and flexibility for additional matters to be considered where appropriate.

The Board considers a number of standing items at each meeting, including: •Chief Executive’s report •Chief Financial Officer’s report •Reports from the Board Committees •Company Secretary’s report, including updates on governance matters and legal updates The key matters considered by the Board during the year are set out below.	Link to strategy		Our stakeholders considered in Board discussions •Customers •Investors •Colleagues •Supply chain and delivery partners •Communities •Political and regulatory The Board considers our key stakeholders in its decision making and, in doing so, ensures that the Directors comply with their duty under section 172 of the Companies Act 2006. Our section 172 statement and further information on our key stakeholders can be found on pages 22 to 24.
		Enable the energy transition for all
		Build the networks of the future now
		Deliver for customers
		Operate safely and efficiently
		Build tomorrow’s workforce today

	The Board sets our strategy and spent significant time in the year considering the Company’s strategic execution. During the year, the Board: •approved the Strategic Business Plan 2024; •considered regulatory filings, including the filing for a multi-year rate agreement with the New York Public Service Commission (NYPSC); •considered the potential impact to regulation and energy policy brought by changes in the political landscape in the US and the UK; •considered the RIIO-T3 business plan submission for Electricity Transmission; •oversaw the progress of transactions, including the sale of Grain LNG and National Grid Renewables; •discussed capital allocation and financing strategy following the completion of the 2024 Rights Issue; and •oversaw strategic infrastructure major project delivery, including those within the ASTI framework.
Strategy, purpose and regulatory
	Through the Safety & Sustainability Committee, the Board is responsible for considering the following throughout the year: •the Responsible Business review contained within the Annual Report; •progress against the Group’s key Responsible Business goals; •progress against the Group’s sustainability strategy and emissions targets; and •the setting and progress of business targets for the LTPP in relation to non financial metrics, specifically net zero transition measures.
Responsible Business
Strategy offsite	The Board’s annual strategy meeting was held in February 2025 at an offsite location in Menlo Park, California where our National Grid Partners business is based. We reviewed the Company’s progress against its strategy, taking into consideration the considerable changes to the environment we’re operating in. It was also an opportunity to outline forward-looking priorities. Focus was given to AI and potential developments in this area and we met external influencers in this market, including Google and Nvidia, to hear about new developments and the impact on the energy market. We also met the following National Grid Partners portfolio companies around how our investments in these different companies and technologies are being utilised: •LineVision; •TS Conductor; and •Veir. This was followed by a number of deep dives into areas of the business, including our customer strategy, US businesses and potential opportunities for growth in our non-regulated businesses.

Strategic Report Corporate Governance Financial Statements Additional Information 105

	The Board receives updates on the Company’s financial performance at each meeting and oversees the financial strategy across the Group. During the year, the Board:  •approved the 2024/25 budget; •reviewed and approved the Strategic Business Plan, the five-year framework and the comprehensive financing plan aligned with the five-year framework, including the £7 billion Rights Issue announced in May 2024; •recommended the 2023/24 final dividend to shareholders and approved the 2024/25 interim dividend; •discussed and approved the Viability and Going Concern statements; •considered and approved the Annual Report and Accounts, including Form 20-F; •reviewed the bid defence and shareholder activism process; •considered our Investor Relations strategy, including stock performance and engagement with investors and analysts, in particular in light of the completion of the £7 billion Rights Issue in May 2024; and •reviewed the tax and insurance strategy and the performance of the Group sponsored defined benefit pension plans.
Financial

	Through the People & Governance Committee and the Remuneration Committee, the Board is responsible for monitoring and assessing the culture of the Group, as well as reviewing succession and executive remuneration in the context of the wider workforce. During the year, the Board: •considered and approved an updated Workforce Engagement Plan and Non-executive Directors undertook workforce engagement activities; •received updates on culture, including the results of Grid:Voice, our annual review of employee engagement and an overview of the Company’s culture diagnostic; •considered succession planning for senior management including the CEO, and the programmes that support the future talent pipeline; •approved for publication the Gender and Ethnicity Pay Gap Report; •approved the Remuneration Policy which is recommended for shareholder approval at the 2025 AGM; •approved the grant of the 2025 Sharesave Plan; and •reviewed the progress of the Company’s Ethics Campaign roll-out.
People, culture and values
	Through the Safety & Sustainability Committee, the Board is responsible for the oversight of safety and wellbeing strategies and their implementation across the Group. During the year, the Board: •conducted a review of our Safety, Health and Environment performance across the Group; •conducted a review of Group Engineering performance; •reviewed the results of the Group’s 2024 Safety Culture Survey; •received an update on climate adaptation and asset resilience strengthening efforts; and •considered the initial reflections from the newly appointed Chief Health, Safety and Wellbeing Officer.
Safety

	The Board sets the approach to risk management and oversees the effectiveness of our internal controls, including our governance framework. During the year, the Board with the support of the Audit & Risk Committee: •considered and approved the Annual Report and Accounts, including Form 20-F, as well as our Notice of AGM; •approved the 2024 Rights Issue prospectus and related documentation; •considered the Group’s internal control and risk management processes; •approved the GPRs, emerging risks and our risk appetite; •considered compliance with the 2024 UK Corporate Governance Code; •approved the Group’s Modern Slavery Statement; •undertook an annual refresh of the Group’s Statement of Delegations of Authority; •carried out an annual review of the Board Governance documents which included our Committees’ Terms of Reference and Matters Reserved for the Board; and •undertook an internal Board evaluation to review the effectiveness of the Chair, the Board and its Committees.
Risk, controls and governance

106	National Grid plc  Annual Report and Accounts 2024/25
Culture and workforce engagement

The Board’s role in establishing

and promoting the Group’s culture

The Board is responsible for ensuring that the Group’s culture is

aligned with its purpose, values and strategy and for assessing and

monitoring how the desired culture has been embedded across the

Group. The Board is committed to embedding the culture needed to

support the delivery of our five-year plan.

The Board is supported in this by the People & Governance Committee

which monitors the effectiveness of workforce engagement and reports

to the Board on alignment with the Company’s strategy, purpose,

values and culture.

The Board assesses and monitors how the Company’s desired culture

has been embedded by:

•considering feedback from the People & Governance Committee on

its review of the annual culture diagnostic;

•discussing and reviewing reports at Board meetings related to

culture, engagement and employee conduct;

•considering the results of the twice-yearly engagement surveys and

onboarding and exit surveys, which drive further insight and

understanding of culture and colleague sentiment;

•overseeing management’s delivery of a wide range of culture

engagement and conduct programmes, including our ‘Living our

Values’ recognition programme, and monitoring the impact of these

programmes via management’s regular reports to the Board; and

•considering feedback from the Remuneration Committee on its

approach to investing in and rewarding the workforce.

The Chief People Officer attended the Board meeting in March 2025 to

present the results of the annual culture diagnostic which showed a

continued shift towards a more results and purpose-led culture. This

followed a similar presentation in November on the half-year employee

survey. Clarity, pride and motivation were identified as clear strengths

for the organisation, pointing to the unique role that National Grid plays

in the communities it serves.

The Chief People Officer also provided an update on progress made

against the Group’s People Strategy, including the Group’s ambition to

‘Build Tomorrow’s Workforce Today’. Based on previous feedback

received, management has continued to evolve the Group’s

communication channels to ensure that all colleagues are provided with

useful, relevant and targeted information, and has strengthened focus

on seeking feedback from town halls, site visits and engagement

surveys.

Senior management supports the Board in embedding and reinforcing

the Group’s culture across various forums, including:

•regular CEO webcasts to provide feedback on performance at an

organisational level while reinforcing performance expectations;

and

•regular meetings of the Senior Leadership Group (SLG) focusing on

performance, aligning and engaging senior leaders on the challenges

ahead.

Several campaigns support the Board in embedding the Company’s

culture; ‘BIG Work’ which targeted all colleagues to help them to

understand the impact of their role and contribution on the overall

performance on the organisation, and the ‘Living our Values’

recognition campaign, which surfaces and celebrates Company values

in action. Our established ‘Appreciate’ recognition scheme allows

colleagues to recognise peers who have demonstrated our values in

their work all year round.

Further information on culture can be found on page 110.

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	107
Board and workforce engagement

During the year, the Board took the opportunity to review and refresh its workforce engagement programme while continuing with the ‘Full Board

Employee Voice’ approach. Four key pillars of engagement were created to support this: talent, site visits, wider workforce (including Employee

Resource Groups) and Board and Committee reporting. The Board agreed that our four pillar structure provided a variety of engagement

opportunities, reaching a breadth of colleagues while maintaining a focus on distilling colleague sentiment to the Board. Examples of the Board’s

engagement during the year are set out below.

Engagement activity	Engagement in action
Talent Provides engagement opportunities with various talent cohorts across the Company and increases familiarity between the Board and succession candidates.	•In July 2024, the Board held an informal dinner with the UK SLG, providing an opportunity for engagement with UK senior leaders. A similar event was then held with the US SLG in March 2025. •Two Non-executive Directors and the Chief Executive attended the Company’s engineering dinners and met with our engineering talent in the UK in July 2024 and the US in March 2025. •In November 2024, the Board attended an informal lunch with individuals from the Next Generation Development Programme, a programme aimed at strengthening senior management succession planning. •High-potential individuals also accompany the Board on certain site visits as well as taking part in wider workforce engagement events.
Site visits Provides the Board exposure to the workforce based at key sites across the organisation and the opportunity to hear from the workforce on the ground and ‘in real time’.	Our Our Non-executive Directors visited a number of operational sites during the year, including: •the Hinkley Connection Project, in April 2024; •the Bramley to Melksham Overhead Line Upgrade Project across the East Coast of England, in July 2024; •the Electricity Distribution Customer Contact Centre in Leicestershire, in August 2024; •the Northport Power Station in Long Island, in November 2024; and •the Floyd Bennett Field Hanger in New York, in March 2025.
Wider workforce Ensures that the Board has the opportunity to hear from a wide cross section of the workforce, including those colleagues who may not be captured through the other pillars of the Board’s engagement programme.	•In June 2024, one of our Non-executive Directors attended our annual ERG summit held in Warwick, which included discussions on executive sponsorship and leadership development. •For Black History Month, senior leaders across the Group were joined by two of our Non-executive Directors in a roundtable discussion webcast, hosted by the Alliance of Black Professionals ERG. •The Chief Executive hosted Grid:live all employee webcasts through the year. In July 2024, a webcast focused on opening up a ‘Big Conversation’ based around the ‘Big Work’ ongoing across the organisation. In December 2024, our Chief Executive and other senior leaders hosted a webcast to introduce our ‘Living our Values’ campaign. Both webcasts provided colleagues from across the organisation with an opportunity to ask questions in an informal forum. •In February 2025, the Board met with our National Grid Partners leadership team, as part of the strategy offsite, to hear about the work ongoing to find and develop innovative technology that will  aid the Company in achieving its deliverables and play its part in the energy transition. •In February 2025, the Chair of the Remuneration Committee met with employees, to hear their views on workforce remuneration and to discuss how executive remuneration aligned with wider Company pay policy. Employees shared their thoughts on the Company’s remuneration policies and the meeting discussions included the alignment of remuneration with the Company’s desired culture and strategy.
Board and Committee reporting Provides the Board and its Committees with the relevant data to support the other engagement pillars.	The Board and Committees received various updates as part of their usual cadence of reporting which provided data to support the previous three pillars of engagement. This reporting is used to tailor engagement across specific areas. Three areas of focus during the year have been: •Grid:Voice - this outlined results from the employee survey, held annually as well as a snapshot at the mid-year point; •Culture diagnostic analysis – this provided an overview of the perceived and actual culture within the organisation and actions to aid with achieving desired cultural behaviours; and •Succession planning - updates were received outlining the Company’s succession framework as well as including progress of individuals within different talent cohorts.

Feedback and engagement insight

Following engagement activities, the Directors provide feedback in subsequent Board meetings. The Board takes the time to discuss the views of

the workforce and takes these views into consideration in wider Board and Committee discussions.

Further details on Grid:Voice can be found on page 20.

108	National Grid plc  Annual Report and Accounts 2024/25
Board evaluation

Our annual evaluation process provides the Board and its Committees with

an opportunity to consider and reflect on the quality and effectiveness of

decision making and the contribution and performance of individual members.

Approach, methodology and outcomes

For 2024/25, the Board undertook an internal evaluation in the form of a confidential and anonymised questionnaire, considering the effectiveness of the

Chair, the Board and its Committees. The format of the evaluation was agreed by the Chair with the support of the Group Company Secretary. The

Board agreed that the internal evaluation should be focused on building on the views and feedback received from the previous year’s evaluation.

The evaluation concluded that the Chair, the Board and its Committees had performed well and had continued to be effective over the past year. As

2024/25 is the last year of the three-year cycle, the 2025/26 evaluation will be an externally led evaluation, in line with the Code requirements.

2023/24		Current: 2024/25		2025/26
Internally led evaluation supported by Independent Board Evaluation (IBE)		Internally led evaluation		Externally led evaluation

Progress against our 2023/24 evaluation actions
Recommendations	Actions	Progress
Succession planning	Focus on engagement and succession planning for executive talent.	•Revised forward planners for the People & Governance Committee to appropriately spread succession and executive talent updates. •Implemented an enhanced Board engagement plan for executive talent. •Developed a succession framework for senior management roles.
Committee structure	Ensure Committee structure is appropriate for increasing focus on sustainability and the energy transition.	•Undertook benchmarking to consider the Committee structure and responsibilities. This was considered and determined as fit for purpose for the 2024/25 year but with a commitment to ongoing review.
Risk reporting	Review risk reporting to the Board.	•New Chief Risk Officer appointed. •Review of GPR allocation to Board and Committees. •Updated risk reporting framework implementation to better demonstrate risk assessments at Group and Business Unit level.
Board support	Continue to focus on Board material  improvements to ensure clarity, conciseness and efficient use of Board time.	•A new paper writing portal with additional AI features implemented to assist paper authors. •Board paper writing training made available to paper authors.

Outcomes from our 2024/25 evaluation
Recommendations	Actions
Succession Continue to give focus to senior leadership succession and the Board’s exposure to senior management.	•In 2024/25 dedicated deep-dives were introduced for the following areas i) CEO succession ii) senior management  iii) wider workforce development programmes. Providing these focused opportunities will continue to form part of 2025/26 planning. •Continue the frequency and variety of engagement, both formal and informal, between the Board and senior management and the wider talent pipeline.
Governance framework Following the completion of the 2024 Rights Issue and the commencement of the Company’s capital delivery programme, assess the Board Committee structure to ensure its scope evolves in line with the Company’s operations and external environment.	•Review the Committee structure particularly in respect of risk, sustainability, reputation, operational and financing matters. •Assess if the continued ownership of all the Company's GPRs by the Audit & Risk Committee remains the most optimal and time efficient oversight model.

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	109
Directors’ induction, development and training

The Group Company Secretary supports the Chair of the Board in

ensuring that each Non-executive Director receives a comprehensive

induction programme on appointment. The induction programme is

designed to align with each Non-executive Director’s role on the Board,

their background and existing experience. The programme includes

introductory meetings with the other Board Directors, overviews of

each business unit led by the relevant President, site visits, and

roundtable discussions with key teams around the business, tailored to

the Director’s Committee memberships.

In order to support ongoing training and development and to ensure the

Board has the depth of knowledge required across different areas of

the business, a number of enrichment sessions were offered

throughout the year covering different matters. These are used to

complement areas of focus on the Board agenda or to provide an

opportunity for further detailed discussion from a previous report to the

Board.

•July 2024 – Connections

•August 2024 – Environmental provisions

•September 2024 – US Transmission networks

•January 2025 – Generative AI

•January 2025 – Remuneration Policy review, including financial

performance measures and the Company’s Annual Performance

Plan (APP) and Long-Term Performance Plan (LTPP)

The Board is also regularly briefed on corporate governance and

regulatory matters by the Group Company Secretary.

Time commitment

The Board monitors external appointments and considers any potential

conflicts of interest prior to approving the appointment of a Director. On

accepting their appointment with the Company, Directors must confirm

they are able to allocate sufficient time to discharge their

responsibilities effectively. Directors are expected to attend meetings of

the Board and any Committees of which they are members and devote

sufficient time to prepare for this in advance. Directors are also

encouraged to undertake site and office visits.

Before accepting any new external appointments, Directors are

required to obtain the prior approval of the Board. The Board considers

new external appointments in light of each Director’s other

appointments and roles on the Board. For each new external

appointment approved by the Board during the year, the Board

concluded that it would not impact each Director’s ability to perform

their duties and, accordingly, the Board gave its prior approval in each

instance.

Re-election of Directors

The People & Governance Committee considers, in respect of each

Director, their skills and experience, time commitment and tenure as

part of the Board’s recommendation to shareholders for their election

or re-election of Directors. The Board believes that each Director who is

being put forward for re-election at the 2025 AGM brings considerable

knowledge, wide-ranging skills and experience to the Board, makes an

effective and valuable contribution, and continues to demonstrate

commitment to their role. The Board also considered the continued

independence of all Non-executive Directors and considers them all to

be independent in line with the Code.

110	National Grid plc  Annual Report and Accounts 2024/25
People & Governance Committee report

	Key activities during the year	Composition
	•Monitored the Company’s culture and reviewed the culture diagnostic •Approved the appointment of Group Executive Committee members •Reviewed the outcome of the Company’s Grid:Voice survey •Focused on talent and succession, including executive development planning •Reviewed the Company’s talent programmes and the development of the talent pipeline	The Committee comprises three independent Non-executive Directors and the Chair of the Board. The Committee held three scheduled meetings and two ad hoc meetings during the year.
		Committee members
		Paula Rosput Reynolds (Chair)
		Jonathan Silver
		Earl Shipp
		Tony Wood
Paula Rosput Reynolds Chair of the People & Governance Committee

Board and Committee structure and composition

As discussed in the Chair’s statement on page 96, during the year the

Board decided to maintain its current size. With effect from 5 July 2024,

we made two committee changes: Jonathan Silver stepped down from

the Audit & Risk Committee, succeeded by Jacqui Ferguson; Jonathan

was appointed to the Finance Committee. We have announced that on

1 September 2025 we will welcome Zoë Yujnovich to the Board as an

Executive Director, prior to her assuming the Chief Executive role in

mid-November.

Being responsive to the environment in which the company operates,

we have been reviewing our Committee structure. While there are legal

and regulatory requirements that define stewardship, we are taking ‘a

clean sheet of paper’ and answering the question of what is fit for

purpose given the complexity of the business environment in which the

Company operates and how it is changing. Working with our Company

Secretary, Chief Risk Officer and others, we are looking at how a

decade of rapid change relates to how the Board should spend its time

and evaluate risks. In the year ahead, we intend to conclude on

changes in the Committee remits and composition of the Committees.

Succession planning

At each of our meetings we considered talent and succession planning,

reflecting the importance placed on ensuring that there is a clear

pipeline of talent to support the Company over the coming years. The

Committee approved the creation of a standalone Group Company

Secretary role, reflecting the broader responsibilities of the Chief Legal

Officer role and appointed Julian Baddeley as Group Company

Secretary with effect from 1 July 2024. Several further changes to the

Group Executive Committee were approved with the appointment of

Ben Wilson as President, National Grid Ventures following the

departure of Katie Jackson earlier in the year, Steve Smith as Chief

Strategy & Regulation Officer, Talvis Love as Chief Information and

Digital Officer and Sally Librera as President, New York following the

retirement of Rudy Wynter.

As noted above and elsewhere in this report, Zoë Yujnovich will join

National Grid on 1 September 2025 initially as CEO-Designate where

there will be a two month transition period until she assumes the role of

CEO in mid-November when John Pettigrew retires from the Board.

Succession is something that should always be on the mind of any

well-functioning board and as such, and given John’s long and

successful leadership of the Group, the Board had been in discussion

with John about this for some time. In order to support the CEO

succession process we appointed Egon Zehnder, who have no other

link to the Company.

The process undertaken was robust, based on the operational, financial

and international stakeholder management aspects of the role, with a

range of candidates considered. Zoë Yujnovich was the standout

candidate, and the Board unanimously approved her appointment.

While significant time was spent considering Chief Executive

succession, the Committee also devoted time to the talent pipeline

below the Executive Directors and their reports. We were briefed on the

composition of the Senior Leadership Group and one level further

below, to understand the identification process and talent development

plans for high potential future leaders. We are pleased to report that

we’ve seen maturation in our training and development programmes,

reflecting meaningful investments in our people. The Board and the

Committee have received presentations regarding plans for the

workforce of the future. Given the scope and scale of our investments

in modernisation and upgrades of our facilities across the Group,

we are aware of the efforts underway to ensure that we have the

appropriate skills and experience needed to maintain our systems

and infrastructure.

To reflect feedback from the Board evaluation requesting further

engagement for the whole Board around talent and succession, all

Non-executive Directors continue to be invited to join the Committee

for discussions related to talent and succession, in particular

executive succession.

Culture

Time and focus continued to be given to the culture of the Company,

looking at the results of our Grid:Voice survey as well as reviewing the

findings of our culture diagnostic. See page 106 for further detail on

how the Board monitors culture.

As an organisation, we continue to strive to be an inclusive place to

work. Through the year we received our usual updates on the

Company’s progress in this area, including hearing how our Global

Inclusion Week had impact across the organisation with significant

engagement from employees and feedback for the third annual ERG

(Employee Resource Group) summit which Tony Wood was able to

attend in part.

Strategic Report Corporate Governance Financial Statements Additional Information 111

Board skills and experience

We find ourselves quite fortunate in the diverse skills and perspectives of

our Board members. They are all either active senior executives and/or

active board members with prior senior executive leadership experience.

Importantly, they devote the necessary time to our business. In the past

year, there have been major undertakings that have involved the Board:

the rights offering, significant regulatory proceedings and consultations,

and succession planning, among others. The Board has been available on

short notice when we have had significant events, such as the transformer

fire at North Hyde substation. In every instance, the Directors gave the

time and attention the respective issues merited.

We have a broad skills list which we categorise into two areas: i) Critical

skills which are crucial to support the strategic direction and oversight of

the Group, as reflected in the below table; and ii) General skills, a further

suite of operational skills which include sustainability and climate change,

major projects oversight, safety and risk management, among others. We

benchmark our Directors against these skills on a regular basis and they

are considered as part of succession planning. Naturally, the needs of the

Board will continue to evolve as the Group’s business evolves.

Strategic oversight	10
Mergers, acquisitions, financing and divestments oversight	10
Regulatory engagement oversight	9
Government and political engagement oversight	8
Accounting and financial reporting oversight	5

Composition, time commitment and independence

Approach to collating diversity data

As required by UK regulation, we report on diversity data to the extent

that respondents voluntarily self-declare. For Non-executive Directors, we

ask that they submit relevant information at year end as part of the

declaration process.

Board appointments are based on merit and objective criteria, including

an analysis of the match of a candidate to skills areas where the Board

determines particular expertise or depth is needed. In accordance with

the UK Governance Code, we have a Board diversity policy. But

aspiration is balanced with needs and circumstances.

Board diversity as at 31 March 2025
Chair and Non-executive Directors’ tenure			Board nationality
	n	0-3 years 2 (22%)		n	UK 6 (54.5%)
	n	3-6 years 5 (56%)		n	US 5 (45.5%)
	n	6-9 years 2 (22%)

In 2024/25 it included aspirations on ethnicity and gender representation

which align with the targets set by the FCA, and an additional aspiration of

50% gender and ethnic diversity on our Board, which was not met in

2024/25 as we had 45.5% gender and ethnic diversity on the Board. As of

1 September 2025, our gender, nationality, ethnicity and tenure of service

percentages will change with the addition of Zoë Yujnovich to the Board.

The percentages will change again in mid-November when John

Pettigrew retires from the Board. Thus, we believe that point in time

reporting is not particularly meaningful. Rather, it is the trends in these

factors – and close examination of the business qualifications of our

Directors – that are the meaningful way to determine how well the Board

is undertaking renewal.

In accordance with Listing Rule 6.6.6R(10), as at 31 March 2025, the

numerical data on the gender identity and ethnic background of our

Board and Group Executive Committee is set out in the tables below.

Gender	Number of Board members	Percentage of the Board	Number of senior positions on the Board1	Number in executive management2	Percentage of executive management2
Men	7	63.6	3	8	53.8
Women	4	36.4	1	6	46.2
Not specified/ prefer not to say	–	–	–	–	–

Ethnicity	Number of Board members	Percentage of the Board	Number of senior positions on the Board1	Number in executive management2	Percentage of executive management2
White British or other White (including minority-white groups)	9	81.8	4	13	92.3
Mixed/ Multiple Ethnic group	–	–	–	–	–
Asian/Asian British	–	–	–	–	–
Black/African/ Caribbean/ Black British	2	18.2	–	1	7.7
Other ethnic group	–	–	–	–	–
Not specified/ prefer not to say	–	–	–	–	–

1Senior positions on the Board refer to the Chair, Chief Executive, Chief Financial Officer

and Senior Independent Director.

2Executive management comprises the Group Executive Committee, including the Group

Company Secretary. The gender balance of senior management and their direct reports

can be found in the Our people section on page 53.

Paula Rosput Reynolds

Chair of the People & Governance Committee

14 May 2025

112	National Grid plc  Annual Report and Accounts 2024/25
Audit & Risk Committee report

	Key activities during the year	Composition
	•Monitored the adequacy and effectiveness of the internal control environment •Reviewed and challenged key accounting judgements •Provided oversight over risk management activities, including conducting Group Principal Risk (GPR) deep dives •Considered audit and corporate governance reforms, including the FRC’s Audit Committee and External Audit: Minimum Standard (the ‘Minimum Standard’) and the revised 2024 Code •Reviewed our planned approach towards compliance with the Global Internal Audit Standards and Provision 29 of the revised 2024 Code	The Committee comprises three independent Non-executive Directors. The Committee held five scheduled meetings and two ad hoc meetings during the year to discuss the 2024 Rights Issue and our Finance Transformation Programme.
		Committee members
		Iain Mackay (Chair)
		Jacqui Ferguson
		Ian Livingston
		Former Committee members
Iain Mackay Chair of the Audit & Risk Committee		Jonathan Silver1
		1.Jonathan Silver stepped down from the Committee effective 5 July 2024.

I am pleased to present the Committee’s report for the year ended

31 March 2025. During the year, the Committee has continued to assist

the Board by assessing the integrity of financial, non-financial and

climate-related reporting, and in monitoring the adequacy of the Group’s

systems of risk management and internal control, and the effectiveness

of the external and corporate auditors.

The Committee has continued to maintain an extensive agenda, focused

on the Company’s audit, compliance and risk management processes.

Key matters considered by the Committee across the year are set out on

page 115. Members of senior management have attended the

Committee’s meetings across the year to present on key matters to

ensure that the Committee is updated on the evolving landscape in

which the Group operates. As Committee Chair, I have held meetings

throughout the year with the external Lead Audit Partner, the CFO, the

Group Head of Audit, the Chief Risk Officer and other senior

management. The Committee reports to the Board on its activities at

Board meetings, and Board members have access to the Committee’s

meeting papers and minutes. A joint meeting was held with the Safety &

Sustainability Committee in September 2024 to discuss the Group’s

sustainability reporting and disclosure strategy.

Financial reporting and accounting judgements

The Committee has overseen progress made by management in the

successful delivery of the Finance Transformation Programme and the

embedding of new processes, technology and ways of working which

continue to drive efficiencies and support the wider business.

The Committee has considered key accounting judgements made by

management across the year. This has included accounting in relation to

US environmental provisions, the disposals of both ESO and the

remaining interest in National Gas, the classification of National Grid

Renewables and Grain LNG as held for sale, and Community Offshore

Wind on which a full impairment has been recognised.

External audit tender

We have spent time supporting management in its planning for an

external audit tender. Our external auditor, Deloitte, was appointed in

2017 and we are required to undertake a tender during 2025 in order for

any appointment to be put to shareholders at our 2026 AGM. The

Committee provided input on management’s plans and ensured the

guidance in the FRC’s Minimum Standard has been considered.

External Quality Assessment (EQA)

We were pleased that our Corporate Audit function received the highest

rating from our EQA by the Chartered Institute of Internal Auditors (IIA) for

its internal audit activity. We will continue to monitor management’s

progress on an ongoing basis and address further improvements.

Risk management and internal controls

The Committee undertakes a bi-annual review of our risk management

processes, including the assessment of the effectiveness of our systems

of risk management and internal controls. The Committee also provides

oversight of the assessment of our GPRs and the mitigations and

controls in place to ensure that they are managed within the risk appetite

agreed by the Board (as detailed on pages 36 - 41). Members of senior

management have attended Committee meetings to present ‘deep-

dives’ on the GPRs within their business area across the year.

The Ethics, Risk & Compliance Committee (ERCC) supports the

Committee in overseeing the implementation of the Group’s risk

management framework and assesses the Group’s Principal Risks. The

ERCC regularly reviews and assesses all risks, including cyber security,

prior to updating the Committee. The Committee has considered cyber

security risks twice during the year with no significant incidents causing

business impact reported. National Grid remains vigilant towards all

cyber security risks, including those arising from third parties. These risks

are partly mitigated by email Data Loss Prevention (DLP) tools and

governance controls related to what data is shared with third-parties.

National Grid’s Chief Information and Digital Officer (CIDO) and Chief

Information Security Officer (CISO) regularly provide reports to the

Committee and brief the full Board at least once per year on cyber

security matters.

The Committee is responsible for reviewing the robustness of our internal

control environment and reviews reporting on controls testing and

assurance work over the Group’s internal controls to provide

comprehensive assessments of the internal control framework. These

assessments are also reviewed as part of external audit. The Committee

remains confident that review processes for the Group’s internal controls

provide reasonable assurance and that the sources of assurance have

sufficient authority, independence and expertise. As Committee Chair, I

reported to the Board in May 2025 on management’s processes for

monitoring and reviewing internal control and risk management and

confirmed that no material weaknesses had been identified by the review

and that systems and processes were functioning effectively.

The Committee has supported management in its planning for the

implementation of Provision 29 of the revised 2024 Code which will

require the Board to make a disclosure in our 2026/27 Annual Report and

Accounts outlining the effectiveness of internal controls, including a

declaration in relation to material internal controls. During the year, the

Committee reviewed management’s planned approach towards

compliance, which is on track.

Iain Mackay

Chair of the Audit & Risk Committee

14 May 2025

Strategic Report Corporate Governance Financial Statements Additional Information 113

Committee financial experience

The Board is satisfied that all Committee members are suitably qualified with recent and relevant financial experience and competence in

accounting, auditing or both. Iain Mackay and Ian Livingston are qualified chartered accountants who are competent in accounting and auditing in

accordance with the Code and the FCA’s Disclosure Guidance and Transparency Rules. The Committee members collectively possess an

appropriate and varied blend of commercial and financial expertise to assess the issues they are required to address. Further information on

Committee members can be found in their biographies on pages 99 to 102. The Committee as a whole is deemed to have competence relevant to

the sector in which the Company operates. For the purposes of the US Sarbanes-Oxley Act of 2002 (SOx), Iain Mackay is the Committee’s

financial expert.

Fair, balanced and understandable

In May 2025, the Committee reviewed this Annual Report and Accounts, having previously provided feedback on earlier drafts. The Committee

concluded that the Annual Report and Accounts, taken as a whole, was fair, balanced and understandable, and provided the information

necessary for shareholders and other stakeholders to assess the Group’s position, performance, business model and strategy.

In its review, the Committee considered the financial and non-financial disclosures contained within the Report, including the TCFD (see pages 59

– 78). The Committee also considered the potential impact on forward-looking assumptions supporting going concern and viability assessments.

In reaching its conclusion, the Committee considered that the following had been carried out which formed the basis of its recommendation to

the Board:

•a full verification exercise to review the financial and non-financial content of statements made with supporting evidence;

•a comprehensive review by management, including Group Executive Committee members, to consider the accuracy and consistency of

messaging and overall balance; and

•feedback from the Company’s advisors, including the external auditor and remuneration advisor.

Significant issues and judgements relating to the financial statements

The significant issues and judgements considered for the year ended 31 March 2025 are set out in the following table. In addition, the Committee

and the external auditor discussed the significant issues addressed by the Committee during the year. Further information can be found in the

Independent Auditors’ Report on pages 153 – 161.

Matters considered	Factors and reasons considered, including financial outcomes
US environmental remediation provisions	•In September 2024, November 2024 and May 2025, the Committee reviewed the accounting for the £2.065 billion of environmental remediation provisions, including the judgements and estimates relating to the net £146 million of exceptional provision decreases relating to legacy New York manufactured gas plant sites and a discount rate change. The Committee discussed the Group's engagement with the Environmental Protection Agency, the New York State Department of Environmental Conservation, developers, community and other stakeholders in determining future remediation approaches. The Committee reviewed and approved the classification of the cost decreases related to these sites as exceptional in accordance with the Group’s exceptional items framework and noted the environmental provision disclosures contained within notes 5, 26 and 35 to the financial statements.
ESO sale to the UK Government	•In October 2024, ESO was transferred into public ownership and began to operate under the National Energy System Operator’s (NESO’s) licence. The assets and liabilities of ESO were presented as held for sale in the half-year financial statements prior to completion of the sale. The disposal realised total consideration of £673 million that resulted in a £187 million gain on disposal classified as exceptional.  The Committee reviewed the gain on disposal calculation and related disclosures in note 10 to the financial statements. The Committee approved the classification of the gain as exceptional in accordance with the Group's exceptional items framework.
National Grid Renewables and Grain LNG: held for sale assessments	•In September 2024, the Committee reviewed and agreed with management’s evaluation that National Grid Renewables and Grain LNG had met the criteria to be classified as held for sale under IFRS 5 and that neither company should be treated as a discontinued operation, given they are not considered to be separate major lines of business or geographical areas of operation. The Committee further agreed with management that no impairment losses should initially be recognised on classification of National Grid Renewables and Grain LNG as held for sale in the half-year financial statements. •On 24 February 2025, we announced that we had agreed to sell National Grid Renewables US onshore renewables business for proceeds of approximately $1.74 billion to Brookfield Asset Management and its institutional partners, including Brookfield Renewable Partners. The transaction is subject to customary consents and regulatory approvals and is expected to close in the first half of the financial year ending 31 March 2026. At the year-end, management assessed that a £31 million impairment loss should be recognised on remeasuring the NG Renewables disposal group to fair value less costs to sell and that it was appropriate to classify this loss as exceptional. No impairment losses were recognised in respect of Grain LNG. The Committee reviewed the results of management’s impairment assessment of the National Grid Renewables disposal group and agreed with management’s conclusions and the disclosures, within notes 5 and 10 of the financial statements.

114	National Grid plc  Annual Report and Accounts 2024/25
Audit & Risk Committee report continued

Matters considered	Factors and reasons considered, including financial outcomes
Impairment of Community Offshore Wind (COSW)	•In March 2025, April 2025 and May 2025, the Committee considered the Group's investment in Community Offshore Wind (COSW) following the issuance of an Executive Memorandum by the US Federal Government in January 2025. The Executive Memorandum temporarily suspends offshore wind leasing and implements a review and pause of permitting. In light of these developments and further developments after the year-end which reaffirmed the view that offshore wind development is likely to be suspended for the foreseeable future, Management assessed that the Group's investment in COSW currently has negligible value and hence, a £303 million impairment should be recognised and classified as exceptional in line with the Group's exceptional items framework. The Committee carefully considered and agreed with Management's assessment and reviewed and approved the disclosures within notes 5 and 16 of the financial statements.
Disposal of remaining interest in National Gas (held through GasT TopCo Limited)	•In July 2024, agreement was reached to sell the 20% retained associate investment in GasT TopCo (the holder of the interest in National Gas) to the existing majority owners, a consortium of infrastructure investors led by Macquarie Asset Management following their exercise of the remaining option. The Committee reviewed the completion of the sale which took place on 26 September 2024. Based on the total sale proceeds of £686 million, the total gain on disposal after transaction costs was £25 million. The gain on disposal has been classified as exceptional within discontinued operations as disclosed within note 10 of the financial statements.
Application of the Group’s exceptional items framework	•During the year, the Committee considered updates from management on the application of the Group’s exceptional items framework which had been applied to certain events and transactions over the period, as set out in note 5 of the financial statements. •For each item, the Committee considered the judgements made by management, including challenging when transactions were concluded as not qualifying for exceptional treatment. •The Committee reviewed the disclosures relating to certain exceptional items, including the transaction and separation costs for the sale of National Grid Renewables and Grain LNG, the impairment of COSW, provisions for UK electricity balancing costs in relation to the ESO sale, and costs incurred relating to the Major Transformation Programme. •Based on the reviews performed, the Committee was satisfied the framework had been correctly applied throughout the year.

Financial reporting

Financial reporting and audit cycle

Going concern and viability

The Committee has continued to review the Group’s viability and status

as a going concern. This included reviewing the Group’s Going concern

statement and Viability statement (as set out on page 168 and page 93

respectively) and the supporting assessment reports prepared by

management. The financial statements are prepared on a going

concern basis such that the Company and the Group have adequate

resources to continue in operation for at least 12 months from the date

of signing the consolidated financial statements for the year ended

31 March 2025.

Statutory reporting framework policy

The Board has responsibility for the effective management of risk for

the Group, including determining its risk appetite, identifying key

strategic and emerging risks and reviewing the risk management and

internal control framework.

The Committee, in supporting the Board to assess the effectiveness of

risk management and internal control processes, relies on a number of

Company-specific internal control mechanisms to support the

preparation of the Annual Report and Accounts and the financial

reporting process. This includes both the Board and the Committee

receiving regular management reports, including analysis of financial

results, forecasts and comparisons with the prior year, and assurance

from both Corporate Audit and the external auditor, Deloitte.

During 2024/25, the Committee has been kept up to date with changes

to legislation, guidance and best practice. In November 2024, the

Committee received an update on current litigation matters as well as

emerging risks to prepare for potential challenges.

In advance of its consideration of the full-year results, the Committee

and Board received a periodic SOx report on management’s opinion on

the effectiveness of internal controls over financial reporting. This report

detailed the Group-wide programme to comply with the requirements

of SOx and was received directly from the Group Financial Controller.

In relation to the financial statements, the Company has specific

internal control mechanisms that govern the financial and non-financial

reporting process and the preparation of the Annual Report and

Accounts. The Committee oversees that the Company provides

accurate, timely reports of financial results and implements accounting

standards and judgements effectively, including in relation to going

concern and viability. Our financial processes include a range of

systems, transactional and management oversight controls. Our

businesses prepare detailed monthly management reports that include

analysis of their results, along with comparisons to relevant budgets,

forecasts and the previous year’s results. Monthly business reviews,

attended by the Chief Executive and/or the CFO, supplement these

reports. Each month, the CFO presents a consolidated financial report

to the Board.

Strategic Report Corporate Governance Financial Statements Additional Information 115

Key matters considered by the Committee

In addition to the significant issues and judgements highlighted on pages 113 – 114, the Committee also considered the following matters during

the course of the year ended 31 March 2025:

Matters considered	Factors and reasons considered, including financial outcomes
Financial and non-financial reporting	•Monitored and reviewed the integrity of the Group’s financial reporting and disclosures and other formal documents relating to its financial performance, including this Annual Report and Accounts. •Considered the financial and non-financial disclosures contained within this Annual Report and Accounts, and reviewed and challenged the appropriateness of estimates and accounting policies. •Reviewed management’s updates on IFRS accounting standards, including the exposure draft on regulatory assets and regulatory liabilities, as well as impacts of IFRS 18 the new standard on Presentation and Disclosure of Financial Statements. •Recommended to the Board management’s key accounting judgements and key sources of estimation uncertainty for the 2024/25 half-year and full-year financial statements and the filing of other reports with the SEC containing financial information.
ESG reporting	•Considered the application of mandatory ESG reporting contained within this Annual Report and Accounts, including the International Sustainability Standards Board (ISSB) standards. •A joint meeting was held with the Safety & Sustainability Committee in September 2024 to discuss the Group’s sustainability reporting and disclosure strategy. •Received an update on the preparation of the Responsible Business and TCFD disclosures. This included reviewing the Group’s climate-related financial disclosures, as disclosed on pages 59 – 78. •Recommended to the Board the Responsible Business disclosures as included in the Annual Report and Accounts and other ESG disclosures for approval.
ESO separation	•Reviewed the controls and accounting judgements relating to the sale of the ESO. •Approved the valuation of the gain on disposal reported in the financial statements. •Approved the classification of the movement in the provision for UK electricity balancing costs as exceptional in accordance with the Group’s exceptional items framework.
APMs and RPMs	•Reviewed and approved the key judgements relating to the Group’s Alternative Performance Measures (APMs) and Regulatory Performance Measures (RPMs). •Considered the effect of the International Accounting Standards Board’s new standard, IFRS 18, on the presentation of the Income Statement and how certain management-defined performance measures will be brought into IFRS scope.
Internal controls	•Received regular updates on progress towards the Group’s annual US regulatory attestation. •Discussed with management its programme of work to further strengthen the maturity of the Group’s risk and controls framework. •Assessed the Group’s approach to cyber security as part of our Enterprise Risk Management process. •Advised the Board that the Group’s internal controls operated effectively in respect of financial, operational and compliance controls.
Risk oversight and viability statement	•Received regular updates on actions being taken to monitor and manage risk in line with the Group’s risk appetite. •Considered confirmations from each of the business units and functions that risks are managed appropriately and that external influences and matters outside of the Group’s control continued to be considered in their assessments. •Received an ESG update on the Group’s transition risks and climate change commitments. •Considered cyber risk and mitigation strategies across the Group. •Monitored the internal control processes, and reviewed and challenged the going concern and viability statements, including testing for reasonable worst-case scenarios. •Advised the Board that the Group’s risk management processes were effective and provided sufficient assurance.

116	National Grid plc  Annual Report and Accounts 2024/25
Audit & Risk Committee report continued

External auditors	•Received a report from Deloitte at each meeting, including updates on the status of, and results from, the annual audit process and monitored the approach, scope and risk assessments within the external audit plan. •Considered Deloitte’s reports to the Committee, including its reports on the 2024/25 half-year and full-year results. •Held private meetings with Deloitte and maintained dialogue throughout the year. •Assessed the professional scepticism, effectiveness and independence of Deloitte and provided oversight of non-audit services from Deloitte. •Recommended the reappointment of Deloitte as the Company’s external auditors to the Board to be recommended to shareholders at the 2025 AGM.
Corporate audit	•Received regular updates on the 2024/25 corporate audit plan and any more significant findings, including themes and progress of actions identified, and approved the corporate audit plan for 2025/26. •Considered the result of the IIA’s EQA on the Group’s internal audit activity; the Corporate Audit function received the highest rating, generally conformed, from the IIA. •Approved the Corporate Audit Charter, which had been updated to reflect the evolving Global Internal Audit Standards.
Compliance, governance and disclosure matters	•Reviewed and approved the updated Terms of Reference for the Committee. •Received updates on ethics and business conduct, including whistleblowing, to support the oversight, management and mitigation of business conduct issues as part of the internal controls framework. •Discussed the whistleblowing procedures in place and confirmed internal procedures remained effective, noting the communications and training programmes provided during the year to employees, including additional communications in relation to fraud and bribery. The Committee also receives regular reports from the General Counsel, Litigation and Chief Compliance Officer to ensure appropriate investigation procedures and reporting channels are in place. •Received bi-annual updates on compliance with external legal requirements and regulations, including any non- compliance issues and steps being taken to improve compliance across the Group.

Risk management and internal controls

Risk management

Effective risk management is key to achieving our strategic priorities.

The Board is accountable for and approves the system of risk

management, which includes setting risk appetite and maintaining the

system of internal controls to manage risk within the Group. The

Committee has delegated responsibility from the Board for the

oversight of the Group’s systems of internal control and risk

management. This includes policies, procedures, and control activities

to ensure compliance with relevant regulations and legislation, the

appropriateness of financial disclosures, appropriate business conduct

and the work of internal audit. As part of the framework, our values – do

the right thing, find a better way and make it happen – help promote a

culture of integrity. The Chief Risk Officer is responsible for establishing

and maintaining the Group’s risk management processes to ensure the

effective management of risk. During the year, the Board provided

oversight of the Group’s Principal Risks (as set out on pages 36 to 41).

The Committee, alongside the Safety & Sustainability Committee,

provided oversight and challenge through detailed risk reviews to

ensure that processes are in place to manage risk appropriately and

effective reporting to the Board.

Internal control and risk management effectiveness

We continually monitor the effectiveness of our internal control and risk

management processes to make sure they are effective, robust and

remain fit for purpose. The monitoring and review process covers all

material controls, including financial, operational and compliance

controls. Effective controls are in place to reduce the likelihood of

occurrence and impact of threats. Based on work conducted by the

Committee during the year, the Committee confirmed to the Board that

the controls framework provided appropriate assurance of the

effectiveness of internal control and risk management frameworks and

that the sources of assurance received from management had

sufficient authority, independence and expertise to provide objective

advice and information.

The Committee also monitors and addresses any material business

conduct or compliance issues. The Certificate of Assurance process

provides management’s assurance to the Committee that all significant

issues relating to the integrity and standard of risk management and

internal controls systems across the Group have been effectively

managed during the reporting period. The process operates via a

cascade system from business unit and functional managers upwards

to the Chief Executive and takes place annually in support of full-year

results. This process captures any significant risk, compliance, ethics

and control issues that have not been reported through other

governance, assurance and reporting processes, and excludes relevant

internal controls over financial reporting which are assessed through

the separate SOx assurance.

Following a thorough review, the Committee confirmed that the

processes provided sufficient assurance and that the sources of

assurance had sufficient authority, independence and expertise.

The Committee noted that no material weaknesses had been identified

by the review and confirmed it was satisfied that systems and

processes functioned effectively. The Committee Chair subsequently

reported to the Board that management’s process for monitoring and

reviewing internal control and risk management processes continued to

be effective.

The Committee is responsible for reviewing management’s approach to

comply with Provision 29 of the UK Corporate Governance Code and

for identifying the material controls that, individually or in aggregate, are

most effective in managing risks that could threaten the Company’s

business model, solvency, or liquidity. This work is currently underway

and includes a comprehensive dry run and an integrated assurance

approach to material controls, in preparation for the annual

effectiveness assessment for the Company’s year ending

31 March 2027.

Strategic Report Corporate Governance Financial Statements Additional Information 117

Corporate audit

The Corporate audit function supports the Group’s risk management

and internal control processes. It maintains an independent and

objective approach to evaluate and enhance process developments.

Assurance work performed by Corporate Audit is conducted in

accordance with the Institute of Internal Auditors International

Professional Practices Framework (IPPF). The IPPF forms the

foundation for effective internal audit practices. Based on the work

performed by the IIA, it was determined that the Corporate Audit

function generally conforms to all relevant principles of the IPPF with a

high degree of conformance. The Committee remains satisfied with the

quality, experience and expertise of the corporate audit function. The

appointment of the Global Head of Audit is a matter reserved for the

Committee. They have responsibility for the Group’s Corporate Audit

function, attend all Committee meetings and have access to the

Committee Chair, and also meet with the Committee without

management in attendance. The Committee regularly reviews progress

of the internal audit plan, including the key themes being raised and the

remedial plans in place alongside the closure of actions. The Corporate

Audit Charter was reviewed by the Committee in November 2024 and

March 2025. It was updated following the EQA to reflect the evolving

Global Internal Audit Standards. The Committee has also been kept

informed of the transformation of the corporate audit function as it

seeks to remain ahead of strategic and technological developments,

effectively meet future stakeholder needs and be equipped to deal with

emerging risks.

External audit

The Committee is responsible for overseeing the relationship with the

external auditor.

•Deloitte is the external auditor to the Company.

•Deloitte was appointed in 2017 following a formal tender process.

•Deloitte was reappointed for 2024/25 at the 2024 AGM.

•The Committee was authorised by shareholders to set Deloitte’s

remuneration at the 2024 AGM.

•The current Lead Audit Partner is Chris Thomas and 2024/25 was

the third year of his term.

Following consideration of the auditor’s independence and objectivity,

the audit quality and the auditor’s performance, the Committee

recommended to the Board Deloitte’s reappointment as external

auditor for the year ending 31 March 2026. A resolution to reappoint

Deloitte and give authority to the Committee to determine its

remuneration will be put to shareholders at the 2025 AGM. The

Committee considers that, during 2024/25, the Company complied with

the mandatory audit processes and audit committee responsibility

provisions of the Competition and Markets Authority Statutory Audit

Services Order 2014. Given the independence and objectivity of

Deloitte to date, the Committee remains satisfied with its performance

and effectiveness, and considers its reappointment for 2025/26 to be in

the best interests of the Company.

The Committee is responsible for considering whether there should be

a rotation of the Company’s external audit firm in order to ensure

continuing quality and independence, including consideration of the

advisability and potential impact of conducting a tender process. The

Committee acknowledges the UK legal requirements relating to

mandatory audit rotation and audit tendering, including the requirement

to undertake a formal process after 10 years. In line with regulation,

over the course of 2025/26, the Committee plans to initiate a

competitive tender of the external audit contract with a view that the

successful audit firm would be recommended to the Board for approval

by 31 December 2025 and, subject to shareholder approval at the 2026

AGM, would be appointed as statutory auditor for the year ending

31 March 2028. The Committee considers that the timing of the re-

tender is in the best interests of the Company as it provides sufficient

time to allow an orderly transition in the event a new external audit firm

is selected.

In undertaking the tender process, the Committee will consider in so far

as practical the guidance on tendering set out in the FRC’s

Minimum Standard.

Additional disclosures will feature in our Annual Report and Accounts

for the year ended 31 March 2026 to detail the work of the Committee,

the selection criteria used and process followed for the tender work

undertaken.

The Committee confirms its continued compliance with the Minimum

Standard. Activities undertaken to demonstrate our compliance are

described throughout this report. Transparency and accountability is

encouraged across all of our financial reporting and auditing practices

to build trust and promote the long-term sustainability of the Company.

Effectiveness, quality and performance

As part of the Committee’s responsibilities, consideration is regularly

given to the effectiveness of the external auditor to verify that the

quality, challenge and output of the external audit process is sufficient.

Throughout the year, the Committee looks at the quality of the auditor’s

reports and considers its response to accounting, financial control and

audit issues as they arise. To maintain high levels of quality, the

Committee reviews and challenges the external audit plan prior to

approval.

The Committee regularly engages and receives the views of senior

management and members of the Finance function in forming

conclusions on auditor effectiveness.

Meetings are held around each scheduled Committee meeting, and

outside the meeting cycle on a regular basis, between the Committee

Chair and the external auditor without management being present, to

encourage open and transparent feedback. The Committee members

also meet privately with the external auditor at least twice per year.

During the year, the Committee:

•reviewed the quality of audit planning, including approach, scope,

progress and level of fees;

•reviewed the outcome of recommendations from the Deloitte

Insights Report (detailed below);

•considered the external auditor’s performance against 11 Audit

Quality Indicators covering aspects of the delivery of the external

audit, including planning, resourcing, the use of technology,

oversight and quality review; and

•confirmed that the Deloitte external audit process had been

delivered effectively.

On an annual basis, the Committee receives an External Auditor

Insights Report, a report summarising the financial reporting and/or

internal control areas that, based on the results of the most recent

audit, Deloitte considers management should prioritise during the year

ahead. The report also includes management’s responses to the

recommendations, along with an update on implementation status of

prior year recommendations.

Following the completion of the 2023/24 audit, management undertook

a survey on the external audit process which sought the views of key

stakeholders involved in the audit. The survey sought input on

Deloitte’s performance and National Grid’s commitment to the audit

and including questions on the following audit areas:

•planning and scope;

•robustness of the process;

•independence and objectivity;

•quality of delivery;

•quality of people and service; and

•understanding of the Company

Feedback from the survey was taken into consideration by Deloitte in

the planning for the 2024/25 audit.

118	National Grid plc  Annual Report and Accounts 2024/25
Audit & Risk Committee report continued

The results of the survey were shared with Deloitte and showed that

Deloitte’s scores increased compared to the prior year following

targeted efforts. The survey confirmed that:

•the audit had contributed to the integrity of the Group’s financial

report;

•the relationship between Deloitte, the Committee and management

continued to be effective; and

•Deloitte demonstrated an appropriate degree of professional

scepticism, and its team possess the required level of skill and

expertise to enable an effective audit.

Auditor independence and objectivity

The independence of the external auditor is essential to the provision of

an objective opinion on the true and fair view presented in the financial

statements.

The Committee considered the safeguards in place, including the

annual review by corporate audit, to assess the external auditor’s

independence. Deloitte reported to the Committee in May 2025 that it

had considered its independence in relation to the audit and confirmed

that it complies with UK regulatory and professional requirements, SEC

regulations and Public Company Accounting Oversight Board (PCAOB)

standards and that its objectivity is not compromised. The Committee

took this into account when considering the external auditor’s

independence and concluded that Deloitte continued to be

independent for the purposes of the external audit and confirmed that

this recommendation was free from third-party influence and restrictive

contractual clauses.

Non-audit services

In line with the FRC’s Ethical Standard and to maintain the external

auditor’s objectivity and independence, we have a policy governing

Deloitte’s provision of non-audit services.

The cap on the total fees that may be paid to the external auditor for

non-audit services in any given year is 70% of the average audit fees

paid in the last three financial years.

The provision of any non-audit service by the external auditor requires

prior approval by the Committee. A subset of services where, due to

their nature, we believe there is no threat to the auditor’s independence

or objectivity and have a value under £250,000 can be approved in

advance by the CFO. These services are limited to:

•audit, review or attest services. These are services that generally

only the external auditor can provide, in connection with statutory

and regulatory filings, including comfort letters, statutory audits,

attest services, consents and assistance with review of filing

documents; and

•the provision of access to technical publications.

In any event, the Committee is provided with a list of all non-audit

services to ensure that it is monitoring all non‑audit services provided.

Non-audit service approvals during 2024/25 principally related to

comfort letters for debt issuances, the refresh of related debt issuance

programmes and reporting accountant services.

External auditors’ fees

The amounts paid to the external auditors’ in the past three years were

as follows:

Total billed non-audit services provided by Deloitte during the year

ended 31 March 2025 were £1.0 million, representing 5.08% of total

audit and non-audit fees. In 2023/24, non-audit services totalled

£4.0 milllion and included fees for Deloitte’s services on the Rights

Issue (17.5% of total audit and non-audit fees).

Further information on the fees paid to Deloitte for audit, audit-related

and other services is provided in note 4 to the financial statements on

page 180.

Total audit and audit-related fees include the statutory fee and fees

paid to Deloitte for other services that the external auditor is required to

perform, such as regulatory audits and SOx attestation. Non-audit fees

represent all non-statutory services provided by Deloitte.

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	119
Safety & Sustainability Committee report

	Key activities during the year	Composition
	•Reviewed and approved for recommendation to the Board, the publication of the Group’s 2024 Responsible Business Report •Reviewed and recommended for approval to the Board, the Group’s second CTP •Reviewed performance against the ESG elements of the 2022, 2023 and 2024 Long-Term Performance Plan (LTPP) awards •Oversaw progress against recommendations arising out of safety and health performance audits	The Committee comprises five independent Non-executive Directors. The Committee held four scheduled meetings during the year.
		Committee members
		Earl Shipp (Chair)
		Jacqui Ferguson1
		Anne Robinson
		Tony Wood
		Martha Wyrsch
		1.Jacqui Ferguson joined the Committee on 5 July 2024
Earl Shipp Chair of the Safety & Sustainability Committee
		Our CTP and Responsible Business Charter can be found on our website nationalgrid.com/ responsibility

Review of the year

Following on from the announcement of the Group’s five-year

framework and the scale of major capital projects that will be

undertaken as part of this, as a Committee we recognise the increased

scrutiny that will be required by the Group to ensure consistency of

safety standards and procedures across our growing contractor base.

We spent time in the year considering this alongside regular updates on

performance against safety strategy and metrics.

We also spent time reviewing our progress against our climate targets,

recognising the fast-moving macro environment and considering if and

how this might impact the Group. We welcomed Jacqui Ferguson as a

member in July 2024 who, along with other members of the Committee

has visited various operational sites throughout the year to truly get a

feel for the culture and safety standards across the organisation.

Sustainability

National Grid plays a central role in the clean energy transition and, as

such, the Committee spends time overseeing the Group’s Responsible

Business strategy, considering the impact of the Group’s operations on

the environment, workforce, communities and other stakeholders.

During the year, the Committee monitored progress against the

Group’s sustainability targets and metrics, discussing our Scope 1, 2

and 3 emissions targets, and considering any factors which may

influence the Group’s ability to meet these. The Committee carefully

considered these targets in line with the Group’s strategic priorities and

stakeholder expectations.

During the year, the Chief Sustainability Officer, Finance and ESG

teams kept the Committee informed of emerging regulations, including

the International Sustainability Standards Board (ISSB) standards, CTP

reporting, and the EU’s Corporate Sustainability Reporting Directive

(CSRD).

The Committee discussed actions being taken to enhance the way the

Group reports on sustainability data and performance. The Committee

considered the impact of the Group’s evolving disclosures on investor

sentiment to ensure our commitments are reflective of the changing

and uncertain environment we are operating within. The Committee

also considered how the Group’s emissions trajectory would be

impacted following the sale of National Grid Renewables, which the

Company announced in February 2025.

Further information on our performance and progress against our

Responsible Business disclosures can be found on pages 42–58.

Safety, wellbeing and asset protection

This year, focus remained on strengthening safety practices and

supporting our people to work safely and efficiently in increasingly

complex environments.

The Committee oversaw the progress and implementation of lessons

learned from fatalities over the past few years and noted the targeted

focus on small, remote-working crews and tighter oversight of these

teams across Business Unit plans. The impact of this work has been

encouraging, with progress being made in this area. Contractor safety

remains a critical area of interest considering the significant role they

play in the Group’s delivery model. The Committee followed

developments in this space, including the introduction of a new Group

Contractor Management Standard which sets out clearer expectations

and more consistent approaches to contractor oversight.

The Committee also considered the results of the Group’s 2024 Safety

Culture Survey. The results showed an improvement in employee

sentiment, reflecting steady progress towards a more proactive

safety culture.

The Committee acknowledged the strengthening of Group-level

leadership in Safety, Health and Wellbeing following the appointment of

a new Director of Safety, Health and Wellbeing after the previous Group

Director's retirement. This change aims to enhance focus and clarity in

delivering safety and wellbeing outcomes. To support this transition, an

independent external review of the Group’s health and safety

management approach was conducted. The review, carried out over 12

weeks, assessed the effectiveness of the Group's health and safety

management system against global best practices. It identified five key

recommendations to improve alignment and consistency between

Group and Business Unit teams. The Committee will monitor the

implementation of these recommendations over the coming year

The Committee continues to consider the implications of ongoing

extreme weather events. The frequency of storms in the UK remained

high with Storm Darragh requiring our biggest ever restoration effort.

The Committee was hugely grateful for the incredible effort from the

workforce who aided in the restoration and worked around the clock to

reconnect power supplies and support our customers. Severe snowfall

in the US also presented operational challenges and the Committee

received updates on how climate adaptation and asset resilience

efforts are being strengthened, including in areas such as wildfire

ignition, storm response, and wind-related risks.

Earl Shipp

Chair of the Safety & Sustainability Committee

14 May 2025

120	National Grid plc  Annual Report and Accounts 2024/25
Finance Committee report

	Key activities during the year	Composition
	•Considered the Group’s financing strategy in light of the new five-year framework, including c.£60 billion of capital investment over 2024/25 to 2028/29. Approved the comprehensive financing plan announced alongside the five-year framework in May 2024, including the £7 billion Rights Issue •Reviewed the five-point risk appetite framework for the Treasury risks under the Committee’s remit and considered the quantitative measures for these risks •Reviewed the processes and controls operated by the Treasury team as it expands its capability and capacity to support delivery of the Company’s new five-year financial framework •Considered the Group’s Tax position, in light of the changing political landscapes in the UK and US •Reviewed the rates and inflation hedging strategies for the Group's debt portfolio	The Committee comprises three independent Non-executive Directors and two Executive Directors. During the year, the Committee held three scheduled meetings and one ad hoc meeting. The Committee welcomed Jonathan Silver as a member in July 2024.
		Committee members
		Ian Livingston (Chair)
		Andy Agg
		Iain Mackay
		John Pettigrew
Ian Livingston Chair of the Finance Committee		Jonathan Silver1
		1.Jonathan Silver joined the Committee on 5 July 2024

Review of the year

This year the Finance Committee continued to support the Group’s

strategy by monitoring the financing policy and financial risk appetite,

taking into account the changing external macro environment. The

Committee gave particular focus to the Group’s financing strategy, as

well as considering the wider engagement with investors and credit

rating agencies, both in advance of and following completion of the £7

billion Rights Issue in May 2024.

Treasury

During the year, the Committee reviewed and updated the Finance

Committee Treasury Policy Framework and Delegations of Authority,

ensuring that these governance documents continue to align with the

Group’s financing objectives and increasing capital expenditure.

The Treasury function updates the Committee on its activities at each

meeting, providing updates on debt issuances at both holding

company and operating subsidiary level.

At the time of the Rights Issue, the Committee approved appropriate

short-term increases to the Company’s counterparty risk policy limits to

enable the investment of the Rights Issue proceeds, and also

recommended the allocation of around £700 million of Rights Issue

proceeds to refinance two of the Company’s outstanding hybrid bonds

at their first call dates.

The Treasury function updated the Committee on the issuance of new

debt by the US holding company and two of the US operating

subsidiaries. This debt was issued as part of the Company’s strategy to

smooth its debt issuance during 2025 and 2026 following the Rights

Issue, and remain active in the debt capital markets.

As mentioned in my report last year, we had discussed with

management its plans to increase the capability and capacity of the

Treasury function given our higher capital requirements. PwC has

supported this, undertaking a review into Treasury’s processes and

controls, to ensure that the function is equipped to support the

Company’s five-year framework. The review found there to be a strong

culture of proactive risk management, and made recommendations to

improve the efficiency and effectiveness of the Treasury function, which

the Committee will monitor.

Insurance

The objective of the Group’s insurance strategy is to facilitate broad

protection of our businesses across the UK and US in an efficient

manner. The Committee reviews and assesses this strategy, to ensure

that it allows the Company to operate within the Group’s approved risk

tolerance and appetite. While we approach a softening of insurance

markets in 2025, the Committee will continue to consider the Group’s

reinsurance purchasing strategy with the aim of achieving longer-term

stability of both capacity and pricing.

Tax

During the year, the Committee considered the Group’s Tax Strategy,

ensuring this aligns with the Group’s risk profile and commitment to our

strong reputation. Following the outcomes of the UK and US elections,

we considered the evolving tax policy in the UK and US and the

potential impact of incoming tax legislation from the new governments.

The Committee also received updates on the ongoing audits in the UK

and US.

Pensions

During the year, the Committee noted the funding positions for all six of

the Company’s UK Defined Benefit Pension plans. The Company

reached agreement with Ofgem regarding funding support, via Ofgem’s

Pension Deficit Allocation Methodology process, for three subsidiary

pension arrangements in 2025. The Committee spent time discussing the

pension implications arising out of the creation of the National Energy

System Operator (NESO). The Committee also discussed the US Defined

Benefit Pension Plans and other post-employment benefits (OPEB) and

received updates on their funding positions and on the investment

returns for the Pension Plans. The Committee received updates on the

work of the Retirement Plans Committee to monitor and mitigate the

investment, liability and governance risks associated with Pension and

OPEB risks.

Looking forward

In the coming year, the Committee will continue to oversee the Group’s

robust tax governance standards and monitor legislative changes. It will

also maintain oversight of the ongoing delivery of the financing strategy

and management of risk for each area within its remit, in particular

noting the impact of external markets and events on these.

Ian Livingston

Chair of the Finance Committee

14 May 2025

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	121
Directors’ Remuneration Report

	Key activities during the year	Composition
	•Stakeholder consultation and development of 2025 Directors’ Remuneration Policy •Consideration of the Rights Issue on remuneration •Ensure remuneration supports the capital investment plan delivery	The Committee comprises four independent Non-executive Directors. During the year, the Committee held four scheduled meetings and two ad hoc meetings.
		Committee members
		Martha Wyrsch (Chair)
		Ian Livingston
		Iain Mackay
		Anne Robinson
Martha Wyrsch Chair of the Remuneration Committee

Review of the year

I am pleased to present the Directors’ Remuneration Report (DRR) for

the year ended 31 March 2025.

This year has seen significant progress and strategic change for

National Grid and our results demonstrate excellent execution against

our key priorities. In May 2024 we successfully completed the £7 billion

Rights Issue underpinning our ability to deliver our five year, £60 billion

investment plan at pace. Delivery is well underway, in December 2024

we published the RIIO-T3 business plan and in May 2025, there is a

Building our Energy future investor event where we showcase the

progress we are making on the delivery of major capital projects across

the UK and US.

During the year, the Committee has been focused on ensuring that our

remuneration strategy supports the business to deliver the capital

investment plan. This year also presented the opportunity to review our

Directors’ Remuneration Policy (Policy), which was last approved in

2022 and examine how it might evolve. As we undertook this review,

we sought to ensure that the best interests of all our stakeholders today

and over the next few years are properly addressed and we engaged

widely with shareholders and other key stakeholders. I’d like to thank

those who participated in this process for their feedback and significant

support, which is covered in further detail later in this letter. The

Committee concluded that while the broad framework of the Policy

remained appropriate, some changes were necessary to ensure that

the Policy remains fit for purpose to support our delivery of a step-

change in critical energy infrastructure both in the UK and US. These

deliverables are essential to support our energy transition and growth

objectives.

The Policy changes we are proposing are reflective of the current

market and are essential to ensuring delivery of our ambitious strategic

plan. The attraction, retention and motivation of excellent leadership to

deliver our growth plans over the short to medium term will help ensure

long-term value is delivered to all of our key stakeholders. National

Grid’s Policy has not materially changed for over a decade, and we are

taking this opportunity to create a competitive Policy that will see us

into the future.

Our 2025 Policy renewal

Shareholder engagement

During the year, I wrote to shareholders (representing c.50% of the total

shares in issue) and other key stakeholders to discuss the proposed

changes to the 2025 Directors’ Remuneration Policy. We appreciated

the thoughtful and constructive comments we received. Our proposed

changes to the Policy reflect the current market and adjustments

necessary to ensure delivery of our ambitious strategic plan. They will

help ensure long-term value is delivered to all of our key stakeholders.

In light of the positive support which we received from our major

shareholders, no substantive changes were required to our proposals.

Total remuneration positioning

National Grid has performed on its growth and investment plans,

delivering a 101% total shareholder return over the 10-year period to

date and outperforming the FTSE 100 index. Further, following the

strategic portfolio repositioning, the Company has increased in size and

changed structure. Our focus as a business is to continue on this

strong growth trajectory. In May 2024, we announced our new five year

financial framework which includes capital investment of around

£60 billion over the five years to March 2029, representing a near two-

fold increase to the investment compared to the prior five years.

During the development of the Policy, the Committee considered

whether the current pay comparator group of the FTSE 11–40, set in

2007/08, remained appropriate. Following a detailed review, we

concluded that the comparator group should instead be the FTSE 1–30

(FTSE 30), having been a constituent of the FTSE 30 for over 20 years,

this better reflects the size and complexity of National Grid and places

us between the lower and the upper quartile of the group when

measured by market capitalisation, revenue and number of employees

(as shown in the charts on the following page).

122	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued

FTSE 30 market capitalisation

FTSE 30 revenue

FTSE 30 number of employees

Note: FTSE 30 data as at 31 March 2025 and quartiles exclude National Grid.

Other relevant factors were also considered such as the scale of our

investment plans and competition for talent in the industry both in the

UK and USA. As shown in the diagram below, the US accounts for

c.46% of our asset base.

2024/25 asset base

Geographical split

¢	US
¢	UK

The Committee believes that pay benchmarking alone does not provide

sufficient rationale for proposing increases and, as such, the

recommended changes are not driven by this change of comparator

group. The proposals we are bringing forward are aimed at supporting

the delivery of the business strategy in an organisation which has

grown significantly in size and complexity.

When looking at some of our main KPIs, over the last decade we have:

•Increased our regulated assets by 62% to £60 billion;

•Increased our capital investment by 183% to £9,847 million; and

•Increased our total number of employees by c.7,000 to 31,654

employees.

In addition to growing in size, we have grown in complexity, having

undergone a strategic transformation which started in 2021. We have

made changes to our asset mix with a shift towards electricity (which is

a higher growth area). Examples of how our structure has changed in

the last five years include:

•Acquired Western Power Distribution, the UK’s largest electricity

distribution network operator for £7.8 billion;

•Sold our Rhode Island gas and electricity business in the US and

our UK Gas transmission and metering business; and

•Awarded the Accelerated Strategic Transmission Investment (ASTI)

projects. The scale and importance of these projects required us to

add a new delivery unit, Strategic Infrastructure, into our corporate

structure.

To support our unprecedented step up in capital investment, as shown

below, investment is also required to ensure we are able to continue to

attract and retain the talent needed to achieve our long-term goals.

c.£60 billion capital investment (2024/25 to 2028/29)

	Near doubling of investment New 5-year framework c.£60bn
Last 5 years £33bn

The total incentive opportunity for Executive Directors at National Grid has

not increased in over a decade, with the current variable pay

arrangements having been in place since 2014. It is also resulting in us

experiencing pay compression issues with the level below Executive

Director. The current incentive opportunities are uncompetitive and create

challenges in attracting and incentivising global talent. We firmly believe

that now is an appropriate time to address the clear shortfall in our

variable pay arrangements, particularly the annual bonus opportunity.

Against the FTSE 30, our maximum total remuneration is positioned

significantly below the lower quartile, as shown in the charts on the

following page. However, as mentioned, National Grid is consistently

positioned around the middle of the FTSE 30 based on market

capitalisation, revenue and number of employees.

Strategic Report Corporate Governance Financial Statements Additional Information 123

CEO FTSE 30 total maximum remuneration

¢	Salary (£m)	¢	Pension (£m)	Proposed National Grid maximum	Current National Grid maximum
¢	Annual bonus (£m)	¢	Long term Incentive Plan (£m)

CFO FTSE 30 total maximum remuneration

¢	Salary (£m)	¢	Pension (£m)	Proposed National Grid maximum	Current National Grid maximum
¢	Annual bonus (£m)	¢	Long term Incentive Plan (£m)

Note: FTSE 30 data from Annual Reports published as of 2 April 2025.

The Committee is also mindful of the US talent market, given that over

half of our revenue comes from our US operations. The US also

continues to provide us with significant growth, demonstrated by

£28 billion of our expected £60 billion investment being deployed in our

US jurisdictions.

Annual Performance Plan (APP)

A fundamental principle of our Policy is to align Executive Directors’

remuneration with the successful delivery of our ambitious strategic

aims. There are a number of key annual targets that we will need to

deliver in order to meet our five year financial framework. In direct

support of this ambition, we are proposing to increase the maximum

annual APP opportunity from 125% to 200% of salary for both

Executive Directors. The proposed maximum APP opportunity would

place Executive Directors at the lower quartile of the FTSE 30 group

(and around the median of the FTSE 11–40, which was our previous

peer group). This increase to APP quantum represents the first increase

in bonus quantum since 2014.

APP deferral

Recognising the significant shareholding requirement which we already

have in place, as well as the need to ensure that our remuneration

package remains competitive, we are proposing to reduce the

proportion of APP paid in shares after Executive Directors have met

their shareholding requirement, from 50% to 33%. The part payment in

shares that are held for two years facilitates the application of malus

and clawback and aligns with shareholder experience. We note that

both of our current Executive Directors materially exceed their

shareholding requirements at 1,616% for the CEO and 978% for the

CFO versus the shareholding requirements of 500% and 400% (of

salary) respectively.

Long-Term Performance Plan (LTPP)

We remain fully committed to our existing remuneration philosophy of

aligning executives to the long-term strategic goals of the Company. As

such, we are proposing an increase in the maximum LTPP opportunity

for the CEO from 350% to 400% of salary and for the CFO from 300%

to 350% of salary, which would place the LTPP below the median of

the FTSE 30 group.

Alongside this increase, we propose removing the current flexibility in

the Policy that allows the Committee, in exceptional circumstances, to

award an additional 50% of salary as incentive pay (which can, as a

one-off arrangement, currently be applied across the APP and LTPP in

any given year). It should be noted that the Committee has not used

this flexibility since it was included in the Policy.

The initial LTPP grant of the awards under the new Policy will not be at

the increased level. We will carefully consider the circumstances under

which the maximum grant might be warranted alongside appropriate

performance conditions and targets at that time. This change is

intended to create a Policy which will provide the Committee with the

necessary flexibility to attract and retain key talent going forward.

Other amendments to the Policy

As part of our holistic Policy review, the Committee is proposing other

minor changes to ensure the effective operation of the Policy. These

include updating the governance process for approving NED fees and

creating flexibility for dividend equivalents to be paid in either cash or

shares, as this flexibility already exists within our plan rules, approved

by shareholders in 2021.

124	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued

Rights Issue

As published in last year’s Report, we made the decision to delay the

target setting and calibration process (for both the APP and LTPP) until

after the Rights Issue.

The targets for our 2024/25 APP and 2024 LTPP awards, reflecting the

impact of the Rights Issue are disclosed on pages 129 and 132

respectively.

Our 2022 and 2023 LTPP awards have performance conditions that

include financial measures of EPS and RoE, both impacted by the

Rights Issue. As noted in last year’s DRR, the Committee agreed to

adjust the impacted financial targets on a nil gain/nil loss basis.

Wider workforce

The Committee considers the context of our wider workforce when

evaluating Executive Directors’ reward. We seek to ensure that

colleagues receive fair and competitive reward packages that are

aligned to the culture at National Grid.

We continue to maintain our commitment to paying a Living Wage as

an accredited Living Wage employer in the UK.

In February 2024, I held a workforce engagement session to hear the

views of employees across the organisation and ensure that they are

considered at Committee meetings. The comments received from

employees in attendance were insightful and constructive. These

comments have been shared with the Committee and are being taken

into consideration as we deliberate on issues that come to us. The

Committee also engages with the wider workforce at all levels on an

array of topics, including remuneration, and details of our Non-

executive Director workforce engagement sessions can be found on

page 106.

Alignment of remuneration with our business

strategy

We align our performance-linked elements of remuneration (APP and

LTPP) to our strategic priorities, long-term shareholder value and our

vision for a secure, affordable and clean energy future, together with

our sustainability commitments.

We are enhancing this alignment for 2025/26 by introducing a capital

delivery measure to the APP to incentivise successful delivery of our

capital investment plan.

Safety is also an important factor in remuneration decisions and in

previous years the Committee has exercised its discretion when

necessary following safety incidents.

CEO succession plan

I welcome the appointment of Zoë Yujnovich as our next CEO. She will

succeed John Pettigrew who, after almost 10 years in post, has

decided to retire from his role effective 16 November 2025.

Following a comprehensive succession planning process both the

Board and John believe it is the right time to transition leadership.

Zoë’s proven track record makes her ideally qualified to guide us into

our next phase of growth.

Zoë will receive a salary of £1,300,000 per annum. The remaining

elements of her remuneration will be in line with the Directors'

Remuneration Policy. On appointment, she will be granted share-based

awards to replace remuneration foregone when leaving her previous

employer. Further details of remuneration arrangements will be set out

in the 2025/26 Directors' Remuneration Report.

Performance and remuneration outcomes

during the year

Salary, pension and benefits

As published in last year’s Report, John Pettigrew (Chief Executive) and

Andy Agg (Chief Financial Officer) both received salary increases of

4.5%, effective 1 July 2024, a figure slightly below the overall UK wider

workforce salary increase of 5.0%.

2024/25 APP

The 2024/25 APP was based on financial performance measures

(70%), operational measures (15%), and individual objectives (15%)

that reflect key business and operational performance goals.

Financial performance (70%)

The financial performance portion of the 2024/25 APP outturned at

98.3% of maximum, driven by achievement of 100% of maximum for

Group Underlying EPS and 96.5% of maximum for Group RoE, both

weighted equally. Both metrics delivered above target performance

driven by strong performance from across the business, including

benefits from new rate cases in the US, interconnectors arbitrage

management and treasury management.

Financial performance was strong during the year with record levels of

capital investment, Rights Issue delivery and successful completion of

the Electricity System Operator (ESO) sale.

Operational performance (15%)

We continue to align the operational performance of our business with

the delivery of impactful, lasting benefits to our stakeholders. For this

period, operational measures were split equally in weight, linked to

Group customer satisfaction (37.7% of maximum achieved), Group

Colleague ‘Delivering Results’ index (25.0% of maximum achieved) and

Group ‘Inclusion’ index (100% of maximum achieved). Performance

against each of these measures was assessed against stretching goals,

aimed at achieving material improvement in performance. On

assessment of all metrics, performance was assessed as 54.2% of

maximum.

Individual performance (15%)

15% of the 2024/25 APP was linked to individual objectives for

Executive Directors. Assessment against these objectives resulted in

performance outcomes of 100% of maximum for John Pettigrew and

90.0% of maximum for Andy Agg. Details of the targets and

performance against these are set out on page 130.

Overall assessment

In reaching its overall decisions on the APP, the Committee considered

the strong performance and delivery throughout the year across

financial, operational, and individual objectives. The Committee

concluded that the outcomes are appropriate in the context of

performance achieved and determined that no discretion was required

to the resultant APP formulaic outcome. Based on the overall

performance of the Group, including the individual performance

assessments of both John Pettigrew and Andy Agg, payouts under the

plan for the period are 91.9% and 90.4% of maximum respectively.

Further details of performance versus the 2024/25 APP are outlined on pages 129 and 130.

Strategic Report Corporate Governance Financial Statements Additional Information 125

2022 and 2024 LTPP

The performance period for the 2022 LTPP ended on 31 March 2025.

Across the period, performance was based on financial measures

(80%) and energy transformation measures (20%), as set out in the

2021/22 Annual Report.

The financial performance portion of the LTPP outturned at 73.0% of

maximum, driven by achievement of 100% of maximum for Group

Underlying EPS and 46.0% of maximum for Group RoE, both weighted

equally. When assessing the degree to which the financial performance

portion reflected the shareholder experience and the management’s

performance against targets set, the Committee noted that the financial

outcome would be significantly impacted by exceptional macro-

economic factors during the period which were not anticipated when

targets were set. The Committee has therefore calculated RoE by

taking account of the impact of these exceptional macro economic

factors on the RoE calculation. This results in 11.41% Group RoE,

leading to 46.0% of maximum vesting for this portion of the award. The

Committee also considered the impact on Group EPS and noted that

whilst these impacts reduce the Group EPS outturn figure they did not

impact the vesting amount. The Committee is satisfied that the overall

LTPP vesting outturn also reflects underlying business performance,

the shareholder experience and management performance against the

targets set. Details of this are set out on pages 130 and 131.

The energy transformation portion of the LTPP outturned at 89.5% of

maximum, driven by achievement of 100% of maximum for Scope 1

emissions and 79.0% of maximum for enablement of energy

transformation, both weighted equally. The Scope 1 emissions outturn

at maximum was driven by SF6 emission reductions, vehicle fleet

emissions and Grain operation emissions reduction. The strong

enablement of energy transformation performance was driven by

energy efficiency programmes and distribution connections.

The resultant formulaic outcome of the 2022 LTPP was 76.3% of

maximum. When reviewing the formulaic vesting outcome, the

Committee considered the broader context of shareholder experience

and the external environment to determine whether the vesting levels

were appropriate. The Committee determined that the levels of vesting

reflected the strong performance, both financially and against strategic

and operational targets, and that no discretion should be applied. The

Committee also evaluated whether there were any potential windfall

gains over the period and determined that no adjustments were

necessary.

As noted in last year’s DRR, we took the decision to delay the grant of

the 2024 LTPP until after the outcome of the Rights Issue was finalised

(in order to neutralise the dilutive effect of the Rights Issue on the

outstanding awards and options). The 2024 LTPP was awarded in July,

and the performance will be assessed over the three-year period

ending 31 March 2027. The performance measures are:

•Cumulative three-year Underlying Group EPS (40%);

•Group RoE (40%); and

•Energy transformation measures (20%).

The targets for this award, along with details of LTPP awards which

vested during the year can be found on pages 130 – 132.

Single total figure of remuneration

The single total figures of remuneration for 2024/25 for both John

Pettigrew and Andy Agg are £6.097 million and £3.678 million

respectively.

These outcomes represent the strong business performance across the

period, supported by the outcomes under the 2024/25 APP. John

Pettigrew and Andy Agg supported the delivery of long-term value

creation during a time of increased external pressures, as highlighted

by the positive outcomes under the 2022 LTPP.

Policy implementation in 2025/26

Salary, pension and benefits

In reviewing the levels of fixed remuneration for the Executive Directors,

the Committee considered the experience of the wider workforce. We

felt it appropriate to increase the salaries of the Executive Directors at

levels on par with increases provided across our wider workforce.

Consequently, the Committee has awarded salary increases of 5.0% to

John Pettigrew and Andy Agg, effective from 1 July 2025. This figure is

on par with the wider UK and US workforce principles (5%). The wider

workforce (non-union) salary budget increase is set at 4.0% plus a 1%

for compression and market adjustment. Pensions and benefits remain

unchanged.

2025/26 APP

For 2025/26, the maximum APP opportunity will be 200% of salary for

both Executive Directors.

The APP will maintain the same financial measures (70%). The

operational measures (15%) will include capital delivery and leadership

of change measures to align the APP with our capital investment plan.

Individual measures (15%) will be linked to individual objectives.

2025 LTPP

The 2025 LTPP award levels will be 350% of salary for John and 300%

of salary for Andy. These levels remain consistent to the awards

granted in 2024. The Committee considered the current operation of

the plan to be effective and the performance measures for the 2025

LTPP are as follows:

•Cumulative three-year Underlying Group EPS (40%);

•Group RoE (40%); and

•Energy transformation measures (20%).

The Committee believes these measures appropriately incentivise

participants in a manner that provides clear alignment with our financial

and strategic vision, as we continue to seek to deliver value for our

shareholders and work towards our energy transformation

commitments.

Chair and Non-executive Director fees

Fees for the Chair and Non-executive Directors are being increased by

4.0%, effective from 1 July 2025.

Conclusion

I would like to thank shareholders for their input and engagement this

year. We aim to maintain an open dialogue and look forward to

receiving your support at the AGM on 9 July 2025.

Martha Wyrsch

Chair of the Remuneration Committee

14 May 2025

126	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report
Summary of the approach taken for 2024/25 and the intended approach for 2025/26

Our current Directors’ Remuneration Policy was approved at the 2022 AGM and will therefore require

reapproval at the 2025 AGM. Our Directors’ Remuneration Policy as set out in this report (the 2025 Directors’

Remuneration Policy) will be put to shareholders for approval at the 2025 AGM to be held on 9 July 2025.

2024/25 remuneration outcomes are aligned to the delivery of our strategy and reflect strong business and individual performance during the year.

Our approach for 2025/26 aims to continue to incentivise delivery of our strategic goals as we enter a new phase of growth at National Grid.

The 2025 Directors’ Remuneration Policy is set out on pages 138 – 146.

Annual report on remuneration

A comparison of the 2024/25 single total figure of remuneration to the previous year is set out below for the Executive Directors, John Pettigrew

and Andy Agg. Both Executive Directors are UK based. Fixed pay consists of salary, pension and benefits paid during the respective financial

years.

The 2024/25 single total figure of remuneration for John Pettigrew and Andy Agg is £6.097 million and £3.678 million and represent an

achievement of 80.4% and 80.5% of the total maximum opportunity respectively.

These outcomes reflect strong annual performance delivery in 2024/25 and long-term value creation. The single total figure of remuneration is

largely driven by the heavy weighting on long-term share awards which reflects the long-term nature of our business, making up to two thirds of

total remuneration and around 80% of variable pay. The 76.3% vesting of the LTPP reflects strong performance against both our financial and

energy transformation measures.

John Pettigrew (£’000)

Fixed pay APP LTPP

Andy Agg (£’000)

Fixed pay APP LTPP

Note: The single total figure of remuneration for 2024/25 is explained in the single total figure of remuneration table for Executive Directors and single total figure for 2023/24 has been

restated to reflect actual share price for 2021 LTPP vesting in 2024 and all dividend equivalent shares, consistent with comparative figures shown in this year’s single total figure

of remuneration table.

	Implementation in 2024/25 (pages 128 - 137)				Implementation in 2025/26 (pages 147 - 149)
Salary	•John Pettigrew’s and Andy Agg’s salaries increased by 4.5% to £1,187,300 and £781,500 as of 1 July 2024 respectively – below the average increase of 5.0% across the UK wider workforce				•John Pettigrew’s and Andy Agg’s salaries will increase by 5.0% to £1,246,665 and £820,575 as of 1 July 2025 respectively – on par with the wider workforce principles (5%)
Pension and benefits	•John Pettigrew’s and Andy Agg’s pension cash allowance was 12% of salary for 2024/25, in line with the UK wider workforce •Other benefits remain unchanged				•Pension and benefits will remain unchanged
APP	2024/25 APP				2025/26 APP Maximum opportunity of 200% of salary for both Executive Directors Measures for 2025/26: •Group RoE (35%) •Group Underlying EPS (35%) •Operational measures – Capital delivery and effectiveness, Leadership of change (15%) •Individual measures (15%)
	Maximum opportunity of 125% of salary for both Executive Directors
	Performance measures (%) weighting			Outturn (% of max)
	Group Underlying EPS (35%)			100%
	Group RoE (35%)			96.5%
	Operational (15%)			54.2%
	Individual (15%): John Pettigrew			100%
	Individual (15%): Andy Agg			90%
	2024/25 APP outcome
		% of Maximum	Actual (£’000)	Maximum (£’000)
	John Pettigrew	91.9%	1,349	1,468
	Andy Agg	90.4%	874	966

Indicates an alternative performance measure

Strategic Report Corporate Governance Financial Statements Additional Information 127

	Implementation in 2024/25 (pages 128 - 137)				Implementation in 2025/26 (pages 147 - 149)
LTPP	2022 LTPP				2025 LTPP Award levels will remain at 350% of salary for the CEO and 300% of salary for the CFO Measures for 2025 LTPP: •Group RoE (40%) •Group Underlying EPS (40%) •Reduction of Scope 1 emissions (10%) •Enablement of strategic growth initiative (10%)
	Award levels were 350% of salary for the CEO and 300% of salary for the CFO
	Performance measures (%) weighting			Outturn (% of max)
	Underlying EPS (40%)			100%
	Group RoE (40%)			46.0%
	Reduction of Scope 1 emissions (10%)			100%
	Enablement of energy transformation (10%)			79.0%
	2022 LTPP outcome
		% of Maximum	Actual (£’000)	Maximum (£’000)
	John Pettigrew	76.3%	3,392	4,445
	Andy Agg	76.3%	1,913	2,507
Shareholding requirements	John Pettigrew and Andy Agg have met their shareholding requirements The above chart excludes shares subject to continued employment (shares held as part of the Sharesave scheme).				Shareholding requirements remain unchanged
Non-executive Director fees	All Non-executive Directors’ fees, including the Chair, increased by 4.5% – below the average increase of 5.0% across the UK wider workforce				•All Non-executive Directors’ fees, including the Chair, will be increased by 4.0% – below the wider workforce principles (5%)

128	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Statement of implementation of Policy in 2024/25

Statement of implementation of Policy in 2024/25

Content contained within a grey box indicates that all the information in the panel is audited

2024/25 remuneration implementation

Single total figure of remuneration – Executive Directors

The following table shows a single total figure of remuneration in respect of qualifying service for 2024/25, together with comparative figures for

2023/24. All figures shown to £’000:

	John Pettigrew		Andy Agg
	2024/25	2023/24	2024/25	2023/24
Salary	1,175	1,125	773	741
Benefits	40	87	25	29
Pension	141	135	93	89
Total fixed pay	1,356	1,347	891	859
APP	1,349	1,062	874	674
LTPP	3,392	3,704	1,913	2,035
Total variable pay	4,741	4,766	2,787	2,709
Total remuneration	6,097	6,113	3,678	3,568

Notes:

Salary: John Pettigrew’s and Andy Agg’s salaries increased by 4.5% to £1,187,300 and £781,500 as of 1 July 2024 respectively – below the average increase of 5.0% across the UK wider

workforce.

Benefits: This includes private medical insurance, life assurance, allowance under the Group’s flexible benefits programme, travel and accommodation expenses, a fully expensed car or cash

alternative and the use of a car and a driver when required. John Pettigrew received £12,000 for his company car allowance, £2,455 for life assurance, £1,208 for private medical insurance and

£17,015 for the use of a car and driver for 2024/25 (2023/24: £70,848). Andy Agg received £12,000 for his company car allowance, £6,597 for life assurance, £2,613 for private medical insurance

and £4,568 for taxable accommodation and travel expenses for 2024/25. A Sharesave option award was granted to John Pettigrew on 13 January 2025 and the benefit (approximately £7,500) of

this award is included. There were no Sharesave options granted to Andy Agg during 2024/25.

Pension: Pension contributions for John Pettigrew and Andy Agg were 12% of salary for 2024/25.

LTPP: The 2022 LTPP is due to vest in July 2025. The average share price over the three months from 1 January 2025 to 31 March 2025 of 962.17 pence has been applied and estimated dividend

equivalents are included. The value of the 2022 LTPP award is driven in part by the share price change of 10.0% from date of grant to date of vest and TSR of 9.5% over the three-year

performance period. The 2021 LTPP figures (included in the 2023/24 column) have been restated to reflect the actual share price on vesting, the numbers of shares that vested due to the Rights

Issue and all dividend equivalent shares. The number of shares that vested were impacted by the Rights Issue, as a result 418,303 shares vested for John Pettigrew and 229,837 shares vested for

Andy Agg. As the vesting share price of 885.40 pence was lower versus the estimate of 1,043.70 pence (and the reduced dividend equivalent shares added for the dividend with a record date of 7

June 2024 with a dividend rate of 39.12 pence per share), the actual value at vesting was £240,345 lower than for the estimate published last year for John Pettigrew and £132,023 lower for Andy

Agg.

Malus and clawback: The Committee considered whether any or all of an award should be forfeited, even if already paid, due to exceptional circumstances outlined in our Policy and determined

that no action was required.

Total pension benefits

John Pettigrew and Andy Agg received a cash allowance in lieu of participation in a pension arrangement. There are no additional benefits on early

retirement. The values of pension contributions, received during this year, are shown in the single total figure of remuneration table.

John Pettigrew has, in addition, accrued defined benefit (DB) entitlements. He opted out of the DB scheme on 31 March 2016 with a deferred

pension and lump sum payable at his normal retirement date of 26 October 2031. At 31 March 2025, John Pettigrew’s accrued DB pension was

£111,699 per annum and his accrued lump sum was £335,096. No additional DB entitlements have been earned over the financial year, other than

an increase for price inflation due under the pension scheme rules and legislation. Under the terms of the pension scheme, if he satisfies the ill-

health requirements or he is made redundant, a pension may be payable earlier than his normal retirement date. A lump sum death in service

benefit is also provided in respect of these DB entitlements.

2024/25 APP

For 2024/25 APP, financial measures represent 70% of the award and operational measures and individual objectives equally represent 15% each

of the award similar to 2023/24. Payment of the APP award is made 50% in shares and 50% in cash. Shares (after any sales to pay associated tax)

must be retained until the shareholding requirement is met, and in any event for a minimum of two years after receipt.

For financial measures, threshold, target and stretch performance levels are set by the Committee for the performance period and pay out at 0%,

50% and 100% of the maximum calculated on a straight-line basis. Operational measures have been assessed on a four-point scale (not met,

partially achieved, achieved and over-achieved) based on quantitative targets set at the beginning of the year by the Committee. Target and

stretch performance levels for the individual objectives are also predetermined by the Committee for the performance period, and an assessment

of the performance relative to the target and stretch performance levels is made at the end of the performance year on each objective. Executive

Directors have a maximum opportunity of 125% of salary for 2024/25.

APP – Financial performance

The financial measures (70%) were weighted equally between two measures – Group Underlying EPS and Group RoE. The Group has continued

to deliver strong financial performance with record levels of capital expenditure, Rights Issue delivery and successful completion of the ESO sale.

Strategic Report Corporate Governance Financial Statements Additional Information 129

The financial performance outcomes of the 2024/25 APP award are summarised in the table below:

Measure		Weighting (% of APP)	Threshold	Target	Stretch	Outcome (% of max)
Group Underlying EPS (pence)		35%	67.0	70.0	73.0	100%
				73.3
Group RoE (%)		35%	8.2%	8.6%	9.0%	96.5%
				8.97%
Total financial outturn		70%				98.3%

Notes:

Group Underlying EPS: Technical adjustments have been made which reduce the performance range (including threshold, target and stretch) by 1.0 pence. This reflects the net effect of currency

adjustments, scrip issuances, US pension assumptions and US/UK pension interest.

Group RoE: Targets have been adjusted to reflect a change in the calculation methodology (approved by the Audit and Risk Committee) to reflect amortisation of goodwill and other indefinite life

intangible assets (ILIs) over 20 years (see page 292). This increased the target by 1.1% from 7.5% to 8.6%.

APP – Operational performance

The operational measures (15%) were weighted equally between three key measures:

•Customer: Group customer satisfaction index;

•Colleague: ‘Delivering Results’ index; and

•Colleague: ‘Inclusion’ index.

Operational measures were assessed on a four-point scale (not met, partially achieved, achieved and over-achieved) based on quantifiable targets

where possible and qualitative outcomes to reflect a balanced assessment of performance. Overall, there was a mixed performance against each

measure with Inclusion goals being achieved and customer and delivering results scores being partially achieved. This resulted in a combined

outcome of 54.2% of maximum.

Measure	Details	Assessment	Outcome
Customer: Group customer satisfaction index (5%)	Blend of customer scores across the business units all equally weighted: •Customer Relationship Index for New York and New England; •Quality of connections, Broad Measure of Customer Service and Major Connections Satisfaction Score for UK ET and UK ED; and •Customer output measures for NGV.	The customer scores for New York and New England were not met partly due to the impact of high bills for residential customers	Not met
		UK ET customer score was achieved due to prioritising in-year tactical actions including proactive New Year communications	Achieved
		UK ED customer score was not met partly due to Storm Darragh and the impact on customer satisfaction	Not met
		NGV customer scores have been achieved with strong performance with effective strategies to maximise interconnector arbitrage	Achieved
		Further detail on customer satisfaction can be found on page 50.
			37.7%
Colleague: Group ‘Delivering Results’ index (5%)	Index in our annual employee engagement survey (Grid:Voice) that assesses the Company values, and measures how the Company has improved the culture and achieved its vision and strategic priorities for this year.	Group ‘Delivering Results’ was 25% (at threshold). The scores show a mixed picture across the business with only some business units achieving their targets. This highlighted the areas where we can direct more resources	Partially met
			25.0%
Colleague: Group ‘Inclusion’ index (5%)	Index in our annual employee engagement survey (Grid:Voice) that assesses whether employees feel included at National Grid.	Inclusion scores were achieved and showed that employees are valued, feel included and are able to be themselves at work	Over-achieved
			100%
Combined operational outcome			54.2%

APP – Individual objectives

In addition to the financial and operational goals outlined above, the Board approves annual individual performance for the Executive Directors in

line with key operational and strategic priorities. As part of the process for assessing individual performance, the Chief Executive provided the

Board with a comprehensive review of company performance and his individual contributions relative to the previously adopted goals. Upon

assessment, the Board considered that the Chief Executive’s performance had contributed significantly to the progress made across each of the

goals. The Chief Executive undertook the same process for the Chief Financial Officer and presented his recommendations to the Committee in

March 2025. The following table sets out the 2024/25 individual objectives together with associated performance commentaries and the

Committee’s assessment of the performance outcome for each of the Executive Directors:

130	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Statement of implementation of Policy in 2024/25 continued

Individual objectives and performance summary – John Pettigrew	Outcome
Continue the journey to a Networks Plus company •Successful Rights Issue and launch of our refined strategy •Divested the ESO, completed the disposition of gas transmission, agreed sale of NGR and initiated sale of our Isle of Grain LNG facility •Delivered a record level of capital expenditure, on time, on budget and safely	100%
Elevate the regulatory and public affairs profile of National Grid •Effected changes in leadership, staffing, strategy and activities of the regulatory and public affairs functions to increase impact •Enhanced cooperation and trust with Ofgem •Successfully agreed rate cases in New York and Massachusetts with 70% of our capital plan now agreed
Address the challenges of true transformation •Digital transformation of US customer service functions, successfully converting all six million customers to a single platform •Undertook efforts to leverage the transformational potential of generative AI •Through NGV, maintained commitment to invest in technologies which will increase the automation and efficiency of grid operations
Invest in Talent and Leadership •Achieved continued improvement in key metrics recorded via the culture diagnostic survey of all employees •Enhanced engagement with the various senior leadership groups, reinforcing the values driven culture and the importance of people •Continued to strengthen the Group Executive Committee with new executive hires and promotions

Individual objectives and performance summary – Andy Agg	Outcome
Ensure financing decisions that deliver the Group strategy are well understood by the Board with strong external investor support •Successful Rights Issue and resulting share price performance •Five year frame launch met with positive market sentiment with investor focus on delivery of capex step-up •Investor perception metrics (Net confidence and Net Satisfaction scores) higher than pre Rights Issue and exceed peer benchmarks •Successful delivery of debt financing strategy	90%
Deliver regulator outcomes in line with Board expectations and yield a positive investor reaction •NGET RIIO-T3 price control: Steady progress with submission positively positioned •MECO rate case filing: Supported delivery of a landmark outcome •Simplified the internal performance framework and introduced senior leader performance-focused sessions
Deliver a step change in organisational capabilities that enable Group-wide efficiency targets to be met, and facilitate capital growth to time and cost •Strong progress on the Enterprise Business Services strategy and finalised the delivery model •Delivered efficiency savings ahead of target •Strengthened financial controls, including increases in automation and lower level of deficiencies than prior year •A number of transactions successfully completed during the year along with the NGR sale announcement
Build capability: Drive the identification and development of talent into the right pipelines and succession for CFO •Senior team succession planning well developed to ensure full coverage of two successors over different timelines •Full utilisation of leadership development programmes

2022 LTPP

Performance conditions

The 2022 LTPP will vest on 1 July 2025 and was based on two equally weighted financial measures, Group Underlying EPS (40%) and Group RoE

(40%). The remaining 20% weighting was split equally between two non-financial measures, Reduction of Scope 1 emissions (10%) and Enablement of

energy transformation (10%). The financial targets and weightings of the 2022 LTPP below are the same for both Executive Directors.

As detailed in the Chair letter, the outturns of the 2022 LTPP are reflective of the business’ performance over the period and are summarised

below. During the performance period, we have delivered record levels of capital expenditure and, with increased clarity about the scale of

investment ahead of us, successfully raised £7 billion of equity through a Rights Issue. We have maintained strong earnings against a complex

landscape of macroeconomic and geopolitical challenges, navigated the start of UK ED’s five year RIIO-2 regulatory framework, alongside new

rate cases in the US and all while maintaining a continued focus on the need to drive efficiency. The outturns are summarised below:

Performance measure		Weighting	Threshold 20% vesting	Maximum 100% vesting		Outcome (% of max)
Cumulative three-year Underlying Group EPS		40%	185p	203p		100%
			213p
Group RoE		40%	11.0%		12.3%
			11.4%			46.0%
National Grid Scope 1 emissions		10%	‘-56ktCO2e	'-132ktCO2e
			‘-139ktCO2e			100%
Enablement of energy transformation: Strategic initiatives (Scope 2 and 3)		10%	Four strategic initiatives assessed on a four-point scale
			79.0%			79.0%
						76.3%

Notes:

Group RoE: Underlying EPS and Group RoE performance targets were adjusted for the impacts of the Rights Issue to ensure participants were in the same position as pre-Rights Issue. In

addition, EPS targets were further adjusted to reflect the change in the underlying EPS definition to exclude the impact of UK regulated Deferred Tax. This change has a positive impact on

underlying EPS but is economically neutral in the medium to long term. EPS targets were adjusted on a nil gain / nil loss basis, it does not impact our performance conditions for Group RoE. In

addition, RoE targets have been adjusted to reflect a change in the calculation methodology (approved by the Audit & Risk Committee) to reflect amortisation of goodwill and other indefinite

life intangible assets (ILIs) over 20 years (see p292).

Strategic Report Corporate Governance Financial Statements Additional Information 131

Vesting

The performance period for the 2022 LTPP ended on 31 March 2025. Across the period, performance was based on financial measures (80%) and

energy transformation measures (20%), as set out in the 2021/22 Annual Report.

The overall outcome of the 2022 LTPP was 76.3% of maximum, with 58.4% of the total award vesting linked to financial measures, driven by

achievement of 100% of maximum for Group Underlying EPS and 46.0% of maximum for Group RoE, both weighted equally; 17.9% of the total

LTPP award vested in relation to the energy transformation measures, driven by achievement of 100% of maximum for Scope 1 emissions and

79.0% of maximum for enablement of energy transformation, both weighted equally.

As highlighted in the Chair letter, when assessing the degree to which the financial performance portion reflected the shareholder experience and

the management’s performance against targets set, the Committee noted that the financial outcome would be significantly impacted by

exceptional macro-economic factors during the period which were not anticipated when targets were set. The Committee has therefore calculated

RoE by taking account of the impact of the exceptional macro economic factors during the period on the RoE calculation. This results in 11.41%

Group RoE, leading to 46.0% of maximum vesting for this portion of the award. Taking account of this impact reduced the Group EPS outturn

figure but did not impact the associated vesting outcome.

The Scope 1 emissions outturn at maximum was driven by SF6 emission reductions, vehicle fleet emissions and Grain operation emissions

reduction. The strong enablement of energy transformation performance was driven by energy efficiency programmes and distribution

connections. The Committee is satisfied that the overall LTPP vesting outturn also reflects underlying business performance and the shareholder

experience. This results in the 2022 LTPP outturn being 76.3% of maximum.

The amounts due to vest under the 2022 LTPP for the performance period that ended on 31 March 2025 are included in the 2024/25 single total

figure table on page 128 and are shown in the table below. The current share price valuation is an estimate based on the average share price over

the three months from 1 January 2025 to 31 March 2025 of 962.17 pence and the proposed 2024/25 final dividend with record date of 30 May

2025, subject to shareholder approval, is included. The total number of shares subject to awards which vest (after any sales to pay associated

income tax and social security), including dividend equivalent shares are subject to a two-year holding period.

The Committee considered wider business factors, such as underlying financial performance, ESG considerations, potential windfall gains and

shareholder experience, when determining the final outturn for the 2022 LTPP and were comfortable that no adjustments were required.

	Shares awarded	Rights Issue adjustment	Total number of shares	Performance outcome (% of maximum)	Vested shares based on performance	Face value of the award at grant (£’000)	Total value (£’000)
John Pettigrew	357,606	38,263	395,869	76.3	302,095	3,230	3,392
Andy Agg	201,727	21,584	223,311	76.3	170,413	1,822	1,913

Assessment of National Grid shareholder returns

National Grid plc’s 10-year annual TSR performance against the FTSE 100 Index since 31 March 2015 is shown below and illustrates the growth in

value of a notional £100 holding invested in National Grid plc on 31 March 2015, compared with the same invested in the FTSE 100 Index. The

FTSE 100 Index has been chosen because it is a widely recognised performance benchmark for large companies in the UK and it is a useful

reference to assess relative value creation for National Grid plc shareholders. Over the last 10-year period, National Grid plc’s TSR is 101% versus

the FTSE 100 Index at 85%, demonstrating sustainable long-term value for our shareholders.

Total Shareholder Return (£)

132	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Statement of implementation of Policy in 2024/25 continued

2024 LTPP

Performance conditions

For the 2024 LTPP, the performance measures comprise two equally weighted financial measures totalling 80% and two equally weighted energy

transformation measures totalling 20% over the three-year performance period, as outlined in the table below.

Performance measure		Weighting	Threshold 20% vesting	Maximum 100% vesting
Cumulative three-year Underlying Group EPS		40%	216p	234p
Group RoE		40%	8.70%	9.95%
Reduction of Scope 1 emissions		10%	6%	12%
Enablement of energy transformation: Strategic initiatives (Scope 2 and 3)		10%	Four strategic initiatives: US energy efficiency programmes, low-carbon generation connections, US future of gas strategy, grid connections reform.

Notes: Vesting between threshold and maximum will be on a straight-line basis.

Conditional awards made during the year

The face value of the awards is calculated using the volume weighted average share price at the date of grant. The share price at the date of grant on 23

July 2024 was 948.45 pence. The 2024 LTPP will vest on 1 July 2027. The total number of shares subject to awards which vest (after any sales to pay

associated income tax and social security), including dividend equivalent shares are subject to a two-year holding period following vesting.

	Basis of award (% of salary)	Number of shares	Face value (£’000)	Proportion vesting at threshold performance	Performance period end date
John Pettigrew	350%	438,141	4,156	20%	31 March 2027
Andy Agg	300%	247,193	2,345	20%	31 March 2027

Statement of Directors’ shareholdings and share interests

The Executive Directors are required to build up and hold a shareholding from vested share plan awards until their shareholding requirement is

met. Until this point, Executive Directors will not be permitted to sell shares, other than to pay income tax liabilities on shares just vested or in

exceptional circumstances approved by the Committee. The following table shows the position of each of the Executive Directors in relation to the

shareholding requirement, including their connected persons. The shareholding is as at 31 March 2025 and the salary used to calculate the value

of the shareholding is the gross salary as at 31 March 2025. The table also presents the number of shares owned by the Non-executive Directors,

including their connected persons.

Both John Pettigrew and Andy Agg have met their shareholding requirement.

Further shares have been purchased in April and May 2025 on behalf of each of John Pettigrew and Andy Agg as part of the Share Incentive Plan

(SIP) (an HMRC tax-advantaged all-employee share plan), thereby increasing the beneficial interests by 29 shares (15 in April and 14 in May) for

both John Pettigrew and Andy Agg. There have been no other changes in Directors’ shareholdings between 1 April 2025 and 14 May 2025.

Directors	Share ownership requirements (multiple of salary)	Number of shares/ADSs owned outright (including connected persons and SIP for Executive Directors)	Value of shares held as a multiple of current salary (excluding closely connected persons)	Number of options granted under the Sharesave Plan	Conditional share awards subject to performance conditions (LTPP 2022, 2023 and 2024)
Executive Directors
John Pettigrew	500%	1,900,220	1,616%	8,889	1,254,813
Andy Agg	400%	756,754	978%	4,777	707,894
Non-executive Directors
Paula Rosput Reynolds (ADSs)	—	22,622	—	—	—
Anne Robinson (ADSs)	—	—	—	—	—
Earl Shipp (ADSs)	—	6,046	—	—	—
Iain Mackay	—	—	—	—	—
Ian Livingston	—	2,374	—	—	—
Jacqui Ferguson	—	—	—	—	—
Jonathan Silver (ADSs)	—	—	—	—	—
Martha Wyrsch (ADSs)	—	25,000	—	—	—
Tony Wood	—	2,583	—	—	—

Notes:

John Pettigrew: On 31 March 2025, held 4,670 options granted under the Sharesave Plan with an exercise price of 711 pence per share (the 20% discounted option price) which can, subject

to their terms, be exercised at 711 pence per share between 1 April 2025 and 30 September 2025. On 31 March 2025, also held 4,219 options granted under the Sharesave Plan with an

exercise price of 743 pence per share (the 20% discounted option price) which can, subject to their terms, be exercised at 743 pence per share between 1 April 2027 and 30 September 2027.

The number of conditional share awards subject to performance conditions is as follows: 2022 LTPP: 395,869; 2023 LTPP: 420,803; 2024 LTPP: 438,141.

Andy Agg: On 31 March 2025, held 4,777 options granted under the Sharesave Plan with an exercise price of 695 pence per share (the 20% discounted option price) and they can, subject to

their terms, be exercised at 695 pence per share between 1 April 2026 and 30 September 2026. The number of conditional share awards subject to performance conditions is as follows: 2022

LTPP: 223,311; 2023 LTPP: 237,390; 2024 LTPP: 247,193.

Paula Rosput Reynolds, Anne Robinson, Earl Shipp, Jonathan Silver and Martha Wyrsch: Holdings are shown as American Depositary Shares (ADSs) and each ADS represents five ordinary

shares.

Strategic Report Corporate Governance Financial Statements Additional Information 133

Post-employment shareholding requirements

Past Executive Directors are required to continue to hold their vested shares/ADSs post employment for a period of two years in line with our

current Policy.

To enforce this, the Executive Directors have given permission for the Group to periodically check with its third-party share scheme administrator

whether the minimum shareholding requirement is being maintained. The Executive Directors have acknowledged that if they breach their post-

employment shareholding requirement for any reason, the Group may enforce at its discretion one or more of the following processes: to request

they repay to the Group an amount equivalent in value to the shareholding requirement that has not been met; the Group may withdraw/vary the

vesting of any future shares granted under the LTPP; the Company may publish a public statement in a form, as the Group may decide, that the

Director has failed to comply with the post-employment shareholding requirement. Executive Directors are reminded annually and when employed,

of the post-employment shareholding requirement. At termination, the minimum shareholding requirement is confirmed to the Director and checks

are made by the Group at the 12-month and 24-month anniversary of leaving and at the relevant financial year end, 31 March, to ascertain if their

post-employment shareholding requirement has been met. 

Shareholder dilution

All Company employees are encouraged to become shareholders through a number of all-employee share plans and a significant proportion of our

employees participate annually. These plans include Sharesave and the SIP in the UK and the US Employee Stock Purchase Plan (ESPP) and US

Incentive Thrift Plan (commonly referred to as a 401(k) plan) in the US which are summarised on page 275 and in our Policy.

Where shares may be issued or treasury shares reissued to satisfy incentives, the aggregate dilution resulting from executive or discretionary

share-based incentives will not exceed 5% in any 10-year period. Dilution resulting from all incentives, including all-employee incentives, will not

exceed 10% in any 10-year period. The Committee reviews dilution levels against these limits annually and under these limits the Company, as at

31 March 2025, had a headroom of 4.04% and 8.18% respectively.

Unvested or unexercised awards under our all-employee and discretionary share plans have been adjusted to take account of the Rights Issue.

Chief Executive pay ratio

We have disclosed our Chief Executive pay ratios comparing the single total figure of remuneration of the Chief Executive to the equivalent pay for

the 25th percentile, median and 75th percentile UK employees (calculated on a full-time equivalent basis), as well as the median Group-wide pay

ratio.

The Chief Executive pay ratio has decreased from 90:1 to 85:1 at the UK median, primarily due to the impact of the 2022 LTPP award which

reduced the Chief Executive’s single total figure of remuneration this year as well as the pay and benefits of employees increasing from last year.

This has also caused the Group median pay ratio to decrease when compared to last year.

Excluding estimated 2022 LTPP vesting, our UK median pay ratio has increased from 34:1 in 2023/24 to 38:1 this year and our Group pay ratio has

increased from 25:1 in 2023/24 to 27:1 this year.

		UK			Group-wide
Year	Method	25th percentile pay ratio	Median pay ratio	75th percentile pay ratio	Median pay ratio
2024/25	Option A	112	85	65	61
2023/24	Option A	117	90	69	65
2022/23	Option A	144	111	86	76
2021/22	Option A	135	105	81	76
2020/21	Option A	104	81	62	54
2019/20	Option A	111	86	66	53
2018/19 – voluntary	Option A	96	76	58	48

Notes: Salaries as at 31 March 2025 and estimated performance-based annual payments for 2024/25 have been annualised for part-time employees to reflect full-time equivalents.

Performance payments have not been further adjusted to compensate where new employees have not completed a full performance year. The comparison with UK employees is specified by

the 2018 amendment of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. US employees represent approximately 57% of our total employees.

Our median pay ratio on a Group-wide basis is outlined above and calculated on the same basis as the UK pay ratios and at an exchange rate of $1.26637:£1.

Changes in the Chief Executive pay ratio reflect the fact that a key feature of our executive and senior leadership remuneration strategy is heavily

weighted towards longer-term performance share-based reward, resulting in larger swings year-on-year than the wider workforce. Across the

wider workforce, employee remuneration is largely focused on in-year annual delivery.

The 2024/25 salary and total pay including benefits for the Chief Executive versus UK employees is shown below.

2024/25 salary and benefits – Chief Executive versus UK wider workforce

	Chief Executive remuneration	UK employee 25th percentile	UK employee median	UK employee 75th percentile
Salary	£1,174,525	£43,263	£49,475	£64,161
Total pay and benefits	£6,097,088	£54,440	£71,802	£94,191

We have chosen to use Option A in calculating the ratios, which is a calculation based on the pay of all UK employees on a full-time equivalent

basis, as this option is considered to be more statistically robust. The ratios are based on total pay and benefits inclusive of short-term and long-

term incentives applicable for the respective financial year (1 April – 31 March). The reference employees at the 25th, median and 75th percentile

have been determined by reference to pay and taxable benefits as at the last day of the respective financial year, 31 March, with estimates for the

respective APP payouts and performance outcomes of the LTPP and dividend equivalents.

134	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Statement of implementation of Policy in 2024/25 continued

We are satisfied that the median pay ratio reported this year is consistent with our wider pay, reward and progression policies for employees. The

median reference employee falls within our collectively bargained employee population and has the opportunity for annual pay increases, annual

performance payments and career progression and development opportunities. The Chief Executive received a pay increase of 4.5% in 2024/25,

below the UK wider workforce increase of 5.0%. For reference, in 2025/26, the Chief Executive will receive a 5.0% pay increase, which is on par

with the wider UK workforce principles (5.0%).

Relative importance of spend on pay

The chart below shows the relative importance of spend on pay compared with other costs and disbursements (dividends, tax, net interest and

capital expenditure). Given the capital-intensive nature of our business and the scale of our operations, these costs were chosen as the most

relevant measures for comparison purposes. All amounts exclude exceptional items and remeasurements.

Relative importance of spend on pay

4%

6%

-12%

-8%

24%

Notes:

1.Presented on a continuing basis only

2.  Percentage increase/decrease of the costs between years is shown

Chief Executive’s pay in the last 10 financial years

Steve Holliday was Chief Executive in 2015/16. John Pettigrew became Chief Executive on 1 April 2016.

	Steve Holliday	John Pettigrew
	2015/16	2016/17	2017/18	2018/19	2019/20	2020/21	2021/22	2022/23	2023/24	2024/25
Single total figure of remuneration (£’000)	5,151	4,623	3,648	4,651	5,205	5,071	6,614	7,262	6,113	6,097
Single total figure of remuneration including only 2014 LTPP (£’000)		3,931
APP (proportion of maximum awarded)	94.60%	73.86%	82.90%	84.20%	70.58%	80.43%	85.20%	82.62%	75.50%	91.92%
LTPP (proportion of maximum vesting)	63.45%	90.41%	85.20%	84.20%	84.90%	68.00%	74.22%	100.00%	81.87%	76.31%

Notes:

John Pettigrew: The single total figure of remuneration for 2024/25 is explained in the single total figure of remuneration table for Executive Directors and the single total figure for 2023/24 has

been restated to reflect actual share price for 2021 LTPP vesting in 2024 and all dividend equivalent shares, consistent with comparative figures shown in this year’s single total figure of

remuneration table.

2014 LTPP: The 2016/17 single total figure of remuneration includes both the 2013 LTPP award and the 2014 LTPP award due to a change in the vesting period from four years (2013 LTPP) to

three years (2014 LTPP).

LTPP plans: Prior to 2014, LTPP awards were made under a different long-term incentive framework which incorporated a four-year performance period for the RoE element of the awards. The

last award under this framework was made in 2013 and was fully vested in 2017. Awards made from 2014 are subject to a three-year performance period. The first of these awards vested in 2017.

Strategic Report Corporate Governance Financial Statements Additional Information 135

Single total figure of remuneration – Non-executive Directors The following table shows a single total figure in respect of qualifying service for 2024/25, together with comparative figures for 2023/24:
	Fees (£’000)		Other emoluments (£’000)		Total (£’000)
	2024/25	2023/24	2024/25	2023/24	2024/25	2023/24
Paula Rosput Reynolds	724	700	51	56	775	756
Anne Robinson	121	116	1	11	123	127
Earl Shipp	129	124	7	11	136	134
Iain Mackay	158	143	40	22	198	165
Ian Livingston	189	162	1	—	190	162
Jacqui Ferguson	123	27	3	1	126	28
Jonathan Silver	120	122	4	12	124	133
Martha Wyrsch	134	123	10	8	145	131
Tony Wood	118	113	6	14	124	128
Total	1,816	1,629	123	135	1,941	1,764
Notes: Non-executive Director fee increases approved in 2023/24 were effective from 1 July 2024. Other emoluments: In accordance with the Group’s expenses policies, Non-executive Directors receive reimbursement for their reasonable expenses for attending Board meetings. In instances where these costs are treated by HMRC as taxable benefits, the Group also meets the associated tax cost to the Non-executive Directors through a PAYE settlement agreement with HMRC and these costs are included in the table above. Jacqui Ferguson: Joined the Safety & Sustainability Committee as a member effective 5 July 2024. Jonathan Silver: Stepped down as member of Audit & Risk Committee and joined the Finance Committee effective 5 July 2024. The total emoluments paid to Executive and Non-Executive Directors in the year were £11.7 million (2023/24: £11.7 million).

Percentage change in remuneration

(Executive Directors, Non-executive Directors, employee average)

We have included percentage change in salary/fee, bonus and benefits for each of the Directors compared with prior years. The regulations cover

employees of the Parent Company only and not across the Group, and given most employees, if not all, are employed by subsidiary undertakings,

we have voluntarily chosen a comparator group of all employees in the UK and the US to provide a representative comparison. In line with the

regulations, we now disclose this information to display a five year history.

	2020/21			2021/22			2022/23			2023/24			2024/5
Executive Directors	Salary	Benefits	Bonus	Salary	Benefits	Bonus	Salary	Benefits	Bonus	Salary	Benefits	Bonus	Salary	Benefits	Bonus
John Pettigrew	1.3%	(4.7)%	15.4%	1.7%	(8.8)%	7.8%	3.4%	(42.0)%	0.3%	3.9%	48.9%	(5.0)%	4.4%	(54.0)%	27.0%
Andy Agg	4.9%	40.6%	17.7%	6.5%	(31.6)%	15.9%	6.5%	32.6%	2.1%	4.6%	0.3%	(7.8)%	4.4%	(14.3)%	29.6%
Non-executive Directors
Paula Rosput Reynolds	n/a	n/a	n/a	2816.8%	n/a	n/a	16.9%	217.1%	n/a	—%	0.4%	n/a	3.4%	(9.2)%	n/a
Anne Robinson	n/a	n/a	n/a	n/a	n/a	n/a	474.0%	n/a	n/a	5.4%	(23.7)%	n/a	4.3%	(89.4)%	n/a
Earl Shipp	0.5%	(100.0)%	n/a	8.6%	n/a	n/a	9.0%	208.6%	n/a	0.7%	(51.6)%	n/a	4.4%	(31.1)%	n/a
Iain Mackay	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	60.7%	9695.4%	n/a	10.2%	86.5%	n/a
Ian Livingston1	n/a	n/a	n/a	n/a	n/a	n/a	113.2%	3.0%	n/a	14.3%	(100.0)%	n/a	16.9%	n/a	n/a
Jacqui Ferguson2	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	362.3%	166.7%	n/a
Jonathan Silver	14.3%	(100.0)%	n/a	(4.2)%	n/a	n/a	24.5%	383.6%	n/a	(1.7)%	(74.2)%	n/a	(0.9)%	(66.2)%	n/a
Martha Wyrsch	n/a	n/a	n/a	n/a	n/a	n/a	111.0%	280.3%	n/a	4.5%	(30.6)%	n/a	9.6%	27.7%	n/a
Tony Wood	n/a	n/a	n/a	n/a	n/a	n/a	144.2%	857.5%	n/a	(3.1)%	(19.0)%	n/a	4.3%	(60.0)%	n/a
Employee median	(8.5)%	1.7%	(5.5)%	2.8%	6.1%	40.0%	12.4%	36.4%	(23.0)%	5.0%	6.6%	(3.8)%	2.3%	3.6%	(8.0)%

Notes:

1.Ian Livingston received no benefits during 2023/24.

2.Jacqui Ferguson was appointed to the Board on 1 January 2024, therefore 2023/24 fees and benefits were prorated.

3.Benefits/other emoluments: For Executive Directors, benefits include private medical insurance, life assurance, allowance under the Group’s flexible benefits programme, travel and

accommodation expenses, a fully expensed car or cash alternative and the use of a car and a driver when required. For Non-executive Directors, the equivalent of benefits is emoluments. In

accordance with the Group’s expenses policies, Non-executive Directors receive reimbursement for their reasonable expenses for attending Board meetings. In instances where these costs are

treated by HMRC as taxable benefits, the Group also meets the associated tax cost to the Non-executive Directors through a PAYE settlement agreement with HMRC and these costs are

included in the table above. The 2022/23 year-on-year increase on Non-executive Directors benefits was due to global travel returning to pre-pandemic levels; therefore Directors travelled

several times during the year incurring travel/accommodation expenses.

136	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Statement of implementation of Policy in 2024/25 continued

Service contracts/letters of appointment

In line with our Policy, all Executive Directors have service contracts which are terminable by either party with 12 months’ notice commencing

immediately after announcement. Non-executive Directors are subject to letters of appointment. The Board Chair’s appointment is subject to six

months’ notice by either party; for other Non-executive Directors, notice is one month. All Directors are required to be elected at each AGM.

There have been no changes made to Directors’ service contracts and letters of appointment, other than the additional US Clawback Policy, which

was adopted in line with the New York Stock Exchange rules requirement. Copies of service contracts and letters of appointment are available for

inspection at the Company’s registered office.

Payments for loss of office and payments to past Directors

There were no payments made to past Directors during 2024/25.

External appointments and retention of fees

As per our Policy, Executive Directors may, with the approval of the Board, accept one external appointment as a Non-executive Director of

another company and retain any fees received for the appointment. Experience as a board member of another company is considered to be

valuable personal development, which in turn is of benefit to the Company. The table below details the Executive Directors’ appointments as Non-

executive Directors in other companies during the year ended 31 March 2025.

	Company	Retained fees
John Pettigrew	Rentokil Initial plc	£97,250
Andy Agg	The Weir Group plc	£85,567

Role of the Remuneration Committee

The Committee is responsible for recommending to the Board the Remuneration Policy for the Executive Directors. The Committee is also

responsible for approving the remuneration of the other members of the Group Executive Committee and the Chair. The aim is to align the Policy

to the Group strategy and key business objectives, and ensure it reflects our shareholders’, customers’ and regulators’ interests. The Committee

receives input on Policy implementation at the wider workforce level before making decisions on matters such as salary increases and annual

incentive payouts and closely reviews the appropriateness of pay positioning by reference to external measures (benchmarking remuneration

packages) and internal review of Group performance and pay gaps (chief executive pay ratios, gender and ethnicity pay gaps) and the relativity

year-on-year of salary, benefits and annual performance incentives compared with the same for the rest of the workforce.

•Clarity: We identify and communicate a range of performance measures in our incentives which clearly link to the successful execution of the

Group’s strategy.

•Simplicity: Elements of our remuneration framework and their purpose are clearly articulated within our market-standard policy and we

believe this is understood by all our stakeholders.

•Risk: Risk is managed in a number of ways and evidenced through our Policy, for example: setting maximum levels for incentive plans;

implementing measures that are aligned to Group performance and shareholder interests; focusing on the long term and creating value

through the LTPP; reviewing formulaic outcomes; malus and clawback provisions including the new US Clawback Policy; and having a high

shareholding requirement for senior executives.

•Predictability: Full information on the potential values which could be earned are disclosed; our Policy outlines threshold, target and

maximum opportunity with varying actual incentive outcomes dependent on performance; and all the checks and balances set out above

under Risk are disclosed as part of the Policy.

•Proportionality: While incentive plans reward executives’ performance in successfully delivering the business strategy, there is also a focus

on sustaining this through holding periods that apply to vested shares and annual incentives paid out as shares; all executives are also

subject to significant shareholding and post-employment shareholding requirements. The Policy does not reward poor performance and the

range of potential payouts under the Policy is appropriate.

•Alignment to culture and strategy: Our culture recognises that how we do things is as vital as what we do and this is reflected in the type

of performance conditions used in our incentive plans. Both the measures themselves and the targets set aim to reinforce this approach.

Our Policy has operated as intended in terms of Group performance and quantum; a review of key considerations and decisions pertaining to its

implementation is provided in the Committee Chair’s statement.

Strategic Report Corporate Governance Financial Statements Additional Information 137

The Committee’s activities in 2024/25

Meeting/circulations	Main areas of discussion
May 2024	AGM update Approval of 2023/24 APP and 2021 LTPP outcomes for the Group Executive Committee Review of Chair fees Discussion on the 2024/25 APP financial, operational and individual objectives and 2024 LTPP targets for the Group Executive Committee Discussion on the impact of the Rights Issue on employee share schemes Discussion on the 2023/24 Directors’ Remuneration Report Discussion on a number of governance updates, including share dilution limits and shareholding for the Group Executive Committee
July 2024	Approval of 2024/25 APP financial, operational and individual objectives and 2024 LTPP targets for the Group Executive Committee Ensure approved targets reflect the impact of the Rights Issue Discussion on the 2025 Remuneration Policy review
November 2024	Discussion on the 2025 Remuneration Policy and the investor engagement plan for 2024/25 Update on the 2024/25 APP provisional outturns for the Group Executive Committee Update on inflight (2022, 2023 and 2024) LTPP awards
February 2025	Discussion on the 2025/26 APP financial, operational and individual objectives and 2025 LTPP targets for the Group Executive Committee Review of broader workforce remuneration and approval of the Gender and Ethnicity Pay Gap calculation Update on the 2025 Remuneration Policy and feedback from the consultation process
March 2025	External market update and evolving governance Discussion on the 2024/25 expected incentive plan outcomes (APP and outstanding LTPP) for the Group Executive Committee Discussion on the 2025/26 APP financial, operational and individual objectives and 2025 LTPP award for the Group Executive Committee Market data review, salary increase proposals, in context of wider workforce increases, for the Group Executive Committee

Advisors to the Remuneration Committee

PricewaterhouseCoopers LLP (PwC) was selected by the Committee to become its independent advisor from 3 August 2020 and provided advice

and counsel to the Committee throughout 2024/25. PwC is a member of the Remuneration Consultants Group (RCG) and has signed up to RCG’s

code of conduct. The Committee is satisfied that any potential conflicts were appropriately managed. Work undertaken by PwC in its role as

independent advisor to the Committee has incurred fees of £243,881 during the 2024/25 on the basis of time charged to perform services and

deliverables.

The Committee reviews the objectivity and independence of the advice it receives from its advisors each year. It is satisfied that PwC provided

credible and professional advice. PwC has provided general and technical remuneration services in relation to employees below Board and Group

Executive Committee level that include broad-based employee reward support and data assurance services. In addition, WTW provided

benchmarking support to the Committee in the year and incurred fees of £30,240.

The Committee considers the views of the Chair on the performance and remuneration of the Chief Executive, and of the Chief Executive on the

performance and remuneration of the other members of the Group Executive Committee. The Committee is also supported by the Group

Company Secretary, and either he or his delegate acts as Secretary to the Committee; the Chief People Officer; the Group Head of Reward; and,

as required, the Chief Financial Officer, the Group Head of Pensions and the Group Financial Controller.

Voting on the Policy at the 2022 AGM and the Directors’    Remuneration Report at the 2024 AGM

2022 Policy

  Directors’ Remuneration Report 2023/24

 

Notes:

1.The Directors’ Remuneration Policy voting figures shown refer to votes cast at the 2022 AGM and represent 66.28% of the issued share capital. In addition, shareholders holding 42.6

million shares abstained.

2.The Directors’ Remuneration Report voting figures shown refer to votes cast at the 2024 AGM and represent 68.16% of the issued share capital. In addition, shareholders holding 1.0 million

shares abstained.

138	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Directors’ Remuneration Policy

2025 Directors’ Remuneration Policy

Our Remuneration strategy sets out to ensure strong alignment with our strategic priorities and creation of value for shareholders while providing

market competitive remuneration to enable the attraction and retention of top leadership talent. Our existing Policy (adopted in 2022) has

supported the delivery of strong performance to date, and created strong alignment between the success of management, our strategic priorities,

and the shareholder experience. Looking forward, our recent strategic portfolio repositioning and new five year financial framework which includes

a capital investment of c.£60 billion, a nearly two-fold increase to the investment in the prior five years, clearly demonstrate that National Grid is

continuing to evolve in size and complexity. During the decision making process the Committee undertook a review of the current Policy and its

implementation to ensure that our 2025 Directors’ Remuneration Policy (2025 Policy) is future-focused and enables delivery of our five-year

framework. During the review process the Remuneration Committee considered the following: wider workforce remuneration, market practice,

external guidance, input from management and input from our independent advisors. The Committee took measures to avoid conflicts of interest

and no Director was present when their own remuneration was discussed.

In light of the above change to scale and complexity and the associated challenges in delivery, the 2025 Policy includes the following main

changes:

Remuneration element	Summary of proposed Policy changes
Salary	•Change the benchmarking peer group from FTSE 11-40 to FTSE 30.
Annual Performance Plan (APP)	•Increase the maximum opportunity from 125% of salary to 200% for both Executive Directors. •Once the shareholding requirement is met, introduce flexibility to reduce the deferral percentage to one-third (currently half). •Deferral period remains at two years.
Long-Term Performance Plan (LTPP)	•Increase the maximum opportunity from 350% and 300% of salary for the CEO and CFO respectively to 400% and 350% of salary.
Exceptional circumstances APP/LTPP	•Remove the flexibility to award up to 50% of salary in either the APP or LTPP in exceptional circumstances.
Non-executive Director fee governance	•Propose that NED fees are set by the CEO and Chair of the Board, supported by the CPO; previously NED fees were set by the Group Executive Committee in conjunction with the Chair of the Board.
Treatment of dividend equivalents	•At the discretion of the Committee, allow dividend equivalents to be delivered in either cash or shares in order to align with the shareholder-approved LTPP plan rules that allow for dividend equivalents to be delivered in either cash or shares.

Rationale for the above changes are set out in the Remuneration Committee Chair’s letter. We have engaged widely with shareholders and proxy

advisory service organisations and are grateful for the engagement, feedback, and overwhelming positive support on our 2025 Policy proposals.

The Committee is committed to maintaining an open dialogue and members remain available to answer questions throughout the AGM process

and forthcoming year ahead on our 2025 Policy as outlined below. It is the intention that the 2025 Policy will apply to payments made and shares

granted from the date of the 2025 AGM.

Strategic Report Corporate Governance Financial Statements Additional Information 139

Policy tables – Executive Directors

Element	Operation	Maximum levels	Performance assessment
Salary Purpose and link to business strategy: to attract, motivate and retain high-calibre individuals.	Salaries are generally reviewed annually and are targeted broadly at the mid-market of our peer group. However, a number of other factors are also taken into account: •the individual’s skills and experience; •scope of the role, including any changes in responsibility; •market data, including salary and total remuneration; and •incentive opportunity in the relevant comparator group.	No prescribed maximum annual increase although increases are generally aligned to or below salary increases received by other Company employees and to market movements. Increases in excess of this may be made at the Committee’s discretion in circumstances such as a significant change in responsibility, progression if more recently appointed in the role and alignment to mid-market levels.	Not applicable.
Benefits Purpose and link to business strategy: to provide competitive and cost effective benefits to attract and retain high- calibre individuals.	Benefits currently provided include: •company car or a cash alternative (UK only); •use of a car and driver when required; •private medical insurance; •life assurance; •personal accident insurance (UK only); •opportunity to purchase additional benefits (including personal accident insurance for US) under flexible benefits schemes available to all employees; and •opportunity to participate in HMRC (UK) or Internal Revenue Service (US) tax- advantaged all-employee share plans. UK Sharesave: monthly contributions from net salary for a period of three or five years. The savings can be used to purchase shares at a discounted price set at the launch of each plan period. Share Incentive Plan: UK employees may use gross salary to purchase shares. These shares are placed in trust. Employee Stock Purchase Plan (ESPP) (423(b) plan): eligible US employees may purchase ADSs on a monthly basis at a discounted price. Other benefits may be offered at the discretion of the Committee. In circumstances where an Executive Director is located outside of the UK, benefits will be set such that they are competitive in the local market.	The cost of providing benefits will vary from year to year in line with the market. Participation in tax-advantaged all-employee share plans is subject to limits set by relevant tax authorities.	Not applicable.

140	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Directors’ Remuneration Policy continued

Element	Operation	Maximum levels	Performance assessment
Pension Purpose and link to business strategy: to help with future financial wellbeing and assist in attraction and retention.	Externally hired Executive Directors may participate in a defined contribution arrangement or alternatively choose to receive cash in lieu. In case of internal promotion to the Board, the Company will recognise legacy defined benefit pension arrangements of existing employees in both the UK and US where these have been provided under an existing arrangement. In line with market practice, pensionable pay for UK-based Executive Directors includes salary only and for US-based Executive Directors includes salary and APP awards.	UK Directors: Defined contribution: annual contributions for new appointments and existing Executive Directors of up to 12% of salary. Executive Directors may take a full or partial cash supplement in lieu. Life assurance of four times salary and a dependant’s pension of one third of salary is provided. Executives with HMRC pension protection may be offered lump sum life assurance only, equal to four times salary. US Directors: Defined contribution: contributions of up to 9% of salary plus APP award with additional 401(k) plan match up to 4%. Defined benefit: no additional defined benefit entitlements will be earned over the financial years from the date of appointment, other than an increase for price inflation due under the pension scheme rules and legislation. Under the terms of the pension scheme, if the Executive Director satisfies the ill-health requirements, or is made redundant, pension may be payable earlier than the normal retirement date. A lump sum death in service benefit is also provided in respect of these defined benefit entitlements.	Not applicable. The current Executive Directors are not active members of a defined benefit plan.

Strategic Report Corporate Governance Financial Statements Additional Information 141

Element	Operation	Maximum levels	Performance assessment
Annual Performance Plan (APP) Purpose and link to business strategy: to incentivise and reward the achievement of annual financial measures and strategic non-financial measures including the delivery of annual individual objectives and demonstration of our Company leadership qualities and values.	The APP comprises reward for achievement against financial and non- financial measures and achievement against individual objectives. Financial and non-financial performance measures and targets are normally agreed at the start of each financial year and are aligned with strategic business priorities. Targets are set with reference to the business plan and strategy. Individual objectives and associated targets are normally agreed also at the start of the year. APP awards are normally paid in June. Where the Executive Director has not yet met their shareholding requirement, at least 50% of the APP award is paid in shares, which (after any sales to pay associated income tax and social security) must be retained for at least two years after receipt. Where an Executive Director has met the shareholding requirement, at least 33% of the APP award will be paid in shares which (after any sales to pay associated income tax and social security) must be retained for at least two years after receipt. Awards are subject to malus and clawback provisions.	The maximum award is 200% of salary in respect of a financial year. The payout levels at threshold, target and stretch performance levels are 0%, 50% and 100%, respectively.	At least 50% of the APP is based on performance against financial measures. The Committee may use its discretion to set financial and non-financial measures, including individual objectives that it considers appropriate in each year. Notwithstanding the level of award achieved, the Committee has the discretion to modify the formulaic amount payable, to reflect wider financial and business performance, demonstration of leadership qualities and our values, or to take account of a significant event.
Long-Term Performance Plan (LTPP) Purpose and link to business strategy: to drive long-term business performance, aligning Executive Director incentives to key shareholder interests over the longer term.	Awards of shares may be granted each year, with vesting subject to long-term performance conditions. The performance measures which are chosen are those that the Committee believes reflect the creation of long-term value within the business. Targets are set for each award with reference to the business plan and strategy. Participants may receive dividend equivalents on vested shares, from the time the award was made, at the discretion of the Committee, accrue dividend equivalents in cash or shares, which may be on a reinvestment basis, and which are subject to the same terms, including vesting date and holding period, as the LTPP award. Any accrued dividend equivalent will be prorated, depending on the level of award vesting. Participants must retain vested shares (after any sales to pay associated income tax and social security) until the shareholding requirement is met, and in any event for a further two years after vesting. Awards are subject to malus and clawback provisions.	The normal annual maximum award limits that may be granted are 400% of salary for the CEO and 350% of salary for other Executive Directors. For each performance measure, threshold performance will trigger up to 20% of the award to vest; 100% will vest if maximum performance is attained.	The Committee will review performance measures for each award cycle prior to grant to ensure continued alignment with the Company’s strategy. As such, different performance measures, targets and/or weightings may be set to reflect the business strategy and the regulatory framework operating at that time. Awards have a three-year performance period followed by a two-year holding period post- vesting. Notwithstanding the level of award achieved, the Committee has the discretion to modify the formulaic amount vesting, to reflect wider financial and business performance, demonstration of leadership qualities and our values, or to take account of a significant event.

142	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Directors’ Remuneration Policy continued

Malus and clawback

The Committee has discretion to determine whether exceptional circumstances exist which justify whether any or all of an award should be

forfeited, even if already paid. The below malus and clawback examples best suit National Grid as they ensure that APP and LTPP outturns are

fully justified.

Examples of exceptional circumstances include, but are not limited to:

•discovery of a material misstatement resulting in an adjustment in the audited accounts of the Company or any Group company;

•the assessment of any performance condition, or condition in respect of a payment or award under the APP or LTPP, that was based on

error, inaccurate or misleading information;

•the discovery that any information used to determine the APP or LTPP award was based on error, inaccurate or misleading information;

•action or conduct of a participant which amounts to fraud or gross misconduct;

•event or behaviour of a participant leading to the censure of the Company by a regulatory authority or has had a significant detrimental

impact on the reputation of any Group company, provided that the Board is satisfied that the relevant participant was responsible for the

censure or reputational damage and that the censure or reputational damage is attributable to the participant; and

•a material failure of risk management and/or corporate failure.

Where the Committee in its absolute discretion determines that exceptional circumstances exist that justify doing so:

•in respect of all or part of an award that has yet to be paid or vested (‘malus’), as applicable, the Committee may determine the award, or

part of it, will be forfeited; and

•in respect of all or part of an award that has been paid or has vested (‘clawback’), as applicable, the Committee may determine the award, or

part of it, will be forfeited and may reclaim an amount considered appropriate through means deemed appropriate to those specific

circumstances.

APP – cash	Malus applies in the year the bonus is earned and up to the payment date of the bonus. Clawback applies from the payment date until two years post the performance period
APP – deferred shares	Malus applies until the end of two years following the financial year in which the bonus is earned and clawback for two years thereafter
LTPP	Malus applies up to vesting and clawback during the two-year holding period

Shareholding requirement – in employment

The requirement of Executive Directors to build up and hold a significant value of National Grid shares ensures they share a significant level of risk

with shareholders and aims to align their interests. Executive Directors are required to build up and retain shares in the Company. The level of

holding required is 500% of salary for the CEO and 400% of salary for the other Executive Directors. Unless the shareholding requirement is met,

Executive Directors will not be permitted to sell shares, other than to pay income tax and social security liabilities on shares just vested or in

exceptional circumstances approved by the Committee.

Shareholding requirement – post employment

The requirement of Executive Directors to continue to hold National Grid shares after leaving ensures they continue to share a risk with

shareholders and maintain alignment with shareholders’ interests. Executive Directors will be required to hold shares equivalent to 200% of salary

calculated at their leaving date, or maintain their actual holding percentage if lower, expressed as a number of shares and hold such shares for a

period of two years. This calculation excludes the value of any awards not yet vested for ‘good leavers’ that will vest according to the normal

schedule and which in any event must be held for a two-year period. The calculation will include recently vested LTPP awards or APP awards paid

as shares which are subject to respective two-year holding periods, even after employment.

Until the post-employment shareholding requirement is met, Executive Directors will not be permitted to sell shares, other than to pay income tax

and social security liabilities on shares just vested or in exceptional circumstances approved by the Committee.

Strategic Report Corporate Governance Financial Statements Additional Information 143

Our reward peer group

The Committee reviews its Remuneration Policy against appropriate peer groups annually to make sure we remain competitive in the relevant

markets. The primary focus for reward market comparisons for UK-based Executive Directors will be the FTSE 30. For US-based Executive

Directors, we will continue to use US general industry and US energy services companies with similar levels of revenue for reward market

comparisons. These peer groups are considered appropriate for a large, complex, international and predominantly regulated business. The

Committee may amend the peer group and reference other peer groups as deemed appropriate.

Policy tables – Non-Executive Directors (NEDs)

Element	Operation	Maximum levels	Performance metrics, weighting and time period applicable
Fees for NEDs Purpose and link to business strategy: to attract NEDs who have a broad range of experience and skills to oversee the implementation of our strategy.	NED fees (excluding those of the Chair) are set by the CEO and the Chair, supported by the CPO. The Chair fees are set by the Committee. Fee structure: •Chair fee (all inclusive); •Base fee; •Committee chair fee; •Committee membership fee; •Senior Independent Director fee; and •Additional Board responsibilities. Fees are reviewed every year taking into account those in companies of similar scale and complexity. The Chair is eligible to receive benefits as deemed appropriate and necessary in respect of the role, which may include, for example, private medical and personal accident cover, the use of a company car and driver, and financial advice. NEDs do not participate in incentives, pension or any other benefits. NEDs are reimbursed for expenses incurred in the course of their duties, such as travel and accommodation expenses, on a grossed-up basis (where applicable). NEDs who also sit on National Grid subsidiary boards may receive additional fees related to service on those boards.	There are no prescribed maximum fee levels although fee increases are generally aligned to salary increases received by other Company employees and market movement of similar scale and complexity. The cost of benefits provided to the Chair is not subject to a predetermined maximum since the purchase cost will vary from year to year.	Not applicable.

Legacy arrangements

For the avoidance of doubt, the Committee may approve payments to satisfy commitments agreed prior to the approval of this Remuneration

Policy, for example, those outstanding and unvested incentive awards which have been disclosed to shareholders in previous Remuneration

Reports and any commitment made to a person before that person became an Executive Director.

Operation of the policy

The Committee reviews annually the overall appropriateness and relevance of the Remuneration Policy and whether any changes should be put to

shareholders. Decisions on the measures and targets for performance-related pay (APP and LTPP) and payouts are made taking account of overall

financial and business performance. The Committee also works closely with the People & Governance Committee regarding the appointment of

new Directors. The Committee will also link in with the Employee Share Schemes Sub-Committee as required. Consistent with the UK Corporate

Governance Code, members of the Remuneration Committee are independent Non-Executive Directors who do not receive any variable

remuneration and do not participate in decisions about their own remuneration.

144	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Directors’ Remuneration Policy continued

Other features of the Remuneration Policy

Policy on recruitment remuneration

Salaries for new Executive Directors appointed to the Board will be set in accordance with the terms of the approved Remuneration Policy in force

at the time of appointment, and in particular will take account the appointee’s skills, experience and the scope and assessment of the market rate

for the role.

Where appropriate, salaries may be set below market level initially, with the Committee retaining discretion to award increases in salary in excess

of the wider workforce to progressively bring the salary up to the market level over time, where this is justified by performance. Any such increases

will be disclosed accordingly, along with a supporting rationale where appropriate.

Benefits consistent with those offered to other Executive Directors under the approved Remuneration Policy in force at the time of appointment will

be offered, taking account of local market practice. The Committee may also agree that the Company will meet certain recruitment costs, for

example legal fees, certain relocation expenses or provide tax equalisation as appropriate.

Pension contributions for new Executive Directors appointed to the Board will be set in accordance with the terms of the approved Remuneration

Policy in force at the time of appointment.

Ongoing incentive pay (APP and LTPP) for new Executive Directors will be in accordance with the approved Remuneration Policy in force at the

time of appointment. This means the normal maximum APP award in any year would be 200% of salary and the normal maximum LTPP award

would be 400% of salary for the CEO and 350% of salary for other Executive Directors, excluding any buyout awards.

For an externally appointed Executive Director, the Company may offer additional cash or share-based payments that it considers necessary to

buy out current entitlements from the former employer that will be lost on recruitment to National Grid. Any such arrangements would, so far as

practicable, reflect the delivery mechanisms, time horizons and levels of conditionality of the remuneration entitlement lost. In order to facilitate

buy-out arrangements, existing incentive arrangements will be used to the extent possible, although awards may also be granted outside of these

shareholder-approved schemes if necessary and as permitted under the Listing Rules.

For an internally appointed Executive Director, any outstanding APP awards will be determined according to the original terms but paid at the end

of the year. Any outstanding LTPP awards will be paid according to the original terms.

Fees for a new Chair or Non-Executive Director will be set in line with the approved Policy in force at the time of appointment.

Service contracts/letters of appointment

In line with our Policy, all Executive Directors have service contracts which are terminable by either party with 12 months’ notice commencing

immediately after announcement. Non-executive Directors are subject to letters of appointment. The Board Chair’s appointment is subject to six

months’ notice by either party; for other Non-executive Directors, notice is one month. Both Executive Directors and Non-executive Directors are

required to be re-elected at each AGM.

Copies of the Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office.

Strategic Report Corporate Governance Financial Statements Additional Information 145

Policy on payment for loss of office

The contracts contain provisions for payment in lieu of notice, at the sole and absolute discretion of the Company. Such contractual payments are

limited to payment of salary only for the remainder of the notice period. In the UK, such payments would usually be phased on a monthly basis,

over a period not greater than 12 months, and the Executive Director would be expected to mitigate any losses where employment is taken up

during the notice period. In the US, for tax compliance purposes, the policy is to make any payment in lieu of notice as soon as reasonably

practicable, and in any event within two and a half months of the later of 31 December and 31 March immediately following the notice date.

In the event of a UK Director’s role becoming redundant, statutory compensation would apply and the relevant pension plan rules may result in the

early payment of an unreduced pension. On termination of employment, no APP award would generally be payable. However, the Committee has

the discretion to deem an individual to be a ‘good leaver’, in which case a pro rata discretionary payment could be paid, based on performance (as

measured at the end of the financial year) and the achievement of individual objectives during the financial year up to termination.

In the UK, any discretionary payment would generally be paid at the normal time. In the US the payment may be made earlier if required for tax

compliance purposes, in which case the Committee would apply discretion to determine an appropriate level of financial performance. Examples

of circumstances which could trigger ‘good leaver’ treatment include redundancy, retirement, illness, injury, disability, mutual agreement and

death. The Committee may apply discretion to determine if any pro rata discretionary payment should be made sooner than it would normally be

paid, for example, in the case of death.

On termination of employment, outstanding awards under the share plans will be treated in accordance with the relevant plan rules approved by

shareholders. Unvested share awards would normally lapse. ‘Good leaver’ provisions apply at the Committee’s discretion and in specified

circumstances.

Examples of circumstances which could trigger ‘good leaver’ treatment include: redundancy, retirement, illness, injury, disability, mutual

agreement and death. In these circumstances, awards will be released to the departing Executive Director, or, in the case of death, to their estate.

Long-term share plan awards held by ‘good leavers’ will normally vest, subject to performance measured at the normal vesting date and be

reduced pro rata for completed time of service starting on the date of grant, as per the plan rules. Such awards would vest at the same time as for

other participants, apart from circumstances in which the award recipient has died, in which case the awards may vest as soon as practicable

(based on a forecast of performance).

At the Committee’s discretion, the Company may also agree other payments such as an agreed amount for legal fees associated with the

departure of the Executive Director and outplacement support.

No compensation would be paid for loss of office of Directors on a change of control of the Company.

No compensation is payable to the Chair or Non-Executive Directors if they are required to stand down or are not re-elected at the AGM.

External appointments

Executive Directors may, with the approval of the Board, accept one external appointment as a Non-executive Director of another company and

retain any fees received for the appointment. Experience as a board member of another company is considered to be valuable personal

development, which in turn is of benefit to the Company.

Corporate and share capital events

The Group’s employee share plans (including the LTPP) contain standard provisions that allow awards (and where relevant their exercise prices) to

be adjusted, or in some cases vest or be exchanged, on the occurrence of a corporate or share capital event such as a capitalisation or Rights

Issue, sub-division, consolidation or reduction of share capital, demerger, special dividend or distribution, listing or change of control, normally at

the discretion of the Committee. The Committee also has the ability to adjust performance targets where appropriate.

146	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Directors’ Remuneration Policy continued

Total remuneration opportunity

The total remuneration for each of the Executive Directors that could result from the 2025 Policy under three different performance levels (below

threshold, when only fixed pay is receivable, on target and maximum) is shown below. The maximum receivable assuming 50% share price growth

in LTPP awards over a three-year performance period, and the basis for this calculation, is set out in the notes below.

John Pettigrew							Andy Agg
	100%	£1,420						100%	£933
	30%	25%	25%		£4,833			32%	27%	41%		£2,975
	17%	30%		53%		£8,247		19%	32%		49%		£5,017

Fixed pay APP LTPP

Notes:

1.Fixed pay consists of salary, pension and benefits in kind as provided under the Remuneration Policy. Salary is that to be paid in 2025/26, taking account of the increases that will be

effective from 1 July 2025 as shown on page 147. Benefits in kind and pension are as shown in the Single Total Figure of Remuneration table for 2024/25 on page 128.

2.APP calculations are based on 200% of salary for the period 1 April 2025 to 31 March 2026. APP payout is 0% for below threshold performance, 50% for on-target performance and the

maximum of 100% is for achieving stretch.

3.LTPP calculations are based on awards to be granted in 2025 of 350% of 1 July 2025 salary for John Pettigrew and 300% of 1 July 2025 salary for Andy Agg (noting that the Policy

maximum is 400% and 350% of salary for the CEO and CFO respectively). LTPP payout is 20% for threshold performance and the maximum of 100% is for achieving stretch and straight

line vesting between. Excludes changes in share price and dividend equivalents.

4.For LTPP calculations, assuming either a 50% share price growth over the three-year performance period, the increase in LTPP value and maximum total compensation for each of the

Executive Directors would be (all amounts expressed as £’000):

•John Pettigrew: LTPP value would increase from £4,363 to £6,545 and maximum total compensation would rise from £8,247 to £10,428 respectively

•Andy Agg: LTPP value would increase from £2,462 to £3,692 and maximum total compensation would rise from £5,017 to £6,247 respectively

Consideration of 2025 Policy elsewhere in the Company

The design and implementation of executive remuneration takes into consideration the wider workforce context and remuneration strategy to

ensure they are mutually reinforcing. Our 2025 Policy is well aligned to policies for our non-unionised workforce, and the Committee actively

considers employee feedback and views on executive pay. The Company issues an employee engagement survey each year, which includes

remuneration as a topic, and regularly engages with employees on a variety of topics including remuneration to ensure employees have an

opportunity to share their feedback and views.

All employees are entitled to salary, benefits, and pension contributions. The approach to assessing salaries, benefits, pensions and other

elements of remuneration is consistent across the Group with an objective to ensure they remain competitive at relevant mid-market levels for all

job bands/roles, including roles that are subject to union negotiation. In the UK, we are committed to fair pay via accreditation with the Living

Wage Foundation. This commits both National Grid and contractors working on our behalf to pay, as a minimum, the real Living Wage as

promoted by the Living Wage Foundation.

Middle to senior leaders are eligible to participate in our long-term incentive plans either through performance share awards or restricted share

awards (under the LTPP) to incentivise and reward their individual contributions toward the Company’s longer-term strategic priorities.

Performance measures for the LTPP are consistent with measures set for Executive Directors to ensure strong alignment and focus on the

Company’s strategic goals.

Across the wider workforce, a greater emphasis and focus is placed on delivery of the Company’s annual operational and financial business plans.

As such, the majority of employees are eligible to participate in the APP. Performance measures for annual incentives are cascaded through the

organisation and designed to ensure they incentivise elements of business performance within an individual’s control and are aligned to an

employee’s annual goals. All Company employees are encouraged to become shareholders through a number of all-employee share plans and a

significant proportion of our employees participate annually. These plans include Sharesave and the SIP in the UK and the 401(k) and 423(b) plans

in the US which are summarised on page 275.

	Strategic Report		Corporate Governance		Financial Statements	Additional Information	147
Implementation of the Policy for 2025/26

Implementation of the Policy for 2025/26

The 2025 Policy will be implemented in 2025/26 as detailed below, subject to shareholder approval at the July 2025 AGM.

Salary and pensions

Salary increases for the Executive Directors will be on par with the wider UK and US workforce principles (5%). The wider workforce (non-union)

salary budget increase is set at 4.0% plus a 1% for compression and market adjustment. The 5.0% increase for both Executive Directors is

aligned to the principles used for wider workforce increases.

John Pettigrew and Andy Agg will both be awarded salary increases of 5.0%, effective from 1 July 2025.

John Pettigrew will remain as Chief Executive until 16 November 2025, but will continue to be available to the Group through to the end of his 12

month notice period, which expires on 30 April 2026. His departure will be treated in accordance with the Directors' Remuneration Policy and his

service contract. Accordingly, he will continue to receive his current level of salary and benefits up to the cessation of his employment.

	From 1 July 2025	From 1 July 2024	% increase
John Pettigrew	£1,246,665	£1,187,300	5.0%
Andy Agg	£820,575	£781,500	5.0%

The pension contribution rate for both Executive Directors is in line with that for the UK wider workforce and new joiners at 12%.

2025/26 APP

The 2025/26 APP measures will be split across financial measures, operational measures and individual objectives, weighted 70%, 15% and 15%

respectively. The maximum APP award for both Executive Directors for 2025/26 is 200% of salary, subject to shareholder approval of the 2025

Policy. John Pettigrew will be eligible, while he remains Chief Executive, for a pro rata annual bonus.

	Measure		Weighting
Financial measures	Underlying Group EPS		35%
	Group RoE		35%
Operational measures	Capital delivery and effectiveness		7.5%
	‘Leadership of change’ index		7.5%
Individual objectives			15%

Financial measures

For 2025/26, the Committee opted to retain Underlying Group EPS and Group RoE as financial measures. Group RoE continues to be a relevant

and important measure of performance as a primarily regulated asset-based company and targets are set to ensure strong in-year returns and

operational results. In respect of earnings measures, Underlying Group EPS remains the most appropriate measure under the APP from the

perspective of the business, and the targets are set in a manner which considers specific challenges and opportunities in the year ahead and are

flexed accordingly while remaining consistent with our longer-term performance goals.

Financial APP targets are considered commercially sensitive and consequently will be disclosed retrospectively in the 2025/26 Directors’

Remuneration Report.

148	National Grid plc  Annual Report and Accounts 2024/25
Directors’ Remuneration Report continued
Implementation of the Policy for 2025/26 continued

Operational measures

For 2025/26, the Committee are introducing two new operational measures; a capital delivery and effectiveness measure and a leadership of

change measure. Both measures will incentivise behaviours aligned with key annual priorities and are linked directly to the Group’s strategy and

five-year framework, which includes stretching commitments on capital investment, EPS growth and Group asset growth.

Progress in the investment programme is a top priority for investors, making a capital delivery and effectiveness measure essential for tracking

performance. Delivering in line with the five-year framework remains critical, with key focus areas for the year ahead centred on efficient delivery of

the programme. The capital delivery and effectiveness measure will be assessed on a four-point assessment, based primarily on quantitative

metrics with a qualitative element to reflect a balanced assessment of progress and performance in our capital investment ambitions.

The ‘Leadership of change’ index measure is a quantitative assessment of our annual Group-wide employee engagement survey of colleagues and

refers to the ability of leaders to drive and sustain high performance during periods of significant change in our business to achieve our

organisational goals, particularly in the context of executing our capital delivery programme. This concept emphasises a blend of trust and

confidence in the strategic vision, excellent change communications, and adaptive leadership to ensure successful outcomes.

The ‘Leadership of change’ index measure will be assessed on a quantitative basis using actual outcomes with an overlay of qualitative

performance, where appropriate, to reflect a balanced assessment of performance.

Individual objectives

The Committee has approved individual objectives for the Executive Directors in line with key strategic and operational priorities for the year

ahead. John Pettigrew’s individual objectives for 2025/26 are focused on: (1) delivering RIIO-T3; and (2) successful CEO transition. Andy Agg’s

individual objectives are focused on: (1) delivering the next steps of the financing strategy; (2) securing positive regulatory outcomes and

supporting the delivery of our capital projects; (3) developing our organisational capabilities and tools; and (4) driving the identification and

development of talent into the right pipelines.

2025 LTPP

The 2025 LTPP performance measures and weightings for all Executive Directors comprise two equally weighted financial measures totalling 80%

and two equally weighted energy transformation measures totalling 20% as outlined in the table below. The maximum 2025 LTPP award is 350%

and 300% of salary for John Pettigrew and Andy Agg respectively, in line with the 2024 LTPP awards (noting the 2025 Policy maximum, subject to

shareholder approval is 400% and 350% for the CEO and CFO respectively).

John Pettigrew will be eligible, while he remains Chief Executive, for a LTPP award and will be treated as a good leaver for the purposes of his

outstanding LTPP awards, which will be pro-rated to his date of leaving and will vest at the normal dates subject to the achievement of the relevant

performance conditions.

LTPP performance is measured over the entire three-year performance period, which for the 2025 LTPP is 1 April 2025 – 31 March 2028.

	Measure		Weighting
Financial measures	Cumulative 3-year Underlying Group EPS		40%
	Group RoE		40%
Energy transformation measures	Reduction of Scope 1 emissions		10%
	Enablement of strategic growth initiative		10%

Financial measures

Financial measures under the 2025 LTPP are selected to provide alignment with the key drivers of the Group’s long-term strategy and value

creation for shareholders. Earnings growth and sustainable investment returns remain key measures of long-term value creation in light of the

Group’s regulated and long-term nature.

The Committee is conscious that financial performance measures under our short-term (APP) and long-term (LTPP) performance plans are similar,

however we are of the belief that these measures are the appropriate and correct measures to deliver both short and long-term business strategy

as well as long-term efficient asset growth and shareholder value.

Consequently, the 2025 LTPP financial measures are designed in a manner which incentivises alternative elements of performance over the

long term as compared with the short term. Specifically in LTPP, Group RoE is averaged across the three-year performance period to incentivise

sustainable returns for shareholders in the longer term. Similarly, the cumulative three-year Underlying Group EPS measure assesses Underlying

EPS for the three years in the LTPP performance period.

Strategic Report Corporate Governance Financial Statements Additional Information 149

Below are the performance ranges for the financial measures in the 2025 LTPP.

Performance conditions

Performance measures		Weighting	Threshold 20% vesting	Maximum 100% vesting
Cumulative three-year Underlying Group EPS		40%	241p	259p
Group RoE		40%	9.35%	10.60%

Note: Vesting between threshold and maximum will be on a straight-line basis. Underlying EPS growth reflects the cumulative summation of the Underlying EPS results for each of the

three years in the performance period: 2025/26, 2026/27 and 2027/28.

Energy transformation measures

Measures linked to the energy transformation continue to set out key targets and outcomes on the Group’s journey to achieve: (1) reductions in the

Company’s direct Scope 1 emissions and (2) enablement of strategic growth initiative.

Similar to last year, the reduction of Scope 1 emissions measure supports meeting our 2030 Group emissions reduction targets. These targets are

SBTi validated and aligned to a 1.5ºC pathway. The second measure of energy transformation strategic growth initiative assesses the delivery of

generation connections that support the Group’s strategic priority to enable the energy transformation through our network.

Performance measures	Weighting	Threshold 20% vesting	Maximum 100% vesting
Reduction of Scope 1 emissions	10%	4%	10%
Enablement of strategic growth initiative	10%	10.2 GW	13.3 GW

Notes: Vesting between threshold and maximum will be on a straight-line basis.

Fees for Non-executive Directors

Non-executive Director fees were reviewed in May 2025 and will be effective from 1 July 2025 in line with the annual salary review cycle for our

wider workforce.

	From 1 July 2025 (£’000)	From 1 July 2024 (£’000)	% increase vs 2024
Chair	760.8	731.5	4.0%
Senior Independent Director	33.9	32.6	4.0%
Board fee	90.4	86.9	4.0%
Chair Audit & Risk Committee	38.1	36.6	4.0%
Chair Remuneration Committee	33.9	32.6	4.0%
Chair other Committees (Finance, Safety & Sustainability)	28.3	27.2	4.0%
Audit & Risk Committee member	26.0	25.0	4.0%
Remuneration Committee member	20.3	19.5	4.0%
Other Committee member (Finance, Safety & Sustainability, People & Governance)	17.0	16.3	4.0%

Note: For the People & Governance Committee, no fees are paid for the Committee Chair, the Senior Independent Director or the Board Chair.

The Directors’ Remuneration Report has been approved by the Board and signed on its behalf by:

Martha Wyrsch

Chair of the Remuneration Committee

14 May 2025

150	National Grid plc  Annual Report and Accounts 2024/25
Financial Statements

Resilient

growth

Directors’ statement and independent auditor’s report
Statement of Directors’ responsibilities	152
Independent Auditor’s Report	153
Consolidated financial statements under IFRS
Primary statements
Consolidated income statement	162
Consolidated statement of comprehensive income	164
Consolidated statement of changes in equity	165
Consolidated statement of financial position	166
Consolidated cash flow statement	167
Notes to the consolidated financial statements
Note 1 – Basis of preparation and recent accounting developments	168
Note 2 – Segmental analysis	172
Note 3 – Revenue	175
Note 4 – Other operating costs	179
Note 5 – Exceptional items and remeasurements	181
Note 6 – Finance income and costs	185
Note 7 – Tax	186
Note 8 – Earnings per share (EPS)	190
Note 9 – Dividends	191
Note 10 – Assets held for sale and discontinued operations	192
Note 11 – Goodwill	195
Note 12 – Other intangible assets	197
Note 13 – Property, plant and equipment	199
Note 14 – Other non-current assets	202
Note 15 – Financial and other investments	202
Note 16 – Investments in joint ventures and associates	204
Note 17 – Derivative financial instruments	206
Note 18 – Inventories	208
Note 19 – Trade and other receivables	209
Note 20 – Cash and cash equivalents	210
Note 21 – Borrowings	211
Note 22 – Trade and other payables	212

Note 23 – Contract liabilities	213
Note 24 – Other non-current liabilities	213
Note 25 – Pensions and other post-retirement benefits	214
Note 26 – Provisions	221
Note 27 – Share capital	223
Note 28 – Other equity reserves	224
Note 29 – Net debt	225
Note 30 – Commitments and contingencies	227
Note 31 – Related party transactions	228
Note 32 – Financial risk management	228
Note 33 – Borrowing facilities	241
Note 34 – Subsidiary undertakings, joint arrangements and associates	242
Note 35 – Sensitivities	246
Note 36 – Post balance sheet events	247
Company financial statements under FRS 101
Company accounting policies	248
Primary statements
Company balance sheet	250
Company statement of changes in equity	251
Notes to the Company financial statements
Note 1 – Fixed asset investments	252
Note 2 – Debtors	252
Note 3 – Creditors	253
Note 4 – Derivative financial instruments	253
Note 5 – Investments	253
Note 6 – Borrowings	254
Note 7 – Share capital	254
Note 8 – Shareholders’ equity and reserves	254
Note 9 – Parent Company guarantees	254
Note 10 – Audit fees	254
Note 11 – Post balance sheet events	254

Strategic Report Corporate Governance Financial Statements Additional Information 151

152	National Grid plc  Annual Report and Accounts 2024/25
Statement of Directors’ responsibilities

The Directors are responsible for preparing the

Annual Report and Accounts, including the Group

financial statements and the Parent Company

financial statements in accordance with applicable

law and regulations.

Company law requires the Directors to prepare financial statements

for each financial year. Under that law, the Directors are required to

prepare the Group financial statements in accordance with International

Accounting Standards in conformity with the requirements of the

Companies Act 2006 and International Financial Reporting Standards

(IFRS) as adopted by the UK. The financial statements also comply with

IFRS as issued by the IASB. In addition, the Directors have elected to

prepare the Parent Company financial statements in accordance

with UK Generally Accepted Accounting Practice (UK Accounting

Standards and applicable law), including FRS 101 ‘Reduced Disclosure

Framework’. Under company law, the Directors must not approve the

accounts unless they are satisfied that they give a true and fair view of

the state of affairs of the Group and Parent Company and of the profit

or loss of the Group and Parent Company for that period.

In preparing the Group financial statements, International Accounting

Standard 1 requires that Directors:

•properly select and apply accounting policies;

•present information, including accounting policies, in a manner that

provides relevant, reliable, comparable and understandable

information;

•provide additional disclosures when compliance with the specific

requirements in IFRS are insufficient to enable users to understand

the impact of particular transactions, other events and conditions

on the entity’s financial position and financial performance; and

•make an assessment of the Group’s ability to continue as

a going concern.

In preparing the Parent Company financial statements, the Directors

are required to:

•select suitable accounting policies and then apply them

consistently;

•make judgements and accounting estimates that are reasonable

and prudent;

•state whether applicable UK Accounting Standards have been

followed, subject to any material departures disclosed and

explained in the financial statements; and

•prepare the financial statements on the going concern basis unless

it is inappropriate to presume that the Company will continue in

business.

The Directors are responsible for keeping adequate accounting records

that are sufficient to show and explain the Group and Parent

Company’s transactions and disclose with reasonable accuracy at any

time the financial position of the Group and Parent Company on a

consolidated and individual basis, and to enable them to ensure that

the Group financial statements comply with the Companies Act 2006.

They are also responsible for safeguarding the assets of the Parent

Company and its subsidiaries and hence for taking reasonable steps

for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the

Company’s website. Legislation in the UK governing the preparation

and dissemination of financial statements may differ from legislation in

other jurisdictions.

Having made the requisite enquiries, so far as the Directors in office at

the date of the approval of this Report are aware, there is no relevant

audit information of which the auditors are unaware and each Director

has taken all reasonable steps to make themselves aware of any

relevant audit information and to establish that the auditors are aware

of that information.

Each of the Directors, whose names and functions are listed on pages

99 – 102 confirms that:

•to the best of their knowledge, the Group financial statements and

the Parent Company financial statements, which have been

prepared in accordance with IFRS as issued by the IASB and IFRS

as adopted by the UK and UK GAAP FRS 101 respectively, give a

true and fair view of the assets, liabilities, financial position and

profit of the Company on a consolidated and individual basis;

•to the best of their knowledge, the Strategic Report contained in

the Annual Report and Accounts includes a fair review of the

development and performance of the business and the position of

the Company on a consolidated and individual basis, together with

a description of the principal risks and uncertainties that it faces;

and

•they consider that the Annual Report and Accounts, taken as a

whole, is fair, balanced and understandable and provides the

information necessary for shareholders to assess the Company’s

position and performance, business model and strategy.

This Responsibilities Statement was approved by the Board and signed

on its behalf.

Directors’ Report

The Directors’ Report, prepared in accordance with the requirements

of the Companies Act 2006 and the UK Listing Authority’s Listing

Rules, and Disclosure Guidance and Transparency Rules, comprising

pages IFC – 149 and 255 – 303, was approved by the Board and

signed on its behalf.

Strategic Report

The Strategic Report, comprising pages IFC – 93, was approved by the

Board and signed on its behalf.

By order of the Board

Julian Baddeley

Group Company Secretary

14 May 2025

Company number: 04031152

Strategic Report Corporate Governance Financial Statements Additional Information 153

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154 National Grid plc  Annual Report and Accounts 2024/25

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162	National Grid plc  Annual Report and Accounts 2024/25
Consolidated income statement
for the years ended 31 March

2025	Notes	Total £m
Continuing operations
Revenue	2(a),3	18,378
Provision for bad and doubtful debts	4	(200)
Other operating costs	4	(13,244)
Operating profit	2(b)	4,934
Finance income	6	450
Finance costs	6	(1,807)
Share of post-tax results of joint ventures and associates	16	73
Profit before tax	2(b)	3,650
Tax	7	(821)
Profit after tax from continuing operations		2,829
Profit after tax from discontinued operations	10	76
Total profit for the year (continuing and discontinued)		2,905
Attributable to:
Equity shareholders of the parent		2,902
Non-controlling interests		3
Earnings per share (pence)
Basic earnings per share (continuing)	8	60.0
Diluted earnings per share (continuing)	8	59.8
Basic earnings per share (continuing and discontinued)	8	61.6
Diluted earnings per share (continuing and discontinued)	8	61.4

2024	Notes	Total £m
Continuing operations
Revenue	2(a),3	19,850
Provision for bad and doubtful debts	4	(179)
Other operating costs	4	(15,208)
Other operating income		12
Operating profit	2(b)	4,475
Finance income	6	248
Finance costs	6	(1,712)
Share of post-tax results of joint ventures and associates	16	37
Profit before tax	2(b)	3,048
Tax	7	(831)
Profit after tax from continuing operations		2,217
Profit after tax from discontinued operations	10	74
Total profit for the year (continuing and discontinued)		2,291
Attributable to:
Equity shareholders of the parent		2,290
Non-controlling interests		1
Earnings per share (pence)¹
Basic earnings per share (continuing)	8	55.5
Diluted earnings per share (continuing)	8	55.3
Basic earnings per share (continuing and discontinued)	8	57.4
Diluted earnings per share (continuing and discontinued)	8	57.1

1. Restated to reflect the impact of the bonus element of the Rights Issue (see note 27).

	Strategic Report		Corporate Governance			Financial Statements		Additional Information	163
Consolidated income statement
for the years ended 31 March

2023	Notes	Total £m
Continuing operations
Revenue	2(a),3	21,659
Provision for bad and doubtful debts	4	(220)
Other operating costs	4	(17,549)
Other operating income		989
Operating profit	2(b)	4,879
Finance income	6	138
Finance costs	6	(1,598)
Share of post-tax results of joint ventures and associates	16	171
Profit before tax	2(b)	3,590
Tax	7	(876)
Profit after tax from continuing operations		2,714
Profit after tax from discontinued operations	10	5,083
Total profit for the year (continuing and discontinued)		7,797
Attributable to:
Equity shareholders of the parent		7,797
Non-controlling interests		—
Earnings per share (pence)¹
Basic earnings per share (continuing)	8	68.6
Diluted earnings per share (continuing)	8	68.3
Basic earnings per share (continuing and discontinued)	8	197.1
Diluted earnings per share (continuing and discontinued)	8	196.2

1. Restated to reflect the impact of the bonus element of the Rights Issue (see note 27).

164	National Grid plc  Annual Report and Accounts 2024/25
Consolidated statement of comprehensive income
for the years ended 31 March

		2025	2024	2023
	Notes	£m	£m	£m
Profit after tax from continuing operations		2,829	2,217	2,714
Profit after tax from discontinued operations		76	74	5,083
Other comprehensive income from continuing operations
Items from continuing operations that will never be reclassified to profit or loss:
Remeasurement losses on pension assets and post-retirement benefit obligations	25	(106)	(218)	(1,362)
Net (losses)/gains in respect of cash flow hedging of capital expenditure		(16)	(37)	10
Tax on items that will never be reclassified to profit or loss	7	27	59	341
Total items from continuing operations that will never be reclassified to profit or loss		(95)	(196)	(1,011)
Items from continuing operations that may be reclassified subsequently to profit or loss:
Retranslation of net assets offset by net investment hedge		(352)	(335)	883
Exchange differences reclassified to the consolidated income statement on disposal		—	—	(170)
Net gains in respect of cash flow hedges		218	240	—
Net (losses)/gains in respect of cost of hedging		(52)	26	(16)
Net gains/(losses) on investment in debt instruments measured at fair value through other comprehensive income		1	21	(25)
Share of other comprehensive income of associates, net of tax		—	—	1
Tax on items that may be reclassified subsequently to profit or loss	7	(40)	(66)	11
Total items from continuing operations that may be reclassified subsequently to profit or loss		(225)	(114)	684
Other comprehensive loss		(320)	(310)	(327)
Other comprehensive (loss)/income for the year, net of tax from discontinued operations	10	(10)	10	(227)
Other comprehensive loss		(330)	(300)	(554)
Total comprehensive income for the year from continuing operations		2,509	1,907	2,387
Total comprehensive income for the year from discontinued operations	10	66	84	4,856
Total comprehensive income for the year		2,575	1,991	7,243
Attributable to:
Equity shareholders of the parent
From continuing operations		2,508	1,906	2,386
From discontinued operations		66	84	4,856
		2,574	1,990	7,242
Non-controlling interests
From continuing operations		1	1	1

	Strategic Report		Corporate Governance			Financial Statements		Additional Information	165
Consolidated statement of changes in equity
for the years ended 31 March

	Notes	Share capital £m	Share premium account £m	Retained earnings £m	Other equity reserves1 £m	Total shareholders’ equity £m	Non- controlling interests £m	Total equity £m
At 31 March 2022		485	1,300	26,611	(4,563)	23,833	23	23,856
Profit for the year		—	—	7,797	—	7,797	—	7,797
Other comprehensive (loss)/income for the year		—	—	(1,253)	698	(555)	1	(554)
Total comprehensive income for the year		—	—	6,544	698	7,242	1	7,243
Equity dividends		—	—	(1,607)	—	(1,607)	—	(1,607)
Scrip dividend-related share issue2		3	(3)	—	—	—	—	—
Issue of treasury shares		—	—	16	—	16	—	16
Transactions in own shares		—	5	(4)	—	1	—	1
Share-based payments		—	—	48	—	48	—	48
Cash flow hedges transferred to the statement of financial position, net of tax		—	—	—	5	5	—	5
At 1 April 2023		488	1,302	31,608	(3,860)	29,538	24	29,562
Profit for the year		—	—	2,290	—	2,290	1	2,291
Other comprehensive loss for the year		—	—	(168)	(132)	(300)	—	(300)
Total comprehensive income/(loss) for the year		—	—	2,122	(132)	1,990	1	1,991
Equity dividends		—	—	(1,718)	—	(1,718)	—	(1,718)
Scrip dividend-related share issue2		5	(6)	—	—	(1)	—	(1)
Issue of treasury shares		—	—	21	—	21	—	21
Transactions in own shares		—	2	(6)	—	(4)	—	(4)
Share-based payments		—	—	37	—	37	—	37
Tax on share-based payments		—	—	2	—	2	—	2
Cash flow hedges transferred to the statement of financial position, net of tax		—	—	—	2	2	—	2
At 1 April 2024		493	1,298	32,066	(3,990)	29,867	25	29,892
Profit for the year		—	—	2,902	—	2,902	3	2,905
Other comprehensive loss for the year		—	—	(80)	(248)	(328)	(2)	(330)
Total comprehensive income/(loss) for the year		—	—	2,822	(248)	2,574	1	2,575
Rights Issue	27	135	—	—	6,704	6,839	—	6,839
Transfer between reserves	27	—	—	6,704	(6,704)	—	—	—
Equity dividends		—	—	(1,529)	—	(1,529)	—	(1,529)
Scrip dividend-related share issue2		10	(10)	—	—	—	—	—
Issue of treasury shares		—	—	18	—	18	—	18
Transactions in own shares		—	4	(11)	—	(7)	—	(7)
Other movements in non-controlling interests		—	—	—	—	—	(3)	(3)
Share-based payments		—	—	37	—	37	—	37
Tax on share-based payments		—	—	(1)	—	(1)	—	(1)
Cash flow hedges transferred to the statement of financial position, net of tax		—	—	—	5	5	—	5
At 31 March 2025		638	1,292	40,106	(4,233)	37,803	23	37,826

1.For further details of other equity reserves, see note 28.

2.Included within the share premium account are costs associated with scrip dividends.

166	National Grid plc  Annual Report and Accounts 2024/25
Consolidated statement of financial position
as at 31 March

		2025	2024
	Notes	£m	£m
Non-current assets
Goodwill	11	9,532	9,729
Other intangible assets	12	3,564	3,431
Property, plant and equipment	13	74,091	68,907
Other non-current assets	14	959	848
Pension assets	25	2,489	2,407
Financial and other investments	15	798	880
Investments in joint ventures and associates	16	608	1,420
Derivative financial assets	17	369	324
Total non-current assets		92,410	87,946
Current assets
Inventories	18	557	828
Trade and other receivables	19	4,092	3,415
Current tax assets		11	11
Financial and other investments	15	5,753	3,699
Derivative financial assets	17	113	44
Cash and cash equivalents	20	1,178	559
Assets held for sale	10	2,628	1,823
Total current assets		14,332	10,379
Total assets		106,742	98,325
Current liabilities
Borrowings	21	(4,662)	(4,859)
Derivative financial liabilities	17	(381)	(335)
Trade and other payables	22	(4,472)	(4,076)
Contract liabilities	23	(96)	(127)
Current tax liabilities		(219)	(220)
Provisions	26	(357)	(298)
Liabilities held for sale	10	(434)	(1,474)
Total current liabilities		(10,621)	(11,389)
Non-current liabilities
Borrowings	21	(42,877)	(42,213)
Derivative financial liabilities	17	(821)	(909)
Other non-current liabilities	24	(876)	(880)
Contract liabilities	23	(2,418)	(2,119)
Deferred tax liabilities	7	(8,038)	(7,519)
Pensions and other post-retirement benefit obligations	25	(573)	(593)
Provisions	26	(2,692)	(2,811)
Total non-current liabilities		(58,295)	(57,044)
Total liabilities		(68,916)	(68,433)
Net assets		37,826	29,892
Equity
Share capital	27	638	493
Share premium account		1,292	1,298
Retained earnings		40,106	32,066
Other equity reserves	28	(4,233)	(3,990)
Total shareholders’ equity		37,803	29,867
Non-controlling interests		23	25
Total equity		37,826	29,892

The consolidated financial statements set out on pages 162 – 247 were approved by the Board of Directors on 14 May 2025 and were signed

on its behalf by:

John Pettigrew

Chief Executive

Andy Agg

Chief Financial Officer

National Grid plc

Registered number: 4031152

	Strategic Report	Corporate Governance		Financial Statements		Additional Information	167
Consolidated cash flow statement
for the years ended 31 March

		2025	2024	2023
	Notes	£m	£m	£m
Cash flows from operating activities
Total operating profit from continuing operations	2(b)	4,934	4,475	4,879
Adjustments for:
Gain on sale of investments		(188)	—	(846)
Other fair value movements		66	(16)	21
Depreciation, amortisation and impairment		2,479	2,061	1,984
Share-based payments		37	37	48
Changes in working capital		40	(147)	547
Changes in provisions		(287)	840	(155)
Changes in pensions and other post-retirement benefit obligations		(90)	31	(46)
Cash generated from operations – continuing operations		6,991	7,281	6,432
Tax paid		(183)	(342)	(89)
Net cash inflow from operating activities – continuing operations		6,808	6,939	6,343
Net cash inflow from operating activities – discontinued operations		—	—	555
Cash flows from investing activities
Purchases of intangible assets		(526)	(549)	(567)
Purchases of property, plant and equipment		(8,780)	(6,904)	(6,325)
Disposals of property, plant and equipment		26	52	87
Investments in joint ventures and associates		(396)	(332)	(443)
Dividends received from joint ventures, associates and other investments		126	176	190
Disposal of interest in the UK Electricity System Operator1	10	577	—	—
Disposal of interest in the UK Gas Transmission business1	10	686	681	4,027
Disposal of interest in The Narragansett Electric Company1		—	—	2,968
Disposal of interest in Millennium Pipeline Company LLC		—	—	497
Disposal of financial and other investments		85	102	116
Acquisition of financial investments		(122)	(81)	(95)
Contributions to National Grid Renewables and Emerald Energy Venture LLC		—	(19)	(19)
Net movements in short-term financial investments		(2,606)	(1,141)	586
Interest received	29(b)	332	148	65
Cash inflows on derivatives	29(b)	11	123	—
Cash outflows on derivatives	29(b)	(6)	—	(362)
Insurance claim from loss of property, plant and equipment		—	143	79
Net cash flow (used in)/from investing activities – continuing operations		(10,593)	(7,601)	804
Net cash flow from/(used in) investing activities – discontinued operations		22	102	(564)
Cash flows from financing activities
Proceeds of Rights Issue	27	7,001	—	—
Transaction fees related to Rights Issue	27	(162)	—	—
Proceeds from issue of treasury shares		18	20	16
Transactions in own shares		(7)	(4)	1
Proceeds received from loans	29(b)	3,237	5,563	11,908
Repayment of loans	29(b)	(2,861)	(1,701)	(15,260)
Payments of lease liabilities	29(b)	(130)	(118)	(155)
Net movements in short-term borrowings	29(b)	925	544	(511)
Cash inflows on derivatives	29(b)	62	86	190
Cash outflows on derivatives	29(b)	(106)	(58)	(118)
Interest paid	29(b)	(1,920)	(1,627)	(1,430)
Dividends paid to shareholders	9	(1,529)	(1,718)	(1,607)
Net cash flow from/(used in) financing activities – continuing operations		4,528	987	(6,966)
Net cash flow used in financing activities – discontinued operations		—	—	(207)
Net increase/(decrease) in cash and cash equivalents	29(b)	765	427	(35)
Reclassification to held for sale	10,29(b)	(123)	(30)	9
Exchange movements	29(b)	(23)	(1)	7
Cash and cash equivalents at start of year		559	163	182
Cash and cash equivalents at end of year	20	1,178	559	163

1.Balances consist of cash proceeds received, net of cash disposed.

168	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements

1. Basis of preparation and recent accounting developments

Accounting policies describe our approach to recognising and measuring transactions and balances in the year. The accounting policies

applicable across the financial statements are shown below, whereas accounting policies that are specific to a component of the financial

statements have been incorporated into the relevant note.

This section also shows areas of judgement and key sources of estimation uncertainty in these financial statements. In addition, we have

summarised new International Accounting Standards Board (IASB) and accounting standards, amendments and interpretations and whether

these are effective for this year end or in later years, explaining how significant changes are expected to affect our reported results.

National Grid’s principal activities involve the transmission and

distribution of electricity in Great Britain and of electricity and gas in

northeastern US. The Company is a public limited liability company

incorporated and domiciled in England and Wales, with its registered

office at 1–3 Strand, London, WC2N 5EH.

The Company, National Grid plc, which is the ultimate parent of the

Group, has its primary listing on the London Stock Exchange and is

also quoted on the New York Stock Exchange.

These consolidated financial statements were approved for issue

by the Board on 14 May 2025.

These consolidated financial statements have been prepared in

accordance with IFRS Accounting Standards as issued by the

International Accounting Standards Board (IASB). They are prepared

on the basis of all IFRS accounting standards and interpretations

that are mandatory for the period ended 31 March 2025 and in

accordance with the Companies Act 2006. The comparative

financial information has also been prepared on this basis.

The consolidated financial statements have been prepared on

a historical cost basis, except for the recording of pension assets

and liabilities, the revaluation of derivative financial instruments and

certain commodity contracts and certain financial assets and

liabilities measured at fair value.

These consolidated financial statements are presented in pounds

sterling, which is also the functional currency of the Company.

The notes to the financial statements have been prepared on a

continuing basis unless otherwise stated.

A. Going concern

As part of the Directors’ consideration of the appropriateness of

adopting the going concern basis of accounting in preparing these

financial statements, the Directors have assessed the principal risks

alongside potential downside business cash flow scenarios impacting

the Group’s operations. The Directors specifically considered both a

base case and reasonable worst-case scenario for business cash

flows.

The main cash flow impacts identified in the reasonable worst-case

scenario are:

•the timing of the sale of assets classified as held for sale

(see note 10);

•adverse impacts of higher spend on our capital expenditure

programme;

•adverse impact from timing across the Group (i.e. a net under-

recovery of allowed revenues or reductions in over-collections)

and slower collections of outstanding receivables;

•higher operating and financing costs than expected, including

non‑delivery of planned efficiencies across the Group; and

•the potential impact of further significant storms in the US.

As part of its analysis, the Board also considered the following

potential levers at their discretion to improve the position identified

by the analysis if the debt capital markets are not accessible:

•the payment of dividends to shareholders;

•significant changes in the phasing of the Group’s capital

expenditure programme, with elements of non-essential works

and programmes delayed; and

•a number of further reductions in operating expenditure across

the Group.

Having considered the reasonable worst-case scenario and the further

levers at the Board’s discretion, the Group continues to have headroom

against the Group’s committed facilities identified in note 33 to the

financial statements.

In addition to the above, the ability to raise new and extend existing

financing was separately included in the analysis, and the Directors

noted £3.2 billion of new long-term senior debt issued in the period

from 1 April 2024 to 31 March 2025 as evidence of the Group’s ability

to continue to have access to the debt capital markets if needed.

Based on the above, the Directors have concluded the Group is well

placed to manage its financing and other business risks satisfactorily

and have a reasonable expectation that the Group will have adequate

resources to continue in operation for at least 12 months from the

signing date of these consolidated financial statements. They therefore

consider it appropriate to adopt the going concern basis of accounting

in preparing the financial statements.

Strategic Report Corporate Governance Financial Statements Additional Information 169

1. Basis of preparation and recent accounting developments continued

B. Basis of consolidation

The consolidated financial statements incorporate the results, assets

and liabilities of the Company and its subsidiaries, together with a share

of the results, assets and liabilities of joint operations.

A subsidiary is defined as an entity controlled by the Group. Control is

achieved where the Group is exposed to, or has the rights to, variable

returns from its involvement with the entity and has the ability to affect

those returns through its power over the entity.

The Group accounts for joint ventures and associates using the equity

method of accounting, where the investment is carried at cost plus

post‑acquisition changes in the share of net assets of the joint venture

or associate, less any provision for impairment. Losses in excess of the

consolidated interest in joint ventures and associates are not

recognised, except where the Company or its subsidiaries have made a

commitment to make good those losses.

Where necessary, adjustments are made to bring the accounting

policies used in the individual financial statements of the Company,

subsidiaries, joint operations, joint ventures and associates into line

with those used by the Group in its consolidated financial statements

under IFRS. Intercompany transactions are eliminated.

The results of subsidiaries, joint operations, joint ventures and

associates acquired or disposed of during the year are included in the

consolidated income statement from the effective date of acquisition or

up to the effective date of disposal, as appropriate.

Acquisitions are accounted for using the acquisition method, where

the purchase price is allocated to the identifiable assets acquired and

liabilities assumed on a fair value basis and the remainder recognised

as goodwill.

C. Foreign currencies

Transactions in currencies other than the functional currency of the

Company or subsidiary concerned are recorded at the rates of

exchange prevailing on the date of the transactions. At each reporting

date, monetary assets and liabilities that are denominated in foreign

currencies are retranslated at closing exchange rates. Non-monetary

assets are not retranslated unless they are carried at fair value.

Gains and losses arising on the retranslation of monetary assets and

liabilities are included in the income statement, except where

the application of hedge accounting requires inclusion in other

comprehensive income (see note 32(e)).

On consolidation, the assets and liabilities of operations that have a

functional currency different from the Company’s functional currency

of pounds sterling, principally our US operations that have a functional

currency of US dollars, are translated at exchange rates prevailing at

the reporting date. Income and expense items are translated at the

average exchange rates for the period where these do not differ

materially from rates at the date of the transaction. Exchange

differences arising are recognised in other comprehensive income and

transferred to the consolidated translation reserve within other equity

reserves (see note 28).

D. Disposal of the UK Electricity System Operator (ESO)

In October 2023, legislation required to enable the separation of the

ESO and the formation of the National Energy System Operator

(NESO), which is now responsible across both the electricity and gas

systems, was passed through Parliament (see note 10). On 1 October

2024, the Group completed the disposal for consideration of

£673 million, recognising a gain on disposal of £187 million. The ESO

did not meet the criteria for classification as a discontinued operation

and therefore its results have not been separately disclosed on the face

of the income statement, and are instead included within the results

from continuing operations.

E. Disposal of the UK Gas Transmission business

As described in note 10, on 26 September 2024 the Group completed

the disposal of its final 20% interest in the UK Gas Transmission

business (held through its associate GasT TopCo Limited) that was

classified as held for sale. The gain on disposal of GasT TopCo Limited

has been recorded within discontinued operations. As an associate

held for sale, the Group did not recognise any share of results in the

period prior to disposal.

170	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

1. Basis of preparation and recent accounting developments continued

F. Areas of judgement and key sources

of estimation uncertainty

The preparation of financial statements requires management to make

estimates and assumptions that affect the reported amounts of assets

and liabilities, disclosures of contingent assets and liabilities, and the

reported amounts of revenue and expenses during the reporting period.

Actual results could differ from these estimates. Information about such

judgements and estimations is in the notes to the financial statements,

and the key areas are summarised below.

Areas of judgement that have the most significant effect on the

amounts recognised in the financial statements are:

•the judgement that it is appropriate to classify our liquefied natural

gas storage business at the Isle of Grain in the UK (Grain LNG) and

National Grid Renewables Development LLC (NG Renewables), our

US onshore renewables business, as held for sale, as detailed in

note 10; and

•the judgement that, notwithstanding legislation enacted and targets

committing the states of New York and Massachusetts to achieving

net zero greenhouse gas emissions by 2050, these do not shorten

the remaining useful economic lives (UELs) of our US gas network

assets, which we consider will have an expected use and utility

beyond 2050 (see key sources of estimation uncertainty below

and note 13).

Key sources of estimation uncertainty that have a significant risk

of causing a material adjustment to the carrying amounts of assets

and liabilities within the next financial year are:

•the cash flows and real discount rates applied in determining

the US environmental provisions, in particular relating to

three Superfund sites and certain other legacy Manufacturing

Gas Plant (MGP) sites (see note 26);

•the estimates made regarding the UELs of our gas network assets

due to uncertainty over the pace of delivery of the energy transition

and the multiple pathways by which it could be delivered. Our

estimates consider anticipated changes in customer behaviour and

developments in new technology, the potential to decarbonise fuel

through the use of renewable natural gas and green hydrogen, and

the feasibility and affordability of increased electrification (see note

13 for details and sensitivity analysis); and

•the valuation of liabilities for pensions and other post-retirement

benefits (see note 25).

In order to illustrate the impact that changes in assumptions for

the valuation of pension assets and liabilities and cash flows for

environmental provisions could have on our results and financial

position, we have included sensitivity analysis in note 35.

G. Impact of climate change and the transition

to net zero

In preparing these financial statements for the year ended 31 March

2025, management has taken into account the Group’s commitments

regarding its transition to net zero and the impact of climate change.

The Group has a published climate transition plan which sets out its

targets to achieve this commitment by 2050, in line with the Paris

Agreement. Management has also identified a number of significant

climate-related risks and opportunities. Changes to the Group’s

commitments and the impact of climate change may have a material

impact on the currently reported amounts of the Group’s assets and

liabilities and on similar assets and liabilities that may be recognised

in future reporting periods, as set out above with respect to the

judgement and key source of estimation uncertainty regarding the UELs

of our US gas network assets. Other climate and transition impacts are

further detailed below.

Repairs to property, plant and equipment and climate

adaptation activities

The Group’s network assets recorded within property, plant and

equipment (PP&E) are at risk of physical impacts from extreme weather

events such as major storms which may be accentuated by increased

frequency of weather incidents and changing long-term climate trends,

thereby leading to asset damage. Major storm costs in the US, net of

deductibles and disallowances, incurred by the Group are recoverable

as revenue in future periods under our rate plans but the associated

repair costs are expensed as incurred as other operating costs

under IFRS.

Impairment of property, plant and equipment and goodwill

Included within the Group’s plant and machinery (see note 13) are

£295 million of oil- and gas-fired electricity generation units with

approximately 3,800 MW of electric generation capacity located in

Long Island, New York. While the Group retains ownership of these

assets, it sells all of the capacity, energy in response to dispatch

requests, and any related ancillary services provided by the generating

facilities to the Long Island Power Authority (LIPA) via a Power Supply

Agreement running until 2028.

The maximum UEL for these units ends in 2040, which aligns to the

target set by the state of New York to achieve decarbonised power

generation by 2040. However, there is a risk that the UEL of certain,

or all, of the units may be shortened, depending on the progress of

decarbonisation activities in Long Island. The Group believes there are

no material accounting judgements in respect of the generation assets

and the UELs have not been accelerated in the year.

The UELs of our assets related to our commercial operations in LNG

at Providence, Rhode Island are informed by the recovery periods used

for ratemaking purposes and the majority of the UELs are covered by

fixed price service contracts. The net book value of these assets will

be immaterial by 2050. The assets related to the Group’s LNG storage

facility at the Isle of Grain in the UK were classified as held for sale in

the year and have a maximum UEL to 2045, which is in line with the

current commercial contracts. Accordingly, the Group believes there

are no material accounting judgements in respect of the UELs of the

LNG assets as of 31 March 2025.

Strategic Report Corporate Governance Financial Statements Additional Information 171

1. Basis of preparation and recent accounting developments continued

G. Impact of climate change and the transition to net zero

continued

The net zero pathway may also impact our US gas networks which

in turn may affect the recoverable amount of our New York and New

England cash-generating units (CGUs). In assessing the recoverability

of our CGUs (see note 11), we calculate the value-in-use based on

projections that incorporate our best estimates of future cash flows and

assumptions pertaining to the net zero plans of the jurisdictions that we

operate in. In respect of our New York and New England CGUs, our

forecast cash flow duration used in our impairment testing is five years.

We apply a terminal growth rate informed by expected long-term

economic inflation and the discount rate used takes into consideration

the potential impact of net zero plans on our gas business. Accordingly,

the impact of certain variables that will play out in the medium to long

term as a result of the anticipated transition to decarbonised power

generation are not anticipated to have an impact on the recoverable

amount of our New York and New England CGUs.

Decommissioning provisions

Provisions to decommission significant portions of our regulated

transmission and distribution assets are not recognised where no legal

obligations exist, and a realistic alternative exists to incurring costs to

decommission assets at the end of their life. Included within the

Group’s decommissioning provisions as at 31 March 2025 (see note

26) is £62 million relating to legal requirements to remove asbestos

upon major renovation or demolition of our oil- and gas-fired electricity

generation structures and facilities located in Long Island, New York.

As noted above, the progress of decarbonisation activities in Long

Island may bring forward the decommissioning of these assets, thereby

increasing the present value of associated decommissioning

provisions. In the current year, there have been no material changes to

the expected timing of decommissioning expenditures. Currently, the

expected timing of decommissioning expenditures has not materially

been brought forward but management will continue to review the

facts and circumstances.

Sensitivity to commodity contract derivatives

The Group has contracts associated with the forward purchase of

gas and enters into derivative financial instruments linked to commodity

prices, including gas options and swaps which are used to manage

market price volatility (see note 17(b)). As at 31 March 2025, the

Group’s gas commodity contract derivatives are primarily short-term

and, accordingly, we do not anticipate a risk as a result of the transition

to net zero.

H. Accounting policy choices

IFRS provides certain options available within accounting standards.

Choices we have made, and continue to make, include the following:

•Presentational formats: we use the nature of expense method for

our income statement and aggregate our statement of financial

position to net assets and total equity.

•Financial instruments: we normally opt to apply hedge accounting

in most circumstances where this is permitted (see note 32(e)).

I. New IFRS accounting standards and interpretations

effective for the year ended 31 March 2025

The Group adopted the following new standards and amendments

to standards which have had no material impact on the Group’s results

or financial statement disclosures:

•amendments to IAS 1 ‘Non-current Liabilities with Covenants’ and

‘Classification of Liabilities as Current or Non-current’;

•amendments to IFRS 16 ‘Lease Liability in a Sale and Leaseback’;

and

•amendments to IAS 7 and IFRS 7 ‘Supplier Finance Arrangements’.

J. New IFRS accounting standards and interpretations

not yet adopted

The following new accounting standards and amendments to existing

standards have been issued but are not yet effective:

•amendments to IAS 21 ‘Lack of exchangeability’;

•IFRS 18 ‘Presentation and Disclosure in Financial Statements’;

•IFRS 9 and IFRS 7 ‘Amendments to the Classification and

Measurement of Financial Instruments’;

•amendments to IFRS 9 and IFRS 7 ‘Contracts Referencing Nature-

dependent Electricity’;

•Annual Improvements to IFRS Accounting Standards – Volume 11;

and

•IFRS 19 ‘Subsidiaries without Public Accountability: Disclosures’.

The Group is currently assessing the impact of the above standards,

but they are not expected to have a material impact other than in

respect of IFRS 18.

IFRS 18 replaces IAS 1 and requires that companies classify all income

and expenses into five categories in the statement of profit or loss,

namely the operating, investing, financing, discontinued operations and

income tax categories. Management-defined performance measures

are disclosed in a single note and enhanced guidance is provided on

the aggregation and disaggregation of information presented in the

financial statements. The Group is in the process of assessing the

impact of IFRS 18 and anticipates changes to certain presentational

and disclosure-related matters in its consolidated financial statements

in future periods.

The Group has not adopted any other standard, amendment or

interpretation that has been issued but is not yet effective.

172	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

2. Segmental analysis

This note sets out the financial performance for the year split into the different parts of the business (operating segments). The performance

of these operating segments is monitored and managed on a day-to-day basis. Revenue and the results of the business are analysed by

operating segment, based on the information the Board of Directors uses internally for the purposes of evaluating the performance of each

operating segment and determining resource allocation between them. The Board is National Grid’s chief operating decision maker (as defined

by IFRS 8 ‘Operating Segments’) and as a matter of course, the Board considers multiple profitability measures by segment, being ‘adjusted

profit’ and ‘underlying profit’. Adjusted profit excludes exceptional items and remeasurements (as defined in note 5) and is used by

management and the Board to monitor financial performance as it is considered that it aids the comparability of our reported financial

performance from year to year. Underlying profit, as presented in the Annual Report and Accounts, represents adjusted profit and also

excludes the effects of timing, major storm costs and deferred tax expenses in our UK Electricity Transmission and UK Electricity Distribution

businesses. The measure of profit disclosed in this note and the primary profitability benchmark considered by the chief operating decision

maker is operating profit before exceptional items and remeasurements, adjusted profit, as this is the measure that is most consistent with the

IFRS results reported within these financial statements.

The results of our six principal businesses are reported to the Board of Directors and are accordingly treated as reportable operating segments.

All other operating segments are reported to the Board of Directors on an aggregated basis. The following table describes the main activities for

each reportable operating segment:

UK Electricity Transmission	The high-voltage electricity transmission networks in England and Wales. This includes our Accelerated Strategic Transmission Investment projects to connect more clean, low-carbon power to the transmission network in England and Wales.
UK Electricity Distribution	The electricity distribution networks of NGED in the East Midlands, West Midlands and South West of England and South Wales.
UK Electricity System Operator	The Great Britain system operator. The Group completed the disposal of the ESO to the UK Government on 1 October 2024 (see note 10).
New England	Electricity distribution networks, high-voltage electricity transmission networks and gas distribution networks in New England.
New York	Electricity distribution networks, high-voltage electricity transmission networks and gas distribution networks in New York.
National Grid Ventures	Comprises all commercial operations in LNG at the Isle of Grain in the UK and Providence, Rhode Island in the US, our electricity generation business in the US, our electricity interconnectors in the UK and our investment in NG Renewables, our renewables business in the US. While NGV operates outside our regulated core business, the electricity interconnectors in the UK are subject to indirect regulation by Ofgem regarding the level of returns they can earn. NG Renewables and Grain LNG were classified as held for sale in the year (see note 10).

Other activities that do not form part of any of the segments in the above table primarily relate to our UK property business together with insurance

and corporate activities in the UK and US and the Group’s investments in technology and innovation companies through National Grid Partners.

(a) Revenue

Revenue primarily represents the sales value derived from the generation, transmission and distribution of energy, together with the sales value

derived from the provision of other services to customers. Refer to note 3 for further details.

Sales between operating segments are priced considering the regulatory and legal requirements to which the businesses are subject. The analysis

of revenue by geographical area is on the basis of destination. There are no material sales between the UK and US geographical areas.

	2025			2024			2023
	Total sales £m	Sales between segments £m	Sales to third parties £m	Total sales £m	Sales between segments £m	Sales to third parties £m	Total sales £m	Sales between segments £m	Sales to third parties £m
Operating segments – continuing operations:
UK Electricity Transmission	2,619	(135)	2,484	2,735	(40)	2,695	1,987	(41)	1,946
UK Electricity Distribution	2,424	(3)	2,421	1,795	(5)	1,790	2,045	(12)	2,033
UK Electricity System Operator	1,029	(17)	1,012	3,788	(35)	3,753	4,690	(31)	4,659
New England	4,306	—	4,306	3,948	—	3,948	4,427	—	4,427
New York	6,689	—	6,689	6,094	—	6,094	6,994	—	6,994
National Grid Ventures	1,397	(47)	1,350	1,389	(57)	1,332	1,341	(58)	1,283
Other	122	(6)	116	244	(6)	238	317	—	317
Total revenue from continuing operations	18,586	(208)	18,378	19,993	(143)	19,850	21,801	(142)	21,659
Split by geographical areas – continuing operations:
UK			6,707			9,063			9,611
US			11,671			10,787			12,048
Total revenue from continuing operations			18,378			19,850			21,659

Strategic Report Corporate Governance Financial Statements Additional Information 173

2. Segmental analysis continued

(b) Operating profit

A reconciliation of the operating segments’ measure of profit to profit before tax from continuing operations is provided below. Further details of

the exceptional items and remeasurements are provided in note 5.

	Before exceptional items and remeasurements			Exceptional items and remeasurements (see note 5)			After exceptional items and remeasurements
	2025	2024	2023	2025	2024	2023	2025	2024	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Operating segments – continuing operations:
UK Electricity Transmission	1,277	1,677	995	—	(3)	(2)	1,277	1,674	993
UK Electricity Distribution	1,610	993	1,091	(12)	(18)	(22)	1,598	975	1,069
UK Electricity System Operator	(364)	880	238	151	(498)	(1)	(213)	382	237
New England	982	643	708	26	(2)	424	1,008	641	1,132
New York	1,023	860	741	246	(498)	(200)	1,269	362	541
National Grid Ventures	380	469	490	(375)	89	467	5	558	957
Other	(143)	(60)	31	133	(57)	(81)	(10)	(117)	(50)
Total operating profit from continuing operations	4,765	5,462	4,294	169	(987)	585	4,934	4,475	4,879
Split by geographical area – continuing operations:
UK	2,775	3,923	2,825	257	(487)	26	3,032	3,436	2,851
US	1,990	1,539	1,469	(88)	(500)	559	1,902	1,039	2,028
Total operating profit from continuing operations	4,765	5,462	4,294	169	(987)	585	4,934	4,475	4,879

	Before exceptional items and remeasurements			Exceptional items and remeasurements (see note 5)			After exceptional items and remeasurements
	2025	2024	2023	2025	2024	2023	2025	2024	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Reconciliation to profit before tax:
Operating profit from continuing operations	4,765	5,462	4,294	169	(987)	585	4,934	4,475	4,879
Share of post-tax results of joint ventures and associates	75	101	190	(2)	(64)	(19)	73	37	171
Finance income	449	244	166	1	4	(28)	450	248	138
Finance costs	(1,810)	(1,723)	(1,680)	3	11	82	(1,807)	(1,712)	(1,598)
Profit before tax from continuing operations	3,479	4,084	2,970	171	(1,036)	620	3,650	3,048	3,590

The following items are included in the total operating profit by segment:

Depreciation, amortisation and impairment1	2025	2024	2023
	£m	£m	£m
Operating segments:
UK Electricity Transmission	(540)	(521)	(484)
UK Electricity Distribution	(249)	(223)	(223)
UK Electricity System Operator	—	(61)	(101)
New England	(469)	(420)	(393)
New York	(731)	(658)	(620)
National Grid Ventures	(173)	(166)	(149)
Other	(13)	(12)	(14)
Total	(2,175)	(2,061)	(1,984)
Asset type:
Property, plant and equipment	(1,878)	(1,769)	(1,700)
Non-current intangible assets	(297)	(292)	(284)
Total	(2,175)	(2,061)	(1,984)

1.Depreciation, amortisation and impairment relates to property, plant and equipment and other intangible assets. The charge is stated net of depreciation and amortisation capitalised.

174	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

2. Segmental analysis continued

(c) Capital investment

Capital investment represents additions to property, plant and equipment, prepayments to suppliers to secure production capacity in relation

to our capital projects, non-current intangibles and additional equity investments in joint ventures and associates. Capital investments exclude

additions for assets or businesses from the point they are classified as held for sale.

	2025	2024	2023
	£m	£m	£m
Operating segments:
UK Electricity Transmission	2,999	1,912	1,301
UK Electricity Distribution	1,426	1,247	1,220
UK Electricity System Operator	—	85	108
New England	1,751	1,673	1,527
New York	3,289	2,654	2,454
National Grid Ventures	378	662	970
Other	4	2	13
Total	9,847	8,235	7,593
Asset type:
Property, plant and equipment	8,894	7,124	6,783
Non-current intangible assets	478	481	578
Equity investments in joint ventures and associates	116	332	197
Capital expenditure prepayments	359	298	35
Total	9,847	8,235	7,593

(d) Geographical analysis of non-current assets

Non-current assets by geography comprise goodwill, other intangible assets, property, plant and equipment, investments in joint ventures and

associates and other non-current assets.

	2025	2024	2023
	£m	£m	£m
Split by geographical area:
UK	42,623	40,065	38,043
US	46,131	44,270	41,761
	88,754	84,335	79,804
Reconciliation to total non-current assets:
Pension assets	2,489	2,407	2,645
Financial and other investments	798	880	859
Derivative financial assets	369	324	276
Non-current assets	92,410	87,946	83,584

Strategic Report Corporate Governance Financial Statements Additional Information 175

3. Revenue

Revenue arises in the course of ordinary activities and principally comprises:

• transmission services;

• distribution services; and

• generation services.

Transmission services, distribution services and certain other services (excluding rental income) fall within the scope of IFRS 15 ‘Revenue from

Contracts with Customers’, whereas generation services (which solely relate to the contract with LIPA in the US) are accounted for under

IFRS 16 ‘Leases’ as rental income, also presented within revenue. Revenue is recognised to reflect the transfer of goods or services to

customers at an amount that reflects the consideration to which the Group expects to be entitled to in exchange for those goods or services

and excludes amounts collected on behalf of third parties and value added tax. The Group recognises revenue when it transfers control

over a product or service to a customer.

Revenue in respect of regulated activities is determined by regulatory agreements that set the price to be charged for services in a given period

based on pre-determined allowed revenues. Variances in service usage can result in actual revenue collected exceeding (over-recoveries) or

falling short (under-recoveries) of allowed revenues. Where regulatory agreements allow the recovery of under-recoveries or require the return

of over-recoveries, the allowed revenue for future periods is typically adjusted. In these instances, no assets or liabilities are recognised for

under- or over-recoveries respectively, because the adjustment relates to future customers and services that have not yet been delivered.

Revenue in respect of non-regulated activities primarily relates to the sale of capacity on our interconnectors, which is determined at auctions.

Capacity is sold in either day, month, quarter or year-ahead tranches. The price charged is determined by market fundamentals rather than

regulatory agreement. The interconnectors are subject to indirect regulation with regard to the levels of returns they are allowed to earn. Where

amounts fall below this range they receive top-up revenues and where amounts exceed this range they must pass back the excess. In these

instances, assets or liabilities are recognised for the top-up or pass-back respectively.

Below, we include a description of principal activities, by reportable segment, from which the Group generates its revenue. For more detailed

information about our segments, see note 2.

(a) UK Electricity Transmission

The UK Electricity Transmission segment principally generates revenue by providing electricity transmission services in England and Wales.

Our business operates as a monopoly regulated by Ofgem, which has established price control mechanisms that set the amount of annual

allowed returns our business can earn (along with the Scottish and Offshore transmission operators amongst others).

The transmission of electricity encompasses the following principal services:

•the supply of high-voltage electricity – revenue is recognised based on usage. Our performance obligation is satisfied over time as our

customers make use of our network. We bill monthly in advance and our payment terms are up to 60 days. Price is determined prior to

our financial year end with reference to the regulated allowed returns and estimated annual volumes; and

•construction work (principally for connections) – revenue is recognised over time, as we provide access to our network. Customers can

either pay over the useful life of the connection or up front. Where the customer pays up front, revenues are deferred as a contract liability

and released over the life of the asset.

For other construction where there is no consideration for any future services (for example diversions), revenues are recognised as the

construction work is completed.

(b) UK Electricity Distribution

The UK Electricity Distribution segment principally generates revenue by providing electricity distribution services in the Midlands and South West

of England and South Wales. Similar to UK Electricity Transmission, UK Electricity Distribution operates as a monopoly in the jurisdictions that it

operates in and is regulated by Ofgem.

The distribution of electricity encompasses the following principal services:

•electricity distribution – revenue is recognised based on usage by customers (over time), based upon volumes and price. The price control

mechanism that determines our annual allowances is similar to UK Electricity Transmission. Revenues are billed monthly and payment terms

are typically within 14 days; and

•construction work (principally for connections) – revenue is recognised over time as we provide access to our network. Where the customer

pays up front, revenues are deferred as a contract liability and released over the life of the asset.

For other construction where there is no consideration for any future services, revenues are recognised as the construction work is completed.

(c) UK Electricity System Operator

The Group disposed of the UK Electricity System Operator on 1 October 2024. Prior to its disposal and the formation of the NESO, the UK

Electricity System Operator earned revenue for balancing supply and demand of electricity on Great Britain’s electricity transmission system,

where it acted as principal. Balancing services are regulated by Ofgem and revenue payable by generators and suppliers of electricity was

recognised as the service was provided.

The UK Electricity System Operator also collected revenues on behalf of transmission operators, principally National Grid Electricity

Transmission plc and the Scottish and Offshore transmission operators, from users (electricity suppliers) who connect to or use the transmission

system. As the UK Electricity System Operator acted as an agent in this capacity, transmission network revenues were recorded net of payments

to transmission operators.

176	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

3. Revenue continued

(d) New England

The New England segment principally generates revenue by providing electricity and gas supply and distribution services and high-voltage

electricity transmission services in New England. Supply and distribution services are regulated by the Massachusetts Department of Public

Utilities (MADPU) and transmission services are regulated by the Federal Energy Regulatory Commission (FERC), both of whom regulate the

rates that can be charged to customers.

The supply and distribution of electricity and gas and the provision of electricity transmission facilities encompasses the following principal

services:

•electricity and gas supply and distribution and electricity transmission – revenue is recognised based on usage by customers (over time).

Revenues are billed monthly and payment terms are 30 days; and

•construction work (principally for connections) – revenue is recognised over time as we provide access to our network. Where the customer

pays up front, revenues are deferred as a contract liability or customer contributions (where they relate to government entities) and released

over the life of the connection.

(e) New York

The New York segment principally generates revenue by providing electricity and gas supply and distribution services and high-voltage electricity

transmission services in New York. Supply and distribution services are regulated by the New York Public Service Commission (NYPSC) and

transmission services are regulated by the FERC, both of which regulate the rates that can be charged to customers.

The supply and distribution of electricity and gas and the provision of electricity transmission facilities encompasses the following principal

services:

•electricity and gas supply and distribution and electricity transmission – revenue is recognised based on usage by customers (over time).

Revenues are billed monthly and payment terms are 30 days; and

•construction work (principally for connections) – revenue is recognised over time as we provide access to our network. Where the customer

pays up front, revenues are deferred as a contract liability or customer contributions (where they relate to government entities) and released

over the life of the connection.

(f) National Grid Ventures

National Grid Ventures generates revenue from electricity interconnectors, LNG at the Isle of Grain in the UK and Providence, Rhode Island in the

US, NG Renewables and rental income.

The Group recognises revenue from transmission services through interconnectors and LNG importation at the Isle of Grain and Providence by

means of customers’ use of capacity and volumes. Revenue is recognised over time and is billed monthly. Payment terms are up to 30 days.

Grain LNG was classified as held for sale in the year (see note 10).

Electricity generation revenue is earned from the provision of energy services and supply capacity to produce energy for the use of customers of

LIPA through a power supply agreement, where LIPA receives all of the energy and capacity from the asset until at least 2028. The arrangement is

treated as an operating lease within the scope of the leasing standard where we act as lessor, with rental income being recorded as other revenue,

which forms part of total revenue. Lease payments (capacity payments) are recognised on a straight-line basis and variable lease payments are

recognised as the energy is generated.

Other revenue in the scope of IFRS 15 principally includes sales of renewables projects from NG Renewables to Emerald Energy Venture LLC

(Emerald), which is jointly controlled by National Grid and Washington State Investment Board (WSIB). NG Renewables develops wind and solar

generation assets in the US, while Emerald has a right of first refusal to buy, build and operate those assets. Revenue is recognised as it is earned.

NG Renewables, together with Emerald, was classified as held for sale in the year (see note 10).

Other revenue, recognised in accordance with standards other than IFRS 15, primarily comprises adjustments in respect of the interconnector

cap and floor and Use of Revenue regimes constructed by Ofgem for certain wholly owned interconnector subsidiaries. Under the cap and floor

regime, where an interconnector expects to exceed its total five-year cap, a provision and reduction in revenue is recognised in the current

reporting period (see note 26). Where an interconnector does not expect to reach its five-year floor, either an asset will be recognised where

a future inflow of economic benefits is considered virtually certain, or a contingent asset will be disclosed where the future inflow is concluded

to be probable. Under the Use of Revenue framework, any revenues in excess of an agreed incentive level must be passed on as savings

to consumers. Where the obligation to transfer excess revenues arises, a payable and reduction in revenue is recognised in the current

reporting period.

(g) Other

Revenue in Other relates to our UK commercial property business. Revenue is predominantly recognised in accordance with standards other than

IFRS 15 and comprises property sales by our UK commercial property business. Property sales are recorded when the sale is legally completed.

Strategic Report Corporate Governance Financial Statements Additional Information 177

3. Revenue continued

(h) Disaggregation of revenue

In the following tables, revenue is disaggregated by primary geographical market and major service lines. The table below reconciles

disaggregated revenue with the Group’s reportable segments (see note 2).

Revenue for the year ended 31 March 2025	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	National Grid Ventures £m	Other £m	Total £m
Revenue under IFRS 15
Transmission1	2,265	—	46	85	252	879	1	3,528
Distribution	—	2,327	—	4,193	6,371	—	—	12,891
System Operator	—	—	966	—	—	—	—	966
Other2	29	90	—	9	16	171	3	318
Total IFRS 15 revenue	2,294	2,417	1,012	4,287	6,639	1,050	4	17,703
Other revenue
Generation	—	—	—	—	—	384	—	384
Other3	190	4	—	19	50	(84)	112	291
Total other revenue	190	4	—	19	50	300	112	675
Total revenue from continuing operations	2,484	2,421	1,012	4,306	6,689	1,350	116	18,378

1.The UK Electricity System Operator transmission revenue generated in the period up until its disposal represents transmission revenues collected, net of payments made to transmission

owners.

2.The UK Electricity Distribution other IFRS 15 revenue principally relates to engineering recharges, which are the recovery of costs incurred for construction work requested by customers,

such as the rerouting of existing network assets. Within NGV, the other IFRS 15 revenue principally relates to revenue generated from our NG Renewables business which was classified

as held for sale in the year (see note 10).

3.Other revenue, recognised in accordance with accounting standards other than IFRS 15, includes property sales by our UK commercial property business, rental income, income arising

in connection with the Transition Services Agreements following the sales of NECO, the UK Gas Transmission business and the ESO, and an adjustment to NGV revenue in respect of the

interconnector cap and floor and Use of Revenue regimes constructed by Ofgem.

Geographical split for the year ended 31 March 2025	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	National Grid Ventures £m	Other £m	Total £m
Revenue under IFRS 15
UK	2,294	2,417	1,012	—	—	889	1	6,613
US	—	—	—	4,287	6,639	161	3	11,090
Total IFRS 15 revenue	2,294	2,417	1,012	4,287	6,639	1,050	4	17,703
Other revenue
UK	190	4	—	—	—	(111)	11	94
US	—	—	—	19	50	411	101	581
Total other revenue	190	4	—	19	50	300	112	675
Total revenue from continuing operations	2,484	2,421	1,012	4,306	6,689	1,350	116	18,378

Revenue for the year ended 31 March 2024	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	National Grid Ventures £m	Other £m	Total £m
Revenue under IFRS 15
Transmission1	2,591	—	(10)	73	493	869	—	4,016
Distribution	—	1,712	—	3,786	5,500	—	—	10,998
System Operator	—	—	3,763	—	—	—	—	3,763
Other2	25	73	—	8	15	168	4	293
Total IFRS 15 revenue	2,616	1,785	3,753	3,867	6,008	1,037	4	19,070
Other revenue
Generation	—	—	—	—	—	360	—	360
Other3	79	5	—	81	86	(65)	234	420
Total other revenue	79	5	—	81	86	295	234	780
Total revenue from continuing operations	2,695	1,790	3,753	3,948	6,094	1,332	238	19,850

1.The UK Electricity System Operator transmission revenue generated in the year represents transmission revenues collected, net of payments made to transmission owners.

2.The UK Electricity Transmission and UK Electricity Distribution other IFRS 15 revenue principally relates to engineering recharges, which are the recovery of costs incurred for construction

work requested by customers, such as the rerouting of existing network assets. Within NGV, the other IFRS 15 revenue principally relates to revenue generated from our NG Renewables

business.

3.Other revenue, recognised in accordance with accounting standards other than IFRS 15, includes property sales by our UK commercial property business, rental income, income arising in

connection with the Transition Services Agreements following the sales of NECO and the UK Gas Transmission business, and a provision and adjustment to NGV revenue in respect of the

interconnector cap and floor and Use of Revenue regimes constructed by Ofgem.

178	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

3. Revenue continued

(h) Disaggregation of revenue continued

Geographical split for the year ended 31 March 2024	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	National Grid Ventures £m	Other £m	Total £m
Revenue under IFRS 15
UK	2,616	1,785	3,753	—	—	878	1	9,033
US	—	—	—	3,867	6,008	159	3	10,037
Total IFRS 15 revenue	2,616	1,785	3,753	3,867	6,008	1,037	4	19,070
Other revenue
UK	79	5	—	—	—	(76)	22	30
US	—	—	—	81	86	371	212	750
Total other revenue	79	5	—	81	86	295	234	780
Total revenue from continuing operations	2,695	1,790	3,753	3,948	6,094	1,332	238	19,850

Revenue for the year ended 31 March 2023	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	National Grid Ventures £m	Other £m	Total £m
Revenue under IFRS 15
Transmission	1,868	—	126	52	567	791	—	3,404
Distribution	—	1,951	—	4,314	6,373	—	—	12,638
System Operator	—	—	4,533	—	—	—	—	4,533
Other¹	31	77	—	8	13	131	—	260
Total IFRS 15 revenue	1,899	2,028	4,659	4,374	6,953	922	—	20,835
Other revenue
Generation	—	—	—	—	—	394	—	394
Other2	47	5	—	53	41	(33)	317	430
Total other revenue	47	5	—	53	41	361	317	824
Total revenue from continuing operations	1,946	2,033	4,659	4,427	6,994	1,283	317	21,659

1.The UK Electricity Transmission and UK Electricity Distribution other IFRS 15 revenue principally relates to engineering recharges, which are the recovery of costs incurred for

construction work requested by customers, such as the rerouting of existing network assets. Within NGV, the other IFRS 15 revenue principally relates to revenue generated from

our NG Renewables business.

2.Other revenue, recognised in accordance with accounting standards other than IFRS 15, includes property sales by our UK commercial property business and rental income, income arising

in connection with the Transition Services Agreements following the sales of NECO and the UK Gas Transmission business, and a provision and adjustment to NGV revenue in respect of the

interconnector cap and floor regime constructed by Ofgem. In the year ended 31 March 2023, the Group also recognised other income relating to an insurance claim.

Geographical split for the year ended 31 March 2023	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	National Grid Ventures £m	Other £m	Total £m
Revenue under IFRS 15
UK	1,899	2,028	4,659	—	—	799	—	9,385
US	—	—	—	4,374	6,953	123	—	11,450
Total IFRS 15 revenue	1,899	2,028	4,659	4,374	6,953	922	—	20,835
Other revenue
UK	47	5	—	—	—	(31)	205	226
US	—	—	—	53	41	392	112	598
Total other revenue	47	5	—	53	41	361	317	824
Total revenue from continuing operations	1,946	2,033	4,659	4,427	6,994	1,283	317	21,659

Contract liabilities (see note 23) represent revenue to be recognised in future periods relating to contributions in aid of construction of

£2,514 million (2024: £2,246 million; 2023: £2,006 million). Revenue is recognised over the life of the asset. The asset lives for connections

in UK Electricity Transmission, UK Electricity Distribution, New England and New York are up to 40 years, 69 years, 50 years and 50 years

respectively. The weighted average amortisation period over which revenue for contract liabilities is recognised is 22 years.

Future revenues in relation to unfulfilled performance obligations amount to £1.5 billion (2024: £6.1 billion; 2023: £5.0 billion). £1.5 billion (2024:

£1.9 billion; 2023: £1.8 billion) relates to connection contracts in UK Electricity Transmission which will be recognised as revenue over a weighted

average of 26 years. The comparative balances include revenues to be earned under contracts held by Grain LNG, which was classified as held

for sale in the year.

The amount of revenue recognised for the year ended 31 March 2025 from performance obligations satisfied (or partially satisfied) in previous

periods, mainly due to changes in the estimate of the stage of completion, is £nil (2024: £nil; 2023: £nil).

Strategic Report Corporate Governance Financial Statements Additional Information 179

4. Other operating costs

Below we have presented separately certain items included in our operating costs from continuing operations. These include a breakdown

of payroll costs (including disclosure of amounts paid to key management personnel) and fees paid to our auditors.

	Total
	2025	2024	2023
	£m	£m	£m
Depreciation, amortisation and impairment¹	2,175	2,061	1,984
Payroll costs	2,143	2,043	1,958
Purchases of electricity	1,429	1,497	2,055
Purchases of gas	1,578	1,289	2,516
Property and other taxes	1,402	1,279	1,302
UK electricity balancing costs	1,143	2,486	4,052
Impairment of joint venture	303	—	—
Other	3,071	4,553	3,682
Other operating costs	13,244	15,208	17,549
Provision for bad and doubtful debts	200	179	220
Total operating costs from continuing operations	13,444	15,387	17,769
Operating costs from continuing operations include:
Inventory consumed	506	408	723
Research and development expenditure	43	32	23

1.Depreciation, amortisation and impairment relates to property, plant and equipment and other intangible assets. The charge is stated net of depreciation and amortisation capitalised.

(a) Payroll costs

	2025	2024	2023
	£m	£m	£m
Wages and salaries1	3,497	3,206	2,971
Social security costs	279	256	244
Defined contribution scheme costs	144	129	98
Defined benefit pension costs	114	96	121
Share-based payments	37	37	46
Severance costs (excluding pension costs)	10	12	3
	4,081	3,736	3,483
Less: payroll costs capitalised	(1,938)	(1,693)	(1,525)
Total payroll costs from continuing operations	2,143	2,043	1,958

1.Included within wages and salaries are US other post-retirement benefit costs of £25 million (2024: £26 million; 2023: £37 million). For further information, refer to note 25.

(b) Number of employees

	31 March 2025	Monthly average 2025	31 March 2024	Monthly average 2024	31 March 2023	Monthly average 2023
UK	13,477	13,919	13,956	13,439	12,572	12,024
US	18,177	17,888	17,469	17,406	16,878	16,539
Total number of employees (continuing operations)	31,654	31,807	31,425	30,845	29,450	28,563

180	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

4. Other operating costs continued

(c) Key management compensation

	2025	2024	2023
	£m	£m	£m
Short-term employee benefits	8	7	7
Share-based payments	4	5	6
Total key management compensation	12	12	13

Key management compensation relates to the Board, including the Executive Directors and Non-executive Directors, for the years presented.

(d) Auditor’s remuneration

Auditor’s remuneration is presented below in accordance with the requirements of the Companies Act 2006 and the principal accountant fees

and services disclosure requirements of Item 16C of Form 20-F:

	2025	2024	2023
	£m	£m	£m
Audit fees payable to the Parent Company’s auditor and their associates in respect of:
Audit of the Parent Company’s individual and consolidated financial statements1	2.8	2.8	2.9
The auditing of accounts of any associate of the Company	8.7	8.8	9.0
Other services supplied2	7.2	7.3	7.4
	18.7	18.9	19.3
Total other services3
All other fees:
Other assurance services4	1.0	4.0	1.4
Other non-audit services not covered above	—	—	0.2
	1.0	4.0	1.6
Total auditor’s remuneration	19.7	22.9	20.9

1.Audit fees in each year represent fees for the audit of the Company’s financial statements for the years ended 31 March 2025, 2024 and 2023.

2.Other services supplied represent fees payable for services in relation to other statutory filings or engagements that are required to be carried out by the auditor. In particular, this includes

fees for reports under section 404 of the US Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley Act), audit reports on regulatory returns and the

review of interim financial statements for the six-month periods ended 30 September 2024, 2023 and 2022 respectively.

3.There were no tax compliance or tax advisory fees and no audit-related fees as described in Item 16C(b) of Form 20-F.

4.In all years, principally relates to assurance services provided in relation to comfort letters for debt issuances and reporting accountant services. The year ended 31 March 2025 also includes

fees for ESG reporting assurance.

The Audit & Risk Committee considers and makes recommendations to the Board, to be put to shareholders for approval at each AGM, in relation

to the appointment, reappointment, removal and oversight of the Company’s independent auditor. The Committee, under authority granted at

the AGM, also considers and approves the audit fees on behalf of the Board in accordance with the Competition and Markets Authority Audit

Order 2014.

Certain services are prohibited from being performed by the external auditor under the Sarbanes-Oxley Act and the FRC’s 2019 Revised

Ethical Standard. Of the above services, none were prohibited.

Strategic Report Corporate Governance Financial Statements Additional Information 181

5. Exceptional items and remeasurements

To monitor our segmental financial performance, we use an adjusted consolidated profit measure that excludes certain income and expenses.

We exclude items from adjusted profit because, if included, these items could distort understanding of our performance for the year and the

comparability between periods. This note analyses these items, which are included in our results for the year but are excluded from adjusted

profit.

Exceptional items and remeasurements from continuing operations

	2025	2024	2023
	£m	£m	£m
Included within operating profit
Exceptional items:
Provision for UK electricity balancing costs	151	(498)	—
Net gain on the sale of the ESO	187	—	—
Major transformation programme	(74)	—	—
Changes in environmental provisions	146	(496)	176
Transaction, separation and integration costs1	(65)	(44)	(117)
Impairment of joint venture	(303)	—	—
Cost efficiency programme	—	(65)	(100)
IFA fire	—	92	130
Net gain on disposal of NECO	—	—	511
Net gain on disposal of Millennium Pipeline Company LLC	—	—	335
	42	(1,011)	935
Remeasurements – commodity contract derivatives	127	24	(350)
	169	(987)	585

Transaction, separation and integration costs represent the aggregate of distinct activities undertaken by the Group in the years presented.

Details of remeasurements, tax exceptional items and the tax effect of exceptional items and remeasurements are also provided in this note.

	2025	2024	2023
	£m	£m	£m
Included within operating profit from continuing operations	169	(987)	585
Included within finance income and costs
Remeasurements:
Net gains/(losses) on financial assets at fair value through profit and loss	1	4	(28)
Net gains on financing derivatives	3	11	82
	4	15	54
Included within share of post-tax results of joint ventures and associates
Remeasurements:
Net losses on financial instruments	(2)	(64)	(19)
Total included within profit before tax	171	(1,036)	620
Included within tax
Tax on exceptional items	76	159	(316)
Tax on remeasurements	(36)	(7)	75
	40	152	(241)
Total exceptional items and remeasurements after tax	211	(884)	379
Analysis of total exceptional items and remeasurements after tax
Exceptional items after tax	118	(852)	619
Remeasurements after tax	93	(32)	(240)
Total exceptional items and remeasurements after tax	211	(884)	379

Exceptional items

Management uses an exceptional items framework that has been discussed and approved by the Audit & Risk Committee. This follows a three-

step process which considers the nature of the event, the financial materiality involved and any particular facts and circumstances. In considering

the nature of the event, management focuses on whether the event is within the Group’s control and how frequently such an event typically

occurs. With respect to restructuring costs, these represent additional expenses incurred that are not related to the normal business and day-to-

day activities. These can take place over multiple reporting periods given the scale of the Group, the nature and complexity of the transformation

initiatives and due to the impact of strategic transactions. In determining the facts and circumstances, management considers factors such as

ensuring consistent treatment between favourable and unfavourable transactions, the precedent for similar items, the number of periods over

which costs will be spread or gains earned, and the commercial context for the particular transaction. The exceptional items framework was last

updated in March 2022.

182	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

5. Exceptional items and remeasurements continued

Exceptional items continued

Items of income or expense that are considered by management for designation as exceptional items include significant restructurings, write-

downs or impairments of non-current assets, significant changes in environmental or decommissioning provisions, integration of acquired

businesses, gains or losses on disposals of businesses or investments and significant debt redemption costs as a consequence of transactions

such as significant disposals or issues of equity, and the related tax, as well as deferred tax arising on changes to corporation tax rates.

Costs arising from efficiency and transformation programmes include redundancy costs. Redundancy costs are charged to the consolidated

income statement in the year in which a commitment is made to incur the costs and the main features of the restructuring plan have been

announced to affected employees.

Set out below are details of the transactions against which we have considered the application of our exceptional items framework in each

of the years for which results are presented.

2025

Provision for UK electricity balancing costs

During the prior year, the ESO’s operating profit increased due to a substantial over-recovery of allowed revenues received under its regulatory

framework. As described in note 3, under IFRS a corresponding liability is not recognised for the return of over-recoveries as this relates to future

customers and services that have not yet been delivered. Following legislation to enable the separation of the ESO and the formation of the NESO,

the Group recognised a liability of £498 million in the year ended 31 March 2024 representing the element of the over-recovery that was expected

to be settled through the sale process. In the year ended 31 March 2025 the liability was remeasured at £347 million to reflect the final amount of

over-recovered revenues that transferred through with the ESO on disposal on 1 October 2024 (see note 10).

Net gain on sale of the ESO

On 1 October 2024, the Group completed the disposal of the ESO to the UK Government for consideration of £673 million (see note 10). As a

result, the Group derecognised net assets of £486 million, resulting in a gain of £187 million. The receipt of cash has been recognised within net

cash used in investing activities within the consolidated cash flow statement.

Major transformation programme

Following the announcement of our new strategic priorities in May 2024, the Group entered into a new four-year transformation programme

designed to implement our refreshed strategy to be a pre-eminent pureplay networks business. In the period, the Group incurred £74 million of

costs in relation to the programme. The costs recognised primarily relate to technology implementation costs, employee costs and professional

fees incurred in delivering the programme. While the costs incurred since the commencement of the programme do not meet the quantitative

threshold to be classified as exceptional on a standalone basis, when taken in aggregate with the costs expected to be incurred over the duration

of the programme, we have concluded that the costs should be classified as exceptional in line with our exceptional items policy. The total cash

outflow for the period was £62 million.

Changes in environmental provisions

In the US, we recognise environmental provisions related to the remediation of the Gowanus Canal, Newtown Creek and the former manufacturing

gas plant facilities previously owned or operated by the Group or its predecessor companies. The sites are subject to both state and federal

environmental remediation laws in the US. Potential liability for the historical contamination may be imposed on responsible parties jointly and

severally, without regard to fault, even if the activities were lawful when they occurred. The provisions and the Group’s share of estimated costs

are re-evaluated at each reporting period. During the period, following discussions with the New York State Department of Environmental

Conservation and the Environmental Protection Agency on the scope and design of remediation activities related to certain of our responsible

sites, we have re-evaluated our estimates of total costs and recognised a net decrease of £64 million in relation to our provisions. Under the terms

of our rate plans, we are entitled to recovery of environmental clean-up costs from rate payers in future reporting periods. Such recoveries through

overall allowed revenues are not classified as exceptional in the future periods that they occur due to the extended duration over which such costs

are recovered and the immateriality of the recoveries in any given year.

The real discount rate applied to the Group’s environmental provisions was also revised in the year to 2.0% (2024: 1.5%) to reflect the substantial

and sustained change in US Government bond yield curves (see note 26). The principal impact of this rate increase was a £82 million decrease in

our US environmental provisions. The weighted average remaining duration of our cash flows is now around 10 years.

Transaction, separation and integration costs

In May 2024, we announced the sale of NG Renewables and Grain LNG as part of our strategic focus on becoming a leading pureplay networks

business. Transaction and separation costs of £26 million were incurred in relation to the planned disposal of NG Renewables and £8 million in

relation to the planned disposal of Grain LNG. The costs incurred primarily related to professional fees and employee costs. In remeasuring the

NG Renewables disposal group to fair value less costs to sell in accordance with IFRS 5, the Group has also recognised a £31 million impairment

loss (see note 10). These costs have been classified as exceptional in accordance with our exceptional items policy. While the costs incurred in the

current year in isolation are not sufficiently material to warrant classification as an exceptional item, when taken in aggregate with the respective

disposals which are anticipated in the year ended 31 March 2026, the impact to the consolidated income statement incurred over both years will

be sufficiently material to be classified as exceptional in line with our policy. The total cash outflow for the year was £6 million.

Impairment of joint venture

In the year, we agreed with our joint venture partner, RWE Renewables, that our investment in Community Offshore Wind, LLC will pause project

development for the time being. The Group has determined that the investment currently has negligible value and an impairment of £303 million

has been recognised (see note 16).

Strategic Report Corporate Governance Financial Statements Additional Information 183

5. Exceptional items and remeasurements continued

Exceptional items continued

2024

Provision for UK electricity balancing costs

As described above, during the prior year the ESO’s operating profit increased due to a substantial over-recovery of allowed revenues received

under its regulatory framework. The Group recognised a liability for the over-recovered revenues which were forecasted to transfer through the

sales process.

Changes in environmental provisions

In the prior year, following discussions with the New York State Department of Environmental Conservation and the Environmental Protection

Agency on the scope and design of remediation activities related to certain of our responsible sites, we re-evaluated our estimates of total costs

and increased our US environmental provision by £496 million (see note 26). Under the terms of our rate plans, we are entitled to recovery of

environmental clean-up costs from rate payers in future reporting periods.

Transaction, separation and integration costs

Separation costs of £11 million were incurred in relation to the disposal of NECO, £6 million in relation to the disposal of the UK Gas Transmission

business and £27 million in connection with the integration of NGED. The costs incurred primarily related to professional fees, relocation costs and

employee costs. The costs were classified as exceptional in accordance with our exceptional items policy. While the transaction, separation and

integration costs incurred during the prior year did not meet the quantitative threshold to be classified as exceptional on a standalone basis, when

taken in aggregate with the £340 million of costs in previous periods, the costs qualified for exceptional treatment in line with our exceptional

items policy. The total cash outflow for the period was £33 million. The Group is entitled to cost recovery in relation to the separation of the ESO.

Accordingly, these costs were not classified as exceptional.

Cost efficiency programme

During the prior year, the Group incurred £65 million of costs in relation to the major cost efficiency programme announced in November 2021, that

targeted at least £400 million savings per annum across the Group by the end of three years. The costs recognised in the period primarily related

to redundancy provisions, employee costs and professional fees incurred in delivering the programme. While the costs incurred during the year

did not meet the quantitative threshold to be classified as exceptional on a standalone basis, when taken in aggregate with the £142 million of

costs incurred since the announcement of the programme, the costs qualified for exceptional treatment in line with our exceptional items policy.

The total cash outflow for the year was £53 million. The cost efficiency programme completed in the prior year.

Fire at IFA converter station

In September 2021, a fire at the IFA1 converter station in Sellindge, Kent caused significant damage to infrastructure on site. In the period, the

Group recognised net insurance claims of £92 million, which were recognised as exceptional in line with our exceptional items policy and

consistent with related claims in the prior year. The total cash inflow in the period in relation to the insurance proceeds was £92 million.

2023

Transaction, separation and integration costs

Separation costs of £39 million were incurred in relation to the disposal of NECO, £38 million in relation to the disposal of a majority stake in our

UK Gas Transmission business and £40 million in connection with the integration of NGED. The costs incurred primarily relate to legal fees,

bankers’ fees, professional fees and employee costs. The total cash outflow for the period was £84 million.

Cost efficiency programme

The Group incurred £100 million of costs in relation to the major cost efficiency programme announced in November 2021. The costs recognised

primarily related to property costs, employee costs and professional fees incurred in delivering the programme. The total cash outflow for the

period was £85 million.

Fire at IFA converter station

In September 2021, a fire at the IFA1 converter station in Sellindge, Kent caused significant damage to infrastructure on site. In the year, the Group

recognised £130 million of insurance claims (net of asset write-offs), which have been recognised as exceptional in line with our exceptional items

policy. The total cash inflow for the period was £79 million.

Changes in environmental provisions

The real discount rate applied to the Group’s environmental provisions was revised to 1.5% (2022: 0.5%) to reflect the substantial and sustained

change in US Government bond yield curves (see note 26). The principal impact of this rate increase was a £165 million decrease in our US

environmental provisions and a £11 million decrease in our UK environmental provision. The weighted average remaining duration of our cash

flows was around 10.5 years.

184	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

5. Exceptional items and remeasurements continued

Exceptional items continued

Net gain on disposal of NECO

On 25 May 2022, the Group completed the sale of a wholly owned subsidiary, NECO, to PPL Rhode Island Holdings, LLC for cash consideration

of £3.1 billion. As a result, the Group derecognised net assets of £2.7 billion, resulting in a pre-tax gain of £511 million. The receipt of cash was

recognised within net cash used in investing activities within the consolidated cash flow statement.

Net gain on disposal of Millennium Pipeline Company LLC

The Group recognised a gain of £335 million on the disposal of its entire 26.25% equity interest in the Millennium Pipeline Company LLC associate

to DT Midstream for cash consideration of £497 million. The receipt of cash was recognised within net cash used in investing activities within the

consolidated cash flow statement.

Remeasurements

Remeasurements comprise unrealised gains or losses recorded in the consolidated income statement arising from changes in the fair value of

certain of our financial assets and liabilities accounted for at fair value through profit and loss (FVTPL). Once the fair value movements are realised

(for example, when the derivative matures), the previously recognised fair value movements are then reversed through remeasurements and

recognised within earnings before exceptional items and remeasurements. These assets and liabilities include commodity contract derivatives

and financing derivatives to the extent that hedge accounting is not available or is not fully effective.

The unrealised gains or losses reported in profit and loss on certain additional assets and liabilities treated at FVTPL are also classified within

remeasurements. These relate to financial assets (which fail the ‘solely payments of principal and interest test’ under IFRS 9), the money market

fund investments used by Group Treasury for cash management purposes and the net foreign exchange gains and losses on borrowing activities.

These are offset by foreign exchange gains and losses on financing derivatives measured at fair value. In all cases, these fair values increase or

decrease because of changes in foreign exchange, commodity or other financial indices over which we have no control.

We report unrealised gains or losses relating to certain discrete classes of financial assets accounted for at FVTPL within adjusted profit. These

comprise our portfolio of investments made by National Grid Partners and our investment in Sunrun Neptune 2016 LLC (both within NGV). The

performance of these assets (including changes in fair value) is included in our assessment of adjusted profit for the relevant business units.

Remeasurements excluded from adjusted profit are made up of the following categories:

i.Net gains/(losses) on commodity contract derivatives represent mark-to-market movements on certain physical and financial commodity

contract obligations in the US and UK. These contracts primarily relate to the forward purchase of energy for supply to customers, or to

the economic hedging thereof, that are required to be measured at fair value and that do not qualify for hedge accounting. Under the

existing rate plans in the US, commodity costs are recoverable from customers although the timing of recovery may differ from the pattern

of costs incurred;

ii.Net gains/(losses) on financing derivatives comprise gains and losses arising on derivative financial instruments, net of interest accrued,

used for the risk management of interest rate and foreign exchange exposures and the offsetting foreign exchange losses and gains on the

associated borrowing activities. These exclude gains and losses for which hedge accounting has been effective and have been recognised

directly in the consolidated statement of other comprehensive income or are offset by adjustments to the carrying value of debt

(see notes 17 and 32). Net foreign exchange gains and losses on financing derivatives used for the risk management of foreign exchange

exposures are offset by foreign exchange losses and gains on borrowing activities;

iii.Net gains/(losses) on financial assets measured at FVTPL comprise gains and losses on the investment funds held by our insurance captives

which are categorised as FVTPL (see note 15); and

iv.Unrealised net gains/(losses) on derivatives and other financial instruments within our joint ventures and associates.

Strategic Report Corporate Governance Financial Statements Additional Information 185

6. Finance income and costs

This note details the interest income generated by our financial assets and interest expense incurred on our financial liabilities, primarily our

financing portfolio (including our financing derivatives). It also includes the net interest on our pensions and other post-retirement assets.

Finance income and costs remeasurements include unrealised gains and losses on certain assets and liabilities treated at FVTPL. The effective

interest income and interest expense and dividends on these items are included in finance income and finance costs before remeasurements

respectively.

		2025	2024	2023
	Notes	£m	£m	£m
Finance income
Net interest income on pensions and other post-retirement benefit obligations	25	98	100	85
Interest income on financial instruments:
Bank deposits and other financial assets		341	139	80
Dividends received on equities held at fair value through other comprehensive income (FVOCI)		1	1	1
Net gains/(losses) on FVTPL financial assets		1	4	(28)
Other income		9	4	—
Finance income		450	248	138
Finance costs
Interest expense on financial liabilities held at amortised cost:
Bank loans and overdrafts		(110)	(140)	(328)
Other borrowings1		(1,553)	(1,424)	(1,330)
Interest on derivatives		(285)	(277)	(170)
Unwinding of discount on provisions and other payables		(130)	(102)	(88)
Other interest		(26)	(31)	(13)
Derivatives designated as hedges for hedge accounting²		4	13	22
Derivatives not designated as hedges for hedge accounting²		(1)	(2)	60
Less: interest capitalised3		294	251	249
Finance costs4		(1,807)	(1,712)	(1,598)
Net finance costs from continuing operations		(1,357)	(1,464)	(1,460)

1.Includes interest expense on lease liabilities (see note 13 for details).

2.Includes a net foreign exchange gain on borrowing and investment activities of £241 million (2024: £271 million gain; 2023: £86 million loss) offset by foreign exchange gains and losses

on financing derivatives measured at fair value and the impacts of hedge accounting.

3.Interest on funding attributable to assets in the course of construction in the current year was capitalised at a rate of 4.3% (2024: 4.7%; 2023: 4.7%). In the UK, capitalised interest qualifies

for a current year tax deduction with tax relief claimed of £39 million (2024: £39 million; 2023: £30 million). In the US, capitalised interest is added to the cost of property, plant and

equipment, and qualifies for tax depreciation allowances.

4.Finance costs include principal accretion on inflation-linked liabilities of £152 million (2024: £208 million; 2023: £483 million).

186	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

7. Tax

Tax is payable in the territories where we operate, mainly the UK and the US. This note gives further details of the total tax charge and tax

liabilities, including current and deferred tax. Current tax charge is the tax payable on this year’s taxable profits. Deferred tax is an accounting

adjustment to provide for tax that is expected to arise in the future due to differences in the accounting and tax bases.

The tax charge for the period is recognised in the income statement, the statement of comprehensive income or directly in the statement of

changes in equity, according to the accounting treatment of the related transaction. The tax charge comprises both current and deferred tax.

Current tax assets and liabilities are measured at the amounts expected to be recovered from or paid to the tax authorities. The tax rates and

tax laws used to compute the amounts are those that have been enacted or substantively enacted by the reporting date.

The Group operates internationally in territories with different and complex tax codes. Management exercises judgement in relation to the level

of provision required for uncertain tax outcomes. Where there are tax positions not yet agreed with the tax authorities, different interpretations of

legislation could lead to a range of outcomes. Judgements are made for each position having regard to particular circumstances and advice

obtained.

Deferred tax is provided for, using the balance sheet liability method and is recognised on temporary differences between the carrying amount

of assets and liabilities in the financial statements and the corresponding tax bases.

Deferred tax liabilities are generally recognised on all taxable temporary differences and deferred tax assets are recognised to the extent that it

is probable that taxable profits will be available against which deductible temporary differences can be utilised. However, deferred tax assets and

liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition of other assets

and liabilities in a transaction (other than a business combination) that affects neither the accounting nor the taxable profit or loss.

Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries and joint arrangements except where

the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the

foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised, based on the

tax rates and tax laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient

taxable profits will be available to allow all or part of the deferred tax asset to be recovered. Unrecognised deferred tax assets are reassessed at

each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to

be recovered.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and

when they relate to income taxes levied by the same tax authority, and the Company and its subsidiaries intend to settle their current tax assets

and liabilities on a net basis.

Strategic Report Corporate Governance Financial Statements Additional Information 187

7. Tax continued

Tax charged to the consolidated income statement – continuing operations

The tax charge for the year can be analysed as follows:

	2025	2024	2023
	£m	£m	£m
Current tax:
UK corporation tax at 25% (2024: 25%; 2023: 19%)	66	410	161
UK corporation tax adjustment in respect of prior years	(36)	(36)	—
	30	374	161
Overseas corporation tax	47	82	225
Overseas corporation tax adjustment in respect of prior years	(39)	(90)	(16)
	8	(8)	209
Total current tax from continuing operations	38	366	370
Deferred tax:
UK deferred tax	524	388	255
UK deferred tax adjustment in respect of prior years	25	43	13
	549	431	268
Overseas deferred tax	195	(40)	233
Overseas deferred tax adjustment in respect of prior years	39	74	5
	234	34	238
Total deferred tax from continuing operations	783	465	506
Total tax charge from continuing operations	821	831	876

Tax charged/(credited) to the consolidated statement of comprehensive income and equity

	2025	2024	2023
	£m	£m	£m
Current tax:
Share-based payments	(1)	(2)	(1)
Deferred tax:
Investments at fair value through other comprehensive income	—	1	(1)
Cash flow hedges, cost of hedging and own credit reserve	36	56	(7)
Remeasurements of pension assets and post-retirement benefit obligations	(23)	(50)	(344)
Share-based payments	2	—	1
	14	5	(352)
Total tax recognised in the statements of comprehensive income from continuing operations	13	7	(352)
Total tax relating to share-based payments recognised directly in equity from continuing operations	1	(2)	—
	14	5	(352)

188	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

7. Tax continued

The tax charge for the year for continuing operations is lower (2024: higher tax charge; 2023: higher tax charge) than the standard rate of

corporation tax in the UK of 25% (2024: 25%; 2023: 19%):

	2025	2024	2023
	£m	£m	£m
Profit before tax from continuing operations	3,650	3,048	3,590
Profit before tax from continuing operations multiplied by UK corporation tax rate of 25% (2024: 25%; 2023: 19%)	913	762	682
Effect of:
Adjustments in respect of prior years1	(11)	(9)	2
Expenses not deductible for tax purposes	40	155	92
Non-taxable income2	(107)	(43)	(75)
Adjustment in respect of foreign tax rates3	4	(20)	147
Deferred tax impact of change in UK tax rate	—	—	66
Adjustment in respect of post-tax profits of joint ventures and associates included within profit before tax	(18)	(9)	(27)
Other4	—	(5)	(11)
Total tax charge from continuing operations	821	831	876
	%	%	%
Effective tax rate – continuing operations	22.5	27.3	24.4

1.The prior year adjustments are primarily due to agreement of prior period tax returns.

2.Includes tax on chargeable disposals after the offset of capital losses. The gain on disposal of the ESO during the year is subject to the Substantial Shareholding Exemption.

3.Included in 2023 are remeasurements of US closing state deferred tax balances as a result of an expected increase in the blended state tax rate following the disposal of NECO.

4.Other primarily comprises the movement in the deferred tax asset on previously unrecognised capital losses, claims for land remediation relief and claims for Research & Development credit.

The mandatory exception to recognising and disclosing information about the deferred tax assets and liabilities related to Pillar Two income taxes

has been applied as required by IAS 12. The Pillar Two global minimum corporation tax rate of 15% introduced by the Organisation for Economic

Co-operation and Development (OECD) was enacted into UK law on 11 July 2023 and was applicable to National Grid from 1 April 2024. Exposure

to additional taxation under Pillar Two is immaterial to the Group.

Factors that may affect future tax charges

The main UK corporation tax rate is 25% and deferred tax balances as at 31 March 2025 have been calculated at 25%.

In light of the US Government’s desire to extend certain provisions of the 2017 Tax Cuts and Jobs Act (TCJA) expiring at the end of 2025, the

US Congress and the US Administration are considering changes to federal tax legislation that could impact National Grid. However, since no

changes have been substantively enacted at the balance sheet date, the income tax balances as at 31 March 2025 have been calculated at the

prevailing tax rates based on the current tax laws.

Strategic Report Corporate Governance Financial Statements Additional Information 189

7. Tax continued

Tax included within the statement of financial position

The following are the major deferred tax assets and liabilities recognised, and the movements thereon, during the current and prior reporting

periods:

	Regulatory licences £m	Accelerated tax depreciation £m	Share- based payments £m	Pensions and other post- retirement benefits £m	Financial instruments £m	Other net temporary differences1 £m	Total £m
Deferred tax liabilities/(assets)
At 1 April 2023	429	8,242	(21)	490	(370)	(1,589)	7,181
Exchange adjustments and other2	—	(132)	—	(1)	—	23	(110)
Charged/(credited) to income statement	—	720	(5)	26	38	(312)	467
(Credited)/charged to other comprehensive income and equity	—	—	—	(50)	57	—	7
Disposals	—	(2)	—	—	—	—	(2)
Reclassification to held for sale (note 10)	—	(12)	1	(4)	—	(9)	(24)
At 1 April 2024	429	8,816	(25)	461	(275)	(1,887)	7,519
Exchange adjustments and other2	—	(147)	—	(5)	—	57	(95)
Charged/(credited) to income statement	—	925	(3)	58	62	(256)	786
(Credited)/charged to other comprehensive income and equity	—	—	2	(23)	38	—	17
Disposals	—	(60)	—	—	—	(5)	(65)
Reclassification to held for sale (note 10)	—	(122)	—	—	—	(2)	(124)
At 31 March 2025	429	9,412	(26)	491	(175)	(2,093)	8,038

1.The deferred tax asset of £2,093 million as at 31 March 2025 (2024: £1,887 million) in respect of other net temporary differences relates to losses of £298 million (2024: £184 million), US

contract and lease liabilities of £603 million (2024: £575 million), US environmental provisions of £575 million (2024: £646 million), US bad debt provision of £155 million (2024: £150 million)

and other short-term temporary differences of £462 million (2024: £332 million).

2.Exchange adjustments and other primarily comprises foreign exchange arising on translation of the US dollar deferred tax balances.

Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances

net. The deferred tax balances (after offset) for statement of financial position purposes consist solely of deferred tax liabilities of £8,038 million

(2024: £7,519 million).

Deferred tax assets in respect of some capital losses as well as trading losses and non-trade deficits have not been recognised as their future

recovery is uncertain or not currently anticipated. The total deferred tax assets not recognised are as follows:

	2025	2024
	£m	£m
Capital losses	2,484	2,483
Trading losses	9	4

The capital losses arose in the UK on disposal of certain businesses or assets. They are available to carry forward indefinitely but can only

be offset against future capital gains.

At 31 March 2025 and 31 March 2024, there were no recognised deferred tax liabilities for taxes that would be payable on the unremitted

earnings of the Group’s subsidiaries or its associates as there are no significant corporation tax consequences of the Group’s UK, US or

overseas subsidiaries or associates paying dividends to their parent companies. There are also no significant income tax consequences for

the Group from the payment of dividends by the Group to its shareholders.

190	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

8. Earnings per share (EPS)

EPS is the amount of profit after tax attributable to each ordinary share. Basic EPS is calculated as profit after tax for the year attributable to

equity shareholders divided by the weighted average number of shares in issue during the year. Diluted EPS shows what the impact would be

if all outstanding share options were exercised and treated as ordinary shares at year end. The weighted average number of shares is increased

by additional shares issued as scrip dividends and reduced by shares repurchased by the Company during the year. The earnings per share

calculations are based on profit after tax attributable to equity shareholders of the Company which excludes non-controlling interests.

(a) Basic EPS

	Earnings	EPS	Earnings	EPS	Earnings	EPS
	2025	2025	2024	2024¹	2023	2023¹
	£m	pence	£m	pence	£m	pence
Earnings from continuing operations	2,826	60.0	2,216	55.5	2,714	68.6
Earnings from discontinued operations	76	1.6	74	1.9	5,083	128.5
Total earnings	2,902	61.6	2,290	57.4	7,797	197.1
		2025		2024¹		2023¹
		millions		millions		millions
Weighted average number of ordinary shares – basic		4,707		3,991		3,956

1. Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue (see note 27).

(b) Diluted EPS

	Earnings	EPS	Earnings	EPS	Earnings	EPS
	2025	2025	2024	2024¹	2023	2023¹
	£m	pence	£m	pence	£m	pence
Earnings from continuing operations	2,826	59.8	2,216	55.3	2,714	68.3
Earnings from discontinued operations	76	1.6	74	1.8	5,083	127.9
Total earnings	2,902	61.4	2,290	57.1	7,797	196.2
		2025		2024¹		2023¹
		millions		millions		millions
Weighted average number of ordinary shares – diluted		4,729		4,008		3,973

1. Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue (see note 27).

(c) Reconciliation of basic to diluted average number of shares

	2025	2024¹	2023¹
	millions	millions	millions
Weighted average number of ordinary shares – basic	4,707	3,991	3,956
Effect of dilutive potential ordinary shares – employee share plans	22	17	17
Weighted average number of ordinary shares – diluted	4,729	4,008	3,973

1. Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue (see note 27).

Strategic Report Corporate Governance Financial Statements Additional Information 191

9. Dividends

Interim dividends are recognised when they become payable to the Company’s shareholders. Final dividends are recognised when they are

approved by shareholders.

	2025			2024			2023
	Pence per share	Cash dividend £m	Scrip dividend £m	Pence per share	Cash dividend £m	Scrip dividend £m	Pence per share	Cash dividend £m	Scrip dividend £m
Final dividend in respect of the prior year	39.12	811	643	37.60	1,325	56	33.76	1,119	114
Interim dividend in respect of the current year	15.84	718	59	19.40	393	320	17.84	488	163
	54.96	1,529	702	57.00	1,718	376	51.60	1,607	277

For comparability purposes the table below presents dividends per share adjusted for a factor of 1.0811 to reflect the bonus element of the

Rights Issue:

	2025			2024			2023
	Pence per share (actual)	Impact of Rights Issue	Pence per share (adjusted)	Pence per share (actual)	Impact of Rights Issue	Pence per share (adjusted)	Pence per share (actual)	Impact of Rights Issue	Pence per share (adjusted)
Final dividend in respect of the prior year	39.12	(2.93)	36.19	37.60	(2.82)	34.78	33.76	(2.53)	31.23
Interim dividend in respect of the current year	15.84	—	15.84	19.40	(1.46)	17.94	17.84	(1.34)	16.50
	54.96	(2.93)	52.03	57.00	(4.28)	52.72	51.60	(3.87)	47.73

The Directors are proposing a final dividend for the year ended 31 March 2025 of 30.88p per share that would absorb approximately £1,512 million

of shareholders’ equity (assuming all amounts are settled in cash). It will be paid on 17 July 2025 to shareholders who are on the register of

members at 30 May 2025 (subject to shareholders’ approval at the AGM). A scrip dividend will be offered as an alternative.

192	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

10. Assets held for sale and discontinued operations

The results and cash flows of significant assets or businesses sold during the year are shown separately from our continuing operations and

presented within discontinued operations in the income statement and cash flow statement. Assets and businesses are classified as held for

sale when their carrying amounts are expected to be recovered through sale rather than through continuing use. They only meet the held for

sale condition when the assets are ready for immediate sale in their present condition, management is committed to the sale and it is highly

probable that the sale will complete within one year. Depreciation ceases on assets and businesses when they are classified as held for sale

and the assets and businesses are impaired if the proceeds less sale costs fall short of the carrying value.

The following assets and liabilities were classified as held for sale:

	2025			2024
	Total assets held for sale £m	Total liabilities held for sale £m	Net assets/ (liabilities) held for sale £m	Total assets held for sale £m	Total liabilities held for sale £m	Net assets/ (liabilities) held for sale £m
UK Electricity System Operator	—	—	—	1,134	(1,427)	(293)
National Grid Renewables	1,528	(108)	1,420	—	—	—
Grain LNG	1,100	(326)	774	—	—	—
Investment in GasT TopCo Limited	—	—	—	689	—	689
RAA	—	—	—	—	(47)	(47)
Net assets/(liabilities) held for sale	2,628	(434)	2,194	1,823	(1,474)	349

Gain on disposal of the ESO

In October 2023, legislation required to enable the separation of the ESO and the formation of the NESO, which will undertake responsibilities

across both the electricity and gas systems, was passed through Parliament. The assets and liabilities of the ESO were consequently presented

as held for sale in the consolidated financial statements in the year ended 31 March 2024. The disposal subsequently completed on 1 October

2024 for consideration of £673 million.

Based on the scale and pass-through nature of the ESO, it is not considered a separate major line of business or geographic operation under

IFRS 5 for treatment as a discontinued operation, and its disposal is not part of a single coordinated plan being undertaken by the Group.

Accordingly, the results have not been separately disclosed on the face of the income statement, and are instead included within the results

from continuing operations. Financial information relating to the gain arising on disposal of the ESO is set out below:

	£m
Intangible assets	485
Property, plant and equipment	121
Trade and other receivables	375
Pension asset	16
Cash and cash equivalents	51
Financial investments	501
Total assets on disposal	1,549
Borrowings	(13)
Other liabilities	(703)
Provision for UK electricity balancing costs	(347)
Total liabilities on disposal	(1,063)
Net assets on disposal	486
Total consideration received¹	673
Gain on sale	187

1.Included within total consideration is deferred proceeds of £45 million which were settled after 31 March 2025.

Up until its disposal, the ESO generated profit after tax of £103 million for the year ended 31 March 2025 (2024: £178 million profit; 2023:

£182 million profit).

Strategic Report Corporate Governance Financial Statements Additional Information 193

10. Assets held for sale and discontinued operations continued

NG Renewables and Grain LNG

On 24 February 2025, the Group agreed to sell NG Renewables, its US onshore renewables business, to Brookfield Asset Management.

Completion of the transaction will be subject to certain consents and regulatory approvals and is expected to complete in the first half of the year

ending 31 March 2026. The Group has also previously announced its intention to sell Grain LNG, its UK LNG asset. As both sales are considered

to be highly probable and expected to complete within a year, the associated assets and liabilities have been presented as held for sale in the

consolidated statement of financial position at 31 March 2025. However, as NG Renewables and Grain LNG do not represent separate major lines

of business or geographical operations, they have not met the criteria for classification as discontinued operations and therefore their results for

the period are not separately disclosed on the face of the income statement.

The following assets and liabilities were classified as held for sale at 31 March 2025.

	National Grid Renewables	Grain LNG
	£m	£m
Goodwill	53	—
Other intangible assets	—	25
Property, plant and equipment	340	898
Investments in joint ventures and associates	873	—
Trade and other receivables	51	31
Cash and cash equivalents	30	123
Financial investments	40	—
Other assets	141	23
Total assets	1,528	1,100
Borrowings	(2)	(132)
Other liabilities	(106)	(194)
Total liabilities	(108)	(326)
Net assets	1,420	774

The Group has recognised a £31 million impairment loss on remeasuring the NG Renewables disposal group to fair value less costs to sell, with

the loss allocated to goodwill. No impairment losses were recognised following reclassification of the Grain LNG assets and liabilities classified

to held for sale. The aggregate profit after tax for NG Renewables and Grain LNG for the period ended 31 March 2025 was £60 million (2024:

£49 million; 2023: £108 million).

The UK Gas Transmission business

On 31 January 2023, the Group disposed of 100% of the UK Gas Transmission business for cash consideration of £4.0 billion and a 40% interest

in a newly incorporated UK limited company, GasT TopCo Limited. The other 60% was purchased by Macquarie Infrastructure and Real Assets

(MIRA) and British Columbia Investment Management Corporation (BCI) (together, the ‘Consortium’). The Group also entered into a Further

Acquisition Agreement (the FAA option) with the Consortium over its remaining 40% interest. Both the investment in GasT TopCo Limited and the

FAA option were immediately classified as held for sale and so the Group has not applied equity accounting in relation to its investment in GasT

TopCo Limited.

The FAA was partially exercised by the Consortium on 11 March 2024 and the Group disposed of 20% of the 40% interest in GasT TopCo

Limited, as detailed in the Annual Report and Accounts for the year ended 31 March 2024. As part of the transaction, the Group also entered into

a new agreement with the Consortium, the Remaining Acquisition Agreement (the ‘RAA’), to replace the FAA option for the potential sale of all or

part of the remaining 20% equity interest in GasT TopCo Limited.

On 26 July 2024, the Consortium exercised its option under the RAA and the disposal of the Group’s remaining interest in GasT TopCo Limited

completed on 26 September 2024. The total sales proceeds were £686 million and the gain on disposal, after transaction costs, was £25 million.

The disposal of the Group’s remaining interest in GasT TopCo Limited was the final stage of the plan to dispose of the UK Transmission

business first announced in 2021. As a result, the gain on disposal and any remeasurements pertaining to the financial derivatives noted above

are shown separately from the continuing business for all periods presented on the face of the income statement as a discontinued operation.

This is also reflected in the statement of comprehensive income, as well as earnings per share (EPS) being shown split between continuing and

discontinued operations.

194	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

10. Assets held for sale and discontinued operations continued

The summary income statements for the years ended 31 March 2025, 2024 and 2023 are as follows:

	Total
	2025	2024	2023
	£m	£m	£m
Discontinued operations
Revenue	—	—	1,604
Other operating costs	—	—	(889)
Operating profit	—	—	715
Finance income	5	17	21
Finance costs1	47	62	(363)
Profit before tax	52	79	373
Tax	(1)	(1)	(93)
Profit after tax from discontinued operations	51	78	280
Gain/(loss) on disposal	25	(4)	4,803
Total profit after tax from discontinued operations	76	74	5,083

1.Finance costs include the remeasurement of the FAA option and the RAA.

The summary statements of comprehensive income for the years ended 31 March 2025, 2024 and 2023 are as follows:

	2025	2024	2023
	£m	£m	£m
Profit after tax from discontinued operations	76	74	5,083
Other comprehensive (loss)/income from discontinued operations
Items from discontinued operations that will never be reclassified to profit or loss:
Remeasurement losses on pension assets and post-retirement benefit obligations	—	—	(313)
Tax on items that will never be reclassified to profit or loss	—	—	78
Total losses from discontinued operations that will never be reclassified to profit or loss	—	—	(235)
Items from discontinued operations that may be reclassified subsequently to profit or loss:
Net gains in respect of cash flow hedges	—	—	6
Net gains in respect of cost of hedging	—	—	4
Net (losses)/gains on investments in debt instruments measured at fair value through other comprehensive income	(13)	13	—
Tax on items that may be reclassified subsequently to profit or loss	3	(3)	(2)
Total (losses)/gains from discontinued operations that may be reclassified subsequently to profit or loss	(10)	10	8
Other comprehensive (loss)/income for the year, net of tax from discontinued operations	(10)	10	(227)
Total comprehensive income for the year from discontinued operations	66	84	4,856

Details of the cash flows relating to discontinued operations are set out within the consolidated cash flow statement.

Strategic Report Corporate Governance Financial Statements Additional Information 195

11. Goodwill

Goodwill represents the excess of what we paid to acquire businesses over the fair value of their net assets at the acquisition date. We assess

whether goodwill is recoverable by performing an impairment review annually or more frequently if events or changes in circumstances indicate

a potential impairment.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and

translated at the closing exchange rate. Goodwill is allocated to CGUs and this allocation is made to those CGUs that are expected to benefit

from the acquisition in which the goodwill arose.

Impairment is recognised where there is a difference between the carrying value of the CGU and the estimated recoverable amount of the CGU

to which that goodwill has been allocated. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

Any impairment loss is first allocated to the carrying value of the goodwill and then to the other assets within the CGU. Recoverable amount is

defined as the higher of fair value less costs to sell and estimated value-in-use at the date the impairment review is undertaken. Value-in-use

represents the present value of expected future cash flows, discounted using a pre-tax discount rate that reflects current market assessments

of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

	Total £m
Net book value at 1 April 2023	9,847
Exchange adjustments	(118)
Net book value at 1 April 2024	9,729
Exchange adjustments	(117)
Reclassification to held for sale (note 10)	(80)
Net book value at 31 March 2025	9,532

Following the announcement of the planned sale of NG Renewables (see note 10), goodwill was reclassified as held for sale in the year.

There was no significant accumulated impairment charge as at 31 March 2025 or 31 March 2024.

Impairment review of goodwill and indefinite-lived intangibles

Goodwill and indefinite-lived intangibles (see note 12) are reviewed annually for impairment and the recoverability is assessed by comparing the

carrying amount of our operations with the expected recoverable amount on a value-in-use basis which uses pre-financing and pre-tax cash flow

projections based on the Group’s financial plans, approved by the Directors. See below for a summary of which operations our goodwill and

indefinite-lived intangibles are allocated to.

	2025	2024
CGU or group of CGUs	£m	£m
Goodwill:
National Grid Ventures – US	100	188
New England	1,506	1,541
New York	3,205	3,279
UK Electricity Distribution1	4,721	4,721
Total goodwill	9,532	9,729
Indefinite-lived intangibles (regulatory licences related to UK Electricity Distribution):
West Midlands	518	518
East Midlands	519	519
South Wales	257	257
South West	420	420
Total indefinite-lived intangibles	1,714	1,714

1.This is a combination of the West Midlands, East Midlands, South Wales and South West CGUs, reflecting the level at which the goodwill is monitored.

In each assessment, the value-in-use has been calculated assuming a stable regulatory framework and is based on projections that incorporate

our best estimates of future cash flows, including costs, changes in commodity prices, future rates and growth. Such projections reflect our

current regulatory agreements and allow for future agreements and recovery of investment, including those related to achieving the net zero plans

of the jurisdictions that we operate in. Our plans have proved to be reliable guides in the past and the Directors believe the estimates are

appropriate.

196	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

11. Goodwill continued

(a) Cash flow periods, terminal value and discount rate assumptions

We select cash flow durations longer than five years, when our forecasts are considered reliable. The cash flow durations selected reflect

our knowledge and understanding of the regulatory environments in which we operate, and most significantly, where markets have legislated

decarbonisation commitments by 2050, we may utilise longer cash flow forecasts that reflect the investment required to deliver those

commitments before applying a terminal value at the point those commitments are due to be fulfilled and market growth is expected to stabilise.

For our regulated UK ED operations, we consider cash flow durations that run until 2050, reflecting the expected investment required in the

network, in excess of economy‑wide long-term growth rates in order to deliver the energy transition. Total expenditure forecasts, comprising

capital and operating expenditure, are estimated with reference to the Group’s strategic modelling and expectations around a reasonable energy

transition based upon the policies and commitments in place today. Cash flows related to uncommitted future restructurings and enhancement

capital expenditure (beyond activity to reinforce the network and build new connections) are excluded from the projections. For our regulated

US operations (New York and New England CGUs), we use a five-year cash flow forecast. For our National Grid Ventures operations, we typically

model cash flows extending out to the end of each project’s operational life based on the long-term horizon of our projects.

For our UK ED business, a nominal terminal growth rate of 1.8% (2024: 2.3%) is assumed upon the terminal year cash flows, reflecting

management’s best view, based on market and operational experience, of the expected long-term growth in the relevant market. For our

regulated US operations we apply a growth rate of 2.3% (2024: 2.4%). This has been determined with regard to data on industry growth

projections, specifically related to the energy transition, and projected growth in real Gross Domestic Product (GDP) for the territory within

which the CGU is based.

Pre-tax cash flows are discounted by applying a pre-tax discount rate reflecting the time value of money and the risks specific to the group of

assets. In practice, the post-tax discount rate for the group of assets in question is derived from a post-tax weighted average cost of capital.

The assumptions used in the calculation of the weighted average cost of capital are benchmarked to externally available data. The determined

discount rate is independent of the entity’s capital structure and reflects a market participant’s view of a risk adjusted discount rate specific to the

CGU or group of CGUs. The post-tax discount rate is then grossed up to a pre-tax discount rate that is applied to pre-tax cash flows. The pre-tax

discount rates used for the year ended 31 March 2025 were as follows: UK ED Group 5.4% (2024: 5.0%); UK ED distribution network operators

5.3% (2024: 5.0%); New York 6.3% (2024: 6.2%); New England 6.2% (2024: 6.1%); and National Grid Ventures – US 6.7% (2024: 7.2%).

(b) Key inputs and sensitivity analysis

In assessing the carrying value of goodwill and licences, we have sensitised our forecasts to factor in adjustments to key inputs to each model.

While regulatory licences are tested for impairment before we test goodwill, we consider the sensitivity for goodwill attributable to UK ED and

our regulated US operations and those related to licences separately below.

Goodwill – UK ED, regulated US operations (New York and New England) and National Grid Ventures – US

While key assumptions underpinning the goodwill valuations will change over time, the Directors consider that no reasonably foreseeable change

would result in an impairment of goodwill. This is in view of the long-term nature of the key assumptions, including those used in determining an

appropriate discount rate, and specifically the risk-free rate and total market return, the margin by which the estimated value-in-use exceeds

the carrying amount and the nature of the regulatory regimes that UK ED and our regulated US businesses operate under.

Indefinite-lived regulatory licences – UK ED

No reasonably possible changes to inputs to the impairment test performed over the South West, East Midlands, West Midlands and South Wales

Distribution Network Operator licences were identified as resulting in an impairment.

Strategic Report Corporate Governance Financial Statements Additional Information 197

12. Other intangible assets

Other intangible assets are the software assets controlled by us and the electricity distribution licences which provide us with the right to

operate and invest in the relevant network that operates as a monopoly in the licensed geographical area. The regulatory licences were

acquired following the Group’s acquisition of NGED.

Our electricity distribution licences are indefinite-lived intangible assets for which there is no foreseeable limit to the period over which they are

expected to generate net cash inflows. Once granted by Ofgem, the licence is issued to a licensee on the basis that it remains active into

perpetuity. On that basis, the value attributed to the electricity distribution network licence assets is considered to have an indefinite useful life.

The regulatory licence assets are subject to a review for impairment annually, or more frequently if events or circumstances indicate a potential

impairment (see note 11 for details of impairment tests performed over indefinite-lived intangible assets). Any impairment is charged to the income

statement as it arises.

Software is recorded at cost less accumulated amortisation and any provision for impairment. Our software assets are tested for impairment only

if there is an indication that their carrying values may have been impaired. Impairments of assets are calculated as the difference between the

carrying value of the asset and the recoverable amount, if lower. Where such an asset does not generate cash flows that are independent from

other assets, the recoverable amount of the CGU to which that asset belongs is estimated. Impairments are recognised in the consolidated

income statement within other operating costs. Any assets which suffered impairment in a previous period are reviewed for possible reversal

of the impairment at each reporting date.

Internally generated intangible assets are recognised only if: i) an asset is created that can be identified; ii) it is probable that the asset created will

generate future economic benefits; and iii) the development cost of the asset can be measured reliably. Where no internally generated intangible

asset can be recognised, development expenditure is recorded as an expense in the period in which it is incurred.

Cloud computing arrangements are reviewed to determine if the Group has control of the software intangible asset. Control is considered to exist

where the Group has the right to take possession of the software and run it on its own or a third party’s computer infrastructure or if the Group

has exclusive rights to use the software such that the supplier is unable to make the software available to other customers.

Costs relating to configuring or customising the software in a cloud computing arrangement are assessed to determine if there is a separate

intangible asset over which the Group has control. If an asset is identified, it is capitalised and amortised over the useful economic life of the asset.

To the extent that no separate intangible asset is identified, then the costs are either expensed when incurred or recognised as a prepayment and

spread over the term of the arrangement if the costs are concluded to not be distinct.

198	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

12. Other intangible assets continued

(a) Analysis of other intangible assets

	Regulatory licences £m	Software £m	Assets in the course of construction £m	Total £m
Cost at 1 April 2023	1,714	3,066	561	5,341
Exchange adjustments	—	(45)	(6)	(51)
Additions	—	17	464	481
Disposals	—	(23)	—	(23)
Reclassifications1	—	598	(436)	162
Reclassification to held for sale (note 10)	—	(520)	(191)	(711)
Cost at 1 April 2024	1,714	3,093	392	5,199
Exchange adjustments	—	(61)	(7)	(68)
Additions	—	16	462	478
Disposals	—	(7)	—	(7)
Reclassifications¹	—	376	(363)	13
Reclassification to held for sale (note 10)	—	(16)	—	(16)
Cost at 31 March 2025	1,714	3,401	484	5,599
Accumulated amortisation at 1 April 2023	—	(1,727)	(10)	(1,737)
Exchange adjustments	—	23	—	23
Amortisation charge for the year	—	(301)	—	(301)
Accumulated amortisation of disposals	—	23	—	23
Reclassifications¹	—	(161)	—	(161)
Reclassification to held for sale (note 10)	—	385	—	385
Accumulated amortisation at 1 April 2024	—	(1,758)	(10)	(1,768)
Exchange adjustments	—	36	—	36
Amortisation charge for the year	—	(323)	—	(323)
Accumulated amortisation of disposals	—	7	—	7
Reclassifications¹	—	2	—	2
Reclassification to held for sale (note 10)	—	11	—	11
Accumulated amortisation at 31 March 2025	—	(2,025)	(10)	(2,035)
Net book value at 31 March 2025²	1,714	1,376	474	3,564
Net book value at 31 March 2024	1,714	1,335	382	3,431

1.Reclassifications includes amounts transferred to property, plant and equipment (see note 13).

2.The Group has capitalised £271 million (2024: £320 million) in relation to the Gas Business Enablement system in the US, of which £271 million (2024: £320 million) is in service and

is being amortised over 10 years, with the remainder included within assets in the course of construction. A further £82 million (2024: £81 million) relates to our UK general ledger system within

software and is being amortised over 10 years.

(b) Asset useful economic lives

No amortisation is provided on regulatory licences. Software is amortised over the period we expect to receive a benefit from the asset.

An amortisation expense is charged to the income statement to reflect the reduced value of the asset over time. Amortisation is calculated by

estimating the number of years we expect the asset to be used (its useful economic life, or UEL) and charging the cost of the asset to the income

statement equally over this period.

	Years
Software	3 to 10
Regulatory licences	Indefinite

Strategic Report Corporate Governance Financial Statements Additional Information 199

13. Property, plant and equipment

Property, plant and equipment are the physical assets controlled by us. The Group’s interest comprises legally protected statutory or

contractual rights of use. Property, plant and equipment is recorded at cost, less accumulated depreciation and any impairment losses.

The cost of property, plant and equipment primarily represents the amount initially paid or the fair value on the date of acquisition of a business.

Cost includes the purchase price of the asset; any payroll and finance costs incurred which are directly attributable to the construction of property,

plant and equipment together with an appropriate portion of overheads which are directly linked to the capital work performed; and the cost of

any associated asset retirement obligations.

Additions represent the purchase or construction of new assets, including capital expenditure for safety and environmental assets, and extensions

to, enhancements to, or replacement of, existing assets. All costs associated with projects or activities which have not been fully commissioned

at the period end are classified within assets in the course of construction.

A depreciation expense is charged to the income statement to reflect annual wear and tear and the reduced value of the asset over time.

Depreciation is calculated by estimating the number of years we expect the asset to be used (its useful economic life or UEL) and charging the

cost of the asset to the income statement equally over this period.

Items within property, plant and equipment are tested for impairment only if there is some indication that the carrying value of the assets may have

been impaired. Impairments of assets are calculated as the difference between the carrying value of the asset and the recoverable amount, if

lower. Where such an asset does not generate cash flows that are independent from other assets, the recoverable amount of the cash-generating

unit to which that asset belongs is estimated. Impairments are recognised in the income statement and, if immaterial, are included within the

depreciation charge for the year.

We operate an energy networks business and therefore have a significant physical asset base. We continue to invest in our networks to

maintain reliability, create new customer connections and ensure our networks are flexible, resilient and prepared for the transition to net zero.

Our business plan envisages these additional investments will be funded through a mixture of cash generated from operations and the issue

of new debt and equity.

(a) Analysis of property, plant and equipment

	Land and buildings £m	Plant and machinery £m	Assets in the course of construction £m	Motor vehicles and office equipment £m	Total £m
Cost at 1 April 2023	4,066	69,765	6,760	1,222	81,813
Exchange adjustments	(49)	(841)	(67)	(19)	(976)
Additions	59	1,157	5,754	197	7,167
Disposals	(55)	(271)	(5)	(134)	(465)
Adjustment for change in discount rate on decommissioning provisions (note 26)	—	29	—	—	29
Reclassifications1	277	4,725	(5,389)	218	(169)
Reclassification to held for sale (note 10)	(88)	(13)	(31)	(134)	(266)
Cost at 1 April 2024	4,210	74,551	7,022	1,350	87,133
Exchange adjustments	(55)	(965)	(91)	(21)	(1,132)
Additions	60	1,172	7,529	220	8,981
Disposals	(59)	(387)	(9)	(239)	(694)
Adjustment for change in discount rate on decommissioning provisions (note 26)	—	7	—	—	7
Reclassifications1	198	4,583	(4,876)	83	(12)
Reclassification to held for sale (note 10)	(110)	(1,195)	(502)	(19)	(1,826)
Cost at 31 March 2025	4,244	77,766	9,073	1,374	92,457
Accumulated depreciation at 1 April 2023	(794)	(15,926)	(55)	(605)	(17,380)
Exchange adjustments	10	177	—	12	199
Depreciation charge for the year²	(80)	(1,515)	(20)	(189)	(1,804)
Disposals	50	252	2	134	438
Reclassifications1	(3)	281	—	(112)	166
Reclassification to held for sale (note 10)	59	1	6	89	155
Accumulated depreciation at 1 April 2024	(758)	(16,730)	(67)	(671)	(18,226)
Exchange adjustments	12	200	—	11	223
Depreciation charge for the year²	(93)	(1,632)	4	(203)	(1,924)
Disposals	49	387	9	236	681
Reclassifications1	(32)	33	3	(5)	(1)
Reclassification to held for sale (note 10)	51	817	—	13	881
Accumulated depreciation at 31 March 2025	(771)	(16,925)	(51)	(619)	(18,366)
Net book value at 31 March 2025	3,473	60,841	9,022	755	74,091
Net book value at 31 March 2024	3,452	57,821	6,955	679	68,907

1.Represents amounts transferred between categories, (to)/from other intangible assets (see note 12), (to)/from inventories.

2.Depreciation of assets in the course of construction relates to impairment provision adjustments.

200	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

13. Property, plant and equipment continued

(b) Asset useful economic lives

No depreciation is provided on freehold land or assets in the course of construction. Other items of property, plant and equipment are depreciated,

on a straight-line basis, at rates estimated to write off their book values over their estimated UELs. In assessing UELs, consideration is given to any

contractual arrangements and operational requirements relating to particular assets. The assessments of estimated UELs and residual values of

assets are performed annually.

Certain network assets are depreciated using the group method of depreciation, in which a single composite depreciation rate is applied to a

particular class of property, plant and equipment. This method pools similar assets together, and then depreciates each group as a whole over

their respective useful lives. In the US, the Company conducts independent depreciation studies on a periodic basis as part of the regulatory

ratemaking process to estimate group depreciation rates. These depreciation studies are subject to review and approval by the US state and

federal regulators, with the depreciation expense recovered through rates charged to customers. Likewise in the UK, the composite depreciation

rates are benchmarked to internal engineering studies and known asset performance lives. Depreciation expense includes a component for the

original cost of assets and a component for estimated cost of future removal, net of any salvage value at retirement. Upon retirement of

components of the Company’s network assets, the original cost of the retired assets, net of salvage value, is charged against accumulated

depreciation, with no gain or loss recognised.

Unless otherwise determined by operational requirements, the depreciation periods for the principal categories of property, plant and equipment

are shown in the table that follows split between the UK and US, along with the weighted average remaining UEL for each class of property, plant

and equipment (which is calculated by dividing the net book value of that class of asset by the respective annual depreciation charge).

		Years
	UK	US	Weighted average remaining UEL
Freehold and leasehold buildings	up to 60	up to 100	39
Plant and machinery:
Electricity transmission plant and wires	up to 100	10 to 85	31
Electricity distribution plant	14 to 99	5 to 85	46
Electricity generation plant	n/a	10 to 93	8
Interconnector plant and other	5 to 70	5 to 54	18
Gas plant – mains, services and regulating equipment	n/a	20 to 95	51
Gas plant – storage	n/a	20 to 60	20
Gas plant – meters	n/a	14 to 45	24
Motor vehicles and office equipment	up to 30	up to 34	3

(c) Gas asset lives

The role that our US gas networks play in the pathway to achieving the greenhouse gas emissions reductions targets set in the jurisdictions in

which we operate is currently uncertain. Policymakers in New York and Massachusetts continue to indicate an increase in electrification to meet

their respective decarbonisation targets, while as a Group we are committed in our transition to net zero. As a result, there is a risk that the UELs

of certain elements of our gas networks may be shortened in line with future policy, regulatory frameworks and planning systems aimed to support

the decarbonisation of the energy sector.

In the US, our gas distribution asset lives are assessed as part of detailed depreciation studies completed as part of each separate rate

proceeding. Depreciation studies consider the physical condition of assets and the expected operational life of an asset. The weighted average

remaining UEL for our US gas distribution fixed asset base is circa 51 years; however, a proportion of our assets are assumed to have UELs

which extend beyond 2080. In assessing these UELs, we consider a range of different pathways related to our gas assets. These pathways factor

in the net zero ambitions of the Group and the jurisdictions that we operate in, anticipated changes in customer behaviour, developments in new

technology, the feasibility and affordability of electrification, and the ability to decarbonise fuel through the use of renewable natural gas (RNG)

and green hydrogen. On balance of the different pathways considered, we continue to believe the lives identified by rate proceedings are the

best estimate of the assets’ UELs given the need to provide safe, affordable and reliable heating services. We keep this assumption under review

and we continue to actively engage and support our regulators to enable the clean energy transition.

Asset depreciation lives feed directly into our US regulatory recovery mechanisms, such that any shortening of asset lives and regulatory recovery

periods as agreed with regulators should be recoverable through future rates, subject to agreement, over future periods, as part of wider

considerations around ensuring the continuing affordability of gas in our service territories.

Given the uncertainty described relating to the UELs of our gas assets, below we provide a sensitivity analysis for the depreciation charge for our

New York and New England segments were a shorter UEL presumed. It should be noted that the net zero pathways which we consider probable

all suggest some role for gas in heating buildings beyond 2050, so our sensitivity analysis for 2050 illustrates an unlikely worst-case scenario.

	Increase in depreciation expense for the year ended 31 March 2025		Increase in depreciation expense for the year ended 31 March 2024
	New York £m	New England £m	New York £m	New England £m
UELs limited to 2050	235	78	208	66
UELs limited to 2060	110	32	100	26
UELs limited to 2070	54	9	46	6

Strategic Report Corporate Governance Financial Statements Additional Information 201

13. Property, plant and equipment continued

(c) Gas asset lives continued

Note that this sensitivity calculation excludes any assumptions regarding the residual value for our asset base and the effect that shortening asset

depreciation lives would be expected to have on our regulatory recovery mechanisms. In the event that any of the US gas distribution assets are

stranded, the Group would expect to recover the associated costs. While recovery is not guaranteed and is determined by regulators in the US,

there are precedents for stranded asset cost recovery for US utility companies.

(d) Right-of-use assets

The Group leases various properties, land, equipment and cars. New lease arrangements entered into are recognised as a right-of-use asset and

a corresponding liability at the date at which the leased asset is available for use by the Group. The right-of-use asset and associated lease liability

arising from a lease are initially measured at the present value of the lease payments expected over the lease term. The lease payments include

fixed payments, any variable lease payments dependent on an index or a rate, and any break fees or renewal option costs that we are reasonably

certain to incur. The discount rate applied is the rate implicit in the lease or, if that is not available, the incremental rate of borrowing for a similar

term and similar security. This is determined based on observable data for borrowing rates for the specific Group entity that has entered into the

lease, with specific adjustments for the term of the lease and any lease-specific risk premium. The lease term takes account of extension options

that are at our option if we are reasonably certain to exercise the option and any lease termination options unless we are reasonably certain not to

exercise the option. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement

over the lease period using the effective interest rate method. The right-of-use asset is depreciated over the shorter of the asset’s useful life

and the lease term on a straight-line basis. For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as

computers), the Group continues to recognise a lease expense on a straight-line basis.

The table that follows shows the movements in the net book value of right-of-use assets included within property, plant and equipment at 31 March

2025 and 31 March 2024, split by category. The associated lease liabilities are disclosed in note 21.

	Land and buildings £m	Plant and machinery £m	Assets in the course of construction £m	Motor vehicles and office equipment £m	Total £m
Net book value at 1 April 2023	281	150	—	240	671
Exchange adjustments	(5)	(2)	—	(5)	(12)
Additions	52	2	—	146	200
Reclassifications	—	(5)	—	5	—
Reclassification to held for sale (note 10)	(12)	—	—	(1)	(13)
Disposals	(1)	—	—	(2)	(3)
Depreciation charge for the year	(22)	(17)	—	(76)	(115)
Net book value at 31 March 2024	293	128	—	307	728
Exchange adjustments	(6)	(2)	—	(7)	(15)
Additions	39	2	—	159	200
Reclassification to held for sale (note 10)	(2)	(15)	—	—	(17)
Disposals	—	—	—	(3)	(3)
Depreciation charge for the year	(21)	(12)	—	(87)	(120)
Net book value at 31 March 2025	303	101	—	369	773

The following balances have been included in the income statement for the years ended 31 March 2025 and 31 March 2024 in respect of right-of-

use assets:

	2025	2024
	£m	£m
Included within net finance income and costs:
Interest expense on lease liabilities	(40)	(69)
Included within revenue:
Lease income1	406	384
Included within operating expenses:
Expense relating to short-term and low-value leases	(24)	(20)

1.Included within lease income is £384 million (2024: £360 million) of variable lease payments, the majority of which relates to the power supply arrangement entered into with LIPA

(see note 3).

202	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

14. Other non-current assets

Other non-current assets include assets that do not fall into specific non-current asset categories (such as goodwill or property, plant and

equipment) where the benefit to be received from the asset is not due to be received until after 31 March 2026.

	2025	2024
	£m	£m
Other receivables¹	299	458
Prepayments²	660	390
	959	848

1.Primarily comprises amounts due in relation to property sales to The Berkeley Group. These amounts will be fully received by 2031.

2.Included within prepayments are capital expenditure prepayments made to suppliers to secure production capacity for certain of our capital projects. The associated cash flows for capital

expenditure prepayments are included within purchases of property, plant and equipment within the consolidated cash flow statement.

15. Financial and other investments

The Group holds a range of financial and other investments. These investments include short-term money market funds, quoted investments

in bonds of other companies, investments in our venture capital portfolio (National Grid Partners), and investments that cannot be readily used

in operations, principally collateral deposited in relation to derivatives.

The classification of each investment held by the Group is determined based on two main factors:

•its contractual cash flows – whether the asset’s cash flows are solely payments of the principal and interest on the financial asset

on pre‑determined dates or whether the cash flows are determined by other factors such as the performance of a company; and

•the business model for holding the investments – whether the intention is to hold onto the investment for the longer term (collect the

contractual cash flows) or to sell the asset with the intention of managing any gain or loss on sale or to manage any liquidity requirements.

The three categories of financial and other investments are as follows:

•Financial assets at amortised cost – debt instruments that have contractual cash flows that are solely payments of principal and interest,

and which are held within a business model whose objective is to collect contractual cash flows, are held at amortised cost. This category

includes our receivables in relation to deposits and collateral;

•FVOCI debt and other investments – debt investments, such as bonds, that have contractual cash flows that are solely payments of principal

and interest, and which are held within a business model whose objective is both to collect the contractual cash flows and to sell the debt

instruments, are measured at FVOCI, with gains or losses recognised in the consolidated statement of comprehensive income instead of

through the income statement. On disposal, any gains or losses are recognised within finance income in the income statement (see note 6).

Other investments include insurance contracts which are held to back the present value of unfunded pension liabilities (see note 25); and

•FVTPL investments – other financial investments are subsequently measured at fair value with any gains or losses recognised in the income

statement (FVTPL). This primarily comprises our money market funds, insurance company fund investments and corporate venture capital

investments held by National Grid Partners.

Financial and other investments are initially recognised on trade date. Subsequent to initial recognition, the fair values of financial assets that are

quoted in active markets are based on bid prices. When independent prices are not available, fair values are determined by applying valuation

techniques used by the relevant markets, including observable market data where possible (see note 32(g) for further details).

Strategic Report Corporate Governance Financial Statements Additional Information 203

15. Financial and other investments continued

	2025	2024
	£m	£m
Non-current
FVOCI debt and other investments	384	397
FVTPL investments	407	483
Financial assets at amortised cost	7	—
	798	880
Current
FVTPL investments	5,156	3,084
Financial assets at amortised cost	597	615
	5,753	3,699
	6,551	4,579
Financial and other investments include the following:
Investments in short-term money market funds	4,725	2,668
Investments held by National Grid Partners	346	375
Investments in Sunrun	60	108
Balances that are restricted or not readily used in operations:
Collateral1	506	496
Insurance company and non-qualified plan investments	578	578
Cash surrender value of life insurance policies	238	235
Other investments	98	119
	6,551	4,579

1.The collateral balance includes £477 million (2024: £466 million) of collateral placed with counterparties with whom we have entered into a credit support annex to the International Swaps

and Derivatives Association (ISDA) Master Agreement, £24 million (2024: £24 million) of restricted amounts allocated for specific projects within National Grid Electricity Transmission plc

and £5 million (2024: £6 million) insurance captive letters of credit.

FVTPL and FVOCI investments are recorded at fair value. The carrying value of current financial assets at amortised cost approximates their fair

values, primarily due to short-dated maturities. The exposure to credit risk at the reporting date is the fair value of the financial investments.

For further information on our credit risk, refer to note 32(a).

For the purposes of impairment assessment, the investments in bonds are considered to be low risk as they are investment grade securities; life

insurance policies are held with regulated insurance companies; and deposits, collateral receivable and other financial assets at amortised cost

have an average credit rating on a weighted basis of AA or better at all times based on investment policy. All financial assets held at FVOCI or

amortised cost are therefore considered to have low credit risk and have an immaterial impairment loss allowance equal to 12-month expected

credit losses.

In determining the expected credit losses for these assets, some or all of the following information has been considered: credit ratings, the

financial position of counterparties, the future prospects of the relevant industries and general economic forecasts.

No FVOCI or amortised cost financial assets have had modified cash flows during the period. There has been no change in the estimation

techniques or significant assumptions made during the year in assessing the loss allowance for these financial assets. There were no significant

movements in the gross carrying value of financial assets during the year that contribute to changes in the loss allowance. No collateral is held

in respect of any of the financial investments in the above table. No balances are more than 30 days past due and no balances were written off

during the year.

204	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

16. Investments in joint ventures and associates

Investments in joint ventures and associates represent businesses we do not control but over which we exercise joint control or significant

influence. They are accounted for using the equity method. A joint venture is an arrangement established to engage in economic activity, which

the Group jointly controls with other parties and has rights to a share of the net assets of the arrangement. An associate is an entity which is

neither a subsidiary nor a joint venture, but over which the Group has significant influence.

	2025			2024
	Associates £m	Joint ventures £m	Total £m	Associates £m	Joint ventures £m	Total £m
Share of net assets at 1 April	158	1,262	1,420	154	1,146	1,300
Exchange adjustments	(4)	(46)	(50)	(3)	(28)	(31)
Additions	23	93	116	13	319	332
Share of post-tax results for the year	11	62	73	9	28	37
Impairment	—	(303)	(303)	—	—	—
Dividends received	(18)	(53)	(71)	(15)	(152)	(167)
Disposals	(1)	—	(1)	(1)	—	(1)
Reclassification to held for sale (note 10)	—	(582)	(582)	—	—	—
Other movements¹	5	1	6	1	(51)	(50)
Share of net assets at 31 March	174	434	608	158	1,262	1,420

1.Other movements in the prior year relate to tax liabilities for US and certain UK associates and joint ventures which are borne by the Group and the elimination of profits arising from sales to the

Group’s share of joint ventures.

A list of joint ventures and associates, including the name and proportion of ownership, is provided in note 34. Transactions with and outstanding

balances with joint ventures and associates are shown in note 31. The joint ventures and associates have no significant contingent liabilities to

which the Group is exposed and the Group has no significant contingent liabilities in relation to its interests in the joint ventures and associates.

The Group has capital commitments in relation to its joint ventures and associates of £635 million (2024: £1,286 million), which primarily relate

to the funding of new capital investment projects.

The following table describes the Group’s material joint ventures and associates at 31 March 2025:

Joint venture1	% stake
BritNed Development Limited1	50%	BritNed is a joint venture with the Dutch transmission system operator, TenneT, and operates the subsea electricity interconnector between Great Britain and the Netherlands, commissioned in 2011.
Nemo Link Limited1	50%	Nemo is a joint venture with the Belgian transmission operator, Elia, and operates the subsea electricity interconnector between Great Britain and Belgium, which became operational in 2019.

1.The joint ventures have reporting periods ending on 31 December with monthly management reporting information provided to the Group.

The Group also holds a 51% interest in Emerald Energy Venture, LLC, a joint venture with Washington State Investment Board which builds and

operates wind and solar assets. In the year, the Group classified its interest in Emerald, together with NG Renewables, as held for sale and ceased

equity accounting for its share of results (see note 10).

In March 2021, the Group entered into an offshore partnership agreement with RWE Renewables to form Community Offshore Wind, LLC. The

purpose of the joint venture is to explore, develop, and eventually construct and operate renewable facilities in the northeastern US offshore wind

market. In February 2022, the partnership successfully bid in the New York Bight seabed lease auction. The Group’s investment in Community

Offshore Wind represents our share of the seabed lease and initial development costs incurred to date. As of 31 March 2025, the project has not

yet reached the construction stage.

On 20 January 2025, an Executive Memorandum was issued by the US Administration on wind power, temporarily suspending offshore wind

leasing, ordering a review of existing leases and directing a review and pause on permitting. Accordingly, we have agreed with RWE Renewables

to place a temporary pause on development of the project. This reflects the uncertainty surrounding the longer-term consequences of the changes

in US energy policy on the renewable energy sector. Certain developments after 31 March 2025 have further reaffirmed the view that the issuance

of the Executive Memorandum will likely suspend any development for the foreseeable future.

Given the recent changes in US energy-related policies, the Group has assessed that these developments currently affect our ability to complete

physical construction of the development and the ability to recover costs from customers through applicable frameworks. We have considered

the potential impact on our valuation of our investment in Community Offshore Wind and determined that the investment currently has negligible

value. Accordingly, the carrying value of the £303 million investment has been fully impaired. The impairment charge has been recognised in the

NGV operating segment. Whilst development activity is currently suspended, we continue to consider Community Offshore Wind could play an

important role in New York’s future energy strategy. We will reassess the project development pause should market conditions improve in the

future.

Strategic Report Corporate Governance Financial Statements Additional Information 205

16. Investments in joint ventures and associates continued

Summarised financial information as at 31 March, together with the carrying amount of material investments, is as follows:

	BritNed Development Limited		Nemo Link Limited
	2025	2024	2025	2024
	£m	£m	£m	£m
Statement of financial position
Non-current assets	352	376	447	478
Cash and cash equivalents	76	69	118	46
All other current assets	48	36	8	6
Non-current liabilities	(51)	(57)	(3)	(3)
Non-current financial liabilities	(32)	(31)	(32)	(32)
Current liabilities	(39)	(39)	(109)	(55)
Net assets	354	354	429	440
Group’s ownership interest in joint venture/associate	177	177	215	220
Group adjustment: elimination of profits on sales to joint venture	—	—	—	—
Carrying amount of the Group’s investment	177	177	215	220

	BritNed Development Limited		Nemo Link Limited
	2025	2024	2025	2024
	£m	£m	£m	£m
Income statement
Revenue	108	158	102	109
Depreciation and amortisation	(16)	(16)	(23)	(23)
Other (costs)/income	(23)	(25)	(16)	(15)
Operating profit	69	117	63	71
Net interest (expense)/income	(1)	(2)	1	—
Profit before tax	68	115	64	71
Income tax expense	(18)	(31)	(16)	(17)
Profit for the year	50	84	48	54
Group’s share of post-tax results for the year	25	42	24	27

The aggregate information of associates and joint ventures that are not individually material is as follows:

	2025	2024
	£m	£m
Share of post-tax results for the year1	24	25
Impairment	(303)	—
Share of total comprehensive income	(279)	25
Aggregate carrying value of the Group’s interests	216	1,023

1.The amount for the year ended 31 March 2024 excludes £42 million loss generated by Emerald Energy Venture LLC in 2024 as it has now been reclassified to held for sale (see note 10).

206	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

17. Derivative financial instruments

Derivatives are financial instruments that derive their value from the price of an underlying item such as interest rates, foreign exchange rates,

credit spreads, commodities, equities or other indices. In accordance with policies approved by the Board, derivatives are transacted generally

to manage exposures to fluctuations in interest rates, foreign exchange rates and commodity prices. Our derivatives balances comprise two

broad categories:

• financing derivatives – these are used to manage our exposure to interest rates and foreign exchange rates. Specifically, we use these

derivatives to manage our financing portfolio, holdings in foreign operations and contractual operational cash flows; and

• commodity contract derivatives – these are used to manage exposure to price and supply risks related to our US customers and

UK business. Some forward contracts for the purchase of commodities meet the definition of derivatives. We also enter into derivative

financial instruments linked to commodity prices, including options and swaps, which are used to manage market price volatility.

Derivatives are initially recognised at fair value and subsequently remeasured to fair value at each reporting date. Changes in fair values are

recorded in the period they arise, in either the consolidated income statement or other comprehensive income. Where the gains or losses recorded

in the income statement arise from changes in the fair value of derivatives to the extent that hedge accounting is not applied or is not fully effective,

these are recorded as remeasurements, detailed in notes 5 and 6. Where the fair value of a derivative is positive it is carried as a derivative asset,

and where negative as a derivative liability.

The fair value of derivative financial instruments is calculated by taking the present value of future cash flows, primarily incorporating market

observable inputs where available. The various inputs include foreign exchange spot and forward rates, yield curves of the respective currencies,

currency basis spreads between the respective currencies, interest rate and inflation curves, the forward rate curves of underlying commodities

and, for those positions that are not fully cash collateralised, the credit quality of the counterparties.

Certain clauses embedded in non-derivative financial instruments or other contracts are presented as derivatives because they impact the risk

profile of their host contracts and they are deemed to have risks or rewards not closely related to those host contracts.

Further information on how derivatives are valued and used for risk management purposes is presented in note 32. Information on commodity

contracts and other commitments not meeting the definition of derivatives is presented in note 30.

The fair values of derivatives by category are as follows:

	2025			2024
	Assets £m	Liabilities £m	Total £m	Assets £m	Liabilities £m	Total £m
Current	113	(381)	(268)	44	(335)	(291)
Non-current	369	(821)	(452)	324	(909)	(585)
	482	(1,202)	(720)	368	(1,244)	(876)
Financing derivatives	375	(1,138)	(763)	333	(1,126)	(793)
Commodity contract derivatives	107	(64)	43	35	(118)	(83)
	482	(1,202)	(720)	368	(1,244)	(876)

(a) Financing derivatives

The fair values of financing derivatives by type are as follows:

	2025			2024
	Assets £m	Liabilities £m	Total £m	Assets £m	Liabilities £m	Total £m
Interest rate swaps	98	(196)	(98)	43	(110)	(67)
Cross-currency interest rate swaps	193	(766)	(573)	234	(844)	(610)
Foreign exchange forward contracts¹	53	(81)	(28)	16	(68)	(52)
Inflation-linked swaps	31	(95)	(64)	40	(104)	(64)
	375	(1,138)	(763)	333	(1,126)	(793)

1.Included within the foreign exchange forward contracts balance are £45 million (2024: £36 million) of derivative liabilities in relation to the hedging of capital expenditure.

Strategic Report Corporate Governance Financial Statements Additional Information 207

17. Derivative financial instruments continued

(a) Financing derivatives continued

The maturity profile of financing derivatives is as follows:

	2025			2024
	Assets £m	Liabilities £m	Total £m	Assets £m	Liabilities £m	Total £m
Current
Less than 1 year	19	(355)	(336)	18	(249)	(231)
	19	(355)	(336)	18	(249)	(231)
Non-current
In 1 to 2 years	46	(61)	(15)	6	(80)	(74)
In 2 to 3 years	41	(77)	(36)	31	(44)	(13)
In 3 to 4 years	47	(73)	(26)	32	(74)	(42)
In 4 to 5 years	6	(25)	(19)	49	(83)	(34)
More than 5 years	216	(547)	(331)	197	(596)	(399)
	356	(783)	(427)	315	(877)	(562)
	375	(1,138)	(763)	333	(1,126)	(793)

The notional contract amounts of financing derivatives by type are as follows:

	2025	2024
	£m	£m
Interest rate swaps	(7,763)	(2,175)
Cross-currency interest rate swaps	(16,019)	(15,602)
Foreign exchange forward contracts	(7,761)	(7,675)
Inflation-linked swaps	(3,190)	(3,190)
	(34,733)	(28,642)

(b) Commodity contract derivatives

The fair values of commodity contract derivatives by type are as follows:

	2025			2024
	Assets £m	Liabilities £m	Total £m	Assets £m	Liabilities £m	Total £m
Commodity purchase contracts accounted for as derivative contracts
Forward purchases of gas	3	(7)	(4)	—	(3)	(3)
Derivative financial instruments linked to commodity prices
Electricity capacity	2	(17)	(15)	—	—	—
Electricity swaps	74	(38)	36	33	(82)	(49)
Electricity options	1	(1)	—	—	(1)	(1)
Gas swaps	15	(1)	14	2	(22)	(20)
Gas options	12	—	12	—	(10)	(10)
	107	(64)	43	35	(118)	(83)

208	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

17. Derivative financial instruments continued

(b) Commodity contract derivatives continued

The maturity profile of commodity contract derivatives is as follows:

	2025			2024
	Assets £m	Liabilities £m	Total £m	Assets £m	Liabilities £m	Total £m
Current
Less than one year	94	(26)	68	26	(86)	(60)
	94	(26)	68	26	(86)	(60)
Non-current
In 1 to 2 years	12	(20)	(8)	3	(28)	(25)
In 2 to 3 years	1	(12)	(11)	5	(4)	1
In 3 to 4 years	—	(2)	(2)	1	—	1
In 4 to 5 years	—	(2)	(2)	—	—	—
More than 5 years	—	(2)	(2)	—	—	—
	13	(38)	(25)	9	(32)	(23)
	107	(64)	43	35	(118)	(83)

The notional quantities of commodity contract derivatives by type are as follows:

	2025	2024
Forward purchases of gas1	74m Dth	38m Dth
Electricity capacity	5 TWh	0 TWh
Electricity swaps	14,040 GWh	14,128 GWh
Gas swaps	30m Dth	44m Dth
Gas options	89m Dth	78m Dth

1.Forward gas purchases have terms up to three years (2024: one year). The contractual obligations under these contracts are £46 million (2024: £14 million).

18. Inventories

Inventories represent assets that we intend to use in order to generate revenue in the short term, either by selling the asset itself (for example

fuel stocks) or by using it to fulfil a service to a customer or to maintain our network (consumables).

Inventories are stated at the lower of weighted average cost and net realisable value. Where applicable, cost comprises direct materials and direct

labour costs as well as those overheads that have been directly incurred in bringing the inventories to their present location and condition.

Emission allowances, principally relating to the emissions of carbon dioxide in the UK and sulphur and nitrous oxides in the US, are recorded as

inventory. They are initially recorded at cost and subsequently at the lower of cost and net realisable value. A liability is recorded in respect of the

obligation to deliver emission allowances and emission charges are recognised in the income statement in the period in which emissions

are made.

	2025	2024
	£m	£m
Fuel stocks	95	188
Raw materials and consumables	356	542
Emission allowances	106	98
	557	828

There is a provision for obsolescence of £1 million against inventories as at 31 March 2025 (2024: £4 million).

Strategic Report Corporate Governance Financial Statements Additional Information 209

19. Trade and other receivables

Trade and other receivables include amounts which are due from our customers for services we have provided, accrued income which has not

yet been billed, prepayments, contract assets where certain milestones are required to be fulfilled and other receivables that are expected to

be settled within 12 months.

Trade and other receivables are initially recognised at fair value, except for trade receivables that do not have a significant financing component

which are measured at transaction price, and are subsequently measured at amortised cost, less any appropriate allowances for estimated

irrecoverable amounts.

	2025	2024
	£m	£m
Trade receivables	3,050	2,501
Accrued income	1,083	885
Provision for impairment of receivables and accrued income	(578)	(559)
Trade receivables and accrued income, net	3,555	2,827
Prepayments	340	385
Contract assets	—	76
Other receivables	197	127
	4,092	3,415

Trade receivables are non-interest-bearing and generally have a term of up to 60 days. Due to their short maturities, the fair value of trade and

other receivables approximates their carrying value. The maximum exposure of trade and other receivables to credit risk is the carrying amount

reported on the balance sheet.

Provision for impairment of receivables

A provision for credit losses is recognised at an amount equal to the expected credit losses that will arise over the lifetime of the trade receivables

and accrued income.

	2025	2024
	£m	£m
At 1 April	559	560
Exchange adjustments	(11)	(12)
Charge for the year, net of recoveries	200	179
Uncollectible amounts written off	(168)	(163)
Reclassification to held for sale (note 10)	(2)	(5)
At 31 March	578	559

The trade receivables balance, accrued income balance and provisions balance split by geography are as follows:

	As at 31 March 2025			As at 31 March 2024
	UK	US	Total	UK	US	Total
	£m	£m	£m	£m	£m	£m
Trade receivables	265	2,785	3,050	162	2,339	2,501
Accrued income	513	570	1,083	337	548	885
Provision for impairment of receivables and accrued income	(3)	(575)	(578)	(3)	(556)	(559)
	775	2,780	3,555	496	2,331	2,827

There are no retail customers in the UK businesses. A provision matrix is not used in the UK, as an assessment of expected losses on individual

debtors is performed and the provision is not material.

In the US, £2,813 million (2024: £2,437 million) of the trade receivables and accrued income balance is attributable to retail customers. For non-

retail US customer receivables, a provision matrix is not used and expected losses are determined on individual debtors.

The provision for retail customer receivables in the US is calculated based on a series of provision matrices which are prepared by regulated

entity and by customer type. The expected loss rates in each provision matrix are based on historical loss rates adjusted for current and forecast

economic conditions at the balance sheet date. The inclusion of forward-looking information in the provision matrix-setting process under IFRS 9

results in loss rates that reflect expected future economic conditions and the recognition of an expected loss on all debtors even where no loss

event has occurred.

In March 2020, the Group’s US distribution business temporarily ceased certain customer cash collection activities in response to regulatory

instructions and to changes in state-, federal- and city-level regulations and guidance, and actions to minimise risk to the Group’s employees

as a result of COVID-19. Customer termination activities also ceased in line with requests by relevant local authorities and this resulted in the

recognition of additional expected credit losses, although cash collection and customer termination activities have subsequently resumed in

both New England and New York.

210	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

19. Trade and other receivables continued

Provision for impairment of receivables continued

In calculating our provision for impairment of receivables at 31 March 2025, we incorporate actual cash collection levels experienced over a

three-year period to determine the expected loss rates per category of outstanding receivable by operating company. These are benchmarked

against provision matrices run on pre‑COVID-19 behaviour and data. Factored into our analysis are expected cash collections based on the

collection activities in New England and New York, as well as the outlook for the wider macroeconomic environment. The resulting rates are

summarised in the provision matrix shown below.

Based on our review, we recognised a charge of £200 million (2024: £176 million), which represents our best estimate based on the information

available. We based our review on certain macroeconomic factors, including unemployment levels, inflation, average commodity rate changes

and our experience regarding debtor recoverability.

The average expected loss rates and gross balances for the retail customer receivables in our US operations are set out below. Loss rates have

increased across the majority of our ageing categories, primarily due to the impact of ongoing cash collection activities.

	2025		2024
	%	£m	%	£m
Accrued income	5	546	3	533
0 – 30 days past due	5	1,033	3	822
30 – 60 days past due	16	313	14	219
60 – 90 days past due	24	154	21	125
3 – 6 months past due	31	172	27	173
6 – 12 months past due	38	186	34	191
Over 12 months past due	53	409	73	374
		2,813		2,437

US retail customer receivables are not collateralised. Trade receivables are written off when regulatory requirements are met. Write-off policies

vary between jurisdictions as they are aligned with the local regulatory requirements, which differ between regulators. There were no significant

amounts written off during the period that were still subject to enforcement action. Our internal definition of default is aligned with that of the

individual regulators in each jurisdiction.

For further information on our wholesale and retail credit risk, refer to note 32(a).

20. Cash and cash equivalents

Cash and cash equivalents include cash balances, together with short-term investments with an original maturity of three months or less that

are readily convertible to cash.

The carrying amounts of cash and cash equivalents approximate their fair values.

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for periods varying between

one day and three months, depending on the immediate cash requirements, and earn interest at the respective short-term deposit rates.

Cash and cash equivalents held in currencies other than sterling have been converted into sterling at year-end exchange rates. For further

information on currency exposures, refer to note 32(c).

Cash and cash equivalents at 31 March 2025 include £nil (2024: £11 million) that is restricted. The restricted cash balances included cash

balances that could only be used for low-carbon network fund projects.

	2025	2024
	£m	£m
Cash at bank	625	259
Short-term deposits	553	300
Cash and cash equivalents	1,178	559

Strategic Report Corporate Governance Financial Statements Additional Information 211

21. Borrowings

We borrow money primarily in the form of bonds and bank loans. These are for a fixed term and may have fixed or floating interest rates or are

linked to inflation indices. We use derivatives to manage risks associated with interest rates, inflation rates and foreign exchange. Lease

liabilities are also included within borrowings.

Our price controls and rate plans lead us to fund our networks within a certain ratio of debt to equity or regulatory asset value and, as a result,

we have issued a significant amount of debt. As we continue to invest in our networks, the value of debt is expected to increase over time.

To maintain a strong balance sheet and to allow us to access capital markets at commercially acceptable interest rates, we balance the

amount of debt we issue with the value of our assets, and we take account of certain other metrics used by credit rating agencies.

Borrowings, which include interest-bearing and inflation-linked debt, overdrafts and collateral payable, are initially recorded at fair value. This

normally reflects the proceeds received (net of direct issue costs for liabilities measured at amortised cost). Subsequently, borrowings are stated

either: i) at amortised cost; or ii) at fair value though profit and loss. Where a borrowing is held at amortised cost, any difference between the

proceeds after direct issue costs and the redemption value is recognised over the term of the borrowing in the income statement using the

effective interest method.

	2025	2024
	£m	£m
Current
Bank loans	488	460
Bonds	1,828	2,841
Commercial paper	2,226	1,444
Lease liabilities	120	114
	4,662	4,859
Non-current
Bank loans	1,834	2,434
Bonds	40,334	39,114
Lease liabilities	709	665
	42,877	42,213
Total borrowings	47,539	47,072

Total borrowings are repayable as follows:

	2025	2024
	£m	£m
Less than 1 year	4,662	4,859
In 1 to 2 years	3,283	2,706
In 2 to 3 years	2,458	3,134
In 3 to 4 years	4,281	2,948
In 4 to 5 years	2,261	4,375
More than 5 years:
By instalments	337	736
Other than by instalments	30,257	28,314
	47,539	47,072

The fair value of borrowings, excluding lease liabilities, at 31 March 2025 was £43,137 million (2024: £42,617 million). Where market values were

available, the fair value of borrowings (Level 1) was £34,639 million (2024: £34,281 million). Where market values were not available, the fair value

of borrowings (Level 2) was £8,498 million (2024: £8,336 million) and calculated by discounting cash flows at prevailing interest rates. The notional

amount outstanding of the debt portfolio at 31 March 2025 was £46,739 million (2024: £46,141 million). There have been no new issuances since

the year end.

Collateral is placed with or received from any derivative counterparty where we have entered into a credit support annex to the ISDA Master

Agreement once the current mark-to-market valuation of the trades between the parties exceeds an agreed threshold. Included in current bank

loans is £49 million (2024: £72 million) in respect of cash received under collateral agreements. For further details of our borrowing facilities, refer

to note 33. For further details of our bonds in issue, please refer to the debt investor section of our website. Unless included herein, the information

on our website is unaudited.

212	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

21. Borrowings continued

Lease liabilities

Lease liabilities are initially measured at the present value of the lease payments expected over the lease term. The discount rate applied

is the rate implicit in the lease or, if that is not available, the incremental rate of borrowing for a similar term and similar security. The lease

term takes account of exercising any extension options that are at our option if we are reasonably certain to exercise the option as well as any

lease termination options, unless we are reasonably certain not to exercise the option. Each lease payment is allocated between the liability

and finance cost. The finance cost is charged to the income statement over the lease period using the effective interest rate method.

	2025	2024
	£m	£m
Gross lease liabilities are repayable as follows:
Less than 1 year	143	133
1 to 5 years	425	370
More than 5 years	494	507
	1,062	1,010
Less: finance charges allocated to future periods	(233)	(231)
	829	779
The present value of lease liabilities are as follows:
Less than 1 year	120	114
1 to 5 years	347	300
More than 5 years	362	365
	829	779

22. Trade and other payables

Trade and other payables include amounts owed to suppliers, tax authorities and other parties which are due to be settled within 12 months.

The total also includes deferred amounts, some of which represent monies received from customers but for which we have not yet delivered

the associated service. These amounts are recognised as revenue when the service is provided.

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost.

	2025	2024
	£m	£m
Trade payables	2,965	2,786
Deferred payables	401	327
Customer contributions1	32	34
Social security and other taxes	131	—
Other payables	943	929
	4,472	4,076

1.Relates to amounts received from government-related entities for connecting to our networks, where we have obligations remaining under the contract.

Due to their short maturities, the fair value of trade and other payables approximates their carrying value.

Strategic Report Corporate Governance Financial Statements Additional Information 213

23. Contract liabilities

Contract liabilities primarily relate to the advance consideration received from customers for construction contracts, mainly in relation to

connections, for which revenue is recognised over the life of the asset.

	2025	2024
	£m	£m
Current	96	127
Non-current	2,418	2,119
	2,514	2,246

Significant changes in the contract liabilities balances during the period are as follows:

	2025	2024
	£m	£m
As at 1 April	2,246	2,006
Exchange adjustments	(28)	(27)
Revenue recognised that was included in the contract liability balance at the beginning of the period	(129)	(252)
Increases due to cash received, excluding amounts recognised as revenue during the period	425	519
At 31 March	2,514	2,246

24. Other non-current liabilities

Other non-current liabilities include deferred income and customer contributions which will not be recognised as income until after 31 March

2026. It also includes other payables that are not due until after that date.

Other non-current liabilities are initially recognised at fair value and subsequently measured at amortised cost.

	2025	2024
	£m	£m
Deferred income	6	11
Customer contributions1	403	411
Other payables²	467	458
	876	880

1.Relates to amounts received from government-related entities for connecting to our networks, where we have obligations remaining under the contract.

2.Included within other payables are payments due in respect of the IFA1 interconnector in accordance with the Use of Revenue regime constructed by Ofgem.

There is no material difference between the fair value and the carrying value of other payables.

214	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

25. Pensions and other post-retirement benefits

All of our employees are eligible to participate in a pension plan. We have defined contribution (DC) and defined benefit (DB) pension plans in

the UK and the US. In the US, we also provide healthcare and life insurance benefits to eligible employees, post-retirement. The fair value of

associated plan assets and present value of DB obligations are updated annually in accordance with IAS 19 ‘Employee Benefits’. We separately

present our UK and US pension plans to show the geographical split. Below we provide a more detailed analysis of the amounts recorded in

the primary financial statements and the actuarial assumptions used to value the DB obligations.

UK pension plans

Defined contribution plan

UK employees are eligible to join the National Grid UK Retirement Plan (NGUKRP), a section of a Master Trust arrangement managed by Legal &

General. National Grid pays contributions into the NGUKRP to provide DC benefits on behalf of its employees, generally providing a double match

of member contributions up to a maximum Company contribution of 12% of salary.

Investment risks are borne by the member and there is no legal or constructive obligation on National Grid to pay additional contributions in the

instance that investment performance is poor. Payments to this DC plan are charged as an expense as they fall due.

Defined benefit plans

National Grid operates various DB pension arrangements in the UK. These include Section A of the National Grid UK Pension Scheme (NGUKPS),

three sections of the industry-wide Electricity Supply Pension Scheme (ESPS), a legacy scheme (WPUPS), a DB section within WPPS and some

unfunded pension obligations. These plans each hold assets in separate Trustee administered funds and are managed by Trustee companies with

boards consisting of company and member appointed Directors. These plans are all closed to new members, except for the ESPS schemes in

very rare circumstances.

The arrangements are subject to independent actuarial funding valuations carried out by the Trustees every three years. Following consultation

and agreement with the Company, the qualified actuary certifies the employers’ contributions which, together with the specified contributions

payable by the employees and proceeds from the plans’ assets, are expected to be sufficient to fund the benefits payable. The latest full actuarial

valuations for each of the DB plans were carried out at 31 March 2022, with three of the plans showing a funding shortfall at the valuation date.

These shortfalls were funded via recovery plan payments from the Company, which as at 31 March 2025 had all been paid. The Company also

funds the cost of future benefit accrual (over and above member contributions) for each of the DB plans, with the aggregate level of ongoing

contributions (excluding recovery plan payments) over the year to 31 March 2025 totalling £100 million (2024: £95 million). For some of the

DB plans, the Company also pays contributions in respect of the costs of plan administration and the Pension Protection Fund (PPF) levies.

The Company has also established security arrangements with two of its DB plans. For National Grid Electricity Group (NGEG) of ESPS, the

Company provides contingent security in the form of surety bonds, letters of credit or cash payments which are implemented if certain trigger

events occur in respect of National Grid Electricity Transmission plc. The security, which is currently capped at £180 million, would then become

payable to NGEG on certain company-related events, such as loss of licence or insolvency. In respect of Section A of NGUKPS, there is a

guarantee in place which is enforceable on insolvency or on failure to pay pension obligations to Section A and can be claimed against National

Grid plc, National Grid Holdings One plc or Lattice Group Limited.

During the year, the National Grid Electricity System Operator (ESO) transferred out of the Group. The sale was completed on 1 October 2024,

with the ESO’s share of DB pension assets and liabilities leaving the Group’s balance sheet on that date, having previously been reallocated

as held for sale (see note 10). In addition, on 31 October 2024 the Trustee of NGEG of ESPS carried out a bulk annuity transaction, securing

approximately £1.7 billion of pensioner liabilities with Aviva plc. As part of the transaction, the scheme’s existing longevity swap policy was

novated to Aviva and is no longer recorded as a scheme asset.

US pension plans

The US pension plans are governed by the Retirement Plan Committee (RPC), a fiduciary committee. The RPC is structured in accordance

with US laws governing retirement plans under the Employee Retirement Income Security Act (ERISA) and comprises appointed employees

of the Company.

Defined contribution plan

National Grid has a DC pension plan which allows employee as well as Company contributions. Non-union employees hired after 1 January 2011,

as well as most new hire union employees, receive a core contribution into the DC plan ranging from 3% to 9% of salary, irrespective of the

employee’s contribution into the plan. Most employees also receive a matching contribution that varies between 25% and 50% of employee

contributions up to a maximum Company contribution of 8%. The assets of the plans are held in trusts and administered by the RPC.

Strategic Report Corporate Governance Financial Statements Additional Information 215

25. Pensions and other post-retirement benefits continued

US pension plans continued

Defined benefit plans

National Grid sponsors four non-contributory qualified DB pension plans, which provide vested non-union employees hired before 1 January 2011,

and vested eligible union employees, with retirement benefits within prescribed limits as defined by the US Internal Revenue Service. National Grid

also provides non-qualified DB pension arrangements for a closed group of current and former employees with designated company investments

set aside to fund these obligations. Benefits under the DB plans generally reflect age, years of service and compensation, and are paid in the form

of an annuity or lump sum. The Company funds the DB plans by contributing no less than the minimum amount required, but no more than the

maximum tax-deductible amount allowed under US Internal Revenue Service regulations. The range of contributions determined under these

regulations can vary significantly depending upon the funded status of the plans. At present, there is some flexibility in the amount that is

contributed on an annual basis. In general, the Company’s policy for funding the US pension plans is to contribute the amounts collected in

rates and capitalised in the rate base during the year, to the extent that the funding is no less than the minimum amount required. For the current

financial year, these contributions amounted to approximately £27 million (2024: £26 million).

In the prior year, some of our US DB pension plans undertook annuity buyout transactions in which a portion of existing retiree pension payments

were transferred to a reputable insurance company in exchange for single bulk premium payments. As a result, all associated financial,

governance and administrative responsibilities for those payments were transferred to the selected insurer.

US other post-retirement benefits

National Grid provides post-retirement healthcare and life insurance benefits to eligible employees. Eligibility is based on certain age and length

of service requirements and, in most cases, retirees contribute to the cost of their healthcare coverage. In the US, there is no governmental

requirement to pre-fund post-retirement healthcare and life insurance plans. However, in general, the Company’s policy for funding the US retiree

healthcare and life insurance plans is to contribute amounts collected in rates and capitalised in the rate base during the year. For the current

financial year, these contributions amounted to £10 million (2024: £21 million).

In the prior year, several post-retirement benefit plans were consolidated in an effort to simplify the plan and trust structure. This consolidation

did not impact the benefits or plan obligations.

Actuarial assumptions

On retirement, members of DB plans receive benefits whose value is dependent on factors such as salary and length of pensionable service.

National Grid’s obligation in respect of DB pension plans is calculated separately for each DB plan by projecting the estimated amount of future

benefit payments that employees have earned for their pensionable service in the current and prior periods. These future benefit payments

are discounted to determine the present value of the liabilities.

Advice is taken from independent actuaries relating to the appropriateness of the key assumptions applied, including life expectancy, expected

salary and pension increases, and inflation. Comparatively small changes in the assumptions used may have a significant effect on the amounts

recognised in the consolidated income statement, the consolidated statement of other comprehensive income and the net asset or liability

recognised in the consolidated statement of financial position. The sensitivities to significant risks are disclosed in note 35. Remeasurements

of pension assets and post-retirement benefit obligations are recognised in full in the period in which they occur in the consolidated statement

of other comprehensive income.

The Company has applied the following financial assumptions in assessing DB liabilities:

	UK pensions			US pensions			US other post-retirement benefits
	2025	2024	2023	2025	2024	2023	2025	2024	2023
	%	%	%	%	%	%	%	%	%
Discount rate – past service	5.73	4.87	4.80	5.50	5.15	4.85	5.50	5.15	4.85
Discount rate – future service	5.95	4.92	4.80	5.50	5.15	4.85	5.50	5.15	4.85
Rate of increase in RPI – past service	2.99	3.05	3.17	n/a	n/a	n/a	n/a	n/a	n/a
Rate of increase in RPI – future service	2.85	2.92	3.07	n/a	n/a	n/a	n/a	n/a	n/a
Salary increases	3.08	3.10	3.11	4.50	4.50	4.50	4.50	4.50	4.50
Initial healthcare cost trend rate	n/a	n/a	n/a	n/a	n/a	n/a	7.80	7.10	6.80
Ultimate healthcare cost trend rate	n/a	n/a	n/a	n/a	n/a	n/a	4.50	4.50	4.50

For UK pensions, single equivalent financial assumptions are shown above for presentational purposes, although full yield curves have been used

in our calculations. The discount rate is determined by reference to high-quality UK corporate bonds at the reporting date. The rate of increase in

salaries has been set using a promotional scale where appropriate. The rates of increases stated are not indicative of historical increases awarded

or a guarantee of future increase, but merely an appropriate assumption used in assessing DB liabilities. Our DB plans in the UK provide for

pension increases that are generally linked to the Retail Price Index (RPI), subject to relevant caps and floors.

Discount rates for US pension liabilities have been determined by reference to appropriate yields on high-quality US corporate bonds at the

reporting date based on the duration of plan liabilities. The healthcare cost trend rate is expected to reach the ultimate trend rate by 2033

(2024: 2033).

216	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

25. Pensions and other post-retirement benefits continued

Actuarial assumptions continued

The table below sets out the projected life expectancies adopted for the UK and US pension arrangements:

	UK pensions			US pensions
	2025	2024	2023	2025	2024	2023
	years	years	years	years	years	years
Assumed life expectation for a retiree aged 65
Males	21.5	21.5	21.9	21.8	21.6	21.6
Females	23.9	23.5	23.7	23.8	23.9	23.8
In 20 years:
Males	22.4	22.6	23.0	23.4	23.3	23.2
Females	25.3	24.9	25.1	25.4	25.5	25.4

The weighted average duration of the DB obligation for each category of plan is 11 years for UK pension plans, 11 years for US pension plans and

12 years for US other post-retirement benefit plans. The table below summarises the split of DB obligations by status for each category of plan:

	UK pensions		US pensions		US other post-retirement benefits
	2025	2024	2025	2024	2025	2024
	%	%	%	%	%	%
Active members	11	14	40	37	28	29
Deferred members	7	8	10	10	—	—
Pensioner members	82	78	50	53	72	71

Amounts recognised in the consolidated statement of financial position

The geographical split of pensions and other post-retirement benefits is as shown below:

	UK pensions		US pensions		US other post-retirement benefits		Total
	2025	2024	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m	£m	£m
Present value of funded obligations	(9,424)	(10,465)	(4,508)	(4,702)	(2,222)	(2,434)	(16,154)	(17,601)
Fair value of plan assets	10,603	11,782	5,180	5,320	2,658	2,631	18,441	19,733
	1,179	1,317	672	618	436	197	2,287	2,132
Present value of unfunded obligations	(51)	(56)	(196)	(210)	—	—	(247)	(266)
Other post-employment liabilities	—	—	—	—	(47)	(52)	(47)	(52)
	1,128	1,261	476	408	389	145	1,993	1,814
Restrictions on asset recognised	—	—	—	—	(77)	—	(77)	—
Net defined benefit asset	1,128	1,261	476	408	312	145	1,916	1,814
Represented by:
Liabilities	(51)	(56)	(196)	(210)	(326)	(327)	(573)	(593)
Assets	1,179	1,317	672	618	638	472	2,489	2,407
	1,128	1,261	476	408	312	145	1,916	1,814

The extent to which pension assets have been recognised in the UK and in the US reflects legal and actuarial advice that we have taken regarding

recognition of surpluses under IFRIC 14. In the UK, the Group has an unconditional right to a refund in the event of a winding up. In the US, surplus

assets of a plan may be used to pay for future benefits expected to be earned under that plan.

At 31 March 2025, the Group recognised an irrecoverable surplus of £77 million related to one OPEB plan. The economic benefit from reductions

in future contributions to the plan is not sufficient to cover the surplus and this plan does not have an unconditional right to a refund of surplus

assets in the event of a winding up without incurring significant tax charges.

Strategic Report Corporate Governance Financial Statements Additional Information 217

25. Pensions and other post-retirement benefits continued

Amounts recognised in the income statement and statement of other comprehensive income

The expense or income arising from all Group retirement benefit arrangements recognised in the Group income statements is shown below:

	2025	2024	2023
	£m	£m	£m
Included within operating costs
Administration costs	22	22	19
Included within payroll costs
Defined benefit plan costs:
Current service cost	138	143	194
Past service cost – augmentations and redundancies	1	9	8
Gains on settlement	—	(30)	(45)
	139	122	157
Included within finance income and costs
Net interest income	(98)	(100)	(85)
Total included in income statement	63	44	91
Exchange adjustments	(20)	(6)	41
Remeasurement losses of pension assets and post-retirement benefit obligations	(29)	(218)	(1,364)
Adjustments for restrictions on the defined benefit asset	(77)	—	—
Total included in the statement of other comprehensive income	(126)	(224)	(1,323)

The geographical split of pensions and other post-retirement benefits is shown below:

	UK pensions			US pensions			US other post-retirement benefits
	2025	2024	2023	2025	2024	2023	2025	2024	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Included within operating costs
Administration costs	14	13	9	6	7	8	2	2	2
Included within payroll costs
Defined benefit plan costs:
Current service cost	45	45	69	68	72	88	25	26	37
Past service cost – augmentations and redundancies	1	9	8	—	—	—	—	—	—
Gains on settlement	—	—	—	—	(30)	(45)	—	—	—
	46	54	77	68	42	43	25	26	37
Included within finance income and costs
Net interest income	(68)	(84)	(64)	(19)	(13)	(21)	(11)	(3)	—
Total included in income statement	(8)	(17)	22	55	36	30	16	25	39
Exchange adjustments	—	—	—	(10)	(5)	36	(10)	(1)	5
Remeasurement (losses)/gains of pension assets and post-retirement benefit obligations	(257)	(474)	(1,183)	106	99	(242)	122	157	61
Adjustments for restrictions on the defined benefit asset	—	—	—	—	—	—	(77)	—	—
Total included in the statement of other comprehensive income	(257)	(474)	(1,183)	96	94	(206)	35	156	66

218	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

25. Pensions and other post-retirement benefits continued

Reconciliation of the net defined benefit asset

	UK pensions		US pensions		US other post-retirement benefits		Total
	2025	2024	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m	£m	£m
Opening net defined benefit asset	1,261	1,614	408	324	145	13	1,814	1,951
Income/(cost) recognised in the income statement (including discontinued operations)	8	17	(55)	(36)	(16)	(25)	(63)	(44)
Remeasurement and foreign exchange effects recognised in the statement of other comprehensive income	(257)	(474)	96	94	112	156	(49)	(224)
Employer contributions	112	118	27	26	143¹	21	282	165
Other movements	4	3	—	—	5	(20)	9	(17)
Reclassification to held for sale (note 10)	—	(17)	—	—	—	—	—	(17)
	1,128	1,261	476	408	389	145	1,993	1,814
Restrictions on the defined benefit asset	—	—	—	—	(77)	—	(77)	—
Closing net defined benefit asset	1,128	1,261	476	408	312	145	1,916	1,814

1.In addition to the regular employer contributions that are described above, the Company made a one-off contribution of £133 million to the OPEB schemes in the current year.

Changes in the present value of defined benefit obligations (including unfunded obligations)

The table below shows the movement in defined benefit obligations across our DB plans over the year.

	UK pensions		US pensions		US other post-retirement benefits		Total
	2025	2024	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m	£m	£m
Opening defined benefit obligations	(10,521)	(10,964)	(4,912)	(5,736)	(2,434)	(2,526)	(17,867)	(19,226)
Current service cost	(45)	(45)	(68)	(72)	(25)	(26)	(138)	(143)
Interest cost	(533)	(536)	(246)	(258)	(120)	(117)	(899)	(911)
Actuarial (losses)/gains – experience	(41)	(2)	(4)	(34)	116	73	71	37
Actuarial gains/(losses) – demographic assumptions¹	(74)	98	(22)	12	19	(4)	(77)	106
Actuarial gains/(losses) – financial assumptions	989	165	156	190	36	(7)	1,181	348
Past service cost – augmentations and redundancies	(1)	(9)	—	—	—	—	(1)	(9)
Liabilities extinguished on settlements	—	—	—	543	—	—	—	543
Medicare subsidy received	—	—	—	—	(31)	(26)	(31)	(26)
Employee contributions	(5)	(10)	—	—	—	—	(5)	(10)
Benefits paid	756	710	282	312	165	152	1,203	1,174
Exchange adjustments	—	—	110	131	52	58	162	189
Reclassification from other post-employment liabilities	—	—	—	—	—	(11)	—	(11)
Reclassification to held for sale (note 10)	—	72	—	—	—	—	—	72
Closing defined benefit obligations	(9,475)	(10,521)	(4,704)	(4,912)	(2,222)	(2,434)	(16,401)	(17,867)

1.For the year ended 31 March 2025 this included actuarial losses of £0.2 billion resulting from the purchase of a bulk annuity policy with Aviva.

Changes in the value of plan assets

The table below shows the movement in pension assets across our DB plans over the year.

	UK pensions		US pensions		US other post-retirement benefits		Total
	2025	2024	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m	£m	£m
Opening fair value of plan assets	11,782	12,578	5,320	6,060	2,631	2,608	19,733	21,246
Interest income	601	620	265	271	131	120	997	1,011
Return on plan assets (less than)/in excess of interest1	(1,131)	(735)	(24)	(69)	(49)	95	(1,204)	(709)
Administration costs	(14)	(13)	(6)	(7)	(2)	(2)	(22)	(22)
Assets distributed on settlements	—	—	—	(513)	—	—	—	(513)
Employer contributions	112	118	27	26	143	21	282	165
Employee contributions	5	10	—	—	—	—	5	10
Benefits paid	(752)	(707)	(282)	(312)	(134)	(152)	(1,168)	(1,171)
Exchange adjustments	—	—	(120)	(136)	(62)	(59)	(182)	(195)
Reclassification to held for sale (note 10)	—	(89)	—	—	—	—	—	(89)
Closing fair value of plan assets	10,603	11,782	5,180	5,320	2,658	2,631	18,441	19,733
Actual return on plan assets	(530)	(115)	241	202	82	215	(207)	302
Expected contributions to plans in the following year	89	108	19	28	—	15	108	151

1.For the year ended 31 March 2025 this included actuarial losses of £0.2 billion resulting from the purchase of a bulk annuity policy with Aviva.

Strategic Report Corporate Governance Financial Statements Additional Information 219

25. Pensions and other post-retirement benefits continued

Asset allocations

The allocation of assets by asset class is set out below. Within these asset allocations there is significant diversification across regions, asset

managers, currencies and bond categories.

UK pensions

	2025			2024			2023
	Quoted	Unquoted	Total	Quoted	Unquoted	Total	Quoted	Unquoted	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equities	716	123	839	576	153	729	475	179	654
Corporate bonds	1,338	(1)	1,337	1,910	—	1,910	1,892	—	1,892
Government securities and liability- driven investments	—	3,938	3,938	—	5,259	5,259	762	4,906	5,668
Property1	—	451	451	—	679	679	23	860	883
Diversified alternatives	381	428	809	669	572	1,241	708	680	1,388
Bulk annuity policies	—	3,239	3,239	—	2,060	2,060	—	2,126	2,126
Longevity swap	—	—	—	—	(94)	(94)	—	(88)	(88)
Cash and cash equivalents	1	—	1	3	—	3	8	—	8
Other (including net current assets and liabilities)	—	(11)	(11)	—	(5)	(5)	59	(12)	47
	2,436	8,167	10,6032	3,158	8,624	11,7822	3,927	8,651	12,5782

1.The allocation in property includes £294 million (2024: £288 million, 2023: £304 million) of investments in forestry funds.

2.The fair value of plan assets set out above includes employer-related investment exposure of £nil (2024: £44 million, 2023: £23 million ). The investment strategies for some of the DB plans

use repurchase agreements to increase market exposure of their liability-driven investments, with the fair value of these instruments totalling approximately £2.9 billion at 31 March 2025

(2024: £2.7 billion, 2023: £3.4 billion).

US pensions

	2025			2024			2023
	Quoted	Unquoted	Total	Quoted	Unquoted	Total	Quoted	Unquoted	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equities	—	887	887	99	1,224	1,323	154	1,346	1,500
Corporate bonds	1,955	401	2,356	1,987	403	2,390	2,147	528	2,675
Government securities	737	467	1,204	360	444	804	410	514	924
Property	—	196	196	—	237	237	—	299	299
Diversified alternatives	—	384	384	54	502	556	85	550	635
Cash and cash equivalents	152	—	152	9	—	9	16	—	16
Other (including net current assets and liabilities)	(2)	3	1	1	—	1	7	4	11
	2,842	2,338	5,180	2,510	2,810	5,320	2,819	3,241	6,060

US other post-retirement benefits

	2025			2024			2023
	Quoted	Unquoted	Total	Quoted	Unquoted	Total	Quoted	Unquoted	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Equities	31	522	553	37	524	561	74	510	584
Corporate bonds	1,350	47	1,397	1,351	46	1,397	1,332	2	1,334
Government securities	441	1	442	410	1	411	431	2	433
Diversified alternatives	103	—	103	92	9	101	100	9	109
Other (including insurance contracts)	—	163	163	—	161	161	1	147	148
	1,925	733	2,658	1,890	741	2,631	1,938	670	2,608

Main defined benefit risks

National Grid underwrites the financial and demographic risks associated with the Group’s DB plans. Although the governing bodies have sole

responsibility for setting investment strategies and managing risks, National Grid closely works with and supports the governing bodies of each

plan, to assist them in mitigating the risks associated with their plans and to ensure that the plans are funded to meet their obligations.

220	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

25. Pensions and other post-retirement benefits continued

Main defined benefit risks continued

The most significant risks associated with the DB plans are as follows:

Main risks	Description and mitigation
Investment risk	The plans invest in a variety of asset classes, with actual returns likely to differ from the underlying discount rate adopted, impacting on the funding position of the plan through the net balance sheet asset or liability. Each plan seeks to balance the level of investment return required with the risk that it can afford to take, to design the most appropriate investment portfolio.
Changes in bond yields	Liabilities will fluctuate as yields change. Volatility of the net balance sheet asset or liability is controlled through liability- matching strategies. The investment strategies allow for the use of synthetic as well as physical assets to be used to hedge interest rate risk.
Inflation risk	Changes in inflation will affect current and future pensions but are partially mitigated through investing in inflation- matching assets and hedging instruments as well as bulk annuity policies. The investment strategies allow for the use of synthetic as well as physical assets to be used to hedge inflation risk.
Member longevity	Improvements in life expectancy will lead to pension payments being paid for longer than expected and benefits ultimately being more expensive. This risk has been partly mitigated by the investment in bulk annuity policies for NGEG of ESPS and two buy-in policies for Section A of NGUKPS.
Counterparty risk	This is managed by having a diverse range of counterparties and through having a strong collateralisation process. Measurement and management of counterparty risk is delegated to the relevant investment managers. For our bulk annuity policies, various termination provisions were included in the contracts, managing our exposure to counterparty risk. The insurers’ operational performance and financial strength are monitored on a regular basis.
Default risk	Debt investments are predominantly made in regulated markets in assets considered to be of investment grade. Where investments are made either in non-investment grade assets or outside of regulated markets, investment levels are kept to prudent levels and subject to agreed ranges, to control the risk.
Liquidity risk	The pension plans hold sufficient cash to meet benefit requirements, with other investments being held in liquid or realisable assets to meet unexpected cash flow requirements. These could include collateral calls relating to the plans’ liability-matching assets which could result from extreme market movements. Should the plans not have sufficient liquidity to meet cash flow requirements, they could be forced to take sub-optimal investment decisions such as selling assets at a reduced price. The plans do not borrow money, or act as guarantor, to provide liquidity to other parties (unless it is temporary).
Currency risk	Fluctuations in the value of foreign denominated assets due to exposure to currency exchange rates are managed through currency hedging overlay and currency hedging carried out by some of the investment managers.

In June 2023, the UK High Court issued a ruling in the case of Virgin Media Limited versus NTL Pension Trustees II Limited and others relating

to the validity of certain historical pension changes. A subsequent appeal was dismissed in July 2024 by the Court of Appeal. The Group has

performed its review of past significant changes made to its UK defined benefit pension arrangements and it has concluded that there is no

financial impact from the ruling of the case.

Investment strategies

The Trustees and RPC, after taking advice from professional investment advisors and in consultation with National Grid, set their key principles,

including expected returns, risk and liquidity requirements. They formulate an investment strategy to manage risk through diversification, taking

into account expected contributions, maturity of the pension liabilities and, in the UK, the strength of the covenant. These strategies allocate

investments between return-seeking assets such as equities and property, and liability-matching assets such as bulk annuity policies, government

securities and corporate bonds which are intended to protect the funding position.

The approximate investment allocations for our plans at 31 March 2025 are as follows:

	UK pensions	US pensions	US other post- retirement benefits
	%	%	%
Return-seeking assets	20	28	31
Liability-matching assets	80	72	69

The governing bodies generally delegate responsibility for the selection of specific bonds, securities and other investments to appointed

investment managers, who are selected based on the required skills, expertise in those markets, process and financial security to manage the

investments. Their performance is regularly reviewed against measurable objectives, consistent with each pension plan’s long-term objectives

and accepted risk levels.

In the UK, each of our pension plans has Responsible Investment (RI) Policies, which consider ESG factors and generally incorporate the six

UN‑backed Principles for Responsible Investment (UNPRI). While each Trustee board understands its fiduciary responsibility to maximise return

on investments based on an appropriate level of risk, they each also recognise that ESG factors can be material to financial outcomes and can

have a potential impact on the quality and sustainability of long-term investment returns. The principal defined contribution arrangement in the

UK embeds ESG factors in the investment options offered to members. As well as offering a range of self‑select ethical funds, it directly

incorporates its Climate Impact Pledge into the default investment options, which act to align the funds to a carbon net zero future.

While in the US there is no regulatory requirement to have ESG-specific principles embedded in investment policies, our investment managers

consider ESG principles to inform their decision-making process. US DC plan members can access ESG investment funds through the mutual

fund brokerage window.

Strategic Report Corporate Governance Financial Statements Additional Information 221

26. Provisions

Provisions are recognised where a legal or constructive obligation exists at the reporting date, as a result of a past event, where the outflow

of economic benefit is probable and where the amount of the obligation can be reliably estimated.

Provisions are recognised for the costs of environmental remediation; decommissioning costs for certain assets that we are required to remove

at the end of their useful economic lives; restructuring costs; and for certain other situations where the above thresholds are met.

Long-term provisions are measured based on management’s best estimates of the likely cash flows, discounted at an appropriate discount rate.

The unwinding of the discount is included within the income statement within finance costs. Short-term provisions are measured at the expected

cash outflow and are not discounted.

	Environmental £m	Decommissioning £m	Other £m	Total provisions £m
At 1 April 2023	1,891	297	454	2,642
Exchange adjustments	(37)	(2)	(8)	(47)
Additions1	600	34	138	772
Unused amounts reversed	(18)	(7)	(100)	(125)
Adjustment for change in discount rate	4	29	—	33
Unwinding of discount	85	11	6	102
Utilised	(107)	(9)	(149)	(265)
Reclassification to held for sale (note 10)	—	—	(3)	(3)
At 31 March 2024	2,418	353	338	3,109
Exchange adjustments	(47)	(5)	(1)	(53)
Additions	60	45	211	316
Unused amounts reversed	(126)	(8)	(16)	(150)
Adjustment for change in discount rate²	(82)	7	—	(75)
Unwinding of discount	105	13	5	123
Utilised	(139)	(6)	(58)	(203)
Reclassification to held for sale (note 10)	(17)	—	(1)	(18)
At 31 March 2025	2,172	399	478	3,049

	2025	2024
	£m	£m
Current	357	298
Non-current	2,692	2,811
	3,049	3,109

1.Included within prior year additions was a £496 million increase in provision related to changes in the scope of work required on the Group’s clean-up operations on the Gowanus Canal

and nearby legacy MGP sites in Brooklyn, New York. These arose from remediation design changes as communicated in the prior year by US environmental agencies.

2.In the year, US environmental provisions decreased by £82 million as a result of the change in the real discount rate from 1.5% to 2.0%.

222	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

26. Provisions continued

Environmental provisions

We recognise environmental provisions for the estimated restoration and remediation costs relating to a number of sites owned and managed by

subsidiary undertakings, together with certain US sites that National Grid no longer owns. The environmental provision is as follows:

	2025			2024
	Discounted £m	Real undiscounted £m	Real discount rate	Discounted £m	Real undiscounted £m	Real discount rate
UK sites	107	115	1.0%	108	118	1.0%
US sites	2,065	2,440	2.0%	2,310	2,579	1.5%
	2,172	2,555		2,418	2,697

Remediation expenditure in the US is expected to be incurred until 2082, of which the majority relates to three Superfund sites (being sites where

hazardous substances are present as a result of the historical operations of manufacturing gas plants previously owned or operated by the Group

or its predecessor companies in Brooklyn, New York). The weighted average duration of the forecasted cash flows is 10 years. Under the terms of

our rate plans, we are entitled to recovery of environmental clean-up costs from rate payers.

Remediation expenditure in the UK relates to old gas manufacturing sites and also to electricity transmission sites. Cash flows are expected to be

incurred until 2070.

The real undiscounted amount is management’s best estimate of the actual cash flows that will be required. The provisions are calculated based

on these cash flows discounted at the appropriate real discount rate for the jurisdiction, which is determined using the relevant government bond

yield curve and the weighted average life of the provisions.

Numerous estimation uncertainties affect the calculation of these provisions, including the impact of and possibility of changes to regulatory

requirements, the accuracy of site surveys, unexpected contaminants, the scope of remediation work, transportation costs, the impact of

alternative technologies, the expected timing, cost and duration of cash flows, and changes in the real discount rate. These provisions incorporate

our best estimate of the financial effect of these uncertainties, but future changes in any of the assumptions could materially impact the calculation

of the provision.

Changes in the provision arising from revised estimates, discount rates or changes in the expected timing of expenditure are recognised in the

income statement. A sensitivity of the impact of changes to the US environmental provision real discount rate and changes in estimated future

cash flows is shown in note 35. The facts and circumstances relating to particular cases are evaluated regularly in determining whether an

environmental provision should be revised (see note 30).

Decommissioning provisions

We recognise provisions for decommissioning costs for various assets we are required to remove at the end of their lives, including the safe

removal of asbestos for certain of our generation units and the restoration of seabeds in respect of our interconnectors. Provisions to

decommission significant portions of our regulated transmission and distribution assets are not recognised where no legal obligations exist and

where a realistic alternative exists to incurring costs to decommission the assets at the end of their lives.

An initial estimate of decommissioning costs attributable to property, plant and equipment is recorded as part of the cost of the related property,

plant and equipment. Changes in the provision arising from revised estimates, discount rates or changes in the expected timing of expenditure that

relates to property, plant and equipment are recorded as adjustments to their carrying value and depreciated prospectively over their remaining

estimated useful economic lives. Expenditure is expected to be incurred until 2109.

Other provisions

Included within other provisions at 31 March 2025 are the following amounts:

•£172 million (2024: £170 million) of estimated liabilities in respect of past events insured by subsidiary undertakings and policy excesses

incurred by operating companies. Estimates are based on experience from previous years. We expect that cash flows will be incurred until

2041; and

•£159 million (2024: £76 million) of estimated liabilities in respect of interconnector excess revenues which will be repayable in future reporting

periods in accordance with the cap and floor regime agreed with Ofgem (see note 3(f)). These estimates are based on the respective

interconnectors’ performance against their cumulative caps and cash outflows will be required to settle these liabilities by the financial year

ending 31 March 2028.

Strategic Report Corporate Governance Financial Statements Additional Information 223

27. Share capital

Ordinary share capital represents the total number of shares issued which are publicly traded. We also disclose the number of treasury shares

the Company holds, which are shares that the Company has bought itself, predominantly to actively manage scrip issuances and settle

employee share option and reward plan liabilities.

Share capital is accounted for as an equity instrument. An equity instrument is any contract that includes a residual interest in the consolidated

assets of the Company after deducting all its liabilities and is recorded at the proceeds received, net of direct issue costs, with an amount equal

to the nominal amount of the shares issued included in the share capital account and the balance recorded in the share premium account.

	Allotted, called-up and fully paid
	Shares million	Nominal value £m
At 1 April 2023	3,930	488
Issued during the year in lieu of dividends1	37	5
At 31 March 2024	3,967	493
Rights Issue	1,085	135
Issued during the year in lieu of dividends1	81	10
At 31 March 2025	5,133	638

1.The issue of shares under the scrip dividend programme is considered to be a bonus issue under the terms of the Companies Act 2006, and the nominal value of the shares is charged to the

share premium account.

The share capital of the Company consists of ordinary shares of 12204⁄473 pence nominal value each including ADSs. The ordinary shares and ADSs

(each of which represents five ordinary shares) allow holders to receive dividends and vote at general meetings of the Company. The Company

holds treasury shares but may not exercise any rights over these shares, including the entitlement to vote or receive dividends. There are no

restrictions on the transfer or sale of ordinary shares.

In line with the provisions of the Companies Act 2006, the Company has amended its Articles of Association and ceased to have authorised

share capital.

The Company conducts a share forfeiture programme following the completion of a tracing and notification exercise to any shareholders who

have not had contact with the Company over the past 12 years, in accordance with the provisions set out in the Company’s Articles of

Association. Under the share forfeiture programme, the shares and dividends associated with shares of untraced members have been forfeited,

with the resulting proceeds transferred to the Company to use in line with the Company’s strategy in relation to corporate responsibility. During the

financial year, the Company received £5 million (2024: £2 million) of proceeds from the sale of untraced shares and derecognised £3 million (2024:

£5 million) of liabilities related to unclaimed dividends, which are reflected in share premium and the income statement respectively.

Rights Issue

In June 2024, the Company completed a Rights Issue to support the future capital investment plans of the Group. The Company raised £6,839

million (net of expenses of £162 million) through the issue of 1,085 million new ordinary shares at 645 pence each on the basis of 7 new ordinary

shares for every 24 existing ordinary shares. The issue price represented a discount of 33% to the closing ex-dividend share price on 23 May

2024, the announcement date of the Rights Issue. The structure of the Rights Issue gave rise to a merger reserve, representing the net proceeds of

the Rights Issue less the nominal value of the new shares issued. Following the receipt of the cash proceeds through the structure, the excess

of the net proceeds over the nominal value of the share capital issued was considered realised and has been transferred from the merger reserve

to retained earnings.

The discount element inherent in the Rights Issue is treated as a bonus issue of shares. Basic and diluted earnings per share figures have been

restated for the comparative period, by adjusting the weighted average number of shares for a factor of 1.0811 to reflect the bonus element of

the Rights Issue, in accordance with IAS 33 Earnings per Share (note 8). For comparability, dividends per share are also restated after taking

account of the bonus element of the Rights Issue, in note 9.

Treasury shares

At 31 March 2025, the Company held 235 million (2024: 247 million) of its own shares. The market value of these shares as at 31 March 2025

was £2,377 million (2024: £2,637 million).

For the benefit of employees and in connection with the operation of the Company’s various share plans, the Company made the following

transactions in respect of its own shares during the year ended 31 March 2025:

i.National Grid settles share awards under its Long-Term Incentive Plan and the Save As You Earn scheme, by the transfer of treasury shares

to its employee share trusts. During the year, 9 million (2024: 4 million) treasury shares were gifted to National Grid Employee Share Trusts

and 3 million (2024: 3 million) treasury shares were reissued in relation to employee share schemes, in total representing 0.2% (2024: 0.2%)

of the ordinary shares in issue as at 31 March 2025. The nominal value of these shares was £1 million (2024: £1 million) and the total

proceeds received were £18 million (2024: £21 million).

ii.During the year, the Company made payments totalling £11 million (2024: £6 million) to National Grid Employee Share Trusts to enable the

Trustees to make purchases of National Grid plc shares to settle share awards in relation to all employee share plans and discretionary

reward plans. The cost of such purchases is deducted from retained earnings in the period that the transaction occurs.

The maximum number of ordinary shares held in Treasury during the year was 247 million (2024: 254 million), representing 4.8% (2024: 6.4%)

of the ordinary shares in issue as at 31 March 2025 and having a nominal value of £31 million (2024: £32 million).

224	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

28. Other equity reserves

Other equity reserves are different categories of equity as required by accounting standards and represent the impact of a number of our

historical transactions or fair value movements on certain financial instruments that the Company holds.

Other equity reserves comprise the translation reserve (see note 1C), cash flow hedge reserve and the cost of hedging reserve (see note 32),

debt instruments at fair value through other comprehensive income reserve (FVOCI debt) (see note 15), the capital redemption reserve and the

merger reserve.

The merger reserve arose as a result of the application of merger accounting principles under the then prevailing UK GAAP, which under IFRS 1

was retained for mergers that occurred prior to the IFRS transition date. Under merger accounting principles, the difference between the carrying

amount of the capital structure of the acquiring vehicle and that of the acquired business was treated as a merger difference and included within

reserves. The merger reserve represents the difference between the carrying value of subsidiary undertaking investments and their respective

capital structures following the Lattice demerger from BG Group plc and the 1999 Lattice refinancing.

The cash flow hedge reserve will either amortise as the committed future cash flows from borrowings are paid, be capitalised in fixed assets, or

amortise as committed future cash flows from revenue are received (as described in note 32). See note 15 for further detail on FVOCI debt and

note 32 in respect of cost of hedging reserve.

As the amounts included in other equity reserves are not attributable to any of the other classes of equity presented, they have been disclosed

as a separate classification of equity.

	Translation £m	Cash flow hedge £m	Cost of hedging £m	FVOCI debt £m	Capital redemption £m	Merger £m	Total £m
At 1 April 2022	594	(85)	(29)	103	19	(5,165)	(4,563)
Exchange adjustments1	882	—	—	—	—	—	882
Exchange differences reclassified to the consolidated income statement on disposal	(170)	—	—	—	—	—	(170)
Net gains/(losses) taken to equity	—	142	(12)	(25)	—	—	105
Share of net gains of associates taken to equity	—	1	—	—	—	—	1
Transferred to profit or loss	—	(136)	—	—	—	—	(136)
Net gains in respect of cash flow hedging of capital expenditure	—	10	—	—	—	—	10
Tax	—	2	3	1	—	—	6
Cash flow hedges transferred to the statement of financial position, net of tax	—	5	—	—	—	—	5
At 1 April 2023	1,306	(61)	(38)	79	19	(5,165)	(3,860)
Exchange adjustments1	(335)	—	—	—	—	—	(335)
Net gains taken to equity	—	16	37	34	—	—	87
Transferred to profit or loss	—	224	(11)	—	—	—	213
Net losses in respect of cash flow hedging of capital expenditure	—	(37)	—	—	—	—	(37)
Tax	—	(50)	(6)	(4)	—	—	(60)
Cash flow hedges transferred to the statement of financial position, net of tax	—	2	—	—	—	—	2
At 1 April 2024	971	94	(18)	109	19	(5,165)	(3,990)
Exchange adjustments¹	(352)	—	—	—	—	—	(352)
Net gains/(losses) taken to equity	—	30	(46)	(12)	—	—	(28)
Transferred to profit or loss	—	188	(6)	—	—	—	182
Rights Issue²	—	—	—	—	—	6,704	6,704
Transfer to retained earnings	—	—	—	—	—	(6,704)	(6,704)
Net losses in respect of cash flow hedging of capital expenditure	—	(16)	—	—	—	—	(16)
Tax	—	(50)	13	3	—	—	(34)
Cash flow hedges transferred to the statement of financial position, net of tax	—	5	—	—	—	—	5
At 31 March 2025	619	251	(57)	100	19	(5,165)	(4,233)

1.The exchange adjustments recorded in the translation reserve comprise a loss of £408 million (2024: loss of £397 million; 2023: gain of £1,080 million) relating to the translation of foreign

operations, offset by a gain of £56 million (2024: gain of £62 million; 2023: loss of £198 million) relating to borrowings, cross-currency swaps and foreign exchange forward contracts used

to hedge the net investment in non sterling-denominated subsidiaries.

2.For details of the Rights Issue and subsequent transfer to retained earnings see note 27.

Strategic Report Corporate Governance Financial Statements Additional Information 225

29. Net debt

We define net debt as the amount of borrowings and financing derivatives less cash and current financial investments.

(a) Composition of net debt

Net debt is comprised as follows:

	2025	2024	2023
	£m	£m	£m
Cash and cash equivalents (see note 20)	1,178	559	163
Current financial investments (see note 15)	5,753	3,699	2,605
Borrowings (see note 21)	(47,539)	(47,072)	(42,985)
Financing derivatives1 (see note 17)	(763)	(793)	(756)
	(41,371)	(43,607)	(40,973)

1.The financing derivatives balance included in net debt excludes the commodity derivatives (see note 17).

(b) Analysis of changes in net debt

	Notes	Borrowings £m	Financing derivatives used to hedge debt £m	Total liabilities from financing activities £m	Cash and cash equivalents £m	Financial investments £m	Other financing derivatives £m	Total1 £m
At 1 April 2024		(47,072)	(764)	(47,836)	559	3,699	(29)	(43,607)
Net increase in cash and cash equivalents		—	—	—	765	—	—	765
Included within financing cash flows:
Proceeds received from loans		(3,237)	—	(3,237)	—	—	—	(3,237)
Repayment of loans		2,861	—	2,861	—	—	—	2,861
Payments of lease liabilities		130	—	130	—	—	—	130
Net movements in short-term borrowings		(925)	—	(925)	—	—	—	(925)
Cash inflows on derivatives		—	(62)	(62)	—	—	—	(62)
Cash outflows on derivatives		—	106	106	—	—	—	106
Interest paid		1,608	312	1,920	—	—	—	1,920
Non-net debt financing cash flows		(8)	—	(8)	—	—	—	(8)
Included within investing cash flows:
Net movements in short-term financial investments		—	—	—	—	2,606	—	2,606
Cash inflows on derivatives		—	—	—	—	—	(11)	(11)
Cash outflows on derivatives		—	—	—	—	—	6	6
Derivative cash flows included in capital expenditure		—	—	—	—	—	9	9
Interest received		—	—	—	—	(332)	—	(332)
Derivative cash flows included in revenue		—	—	—	—	—	(8)	(8)
Fair value gains and losses		(26)	(30)	(56)	—	1	(7)	(62)
Foreign exchange movements		866	—	866	(23)	(25)	—	818
Interest (charges)/income	6	(1,663)	(295)	(1,958)	—	338	10	(1,610)
Other non-cash movements		(207)	—	(207)	—	—	—	(207)
Reclassification to held for sale2	10	134	—	134	(123)	(534)	—	(523)
At 31 March 2025		(47,539)	(733)	(48,272)	1,178	5,753	(30)	(41,371)
Balances at 31 March 2025 comprise:
Non-current assets		—	340	340	—	—	16	356
Current assets		—	5	5	1,178	5,753	14	6,950
Current liabilities		(4,662)	(347)	(5,009)	—	—	(8)	(5,017)
Non-current liabilities		(42,877)	(731)	(43,608)	—	—	(52)	(43,660)
		(47,539)	(733)	(48,272)	1,178	5,753	(30)	(41,371)

1.Includes accrued interest of £477 million.

2.Reclassification to held for sale represents the closing net debt position of NG Renewables and Grain LNG and the disposal of the ESO (see note 10).

226	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

29. Net debt continued

	Notes	Borrowings £m	Financing derivatives used to hedge debt £m	Total liabilities from financing activities £m	Cash and cash equivalents £m	Financial investments £m	Other financing derivatives £m	Total¹ £m
At 1 April 2023		(42,985)	(793)	(43,778)	163	2,605	37	(40,973)
Net increase in cash and cash equivalents		—	—	—	427	—	—	427
Included within financing cash flows:
Proceeds received from loans		(5,563)	—	(5,563)	—	—	—	(5,563)
Repayment of loans		1,701	—	1,701	—	—	—	1,701
Payments of lease liabilities		118	—	118	—	—	—	118
Net movements in short-term borrowings		(544)	—	(544)	—	—	—	(544)
Cash inflows on derivatives		—	(86)	(86)	—	—	—	(86)
Cash outflows on derivatives		—	58	58	—	—	—	58
Interest paid		1,330	297	1,627	—	—	—	1,627
Non-net debt financing cash flows		(18)	—	(18)	—	—	—	(18)
Included within investing cash flows:
Net movements in short-term financial investments		—	—	—	—	1,141	—	1,141
Cash inflows on derivatives		—	—	—	—	—	(123)	(123)
Cash outflows on derivatives		—	—	—	—	—	—	—
Derivative cash flows included in capital expenditure		—	—	—	—	—	5	5
Interest received		—	—	—	—	(148)	—	(148)
Derivative cash flows included in revenue		—	—	—	—	—	(11)	(11)
Fair value gains and losses		(69)	40	(29)	—	4	60	35
Foreign exchange movements		718	—	718	(1)	(49)	—	668
Interest (charges)/income	6	(1,564)	(284)	(1,848)	—	152	7	(1,689)
Other non-cash movements		(209)	4	(205)	—	—	(4)	(209)
Reclassification to held for sale2		13	—	13	(30)	(6)	—	(23)
At 31 March 2024		(47,072)	(764)	(47,836)	559	3,699	(29)	(43,607)

1.Includes accrued interest of £490 million.

2.Reclassification to held for sale represents the closing net debt position of the ESO (see note 10).

	Notes	Borrowings £m	Financing derivatives used to hedge debt £m	Total liabilities from financing activities £m	Cash and cash equivalents1 £m	Financial investments £m	Other financing derivatives £m	Total2 £m
At 1 April 2022		(45,465)	(750)	(46,215)	204	3,145	57	(42,809)
Net decrease in cash and cash equivalents		—	—	—	(48)	—	—	(48)
Included within financing cash flows:
Proceeds received from loans		(11,908)	—	(11,908)	—	—	—	(11,908)
Repayment of loans		15,260	—	15,260	—	—	—	15,260
Payments of lease liabilities		155	—	155	—	—	—	155
Net movements in short-term borrowings		511	—	511	—	—	—	511
Cash inflows on derivatives		—	(190)	(190)	—	—	—	(190)
Cash outflows on derivatives		—	118	118	—	—	—	118
Interest paid		1,277	153	1,430	—	—	—	1,430
Non-net debt financing cash flows		(27)	—	(27)	—	—	—	(27)
Included within investing cash flows:
Net movements in short-term financial investments		—	—	—	—	(586)	—	(586)
Cash outflows on derivatives		—	—	—	—	—	362	362
Derivative cash outflow in relation to capital expenditure		—	—	—	—	—	12	12
Interest received		—	—	—	—	(65)	—	(65)
Fair value gains and losses		367	46	413	—	(18)	(394)	1
Foreign exchange movements		(1,311)	—	(1,311)	7	61	—	(1,243)
Interest (charges)/income	6	(1,658)	(170)	(1,828)	—	73	—	(1,755)
Other non-cash movements		(283)	—	(283)	—	—	—	(283)
Reclassification to held for sale3		97	—	97	—	(5)	—	92
At 31 March 2023		(42,985)	(793)	(43,778)	163	2,605	37	(40,973)

1.Cash and cash equivalents at the start of the year exclude the Group’s bank overdraft as at 1 April 2023 of £22 million.

2.Includes accrued interest of £401 million.

3.Reclassification to held for sale represented the disposal of NECO, which was not classified as a discontinued operation.

Strategic Report Corporate Governance Financial Statements Additional Information 227

30. Commitments and contingencies

Commitments are those amounts that we are contractually required to pay in the future as long as the other party meets its obligations. These

commitments primarily relate to energy purchase agreements and contracts for the purchase of assets which, in many cases, extend over a

long period of time. We also disclose any contingencies, which include guarantees that companies have given, where we pledge assets

against current obligations that will remain for a specific period.

Contingent assets are disclosed where the Group concludes that an inflow of economic benefits is probable.

	2025	2024
	£m	£m
Future capital expenditure
Contracted for but not provided	5,017	3,329
Energy purchase commitments1
Less than 1 year	1,265	1,244
In 1 to 2 years	1,259	982
In 2 to 3 years	1,147	1,062
In 3 to 4 years	1,011	941
In 4 to 5 years	927	866
More than 5 years	8,271	9,080
	13,880	14,175
Guarantees
Guarantee of subleases for US properties (expire up to 2037)	66	67
Guarantees of certain obligations of Eastern Green Link Joint Operations (various expiry dates)	2,296	2,465
Guarantees of certain obligations of Grain LNG (expected expiry 2025)	20	32
Guarantees of certain obligations of National Grid North Sea Link Limited (various expiry dates)	251	271
Guarantees of certain obligations of St William Homes LLP (various expiry dates)	25	44
Guarantees of certain obligations of National Grid IFA 2 Limited (various expiry dates)	100	121
Guarantees of certain obligations of National Grid Viking Link Limited (expected expiry 2025)	60	243
Other guarantees and letters of credit (various expiry dates)	334	123
	3,152	3,366

1.Energy purchase commitments relate to contractual commitments to purchase electricity or gas that are used to satisfy physical delivery requirements to our customers or for energy that we

use ourselves (i.e. normal purchase, sale or usage) and hence are accounted for as ordinary purchase contracts (see note 32(f)). Details of commodity contract derivatives that do not meet the

normal purchase, sale or usage criteria, and hence are accounted for as derivative contracts, are shown in note 17(b).

Through the ordinary course of our operations, we are party to various litigation, claims and investigations. We do not expect the ultimate

resolution of any of these proceedings to have a material adverse effect on our results of operations, cash flows or financial position.

Contingent liabilities

The Group is subject to national and local laws governing the clean-up of sites used previously in its operations. These laws and associated

regulations require the Group to take future actions to remediate the effects on the environment of the release of chemicals and other substances.

Such contingencies may exist for various sites, including manufactured gas plants, power stations and water courses that were impacted by

those activities. The ultimate costs of these clean-ups involve estimation uncertainty as work may be impacted by changing regulations and

additional work may be required once sites have been fully surveyed. The estimated clean-up costs have been provided for in note 26 based

upon management’s best estimate of the likely future cash flows. While the amounts of future possible costs that are not provided for could

be material to the Group’s results in the period when they are recognised, it is not possible to reliably estimate the amounts involved at this time.

As environmental remediation costs are recoverable through the Group’s rate-setting processes, the Group does not expect these costs to have

a material impact on its liquidity.

228	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

31. Related party transactions

Related parties include joint ventures, associates, investments and key management personnel.

The following significant transactions with related parties were in the normal course of business. Amounts receivable from and payable to related

parties are due on normal commercial terms.

	2025	2024	2023
	£m	£m	£m
Sales: Goods and services supplied to joint ventures1	153	221	100
Sales: Goods and services supplied to associates	1	1	1
Sales: Goods and services supplied to subsidiary of an associate1	51	70	6
Purchases: Goods and services received from joint ventures	—	6	—
Purchases: Goods and services received from associates2	29	4	31
Purchases: Goods and services received from subsidiaries of an associate	—	1	—
Interest received from joint ventures	6	—	—
Interest paid to joint ventures	2	—	—
Receivables from joint ventures3	323	80	58
Receivables from associates	1	—	—
Receivables from subsidiaries of an associate	—	8	8
Payables to joint ventures	15	—	19
Payables to associates	—	1	1
Dividends received from joint ventures4	62	152	150
Dividends received from associates5	39	117	32

1.During the year, £114 million of sales were made to Emerald Energy Venture LLC (2024: £126 million; 2023: £76 million), £12 million (2024: £71 million; 2023: £nil) of sales were made

to Nemo Link Limited and £51 million (2024: £70 million) of sales were made to National Gas Transmission Plc up until its disposal.

2.Includes decommissioning expense in relation to associates.

3.Amounts receivable from joint ventures include £320 million (2024: £77 million; 2023: £55 million) from Emerald Energy Venture LLC.

4.Includes dividends of £22 million (2024: £116 million; 2023: £84 million) received from BritNed Development Limited and £26 million (2024: £17 million; 2023: £47 million) from

Nemo Link Limited.

5.Includes dividends received in the period up until disposal of £22 million (2024: £102 million) from GasT TopCo Limited and £17 million (2024: £12 million; 2023: £12 million) from New York

Transco LLC.

Details of investments in principal subsidiary undertakings, joint ventures and associates are disclosed in note 34, and information relating

to pension fund arrangements is disclosed in note 25. For details of Directors’ and key management remuneration, refer to note 4(c).

32. Financial risk management

Our activities expose us to a variety of financial risks, including credit risk, liquidity risk, capital risk, currency risk, interest rate risk, inflation risk

and commodity price risk. Our risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential

volatility of financial performance from these risks. We use financial instruments, including derivative financial instruments, to manage these risks.

Risk management related to financing activities is carried out by a central treasury department under policies approved by the Finance Committee

of the Board. The objective of the treasury department is to manage funding and liquidity requirements, including managing associated financial

risks, to within acceptable boundaries. The Finance Committee provides written principles for overall risk management and written policies

covering the following specific areas: foreign exchange risk, interest rate risk, credit risk, liquidity risk, use of derivative financial instruments and

non-derivative financial instruments, and investment of excess liquidity. The Finance Committee has delegated authority to administer the

commodity price risk policy and credit policy for US‑based commodity transactions to the Energy Procurement Risk Management Committee and

the National Grid USA Board of Directors.

We have exposure to the following risks, which are described in more detail below:

•credit risk;

•liquidity risk;

•currency risk;

•interest rate risk;

•commodity price risk;

•valuation risk; and

•capital risk.

Where appropriate, derivatives and other financial instruments used for hedging currency and interest rate risk exposures are formally designated

as fair value, cash flow or net investment hedges as defined in IFRS 9. Hedge accounting allows the timing of the profit or loss impact of qualifying

hedging instruments to be recognised in the same reporting period as the corresponding impact of hedged exposures. To qualify for hedge

accounting, documentation is prepared specifying the risk management objective and strategy, the component transactions and methodology

used for measurement of effectiveness.

Strategic Report Corporate Governance Financial Statements Additional Information 229

32. Financial risk management continued

Hedge accounting relationships are designated in line with risk management activities further described below. The categories of hedging entered

into are as follows:

•currency risk arising from our forecast foreign currency transactions (capital expenditure or revenues) is designated in cash flow hedges;

•currency risk arising from our net investments in foreign operations is designated in net investment hedges; and

•currency and interest rate risk arising from borrowings are designated in cash flow or fair value hedges.

Critical terms of hedging instruments and hedged items are transacted to match on a 1:1 ratio by notional values. Hedge ineffectiveness can

nonetheless arise from inherent differences between derivatives and non-derivative instruments and other market factors, including credit,

correlations, supply and demand, and market volatilities. Ineffectiveness is recognised in the remeasurements component of finance income

and costs (see note 6). Hedge accounting is discontinued when a hedging relationship no longer qualifies for hedge accounting.

Certain hedging instrument components are treated separately as costs of hedging with the gains and losses deferred in a component of other

equity reserves and released systematically into profit or loss to correspond with the timing and impact of hedged exposures, or released in full

to finance costs upon an early discontinuation of a hedging relationship.

Refer to sections (c) currency risk and (d) interest rate risk below for further details on hedge accounting.

(a) Credit risk

We are exposed to the risk of loss resulting from counterparties’ default on their commitments, including failure to pay or make a delivery on

a contract. This risk is inherent in our commercial business activities. Exposure arises from derivative financial instruments, deposits with banks

and financial institutions, trade receivables and committed transactions with wholesale and retail customers.

Treasury credit risk

Counterparty risk arises from the investment of surplus funds and from the use of derivative financial instruments. As at 31 March 2025, the

following limits were in place for investments and derivative financial instruments held with banks and financial institutions:

	Maximum limit £m	Utilisation of maximum limit £m	Long-term limit £m	Utilisation of long-term limit £m
Triple ‘A’ G7 sovereign entities (AAA)	2,818	—	2,114	—
Triple ‘A’ vehicles (AAA)	500	453	—	—
Triple ‘A’ range institutions and non-G7 sovereign entities (AAA)	2,562	—	1,922	—
Double ‘A+’ G7 sovereign entities (AA+)	2,562	—	1,922	—
Double ‘A’ range institutions (AA)	1,537 to 2,050	0 to 337	1,153 to 1,537	0 to 325
Single ‘A’ range institutions (A)	512 to 1,025	0 to 617	384 to 769	0 to 375

The maximum limit applies to all transactions, including long-term transactions. The long-term limit applies to transactions which mature in

more than 12 months’ time.

As at 31 March 2025 and 2024, we had a number of exposures to individual counterparties. In accordance with our treasury policies, counterparty

credit exposure utilisations are monitored daily against the counterparty credit limits. Counterparty credit ratings and market conditions are

reviewed continually, with limits being revised and utilisation adjusted, if appropriate. Management does not expect any significant losses from

non-performance by these counterparties. Investments associated with insurance and employee benefit trusts, such as the investments held at

FVOCI, sit outside of treasury credit risk and are managed to individual mandates aligned to their regulated purpose.

Commodity credit risk

The credit policy for UK- and US-based commodity transactions is owned by the Finance Committee to the Board, which establishes controls

and procedures to determine, monitor and minimise the credit exposure to counterparties.

Wholesale and retail credit risk

Our principal commercial exposure is in the US, where we are required to supply electricity and gas under state regulations. Our policies and

practices are designed to limit credit exposure by collecting security deposits prior to providing utility services, or after utility services have

commenced if certain applicable regulatory requirements are met. Collection activities are managed on a daily basis. Sales to retail customers are

usually settled in cash, cheques, electronic bank payments or by using major credit cards. We are committed to measuring, monitoring, minimising

and recording counterparty credit risk in our wholesale business. The utilisation of credit limits is regularly monitored, and collateral is collected

against these accounts when necessary.

In March 2020, the Group’s US distribution business temporarily ceased certain customer cash collection activities in response to regulatory

instructions and to changes in state-, federal- and city-level regulations and guidance, and actions to minimise risk to the Group’s employees

as a result of COVID-19. Customer termination activities also ceased in line with requests by relevant local authorities and this resulted in the

recognition of additional expected credit losses, although cash collection and customer termination activities have subsequently resumed in

both New England and New York (see note 19 for further details).

230	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

32. Financial risk management continued

(a) Credit risk continued

Offsetting financial assets and liabilities

The following tables set out our financial assets and liabilities which are subject to offset and to enforceable master netting arrangements or similar

agreements. The tables show the amounts which are offset and reported net in the statement of financial position. Amounts which cannot be offset

under IFRS, but which could be settled net under terms of master netting arrangements if certain conditions arise, and with collateral received or

pledged, are presented to show National Grid’s net exposure.

Financial assets and liabilities on different transactions would only be reported net in the balance sheet if the transactions were with the same

counterparty, a currently enforceable legal right of offset exists and the cash flows were intended to be settled on a net basis.

Amounts which do not meet the criteria for offsetting on the statement of financial position, but could be settled net in certain circumstances,

principally relate to derivative transactions under ISDA agreements, where each party has the option to settle amounts on a net basis in the event

of default of the other party.

Commodity contract derivatives that have not been offset on the balance sheet may be settled net in certain circumstances under ISDA or North

American Energy Standards Board (NAESB) agreements.

The Group has no offsetting arrangements in relation to bank account balances and bank overdrafts as at 31 March 2025 (2024: £nil).

The gross amounts offset for trade payables and receivables, which are subject to general terms and conditions, are insignificant.

				Related amounts available to be offset but not offset in statement of financial position
At 31 March 2025	Gross carrying amounts £m	Gross amounts offset £m	Net amount presented in statement of financial position £m	Financial instruments £m	Cash collateral received/ pledged £m	Net amount £m
Assets
Financing derivatives	375	—	375	(296)	(12)	67
Commodity contract derivatives	107	—	107	(20)	—	87
	482	—	482	(316)	(12)	154
Liabilities
Financing derivatives	(1,138)	—	(1,138)	296	462	(380)
Commodity contract derivatives	(64)	—	(64)	20	(7)	(51)
	(1,202)	—	(1,202)	316	455	(431)
	(720)	—	(720)	—	443	(277)

				Related amounts available to be offset but not offset in statement of financial position
At 31 March 2024	Gross carrying amounts £m	Gross amounts offset £m	Net amount presented in statement of financial position £m	Financial instruments £m	Cash collateral received/ pledged £m	Net amount £m
Assets
Financing derivatives	333	—	333	(246)	(28)	59
Commodity contract derivatives	35	—	35	(27)	—	8
	368	—	368	(273)	(28)	67
Liabilities
Financing derivatives	(1,126)	—	(1,126)	246	441	(439)
Commodity contract derivatives	(118)	—	(118)	27	11	(80)
	(1,244)	—	(1,244)	273	452	(519)
	(876)	—	(876)	—	424	(452)

Strategic Report Corporate Governance Financial Statements Additional Information 231

32. Financial risk management continued

(b) Liquidity risk

Our policy is to determine our liquidity requirements by the use of both short-term and long-term cash flow forecasts. These forecasts are

supplemented by a financial headroom analysis which is used to assess funding requirements for at least a 24-month period and maintain

adequate liquidity for a continuous 12-month period.

We believe our contractual obligations, including those shown in commitments and contingencies in note 30, can be met from existing cash

and investments, operating cash flows and other financing that we reasonably expect to be able to secure in the future, together with the use

of committed facilities if required.

Our debt agreements and banking facilities contain covenants, including those relating to the periodic and timely provision of financial information

by the issuing entity, restrictions on disposals and financial covenants, such as restrictions on the level of subsidiary indebtedness. Failure to

comply with these covenants, or to obtain waivers of those requirements, could in some cases trigger a right, at the lender’s discretion, to require

repayment of some of our debt and may restrict our ability to draw upon our facilities or access the capital markets.

The following is a payment profile of our financial liabilities and derivatives:

At 31 March 2025	Less than 1 year £m	1 to 2 years £m	2 to 3 years £m	More than 3 years £m	Total £m
Non-derivative financial liabilities
Borrowings, excluding lease liabilities	(4,111)	(3,159)	(2,404)	(36,381)	(46,055)
Interest payments on borrowings1	(1,552)	(1,497)	(1,397)	(16,707)	(21,153)
Lease liabilities	(143)	(131)	(117)	(671)	(1,062)
Other non-interest-bearing liabilities	(3,908)	(467)	—	—	(4,375)
Derivative financial liabilities
Financing derivatives – receipts2	4,236	3,179	4,710	2,822	14,947
Financing derivatives – payments2	(4,777)	(3,514)	(5,072)	(3,380)	(16,743)
Commodity contract derivatives – receipts2	9	5	1	—	15
Commodity contract derivatives – payments2	(67)	(36)	(29)	(43)	(175)
Derivative financial assets
Financing derivatives – receipts2	1,907	4,032	2,598	1,460	9,997
Financing derivatives – payments2	(1,897)	(3,970)	(2,467)	(1,369)	(9,703)
Commodity contract derivatives – receipts2	84	8	—	—	92
Commodity contract derivatives – payments2	(16)	(6)	(3)	—	(25)
	(10,235)	(5,556)	(4,180)	(54,269)	(74,240)

At 31 March 2024	Less than 1 year £m	1 to 2 years £m	2 to 3 years £m	More than 3 years £m	Total £m
Non-derivative financial liabilities
Borrowings, excluding lease liabilities	(4,480)	(2,627)	(3,036)	(35,243)	(45,386)
Interest payments on borrowings1	(1,505)	(1,442)	(1,386)	(17,247)	(21,580)
Lease liabilities	(133)	(118)	(97)	(662)	(1,010)
Other non-interest-bearing liabilities	(3,715)	(458)	—	—	(4,173)
Derivative financial liabilities
Financing derivatives – receipts2	5,583	2,993	2,672	5,246	16,494
Financing derivatives – payments2	(6,068)	(3,496)	(2,909)	(5,756)	(18,229)
Commodity contract derivatives – receipts2	8	3	—	—	11
Commodity contract derivatives – payments2	(79)	(24)	(7)	—	(110)
Derivative financial assets
Financing derivatives – receipts2	1,927	311	3,993	2,485	8,716
Financing derivatives – payments2	(1,884)	(312)	(3,935)	(2,305)	(8,436)
Commodity contract derivatives – receipts2	23	8	1	—	32
Commodity contract derivatives – payments2	(9)	(5)	(1)	—	(15)
	(10,332)	(5,167)	(4,705)	(53,482)	(73,686)

1.The interest on borrowings is calculated based on borrowings held at 31 March without taking account of future issues. Floating rate interest is estimated using a forward interest rate curve

as at 31 March. Payments are included on the basis of the earliest date on which the Company can be required to settle.

2.The receipts and payments line items for derivatives comprise gross undiscounted future cash flows, after considering any contractual netting that applies within individual contracts. Where

cash receipts and payments within a derivative contract are settled net, and the amount to be received/(paid) exceeds the amount to be paid/(received), the net amount is presented within

derivative receipts/(payments).

232	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

32. Financial risk management continued

(c) Currency risk

National Grid operates internationally with mainly pound sterling as the functional currency for the UK companies and US dollar for the

US businesses. Currency risk arises from three major areas: funding activities, capital investment and related revenues, and holdings in foreign

operations. This risk is managed using financial instruments including derivatives as approved by policy, typically cross-currency interest rate

swaps, foreign exchange swaps and forwards.

Funding activities – we borrow in various debt markets across the world. Foreign currency funding gives rise to risk of volatility in the amount

of functional currency cash to be repaid. This risk is reduced by swapping principal and interest back into the functional currency of the issuer.

All foreign currency debt and transactions are hedged except where they provide a natural offset to assets elsewhere in the Group.

Capital investment and related revenues – capital projects often incur costs or generate revenues in a foreign currency, most often euro

transactions done by the UK business. Our policy for managing foreign exchange transaction risk is to hedge contractually committed foreign

currency cash flows over a prescribed minimum size, typically by buying euro forwards to hedge future expenditure and selling euro forwards

to hedge future revenues. For hedges of forecast cash flows, our policy is to hedge a proportion of highly probable cash flows.

Holdings in foreign operations – we are exposed to fluctuations on the translation into pounds sterling of our foreign operations. The policy for

managing this translation risk is to issue foreign currency debt or to replicate foreign debt using derivatives that pay cash flows in the currency

of the foreign operation. The primary managed exposure arises from dollar denominated assets and liabilities held by our US operations, with

a smaller euro exposure in respect of joint venture investments.

Derivative financial instruments were used to manage foreign currency risk as follows:

	2025					2024
	Sterling £m	Euro £m	Dollar £m	Other £m	Total £m	Sterling £m	Euro £m	Dollar £m	Other £m	Total £m
Cash and cash equivalents	1,047	—	131	—	1,178	402	—	157	—	559
Financial investments	5,129	—	624	—	5,753	1,514	—	2,185	—	3,699
Borrowings	(13,913)	(12,968)	(19,217)	(1,441)	(47,539)	(14,498)	(11,936)	(18,938)	(1,700)	(47,072)
Pre-derivative position	(7,737)	(12,968)	(18,462)	(1,441)	(40,608)	(12,582)	(11,936)	(16,596)	(1,700)	(42,814)
Derivative effect	(8,539)	13,886	(7,755)	1,645	(763)	(9,102)	12,976	(6,625)	1,958	(793)
Net debt position	(16,276)	918	(26,217)	204	(41,371)	(21,684)	1,040	(23,221)	258	(43,607)

The exposure to dollars largely relates to our net investment hedge activities and exposure to euros largely relates to hedges for our future

non‑sterling capital expenditure and associated revenues.

The currency exposure on other financial instruments is as follows:

	2025					2024
	Sterling £m	Euro £m	Dollar £m	Other £m	Total £m	Sterling £m	Euro £m	Dollar £m	Other £m	Total £m
Trade and other receivables	424	—	2,272	—	2,696	280	—	1,878	—	2,158
Trade and other payables	(1,359)	—	(2,549)	—	(3,908)	(1,330)	—	(2,385)	—	(3,715)
Other non-current liabilities	(171)	—	(296)	—	(467)	(169)	—	(289)	—	(458)

The carrying amounts of other financial instruments are denominated in the above currencies, which in most instances are the functional currency

of the respective subsidiaries. Our exposure to dollars is due to activities in our US subsidiaries. We do not have any other significant exposure to

currency risk on these balances.

Hedge accounting for currency risk

Where available, derivatives transacted for hedging are designated for hedge accounting. Economic offset is qualitatively determined because

the critical terms (currency and volume) of the hedging instrument match the hedged exposure. If a forecast transaction was no longer expected

to occur, the cumulative gain or loss previously reported in equity would be transferred to the income statement. This has not occurred in the

current or comparative years.

Cash flow hedging of currency risk of capital expenditure and revenue are designated as either hedging the exposure to movements in the

spot or forward translation risk. Gains and losses on hedging instruments arising from undesignated forward points and foreign currency basis

spreads are excluded from designation and are recognised immediately in profit or loss, along with any hedge ineffectiveness. On recognition of

the hedged purchase or sale in the financial statements, the associated hedge gains and losses, deferred in the cash flow hedge reserve in other

equity reserves, are transferred out of reserves and included with the recognition of the underlying transaction. Where a non-financial asset or

a non-financial liability results from a forecast transaction or firm commitment being hedged, the amounts deferred in reserves are included

directly in the initial measurement of that asset or liability.

Net investment hedging is also designated as hedging the exposure to movements in spot translation rates only: spot-related gains and losses

on hedging instruments are presented in the cumulative translation reserve within other equity reserves to offset gains or losses on translation of

the hedged balance sheet exposure. Any ineffectiveness is recognised immediately in the income statement. Amounts deferred in the cumulative

translation reserve with respect to net investment hedges are subsequently recognised in the income statement in the event of disposal of the

overseas operations concerned. Any remaining amounts deferred in the cost of hedging reserve are also released to the income statement.

Strategic Report Corporate Governance Financial Statements Additional Information 233

32. Financial risk management continued

(c) Currency risk continued

Hedges of foreign currency funding are designated as cash flow hedges or fair value hedges of forward exchange risk (hedging both currency

and interest rate risk together, where applicable). Gains and losses arising from foreign currency basis spreads are excluded from designation

and are treated as a cost of hedging, deferred initially in other equity reserves and released into profit or loss over the life of the hedging

relationship. Hedge accounting for funding is described further in the interest rate risk section that follows.

(d) Interest rate risk

National Grid’s interest rate risk arises from our long-term borrowings. Our interest rate risk management policy is to seek to minimise total

financing costs (being interest costs and changes in the market value of debt). Hedging instruments principally consist of interest rate and cross-

currency swaps that are used to translate foreign currency debt into functional currency and to adjust the proportion of fixed rate and floating rate

in the borrowings portfolio to within a range set by the Finance Committee of the Board. The benchmark interest rates hedged are currently based

on Secured Overnight Financing Rate (SOFR) for USD and Sterling Overnight Index Average (SONIA) for GBP.

We also consider inflation risk and hold some inflation-linked borrowings. We believe that these provide a partial economic offset to the inflation

risk associated with our UK inflation-linked revenues.

The table in note 21 sets out the carrying amount, by contractual maturity, of borrowings that are exposed to interest rate risk before taking into

account interest rate swaps.

Net debt was managed using derivative financial instruments to hedge interest rate risk as follows:

	2025					2024
	Fixed rate £m	Floating rate £m	Inflation linked £m	Other1 £m	Total £m	Fixed rate £m	Floating rate £m	Inflation linked £m	Other1 £m	Total £m
Cash and cash equivalents	131	1,047	—	—	1,178	157	402	—	—	559
Financial investments	—	5,719	—	34	5,753	—	3,640	—	59	3,699
Borrowings²	(39,847)	(3,061)	(4,631)	—	(47,539)	(39,948)	(2,378)	(4,746)	—	(47,072)
Pre-derivative position	(39,716)	3,705	(4,631)	34	(40,608)	(39,791)	1,664	(4,746)	59	(42,814)
Derivative effect	3,841	(4,540)	(64)	—	(763)	5,034	(5,763)	(64)	—	(793)
Net debt position	(35,875)	(835)	(4,695)	34	(41,371)	(34,757)	(4,099)	(4,810)	59	(43,607)

1.Represents financial instruments which are not directly affected by interest rate risk, such as investments in equity or other similar financial instruments.

2.Commercial paper is presented as floating rate as it has short-term maturities between 1–7 months and is regularly refinanced at current market rates.

Hedge accounting for interest rate risk

Borrowings paying variable or floating rates expose National Grid to cash flow interest rate risk, partially offset by cash held at variable rates.

Where a hedging instrument results in paying a fixed rate, it is designated as a cash flow hedge because it has reduced the cash flow volatility

of the hedged borrowing. Changes in the fair value of the derivative are initially recognised in other comprehensive income as gains or losses

in the cash flow hedge reserve, with any ineffective portion recognised immediately in the income statement.

Borrowings paying fixed rates expose National Grid to fair value interest rate risk. Where the hedging instrument pays a floating rate, it is

designated as a fair value hedge because it has reduced the fair value volatility of the borrowing. Changes in the fair value of the derivative and

changes in the fair value of the hedged item in relation to the risk being hedged are both adjusted on the balance sheet and offset in the income

statement to the extent the fair value hedge is effective, with the residual difference remaining as ineffectiveness.

Both types of hedges are designated as hedging the currency and interest rate risk arising from changes in forward points. Amounts accumulated

in the cash flow hedge reserve (cash flow hedges only) and the deferred cost of hedging reserve (both cash flow and fair value hedges) are

reclassified from reserves to the income statement on a systematic basis as hedged interest expense is recognised. Adjustments made to the

carrying value of hedged items in fair value hedges are similarly released to the income statement to match the timing of the hedged

interest expense.

When hedge accounting is discontinued, any remaining cumulative hedge accounting balances continue to be released to the income statement

to match the impact of outstanding hedged items. Any remaining amounts deferred in the cost of hedging reserve are released immediately to the

income statement as finance costs.

234	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

32. Financial risk management continued

(e) Hedge accounting

In accordance with the requirements of IFRS 7, certain additional information about hedge accounting is disaggregated by risk type and hedge

designation type in the tables below:

Year ended 31 March 2025	Fair value hedges of foreign currency and/or interest rate risk £m	Cash flow hedges of foreign currency and/or interest rate risk £m	Cash flow hedges of foreign currency risk £m	Net investment hedges £m
Consolidated statement of comprehensive income
Net gains/(losses) in respect of:
Cash flow hedges	—	26	(12)	—
Cost of hedging	(14)	(36)	—	4
Net investment hedges	—	—	—	56
Transferred to profit or loss in respect of:
Cash flow hedges	—	182	6	—
Cost of hedging	1	(3)	—	(4)
Consolidated statement of changes in equity
Other equity reserves – cost of hedging balances	(24)	(54)	—	3
Consolidated statement of financial position
Borrowings – carrying value of hedging instruments
Liabilities – non-current	—	—	—	(1,734)
Derivatives – carrying value of hedging instruments1
Assets – current	—	1	3	6
Assets – non-current	32	194	1	—
Liabilities – current	(253)	(50)	(6)	(2)
Liabilities – non-current	(397)	(183)	(41)	(1)
Profiles of the significant timing, price and rate information of hedging instruments
Maturity range	Jan 2026 – Sep 2044	Jun 2025 – Nov 2040	Apr 2025 – Jun 2031	Apr 2025 – Jan 2034
Spot foreign exchange range:
GBP:USD	n/a	1.30 – 1.66	1.25 – 1.30	1.26 – 1.29
GBP:EUR	1.11 – 1.24	1.08 – 1.19	1.11 – 1.21	1.19 – 1.21
EUR:USD	1.05 – 1.15	1.06 – 1.15	n/a	n/a
Interest rate range:
GBP	SONIA -260bps/+374bps	0.976% – 7.410%	n/a	n/a
USD	SOFR +83bps/+223bps	2.095% – 5.989%	n/a	n/a

1.The use of derivatives may entail a derivative transaction qualifying for more than one hedge type designation under IFRS 9. Therefore, the derivative amounts in the table above are grossed

up by hedge type, whereas they are presented net at an instrument level in the statement of financial position.

Strategic Report Corporate Governance Financial Statements Additional Information 235

32. Financial risk management continued

(e) Hedge accounting continued

Year ended 31 March 2024	Fair value hedges of foreign currency and/or interest rate risk £m	Cash flow hedges of foreign currency and/or interest rate risk £m	Cash flow hedges of foreign currency risk £m	Net investment hedges £m
Consolidated statement of comprehensive income
Net gains/(losses) in respect of:
Cash flow hedges	—	5	(26)	—
Cost of hedging	—	(1)	—	38
Net investment hedges	—	—	—	62
Transferred to profit or loss in respect of:
Cash flow hedges	—	220	4	—
Cost of hedging	1	(4)	—	(8)
Consolidated statement of changes in equity
Other equity reserves – cost of hedging balances	(11)	(16)	—	3
Consolidated statement of financial position
Borrowings – carrying value of hedging instruments
Liabilities – non-current	—	—	—	(1,768)
Derivatives – carrying value of hedging instruments1
Assets – current	—	—	5	11
Assets – non-current	33	161	1	—
Liabilities – current	(96)	(112)	(4)	(8)
Liabilities – non-current	(499)	(164)	(32)	—
Profiles of the significant timing, price and rate information of hedging instruments
Maturity range	Jul 2024 – Sep 2044	Jul 2024 – Nov 2040	Apr 2024 – Feb 2030	Apr 2024 – Jan 2034
Spot foreign exchange range:
GBP:USD	n/a	1.30 – 1.66	1.23 – 1.27	1.22 – 1.29
GBP:EUR	1.11 – 1.24	1.08 – 1.19	1.11 – 1.18	1.17 – 1.17
EUR:USD	1.07 – 1.15	1.07 – 1.15	n/a	n/a
Interest rate range:
GBP	SONIA +56bps/+374bps	0.976% – 7.410%	n/a	n/a
USD	SOFR +83bps/+223bps	2.095% – 5.989%	n/a	n/a

1.The use of derivatives may entail a derivative transaction qualifying for more than one hedge type designation under IFRS 9. Therefore, the derivative amounts in the table above are grossed

up by hedge type, whereas they are presented net at an instrument level in the statement of financial position.

236	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

32. Financial risk management continued

(e) Hedge accounting continued

The following tables show the effects of hedge accounting on financial position and year-to-date performance for each type of hedge.

(i) Fair value hedges of foreign currency and interest rate risk on recognised borrowings:

As at 31 March 2025		Balance of fair value hedge adjustments in borrowings		Change in value used for calculating ineffectiveness
	Hedging instrument notional	Continuing hedges	Discontinued hedges	Hedged item	Hedging instrument	Hedge ineffectiveness
Hedge type	£m	£m	£m	£m	£m	£m
Foreign currency and interest rate risk on borrowings1	(6,767)	756	(25)	106	(94)	12

1.The carrying value of the hedged borrowings is £6,414 million, of which £118 million is current and £6,296 million is non-current.

As at 31 March 2024		Balance of fair value hedge adjustments in borrowings		Change in value used for calculating ineffectiveness
	Hedging instrument notional	Continuing hedges	Discontinued hedges	Hedged item	Hedging instrument	Hedge ineffectiveness
Hedge type	£m	£m	£m	£m	£m	£m
Foreign currency and interest rate risk on borrowings1	(5,096)	720	(35)	40	(22)	18

1.The carrying value of the hedged borrowings was £4,364 million, of which £271 million was current and £4,093 million was non-current.

(ii) Cash flow hedges of foreign currency and interest rate risk:

As at 31 March 2025		Balance in cash flow hedge reserve		Change in value used for calculating ineffectiveness
	Hedging instrument notional	Continuing hedges	Discontinued hedges	Hedged item	Hedging instrument	Hedge ineffectiveness
Hedge type	£m	£m	£m	£m	£m	£m
Foreign currency and interest rate risk on borrowings and forecast cash flows	(14,769)	376	—	(33)	27	(6)
Foreign currency risk on forecast cash flows	(1,907)	(43)	—	12	(12)	—

As at 31 March 2024		Balance in cash flow hedge reserve		Change in value used for calculating ineffectiveness
	Hedging instrument notional	Continuing hedges	Discontinued hedges	Hedged item	Hedging instrument	Hedge ineffectiveness
Hedge type	£m	£m	£m	£m	£m	£m
Foreign currency and interest rate risk on borrowings and forecast cash flows	(9,892)	154	—	(18)	3	(15)
Foreign currency risk on forecast cash flows	(2,039)	(31)	—	28	(28)	—

(iii) Net investment hedges of foreign currency risk:

As at 31 March 2025		Balance in translation reserve		Change in value used for calculating ineffectiveness
	Hedging instrument notional	Continuing hedges	Discontinued hedges	Hedged item	Hedging instrument	Hedge ineffectiveness
Hedge type	£m	£m	£m	£m	£m	£m
Currency risk on foreign operations	(2,641)	55	(2,523)	(56)	56	—

As at 31 March 2024		Balance in translation reserve		Change in value used for calculating ineffectiveness
	Hedging instrument notional	Continuing hedges	Discontinued hedges	Hedged item	Hedging instrument	Hedge ineffectiveness
Hedge type	£m	£m	£m	£m	£m	£m
Currency risk on foreign operations	(2,999)	40	(2,564)	(62)	62	—

Strategic Report Corporate Governance Financial Statements Additional Information 237

32. Financial risk management continued

(f) Commodity price risk

We purchase electricity and gas to supply our customers in the US and to meet our own energy needs. Substantially all our costs of purchasing

electricity and gas for supply to customers are recoverable at an amount equal to cost. The timing of recovery of these costs can vary between

financial periods leading to an under- or over-recovery within any particular year that can lead to large fluctuations in the income statement. We

follow approved policies to manage price and supply risks for our commodity activities.

Our energy procurement risk management policy and delegations of authority govern our US commodity trading activities for energy transactions.

The purpose of this policy is to ensure we transact within pre-defined risk parameters and only in the physical and financial markets where we or

our customers have a physical market requirement. In addition, state regulators require National Grid to manage commodity risk and cost volatility

prudently through diversified pricing strategies. In some jurisdictions we are required to file a plan outlining our strategy to be approved by

regulators. In certain cases, we might receive guidance with regard to specific hedging limits.

Energy purchase contracts for the forward purchase of electricity or gas that are used to satisfy physical delivery requirements to customers,

or for energy that the Group uses itself, meet the expected purchase or usage requirements of IFRS 9. They are, therefore, not recognised in

the financial statements until they are realised. Disclosure of commitments under such contracts is made in note 30.

US states have introduced a variety of legislative requirements with the aim of increasing the proportion of our electricity that is derived from

renewable or other forms of clean energy. Annual compliance filings regarding the level of Renewable Energy Certificates (and other similar

environmental certificates) are required by the relevant department of utilities. In response to the legislative requirements, National Grid has

entered into long-term, typically fixed-price, energy supply contracts to purchase both renewable energy and environmental certificates.

We are entitled to recover all costs incurred under these contracts through customer billing.

Under IFRS, where these supply contracts are not accounted for as leases, they are considered to comprise two components, being a forward

purchase of power at spot prices and a forward purchase of environmental certificates at a variable price (being the contract price less the spot

power price). With respect to our current contracts, neither of these components meets the requirement to be accounted for as a derivative.

The environmental certificates are currently required for compliance purposes, and at present there are no liquid markets for these attributes.

Furthermore, this component meets the expected purchase or usage exemption of IFRS 9. We expect to enter into an increasing number of

these contracts in order to meet our compliance requirements in the short to medium term. In future, if and when liquid markets develop, and

to the extent that we are in receipt of environmental certificates in excess of our required levels, this exemption may cease to apply and we

may be required to account for forward purchase commitments for environmental certificates as derivatives at fair value through profit and loss.

In the UK, financial transactions have been introduced to manage exposures on the North Sea Link interconnector. These bilateral transactions

are cash-settled against the relevant day-ahead prices in order to manage the risk associated with the sale of physical capacity on the link.

The mark-to-market exposure of any open positions is calculated based on futures products in the GB and Nordic markets.

(g) Fair value analysis

Included in the statement of financial position are financial instruments which are measured at fair value. These fair values can be categorised into

hierarchy levels that are representative of the inputs used in measuring the fair value. The best evidence of fair value is a quoted price in an actively

traded market. In the event that the market for a financial instrument is not active, a valuation technique is used.

	2025				2024
	Level 1 £m	Level 2 £m	Level 3 £m	Total £m	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Assets
Investments held at FVTPL	5,156	—	407	5,563	3,084	—	483	3,567
Investments held at FVOCI1	—	384	—	384	—	397	—	397
Financing derivatives	—	344	31	375	—	293	40	333
Commodity contract derivatives	—	102	5	107	—	35	—	35
	5,156	830	443	6,429	3,084	725	523	4,332
Liabilities
Financing derivatives	—	(1,043)	(95)	(1,138)	—	(1,022)	(104)	(1,126)
Commodity contract derivatives	—	(39)	(25)	(64)	—	(105)	(13)	(118)
	—	(1,082)	(120)	(1,202)	—	(1,127)	(117)	(1,244)
	5,156	(252)	323	5,227	3,084	(402)	406	3,088

1.Investments held includes instruments which meet the criteria of IFRS 9 or IAS 19.

Level 1:	Financial instruments with quoted prices for identical instruments in active markets.
Level 2:	Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets, and financial instruments valued using models where all significant inputs are based directly or indirectly on observable market data.
Level 3:	Financial instruments valued using valuation techniques where one or more significant inputs are based on unobservable market data.

238	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

32. Financial risk management continued

(g) Fair value analysis continued

Our Level 1 financial investments and liabilities held at fair value are valued using quoted prices from liquid markets and primarily comprise

investments in short-term money market funds.

Our Level 2 financial investments held at fair value primarily include bonds with a tenor greater than one year and are valued using quoted prices

for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets. Alternatively, they are valued using

models where all significant inputs are based directly or indirectly on observable market data.

Our Level 2 financing derivatives include cross-currency, interest rate and foreign exchange derivatives. We value these by discounting all future

cash flows by externally sourced market yield curves at the reporting date, taking into account the credit quality of both parties. These derivatives

can be priced using liquidly traded interest rate curves and foreign exchange rates, and therefore we classify our vanilla trades as Level 2 under

the IFRS 13 framework.

Our Level 2 US commodity contract derivatives include over-the-counter gas and power swaps as well as forward physical gas deals. We value

our contracts based on market data obtained from the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE), where

monthly prices are available. We discount based on externally sourced market yield curves at the reporting date, taking into account the credit

quality of both parties and liquidity in the market. Our commodity contracts can be priced using liquidly traded swaps. Therefore, we classify

our vanilla trades as Level 2 under the IFRS 13 framework.

Our Level 3 financing derivatives include inflation-linked swaps, where the market is illiquid. In valuing these instruments, we use in‑house

valuation models and obtain external valuations to support each reported fair value.

Our Level 3 UK commodity contract derivatives consist of UK electricity capacity swaps.

Our Level 3 US commodity contract derivatives primarily consist of our forward purchases of electricity and gas that we value using proprietary

models. Derivatives are classified as Level 3 where significant inputs into the valuation technique are neither directly nor indirectly observable

(including our own data, which are adjusted, if necessary, to reflect the assumptions market participants would use in the circumstances).

Our Level 3 financial investments include equity investments accounted for at fair value through profit and loss. These equity holdings are part

of our corporate venture capital portfolio held by National Grid Partners and comprise a series of relatively small, early-stage non-controlling

minority interest unquoted investments where prices or valuation inputs are unobservable. Twenty-two equity investments (out of 41) are fair

valued based on the latest transaction price (a price within the last 12 months), either being the price we paid for the investments, marked to

a latest round of funding and adjusted for our preferential rights or based on an internal model. In addition, we have 19 investments without

a transaction in the last 12 months that underwent an internal valuation process using the Black-Scholes Merton Option Pricing Model (OPM

Backsolve). Between 12 and 18 months, a blend between OPM Backsolve and other techniques is utilised, such as proxy group revenue

multiples, discounted cash flow, comparable company analysis and probability weighted expected return approach, in order to triangulate

a valuation. After 18 months, the valuation is based on these alternative methods as the last fundraising price is no longer a reliable basis

for valuation.

Our Level 3 financial investments also include our investment in Sunrun Neptune 2016 LLC, which is accounted for at fair value through profit

and loss. The investment is fair valued by discounting expected cash flows using a weighted average cost of capital specific to Sunrun Neptune

2016 LLC.

Strategic Report Corporate Governance Financial Statements Additional Information 239

32. Financial risk management continued

(g) Fair value analysis continued

The changes in value of our Level 3 financial instruments are as follows:

	Financing derivatives		Commodity contract derivatives		Other3		Total
	2025	2024	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m	£m	£m
At 1 April	(64)	(100)	(13)	(36)	483	433	406	297
Net gains/(losses) for the year1,2	—	36	(41)	—	(77)	6	(118)	42
Purchases	—	—	—	(16)	45	35	45	19
Settlements	—	—	25	39	(44)	9	(19)	48
Reclassifications/transfers out of Level 3⁴	—	—	9	—	—	—	9	—
At 31 March	(64)	(64)	(20)	(13)	407	483	323	406

1.Loss of £nil (2024: £36 million gain) is attributable to financing derivatives held at the end of the reporting period and has been recognised in finance costs in the consolidated income

statement.

2.Includes a loss of £6 million (2024: £18 million loss) attributable to commodity contract derivative financial instruments held at the end of the reporting period and has been recognised

in other operating costs in the consolidated income statement.

3.Other comprises our investments in Sunrun Neptune 2016 LLC and the investments made by National Grid Partners, which are accounted for at fair value through profit and loss. Net gains

and losses are recognised within revenue in the consolidated income statement.

4.£9 million (2024: £nil) of US Commodity contract derivatives were reclassified out of Level 3 to Level 2 in the period due to improved observability of the fair value of these instruments.

The impacts on a post-tax basis of reasonably possible changes in significant Level 3 assumptions are as follows:

	Financing derivatives		Commodity contract derivatives		Other3
	2025	2024	2025	2024	2025	2024
	£m	£m	£m	£m	£m	£m
10% increase in commodity prices1	—	—	8	4	—	—
10% decrease in commodity prices1	—	—	(7)	(4)	—	—
+10% market area price change	—	—	—	—	—	—
-10% market area price change	—	—	—	—	—	—
+20 basis points change in Limited Price Inflation (LPI) market curve²	(33)	(41)	—	—	—	—
-20 basis points change in LPI market curve²	33	41	—	—	—	—
+20 basis points increase between RPI and Consumer Price Index (CPI)	31	37	—	—	—	—
-20 basis points decrease between RPI and CPI	(29)	(34)	—	—	—	—
+100 basis points change in discount rate	—	—	—	—	(6)	(7)
-100 basis points change in discount rate	—	—	—	—	7	9
+10% change in venture capital price	—	—	—	—	26	28
-10% change in venture capital price	—	—	—	—	(26)	(28)

1.Level 3 commodity price sensitivity is included within the sensitivity analysis disclosed in note 35.

2.A reasonably possible change in assumption of other Level 3 derivative financial instruments is unlikely to result in a material change in fair values.

3.The investments acquired in the period were on market terms, and sensitivity is considered insignificant at 31 March 2025.

The impacts disclosed above were considered on a contract-by-contract basis, with the most significant unobservable inputs identified.

240	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

32. Financial risk management continued

(h) Capital risk management

The capital structure of the Group consists of shareholders’ equity, as disclosed in the consolidated statement of changes in equity, and net debt

(note 29). National Grid’s objectives when managing capital are: to safeguard our ability to continue as a going concern; to remain within regulatory

constraints of our regulated operating companies; and to maintain an efficient mix of debt and equity funding, thus achieving an optimal capital

structure and cost of capital. We regularly review and manage the capital structure as appropriate in order to achieve these objectives.

Maintaining appropriate credit ratings for our operating and holding companies is an important aspect of our capital risk management strategy

and balance sheet efficiency. We monitor our balance sheet efficiency using several metrics, including retained cash flow/net debt (RCF/debt),

regulatory gearing and interest cover. For the year ended 31 March 2025, these metrics for the Group were 9.8% (2024: 9.2%), 61% (2024: 69%)

and 3.8x (2024: 3.9x), respectively. We believe these are consistent with the current credit ratings for National Grid plc in respect of the main

companies of the Group, based on guidance from the rating agencies.

We monitor the RAV gearing within National Grid Electricity Transmission plc (NGET) and the four distribution network operators of National Grid

Electricity Distribution plc (NGED). This is calculated as net debt expressed as a percentage of RAV, and indicates the level of debt employed to

fund our UK-regulated businesses. It is compared with the level of RAV gearing indicated by Ofgem as being appropriate for these businesses,

between 55% and 60%. We also monitor net debt as a percentage of rate base for our US operating companies, comparing this with the allowed

rate base gearing inherent within each of our agreed rate plans, typically around 50%.

As part of the Group’s debt financing arrangements, we are subject to a number of financial covenants associated with existing borrowings and

facility arrangements:

•the requirement to maintain subsidiary indebtedness relating to both non-US and US subsidiaries (excluding National Grid North America Inc.)

limits the total indebtedness in absolute terms to £45 billion (2024: £35 billion) for non-US subsidiaries and $45 billion (2024: $35 billion) for

US subsidiaries. As at 31 March 2025, headroom on these covenants exceeds £20 billion;

•the Articles of Association of National Grid plc limit Group total borrowings less cash and short-term investments in absolute terms

to £55 billion. As at 31 March 2025, headroom on the limit exceeds £10 billion; and

•net debt to RAV gearing covenants limit gearing to 85% of RAV for each NGED operating company. As at 31 March 2025, headroom

on this covenant exceeds 20 percentage points for all impacted companies based on the covenant definition of net debt. The carrying

value of the bonds under this covenant restriction are £3,005 million (2024: £3,405 million).

We consider the risk of breaching these covenants as remote given the level of headroom present.

The majority of our regulated operating companies in the US and the UK are subject to certain restrictions on the payment of dividends by

administrative order, contract and/or licence. The types of restrictions that a company may have that would prevent a dividend being declared

or paid unless they are met include the following:

•the requirement to notify by certification to regulators and certain lenders;

•dividends must be approved in advance by the relevant US state regulatory commission;

•the subsidiary must have one or two recognised rating agency credit ratings of at least investment grade depending on contractual

requirements;

•dividends must be limited to cumulative retained earnings, including pre-acquisition retained earnings and in line with relevant company

legislation;

•the securities of National Grid plc must maintain an investment grade credit rating, and if that rating is the lowest investment grade bond

rating it cannot have a negative watch/review for downgrade notice by a credit rating agency;

•the subsidiary must not carry out any activities other than those permitted by the licences;

•the subsidiary must not create any cross-default obligations or give or receive any intra-group cross-subsidies;

•the percentage of equity compared with total capital of the subsidiary must remain above certain levels; and

•in the case of NGED, the percentage of debt compared with total RAV of the subsidiary must remain below 85%.

These restrictions are subject to alteration in the US as and when a new rate case or rate plan is agreed with the relevant regulatory bodies for

each operating company and, in the UK, through the normal licence review process.

As most of our business is regulated, at 31 March 2025 the majority of our net assets are subject to some of the restrictions noted above. These

restrictions are not considered to be significantly onerous, nor do we currently expect they will prevent the planned payment of dividends in the

future in line with our dividend policy.

All the above requirements are monitored on a regular basis in order to ensure compliance. The Group has complied with all externally imposed

capital requirements to which it is subject.

Strategic Report Corporate Governance Financial Statements Additional Information 241

33. Borrowing facilities

To support our liquidity requirements and provide backup to commercial paper and other borrowings, we agree committed credit facilities with

financial institutions over and above the value of borrowings that may be required. These committed credit facilities are undrawn.

An analysis of the maturity of our undrawn committed facilities as at 31 March 2025 is shown below:

	2025	2024
	£m	£m
Undrawn committed borrowing facilities expiring:
Less than 1 year	—	—
In 1 to 2 years	—	—
In 2 to 3 years	5,982	195
In 3 to 4 years	105	5,859
In 4 to 5 years	1,745	106
More than 5 years	—	1,745
	7,832	7,905

Of the unused facilities at 31 March 2025, £7,792 million (2024: £7,864 million) is available for liquidity purposes, while £40 million (2024: £41 million)

is available as backup to specific US borrowings.

242	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

34. Subsidiary undertakings, joint arrangements and associates

While we present consolidated results in these financial statements as if we were one company, our legal structure is such that there are a

number of different operating and holding companies that contribute to the overall result. This structure has evolved through acquisitions as

well as regulatory requirements to have certain activities within separate legal entities.

Subsidiary undertakings

A list of the Group’s subsidiaries as at 31 March 2025 is given below. The entire share capital of subsidiaries is held within the Group except where

the Group’s ownership percentages are shown. These percentages give the Group’s ultimate interest and therefore allow for the situation where

subsidiaries are owned by partly owned intermediate subsidiaries. Where subsidiaries have different classes of shares, this is largely for historical

reasons, and the effective percentage holdings given represent both the Group’s voting rights and equity holding. Shares in National Grid (US)

Holdings Limited, National Grid Luxembourg SARL, NGG Finance plc and Project SPV (Jersey) Investment Limited are held directly by National

Grid plc. All other holdings in subsidiaries are owned by other subsidiaries within the Group. All subsidiaries are consolidated in the Group’s

financial statements. The Group does not have any branches.

Principal Group companies are identified in bold. These companies are incorporated and principally operate in the countries under which they

are shown. All entities incorporated in the US are taxed in the US on their worldwide income other than where indicated in the footnotes below.

Other entities are tax resident in their jurisdiction of incorporation other than where indicated in the footnotes below.

Incorporated in England and Wales

Registered office: 1–3 Strand, London, WC2N 5EH, UK (unless stated otherwise in footnotes).

Birch Sites Limited

Carbon Sentinel Limited

Central Networks Trustees Limited1

Icelink Interconnector Limited

Kelston Properties 2 Limited1

Lattice Group Limited

NatgridTW1 Limited

National Grid (US) Holdings Limited2

National Grid (US) Investments 4 Limited2

National Grid (US) Partner 1 Limited2

National Grid Carbon Limited

National Grid Commercial Holdings Limited

National Grid Continental Limited

National Grid Distributed Energy Limited

National Grid Electricity Distribution (East Midlands) plc1

National Grid Electricity Distribution (South Wales) plc1

National Grid Electricity Distribution (South West) plc1

National Grid Electricity Distribution (West Midlands) plc1

National Grid Electricity Distribution Generation Limited1

National Grid Electricity Distribution Holdings Limited1

National Grid Electricity Distribution Investments Limited1

National Grid Electricity Distribution Midlands Limited1

National Grid Electricity Distribution Network Holdings Limited1

National Grid Electricity Distribution plc1

National Grid Electricity Distribution Property Investments Limited1

National Grid Electricity Group Trustee Limited

National Grid Electricity Transmission plc

National Grid Energy Metering Limited

National Grid Grain LNG Limited

National Grid Helicopters Limited1

National Grid Holdings Limited2

National Grid Holdings One plc

National Grid Hydrogen Limited

National Grid IFA 2 Limited

National Grid Interconnector Holdings Limited

National Grid Interconnectors Limited

National Grid International Limited2

National Grid Lion Link Limited

National Grid Nautilus Limited

National Grid North Sea Link Limited

National Grid Offshore Limited

National Grid Partners Limited

National Grid Plus Limited

National Grid Property Holdings Limited

National Grid Telecoms Limited1

National Grid Twelve Limited

National Grid Twenty Eight Limited

National Grid Twenty Seven Limited

National Grid UK Limited

National Grid Ventures Limited

National Grid Viking Link Limited

National Grid William Limited

NG Nominees Limited*2,3

NGC Employee Shares Trustee Limited

NGG Finance plc

Ngrid Intellectual Property Limited

Port Greenwich Limited

Sheet Road Management Company Limited (51%)4

South Wales Electricity Share Scheme Trustees Limited1

Thamesport Interchange Limited

The National Grid Group Quest Trustee Company Limited*3

Warwick Technology Park Management Company (No 2) Limited (60.56%)5

Western Power Pension Trustee Limited1

WPD WEM Holdings Limited1

WPD WEM Limited1

1.Registered office: Avonbank, Feeder Road, Bristol, Avon, BS2 0TB, UK.

2.Companies where National Grid plc has issued guarantees over the liabilities of the companies as at 31 March 2025 and for which the companies are taking the exemption from the

requirements of an audit for their individual financial statements as permitted by section 479A of the Companies Act.

3.Registered office: C/o Interpath Limited, 10 Fleet Place, London, EC4M 7RB, UK.

4.Registered office: Netley Old Hall Farm, Dorrington, Shrewsbury, SY5 7JY, UK.

5.Registered office: Shire Hall, PO Box 9, Warwick, CV34 4RL, UK.

*In liquidation.

Strategic Report Corporate Governance Financial Statements Additional Information 243

34. Subsidiary undertakings, joint arrangements and associates continued

Subsidiary undertakings continued

Incorporated in the US

Registered office: National Registered Agents, Inc., 1209 Orange Street, Wilmington, DE 19801, USA (unless stated otherwise in footnotes).

Apple River Solar, LLC

Apple River Storage, LLC

Armenia Solar, LLC

Bazile Creek Wind Farm, LLC

Bee Hollow Solar, LLC

Belle Plaine Solar, LLC

Blue Ridge Wind, LLC

Blue Spring Solar, LLC

Blues Solar, LLC

Boone Solar, LLC

Boston Gas Company1

Brock Solar, LLC

Broken Bridge Corp.2

Brook Trout Solar, LLC

Burley Solar, LLC

Burr Ridge Wind, LLC

Cage Ranch Solar II, LLC

Cage Ranch Solar III, LLC

Cage Ranch Solar, LLC

Caldwell Solar II, LLC

Caldwell Solar, LLC

Camp Creek Wind Farm, LLC

Carnation Solar, LLC

Cattle Ridge Wind Farm 2, LLC

Cedar Grove Solar, LLC

Charter Oak Solar, LLC

Charter Oak Storage, LLC

Clay Boswell Solar, LLC

Clermont Solar, LLC

Coles Solar, LLC

Compass Prairie Wind, LLC

Conestoga Wind, LLC

Creekview Solar, LLC

Crocker Wind Farm 2, LLC

Dakota Hills Wind Farm, LLC

Deatsville Solar, LLC

Donnellson Solar, LLC

Doorstep Community LLC3

Eldena Solar, LLC

Elk Creek Solar 2, LLC

Elk Creek Solar, LLC

EUA Energy Investment Corporation1

Exie Solar, LLC

Firstview Wind Farm, LLC

Fort Solar, LLC

Front Range Wind Farm, LLC

Galaxy Solar 2, LLC

Galaxy Solar, LLC

Golden Solar, LLC

Goldenrod Wind Farm, LLC

Goldfinch Solar, LLC

Granite Rock Wind Farm, LLC4

Granite State Power Link LLC3

Grant Solar 2, LLC

Grant Solar, LLC

Grayson Solar, LLC

Grazing Hills Wind Farm, LLC

Greenbrier Creek Solar, LLC

Greenwood Solar, LLC

Grid NY LLC6

Grindstone Wind Farm, LLC5

Hale County Solar, LLC

Hansford Energy Storage, LLC

Harmony Solar ND 2, LLC

Harmony Solar ND, LLC

Harrington Solar, LLC

Hartley Solar, LLC

Hearth Solar, LLC

Honeybee Solar, LLC

Hoosier Solar, LLC

Illumination Solar, LLC

Itasca Energy Development, LLC4

Itasca Energy Services, LLC

Jack Rabbit Wind, LLC

Jackson County Solar, LLC

KeySpan CI Midstream Limited3

KeySpan Energy Corporation6

KeySpan Energy Services Inc.3

KeySpan Gas East Corporation6

KeySpan International Corporation3

KeySpan MHK, Inc.3

KeySpan Midstream, Inc.3

KeySpan Plumbing Solutions, Inc.6

Kit Carson Wind, LLC

Kit Fox Storage, LLC

Knox Solar, LLC

Kota Storage, LLC

KSI Contracting, LLC3

KSI Electrical, LLC3

KSI Mechanical, LLC3

Lake Charlotte Solar, LLC

Lakeside Solar, LLC

Land Management & Development, Inc.6

Landwest, Inc.6

Lansing Solar, LLC

Las Moras Storage, LLC

Leola Wind Farm, LLC

Liberty Solar, LLC

Lime Creek Wind, LLC

Livingston County Solar, LLC

Long Mount Storage, LLC

Lordsburg Solar, LLC

Louisa Solar, LLC

Lowlands Solar, LLC

Lydia Solar, LLC

Massachusetts Electric Company1

Maverick Wind Farm, LLC

Meadowlands Solar, LLC

Mentha Solar, LLC

Metrowest Realty LLC3

Millers Ferry Solar, LLC

Morgan County Solar, LLC

Morning Glory Solar, LLC4

Muddy Creek Solar, LLC

Mustang Ridge Wind Farm, LLC

Mystic Steamship Corporation7

Nantucket Electric Company1

National Grid Development Holdings Corp.3

National Grid Electric Services LLC6

National Grid Energy Trading Services LLC6

National Grid Engineering & Survey Inc.6

National Grid Generation LLC6

National Grid Generation Ventures LLC6

National Grid Glenwood Energy Center LLC3

National Grid IGTS Corp.6

National Grid Insurance USA Ltd8

National Grid LNG LLC3

National Grid NE Holdings 2 LLC1

National Grid North America Inc.3

National Grid Partners Inc.6

National Grid Partners LLC3

National Grid Port Jefferson Energy Center LLC3

National Grid Renewables Development, LLC

National Grid Renewables E Wind, LLC9

National Grid Renewables Operations, LLC

National Grid Renewables Projects, LLC4

National Grid Renewables Stutsman, LLC

National Grid Renewables, LLC3

National Grid Services Inc.3

National Grid US LLC3

National Grid USA Service Company, Inc.1

National Grid USA3

NEES Energy, Inc.1

New England Electric Transmission Corporation2

New England Energy Incorporated1

New England Hydro Finance Company, Inc. (53.704%)1

New England Hydro-Transmission Corporation (53.704%)2

New England Hydro-Transmission Electric Company, Inc. (53.704%)1

New England Power Company1

Newport America Corporation10

Newton Solar, LLC

NG Renewables Energy Marketing, LLC

244	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

NG Renewables Energy Services, LLC

NG Renewables Remote Operations Center, LLC

NGNE LLC3

NGV Emerald Energy Venture Holdings, LLC3

NGV H2 Generation LLC3

NGV H2 Holdings LLC3

NGV LNG Holdings LLC3

NGV NGR Acquisition Co, LLC3

NGV NGR Holdco, LC3

NGV OSW Holdings, LLC3

NGV US Distributed Energy Inc.3

NGV US Transmission Inc.3

NGV US, LLC3

Niagara Mohawk Energy, Inc.3

Niagara Mohawk Holdings, Inc.6

Niagara Mohawk Power Corporation6

Niobrara Wind, LLC

NM Properties, Inc.6

Noble Solar, LLC11

Nordic VOS, LLC

North East Transmission Co., Inc.3

North Fork Wind, LLC

Oakland Solar, LLC

Opinac North America, Inc.3

Pasture Peaks Wind Farm, LLC

Peony Solar, LLC

Philadelphia Coke Co., Inc.3

Pike County Solar, LLC

Pipestone Solar, LLC

Plum Creek Wind Farm 2, LLC

Plum Creek Wind Farm, LLC

Port of the Islands North, LLC6

Portage Solar, LLC

Prairie Oasis Solar, LLC

Prairie Rose Wind 2, LLC4

Prosperity Wind Farm 2, LLC

Prosperity Wind Farm, LLC

Red Rock Solar SD, LLC

Regal Solar 2, LLC

Regal Solar, LLC

Reunion Solar, LLC

River North Solar, LLC

Robertson Solar, LLC

Rock Ridge Wind Farm, LLC

Rolling Hills Solar, LLC

Royal Solar 2, LLC

Royal Solar, LLC

Royerton Solar, LLC

Royerton Storage, LLC

Saginaw Bay Solar, LLC

Saltillo Storage, LLC

Sandbar Solar, LLC

Sandstone Bluffs Wind Farm, LLC

Sandstone Creek Solar 2, LLC

Sandstone Creek Solar, LLC

Sapphire Sky Wind Farm, LLC

Sherco Solar 2, LLC4

Sherco Solar 3, LLC

Silver City Solar, LLC

Simpson Solar, LLC

Spring Brook Solar, LLC

Spring River Solar, LLC

Sprouting Skies Wind Farm, LLC

Stony Brook Wind, LLC

Stony Point Solar, LLC

Summit Lake Solar, LLC

Sunbeam Solar, LLC

Sunrise Solar, LLC

Sycamore Creek Solar, LLC

Tejano Storage, LLC

Thacker Solar, LLC

The Brooklyn Union Gas Company6

Torchlight Solar, LLC4

Transgas Inc.1

Tri-City Solar, LLC

Trout Lily Wind Farm, LLC

Uintah Solar, LLC

Ulysses Crossing Solar, LLC

Upper Hudson Development, Inc.6

Valley Solar, LLC

Vermont Green Line Devco, LLC (90%)3

Violet Storage, LLC

Virtue Solar, LLC

Vivid Solar, LLC

Wallowa Solar, LLC

Wayfinder Group, Inc.1

White Elm Wind Farm, LLC

Wildcat Ridge Wind Farm, LLC

Wilder Solar, LLC

Willard Solar, LLC

Williams County Solar, LLC

Wiregrass Solar, LLC

Woodlands Solar, LLC

Worthington Solar, LLC

Young County Solar, LLC

34. Subsidiary undertakings, joint arrangements and associates continued

Subsidiary undertakings continued

Incorporated in Guernsey

Registered office: KPMG Advisory Limited, Glategny Court, Glategny

Esplanade, St. Peter Port, GY1 1WR, Guernsey

NG Electricity Distribution Limited*†

Incorporated in the Isle of Man

Registered office: Third Floor, St George’s Court, Upper Church Street,

Douglas, IM1 1EE, Isle of Man, UK

National Grid Insurance Company (Isle of Man) Limited

Incorporated in Jersey

Registered office: 22 Grenville Street, St. Helier, JE4 8PX, Jersey

Project SPV (Jersey) Investment Limited (89%)†

Incorporated in Luxembourg

Registered office: 412F, Route d’Esch, L-2086, Luxembourg, Grand Duchy

of Luxembourg

National Grid Luxembourg SARL

1.Registered office: Corporation Service Company, 84 State Street, Boston MA 02109, USA.

2.Registered office: Corporation Service Company, 10 Ferry Street, Suite 313, Concord NH 03301, USA.

3.Registered office: Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808, USA.

4.Registered office: 8400 Normandale Lake Blvd., Suite 1200, Bloomington MN 55437, USA.

5.Registered office: National Registered Agents Inc., 30600 Telegraph Road, Suite 2345, Bingham Farms MI 48025, USA.

6.Registered office: Corporation Service Company, 80 State Street, Albany NY 12207, USA.

7.Registered office: Corporation Trust Company, 1209 Orange Street, Wilmington DE 19801, USA.

8.Registered office: 100 Bank Street, Suite 630, Burlington, Chittenden County VT 05401, USA.

9.Registered office: National Registered Agents, Inc., 301 S. Bedford Street, Suite 1, Madison WI 53703, USA.

10.Registered office: Corporation Service Company, 222 Jefferson Boulevard, Suite 200, Warwick RI 02888, USA.

11.Registered office: National Registered Agents, Inc., 1999 Bryan Street, Dallas TX 75201, USA.

*In liquidation.

†Entity is tax resident in the UK.

Strategic Report Corporate Governance Financial Statements Additional Information 245

34. Subsidiary undertakings, joint arrangements and associates continued

Joint ventures

A list of the Group’s joint ventures as at 31 March 2025 is given below.

All joint ventures are included in the Group’s financial statements using

the equity method of accounting.

Incorporated in England and Wales

Registered office: 1–3 Strand, London, WC2N 5EH, UK (unless stated

otherwise in footnotes).

BritNed Development Limited (50%)**

National Places LLP (50%)1*

Nemo Link Limited (50%)

Incorporated in the US

Registered office: Corporation Service Company, 251 Little Falls Drive,

Wilmington, DE 19808, USA (unless stated otherwise in footnotes).

Clean Energy Storage Systems LLC (50%)

Community Offshore Wind, LLC (27.27%)2

Emerald Energy Venture, LLC (51%)

Island Park Energy Center, LLC (50%)

LI Energy Storage System, LLC (50%)

LI Solar Generation, LLC (50%)

Incorporated in France

Registered office: 1 Terrasse Bellini, Tour Initiale, TSA 41000 – 9291,

Paris La Defense, CEDEX, France.

IFA2 (50%)*

Joint operations

A list of the Group’s incorporated joint operations as at 31 March 2025

is given below. All joint operations are included in the Group’s financial

statements under IFRS 11 Joint arrangements.

Incorporated in England and Wales

Registered office: 1–3 Strand, London, WC2N 5EH, UK (unless stated

otherwise in footnotes).

Eastern Green Link 1 Limited (50%)

Eastern Green Link 2 Limited (50%)3

NGET/SPT Upgrades Limited (50%)†

Associates

A list of the Group’s associates as at 31 March 2025 is given below.

Unless otherwise stated, all associates are included in the Group’s

financial statements using the equity method of accounting.

Incorporated in England and Wales

Registered office: Friars House, Manor House Drive, Coventry, CV1 2TE, UK.

Joint Radio Company Limited (25%)***

Incorporated in the US

Registered office: The Corporation Trust Company, Corporation Trust

Center, 1209 Orange Street, Wilmington DE 19801, USA (unless stated

otherwise in footnotes).

Clean Line Energy Partners LLC (32%)

Connecticut Yankee Atomic Power Company (19.5%)4

Direct Global Power Inc. (26%)

Energy Impact Fund LP (9.41%)5

KHB Venture LLC (33.33%)6

Maine Yankee Atomic Power Company (24%)7

New York Transco LLC (28.3%)8

The Hive IV, LLC (28.2%)

Yankee Atomic Electric Company (34.5%)9

Other investments

A list of the Group’s other investments as at 31 March 2025 is given

below.

Incorporated in England and Wales

Registered office: 1 More London Place, London SE1 2AF, UK.

Energis plc (33.06%)*

Registered office: Third Floor, Northumberland House, 303–306 High Holborn,

London, WC1V 7JZ.

Electralink Limited (27.04%)

1.Registered office: 305 Gray's Inn Road, London, England, WC1X 8QR.

2.Registered office: The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington DE 19801, USA.

3.Registered office: No.1 Forbury Place, 43 Forbury Road, Reading, RG1 3JH, UK.

4.Registered office: Carla Pizzella, 362 Injun Hollow Road, East Hampton CT 06424-3099, USA.

5.Registered office: Harvard Business Services, Inc., 16192 Coastal Highway, Lewes DE 19958, USA.

6.Registered office: c/o de maximis, inc., 135 Beaver Street, 4th Floor, Waltham MA 02452, USA.

7.Registered office: Joseph D Fay, 321 Old Ferry Road, Wiscasset ME 04578, USA.

8.Registered office: Corporation Service Company, 80 State Street, Albany NY 12207, USA.

9.Registered office: Karen Sucharzewski, 49 Yankee Road, Rowe MA 01367, USA.

*In liquidation.

**National Grid Interconnector Holdings Limited owns 284,500,000 €0.20 C Ordinary shares and one £1.00 Ordinary A share.

***National Grid Electricity Transmission plc owns one £0.50 A Ordinary share.

†National Grid Electricity Transmission plc owns 50 £1.00 A Ordinary shares.

‡In administration.

Our interests and activities are held or operated through the subsidiaries, joint arrangements or associates as disclosed above. These interests

and activities (and their branches) are established in – and subject to the laws and regulations of – these jurisdictions.

The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 supported by

guarantees issued by National Grid plc over their liabilities for the year ended 31 March 2025:

Company name	Company number
National Grid Holdings Limited	3096772
National Grid International Limited	2537092
National Grid (US) Holdings Limited	2630496
National Grid (US) Investments 4 Limited	3867128
National Grid (US) Partner 1 Limited	4314432
NG Nominees Limited*	2489329

246	National Grid plc  Annual Report and Accounts 2024/25
Notes to the consolidated financial statements continued

35. Sensitivities

In order to give a clearer picture of the impact on our results or financial position of potential changes in significant estimates and assumptions,

the following sensitivities are presented. These sensitivities are based on assumptions and conditions prevailing at the year end and should

be used with caution. The effects provided are not necessarily indicative of the actual effects that would be experienced because our actual

exposures are constantly changing.

The sensitivities in the tables below show the potential impact in the income statement (and consequential impact on net assets) for a reasonably

possible range of different variables, each of which has been considered in isolation (i.e. with all other variables remaining constant). There are a

number of these sensitivities which are mutually exclusive, and therefore if one were to happen another would not, meaning a total showing how

sensitive our results are to these external factors is not meaningful.

The sensitivities included in the tables below broadly have an equal and opposite effect if the sensitivity increases or decreases by the same

amount unless otherwise stated.

(a) Sensitivities on areas of estimation uncertainty

The table below sets out the sensitivity analysis for certain areas of estimation uncertainty set out in note 1F. These estimates are those that have

a significant risk of resulting in a material adjustment to the carrying values of assets and liabilities in the next year. This includes the impact of

changes in assumptions on the net assets recognised at the balance sheet date and the amount charged to the income statement for the following

year. Note that the sensitivity analysis for the useful economic lives of our gas network assets is included in note 13.

	2025			2024
	Assumptions used	Income statement £m	Net assets £m	Assumptions used	Income statement £m	Net assets £m
Pensions and other post-retirement benefit liabilities (pre-tax):
UK discount rate change¹	1%	20	920	1%	22	1,147
US discount rate change¹	1%	18	784	1%	18	801
UK inflation rate change²	1%	6	701	1%	8	902
UK long-term rate of increase in salaries change	1%	1	52	1%	4	81
US long-term rate of increase in salaries change	1%	3	46	1%	2	37
UK change to life expectancy at age 653	one year	—	320	one year	2	402
US change to life expectancy at age 65	one year	2	181	one year	2	288
Assumed US healthcare cost trend rates change	1%	19	245	1%	18	276
US environmental provision:
Change in the real discount rate	1%	155	155	1%	173	173
Change in estimated future cash flows	20%	413	413	20%	462	462

1.A change in the discount rate is likely to be driven by changes in bond yields and, as such, would be expected to be offset to a significant degree by a change in the value of the bond

assets held by the plans. In the UK, there would also be a £288 million (2024: £171 million) net assets offset from the buy-in policies, where the accounting value of the buy‑in asset is set

equal to the associated liabilities.

2.The projected impact resulting from a change in RPI reflects the associated effect on escalation rates for pensions in payment and in deferment and future salary increases. The buy‑in

policies would have a £211 million (2024: £150 million) net assets offset to the above.

3.In the UK, the buy-in policies and in the prior year the longevity swap would have a £109 million (2024: £126 million) net assets offset to the above.

Pensions and other post-retirement benefits assumptions

Sensitivities have been prepared to show how the defined benefit obligations and forecast amounts charged to the income statement for the

following year could potentially be impacted by changes in the relevant actuarial assumptions that were reasonably possible as at 31 March 2025.

In preparing sensitivities, the potential impact has been calculated by applying the change to each assumption in isolation and assuming all other

assumptions remain unchanged. This is with the exception of RPI in the UK where the corresponding change to increases to pensions in payment,

increases to pensions in deferment and increases in salary are recognised.

(b) Sensitivities on financial instruments

We are further required to show additional sensitivity analysis under IFRS 7 and this is shown separately in the following table due to the

additional assumptions that are made in order to produce meaningful sensitivity disclosures. The analysis is prepared assuming the amount

of liability outstanding at the reporting date was outstanding for the whole year.

Our net debt as presented in note 29 is sensitive to changes in market variables, primarily being UK and US interest rates, the UK inflation rate

and the dollar to sterling exchange rate. These impact the valuation of our borrowings, deposits and derivative financial instruments. The analysis

illustrates the sensitivity of our financial instruments to reasonable possible changes in these market variables.

Strategic Report Corporate Governance Financial Statements Additional Information 247

35. Sensitivities continued

(b) Sensitivities on financial instruments continued

The following main assumptions were made in calculating the sensitivity analysis for continuing operations:

•the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives portfolio, and the proportion of financial

instruments in foreign currencies are all constant and on the basis of the hedge designations in place at 31 March 2025 and 2024

respectively;

•the statement of financial position sensitivity to interest rates relates to items presented at their fair values: derivative financial instruments;

and our investments measured at FVTPL and FVOCI. Further debt and other deposits are carried at amortised cost and so their carrying

value does not change as interest rates move;

•the sensitivity of interest expense to movements in interest rates is calculated on net floating rate exposures on debt, deposits and derivative

instruments;

•changes in the carrying value of derivatives from movements in interest rates of designated cash flow hedges are assumed to be recorded

fully within equity; and

•changes in the carrying value of derivative financial instruments designated as net investment hedges from movements in interest rates are

presented in equity as costs of hedging, with a one-year release to the income statement. The impact of movements in the dollar to sterling

exchange rate is recorded directly in equity.

	2025			2024
	Assumptions used	Income statement £m	Other equity reserves £m	Assumptions used	Income statement £m	Other equity reserves £m
Financial risk (post tax):
UK inflation change¹	1%	35	—	1%	36	—
UK interest rates change	1%	13	376	1%	24	304
US interest rates change	1%	18	134	1%	5	39
US dollar exchange rate change²	10%	69	225	10%	58	268

1.Excludes sensitivities to LPI curve. Further details on sensitivities are provided in note 32(g).

2.The other equity reserves impact does not reflect the exchange translation in our US subsidiaries’ net assets. It is estimated this would change by £1,730 million (2024: £1,680 million) in the

opposite direction if the dollar exchange rate changed by 10%.

Our commodity contract derivatives are sensitive to price risk. Additional sensitivities in respect to commodity price risk and to our derivative fair

values are as follows:

	2025			2024
	Assumptions used	Income statement £m	Net assets £m	Assumptions used	Income statement £m	Net assets £m
Commodity price risk (post tax):
Increase in commodity prices	10%	62	62	10%	43	43
Decrease in commodity prices	10%	(61)	(61)	10%	(43)	(43)
Assets and liabilities carried at fair value (post tax):
Fair value change in derivative financial instruments¹	10%	(57)	(57)	10%	(59)	(59)
Fair value change in commodity contract derivative liabilities	10%	3	3	10%	(6)	(6)

1.The effect of a 10% change in fair value assumes no hedge accounting.

36. Post balance sheet events

On 6 May 2025, NGG Finance plc issued an irrevocable notice of redemption for the £1 billion 5.625% fixed rate resettable capital securities.

This was to redeem all outstanding securities on the first optional redemption date of 8 June 2025. The maturity of the securities as at the reporting

date was 18 June 2073. In light of this information, the Group estimates that the financial effect of the settlement of this liability for cash in full is the

face value of the borrowing as well as the interest accrued, which amounted to £1,044 million as at 31 March 2025.

248 National Grid plc  Annual Report and Accounts 2024/25

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Strategic Report Corporate Governance Financial Statements Additional Information 249

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250 National Grid plc  Annual Report and Accounts 2024/25

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Strategic Report Corporate Governance Financial Statements Additional Information 251

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252 National Grid plc  Annual Report and Accounts 2024/25

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Strategic Report Corporate Governance Financial Statements Additional Information 253

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254 National Grid plc  Annual Report and Accounts 2024/25

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	Strategic Report	Corporate Governance	Financial Statements		Additional Information		255
Additional Information

Delivering

value

The business in detail
UK regulation	256
US regulation	258
Internal control and risk factors
Disclosure controls	262
Internal control over financial reporting	262
Risk factors	263
Shareholder information
Articles of Association	270
Depositary payments to the Company	271
Documents on display	271
Events after the reporting period	271
Exchange controls	271
Share information	272
Material interests in shares	272
Shareholder analysis	273
Taxation	274
UK stamp duty and stamp duty reserve tax (SDRT)	275
All-employee share plans	275
Other disclosures
Change of control provisions	276
Code of Ethics	276
Conflicts of interest	276
Corporate governance practices: differences from NYSE listing standards	276
Directors’ indemnity and Directors’ and Officers’ liability insurance	276

Employees	276
Human rights and modern slavery	277
Our people	277
Unresolved SEC staff comments	277
Property, plant, equipment and borrowings	277
Listing Rule 6.6.1 R cross-reference table	278
Political donations and expenditure	278
Material contracts	278
Research, development and innovation activity	278
Other unaudited financial information	279
Commentary on consolidated financial statements	295
Definitions and glossary of terms	297
Want more information or help?	302
Cautionary statement	303

256	National Grid plc  Annual Report and Accounts 2024/25
The business in detail

UK regulation

Regulators

Our licences to participate in transmission, distribution and

interconnection activities are established under the Electricity Act 1989.

These require us to develop, maintain and operate economic and

efficient networks and to facilitate competition in the supply of

electricity in GB. They also give us statutory powers, including the right

to bury our pipes or cables under public highways and the ability to use

compulsory powers to purchase land so we can conduct our business.

Our licensed activities are regulated by Ofgem, which has a statutory

duty under the Electricity Act 1989 to protect the interests of

consumers. To protect consumers from the ability of companies to set

unduly high prices, Ofgem has established price controls that limit the

amount of revenue such regulated businesses can earn. In setting price

controls, Ofgem must have regard to the need to secure that licence

holders are able to finance their obligations under the Electricity Act

1989. This should give us a level of revenue for the duration of the price

control that is sufficient to meet our statutory duties and licence

obligations with a reasonable return on our investments. Licensees and

other affected parties can appeal price controls or within period licence

modifications which have errors, including in respect of financeability.

Each of our UK ET and UK ED businesses operate under separate price

controls, which cover our roles as Transmission Owner (TO) and

Distribution Network Operator (DNO). UK ET fulfils the TO function for

electricity and UK ED fulfils the DNO activities.

The transmission and distribution businesses follow the RIIO (Revenue

= Incentives + Innovation + Outputs) framework established by Ofgem.

There are multiple price controls under this framework, including:

•RIIO-T1 (electricity transmission, April 2013 – March 2021);

•RIIO-T2 (electricity transmission, April 2021 – March 2026);

•RIIO-ED1 (electricity distribution, April 2015 – March 2023); and

•RIIO-ED2 (electricity distribution, April 2023 – March 2028).

TOs and DNOs in the UK are natural monopolies and, to ensure value

for money for consumers, UK ET and ED are regulated by Ofgem.

The operations are regulated under the respective transmission and

distribution licences which set the requirements that UK ET and ED

need to deliver for their customers. In addition to the base level of

revenue which the TOs and DNOs are allowed to earn, there are

incentives to innovate and deliver various outputs relating to customer

service, network performance, the environment, connections, DSO

activities and efficiency. The achievement or not of targets in relation

to these activities can result in rewards or penalties.

In addition to two regulated network price controls, there is also a tariff

cap and floor price control applied to regulation of our electricity

interconnector interests.

RIIO price controls

Under RIIO, the outputs we deliver are explicitly articulated and our

allowed revenues are linked to their delivery, although some outputs

and deliverables have only a reputational impact, penalty only

mechanism or are linked to legislation. These outputs reflect what our

stakeholders have told us they want us to deliver and were determined

through an extensive consultation process, which gave stakeholders a

greater opportunity to influence the decisions.

Using information we have submitted and, along with independent

assessments, Ofgem determines the efficient level of expected

costs necessary for these deliverables to be achieved. Under RIIO, this

is known as ‘totex’, which is a component of total allowable

expenditure and is broadly the sum of what was defined in previous

price controls as operating expenditure (opex) and capital expenditure

(capex).

A number of assumptions are necessary in setting allowances for the

outputs that we will deliver, including the volumes of work that will be

needed and the price of the various external inputs required to achieve

them. Consequently, there are a number of uncertainty mechanisms

within the RIIO framework designed to protect consumers and network

companies by avoiding the need to set allowances when future needs

and costs are uncertain.

Where we under- or over-spend the allowed totex for reasons that are

not covered by uncertainty mechanisms, there is a ‘sharing’ factor. This

means we share the under- or over-spend with customers through an

adjustment to allowed revenues in future years. This sharing factor

provides an incentive for us to provide the outputs efficiently, as we are

able to keep a portion of savings we make, with the remainder

benefitting our customers. Likewise, it provides a level of protection for

us if we need to spend more than allowances. Alongside this, there are

several specific areas where companies can submit further claims for

new allowances within the period, for instance to enable net zero.

Allowed revenue to fund totex costs is split between RIIO ‘fast’ and

‘slow’ money categories using specified ratios that are fixed for the

duration of the price control. Fast money represents the amount of

totex we are able to recover in the year of expenditure. Slow money is

added to our RAV – effectively the regulatory IOU.

For more details on the sharing factors under RIIO for our transmission

businesses, please see the tables on page 257.

Regulation of UK ED:

The RIIO-ED2 price control

RIIO-ED2, covering the period 1 April 2023 – 31 March 2028, is the

second electricity distribution price control to be set under the RIIO

model. It builds on from the framework established in the first price

control, RIIO-ED1, that ran for 8 years from 1 April 2015 to 31 March

2023.

Our RIIO-ED2 business plan was co-created with our stakeholders,

through our largest ever stakeholder consultation process with the

broadest range of representatives. In order to enable us to actively

drive the nation’s move to decarbonisation, our RIIO-ED2 business plan

has been designed to achieve four crucial outcomes for our customers:

•Affordability: We aim to continue to deliver high standards of safety,

reliability and customer service that customers have come to expect

from us, while keeping our portion of consumer bills affordable.

•Sustainability: We will support the UK’s ambitions to achieve net

zero carbon emissions by 2050, driving crucial changes in energy

usage and customer green behaviour. We will set the benchmark by

achieving net zero in our own operations by 2043 (excluding Scope 3

emissions) and we will work towards ensuring the network is ready to

enable local authorities to achieve similar ambitions in their regions.

We will also actively work with industry and Government to achieve

‘Clean Power 30’, within which at least 95% of the country’s

generation will come from clean sources including renewables. This

will see both UK ET and UK ED actively engaging with areas of

reform to ensure that the grid is decarbonised in a sustainable way.

•Connectability: We will strive to ensure that a lack of network

capacity is not a barrier for our customers. We will ensure that the

network can cater for the increasing demand of low carbon

technologies and renewable energy over the next five years, while

recognising that the generation mix needs to be balanced to retain

resilience for security of supply. We will actively work with Ofgem

and industry to reform the Connections processes, including

continuing engagement on a review of the End-to-End Connections

journey. This will ensure that the connections process meets

customer need, while enabling investment ahead of need to support

decarbonisation.

•Vulnerability: We will aim to deliver a first class programme of

inclusive support. This will include offering smart energy action plans

for vulnerable customers each year, ensuring no one is left behind in

a smart future. We will also strive to more than double our ground

breaking fuel poverty support to help at least 113,000 fuel poor

customers save £60 million on their energy bills over RIIO-ED2.

Strategic Report Corporate Governance Financial Statements Additional Information 257

Regulation of UK ET:

The RIIO-T2 price control

The RIIO-T2 price control started on 1 April

2021 and builds on the framework established

for RIIO-T1. For example, it introduced a range

of new mechanisms to facilitate the transition

to net zero, continues support for innovation,

incentivises us to deliver outputs and service

quality with ambitious targets aligned to our

customers’ and stakeholders’ requirements

and increases the opportunity to secure new

funding within the price control period.

The Independent User Group (IUG) includes

a cross-section of the energy industry and

represents the interests of consumers,

environmental and public interest groups, as

well as large-scale and small-scale customers.

It was established in July 2018 to ensure

stakeholders are at the heart of our decision-

making processes and our plan is fully

reflective of customers’, consumers’ and other

stakeholders’ requirements.

The IUG has an enduring role in RIIO-T2 with

three key focus areas:

•scrutinise and challenge the periodic

business plans;

•monitor, interrogate and help the business

to enhance transparency of performance

against commitments; and

•act as a ‘critical friend’ for strategy,

culture and processes in key areas

such as stakeholder engagement,

innovation, customers, consumers

and responsible businesses.

Competition in onshore transmission

We continue to support onshore competition

where it can deliver benefits to consumers.

The wider landscape has shifted significantly

since competition in onshore networks was

first considered, and continues to do so,

particularly around the move to centralised

network planning arrangements. We think it is

crucial that the competition framework is

designed in the right way to incentivise

innovation on design, ensure timely and robust

delivery and deliver benefits to customers. We

are working closely with NESO, DESNZ and

Ofgem to support the development of the

competition framework, ensuring that this is

aligned with the wider landscape, and to

support identification of a suitable pipeline of

projects. We support the ambition to tender a

suitable pilot project in Q4 2025 which should

be used to test the framework and to apply

learnings for future tenders.

Key parameters from Ofgem’s RIIO-ED2 determination for UK ED and RIIO-T2 determination for UK ET

	UK ED	UK ET
Allowed Return on Equity (RoE)1	5.28 – 5.59% (real, relative to CPIH) at 60% gearing	4.25 – 5.20% (real, relative to CPIH) at 55% gearing (4.52 – 5.59% at 60% gearing)
Allowed debt funding	Calculated and updated each year using 17-year trailing average of iBoxx Utilities 10+ year index, plus 25bps additional cost of borrowing, 55bps calibration adjustments, plus 6bps infrequent issuer premium for West Midlands, South Wales and South West	Calculated and updated each year using an extending ‘trombone-like’ trailing average of iBoxx Utilities 10+ year index (increases from 10 years for 2021/22 to 14 years for 2025/26), plus 25bps additional borrowing costs
Depreciation of RAV	Straight-line 45-year depreciation	No change in policy: straight-line over 45 years for post-2021 RAV additions, with pre-2021 RAV additions as per RIIO-T1
Notional gearing	60%	55%
Split between fast/slow money	Capitalisation rate 1 slow money 77% – 79% Capitalisation rate 2 slow money 85%	Fast: RIIO-T2 baseline 22%; RIIO-T2 uncertainty mechanisms 15% Slow: RIIO-T2 baseline 78%; TO uncertainty mechanisms 85%
Sharing factor	50%	33%
Core baseline totex (cumulative for the five years of RIIO-ED2 and of RIIO-T2)	£5.9 billion in 2020/21 prices	£5.8 billion

1.The cost of equity in RIIO-ED2 is subject to annual adjustments that are calculated using the Capital Asset Pricing Model, through indexation of the ‘risk-free rate’ parameter. The range

shown above is Ofgem’s estimate of the allowed RoE over the five years of RIIO-ED2, as updated in the RIIO-ED2 Price Control Financial Model published in December 2023. The cost

of equity in RIIO-T2 is subject to annual adjustments that are calculated using the Capital Asset Pricing Model, through indexation of the ‘risk-free rate’ parameter. The range shown above

is Ofgem’s estimate of the allowed RoE over the five years of RIIO-T2, as updated in the RIIO-T2 Price Control Financial Model published in January 2024.

258	National Grid plc  Annual Report and Accounts 2024/25
The business in detail continued

Regulation of NESO:

RIIO-2 price controls

NESO, which formed part of the Group for six months of the financial

year, had a bespoke regulatory framework under RIIO-2. Modifications

to its RIIO-2 price control, including regulatory instructions and

guidance and regulatory reporting pack for RIIO-2 took effect on 25

July 2024 to reflect the costs relating to new roles, Future System

Operator transition costs, National Grid payments and the introduction

of fixed BSUoS tariffs, ahead of the sale by National Grid to DESNZ of

NESO on 1 October 2024.

Interconnectors regulation

Interconnectors primarily derive their revenues from sales of capacity to

users who wish to move power between market areas with different

prices.

Under UK legislation, interconnection businesses must be separate

from the transmission businesses.

There is a range of different regulatory models available for

interconnector projects. These involve various levels of regulatory

intervention, ranging from fully merchant (where the project is fully

reliant on sales of interconnector capacity) to cap and floor.

The cap and floor regime is now the regulated route for interconnector

investment in GB and may be sought by project developers who do not

qualify for, or do not wish to apply for, exemptions from UK and

European legislation which would facilitate a merchant development.

Offshore hybrid assets (OHA) combine interconnection with offshore

wind. Ofgem established an OHA pilot scheme and decided that an

adjusted version of the cap and floor regulatory regime should apply to

those projects that receive approval within that scheme. The variations

to the interconnector cap and floor regime reflect the differing risks and

characteristics of OHAs. In November 2024, Ofgem initially approved

the LionLink to the Netherlands project, developed by National Grid

Ventures, for a pilot OHA regulatory regime.

US regulation

Regulators

In the US, public utilities’ retail transactions are regulated by state utility

commissions which serve as economic regulators, approving

cost recovery and authorised rates of return. The state commissions

establish the retail rates to recover the cost of transmission and

distribution services within their jurisdictions. They also serve the public

interest by making sure utilities provide safe and reliable services at just

and reasonable prices. The commissions establish service standards

and approve public utility mergers and acquisitions. State commissions

are also asked to approve a variety of programmes and costs related to

state energy and climate goals.

At the federal level, FERC regulates wholesale transactions for utilities,

such as interstate transmission and wholesale electricity sales,

including rates for these services. FERC also regulates public utility

holding companies and centralised service companies, including those

of our US businesses.

Regulatory process

The US regulatory regime is premised on allowing the utility the

opportunity to recover its cost of service and earn a reasonable return

on its investments as determined by each commission. Utilities submit

formal rate filings (rate cases) to the relevant state regulator when

additional revenues are necessary to provide safe, reliable service to

customers. Additionally, utilities can be compelled to file a rate case,

either due to complaints filed with the commission or at the

commission’s own discretion.

The rate case is sometimes negotiated with parties representing

customers and other interests. The utility is required to prove that the

requested rate change is just and reasonable, and the requested rate

plan can span multiple years. In the states where we operate,

it can typically take 9–13 months for the commission to render a final

decision, although, in some instances, rules allow for longer negotiation

periods which may extend the length of the rate case proceeding.

Unlike the state processes, FERC, as the federal regulator, has no

specified timeline for adjudicating a rate case; typically it makes a final

decision retroactively when the case is completed.

Gas and electricity rates are established from a revenue requirement, or

cost of service, equal to the utility’s total cost of providing distribution

or delivery services to its customers, as approved by the commission

in the rate case. This revenue requirement includes operating

expenses, depreciation, taxes, and a fair and reasonable return on

shareholder capital invested in certain components of the utility’s

regulated asset base or ‘rate base’.

The final revenue requirement and rates for service are approved in the

rate case decision. The revenue requirement is derived from

a comprehensive study of the utility’s total costs during a

representative 12-month period, referred to as a test year. Each

commission has its own rules and standards for adjustments to the test

year. These may include forecast capital investments and operating

costs.

Our rate plans

Each operating company has a set of rates for service. We have three

electric distribution operating companies: (1) Niagara Mohawk Power

Corporation, with operations in upstate New York; (2) Massachusetts

Electric Company; and (3) Nantucket Electric Company, the latter two

having operations in Massachusetts.

We also have four gas distribution operating companies: (1) Niagara

Mohawk Power Corporation, with operations in upstate New York; (2)

Brooklyn Union Gas Company, with operations in downstate New York;

(3) KeySpan Gas East Corporation, with operations in downstate New

York; and (4) Boston Gas Company, with operations in Massachusetts.

Our distribution operating companies have revenue decoupling

mechanisms that delink their revenues from the quantity of energy

delivered and billed to customers. These mechanisms remove the

natural disincentive utility companies have for promoting and

encouraging customer participation in

energy-efficiency programmes that lower energy end-use

and distribution volumes.

We bill our customers for their use of electricity and gas services.

Customer bills typically cover the cost of the commodity (electricity or

gas delivered) and charges covering our delivery service. Our

customers are allowed to select an unregulated competitive supplier for

the commodity component of electricity and gas utility services.

A substantial proportion of our costs, in particular electricity and gas

commodity purchases, are pass-through costs, fully recoverable from

our customers. We recover pass-through costs through making

separate charges to customers, designed to recover those costs with

no profit. We adjust the charges from time to time, often annually to

make sure that any over- or under-recovery of these costs is returned

to, or recovered from, our customers. Our rate plans are designed

to a specific allowed RoE, by reference to an allowed operating

expense level and rate base. Some rate plans include earnings-sharing

mechanisms that allow us to retain a proportion of the earnings above

our allowed RoE, achieved through improving efficiency, with the

balance benefiting customers. In addition, our performance under

certain rate plans is subject to service performance targets. We may be

subject to monetary penalties in cases where we do not meet those

targets.

Strategic Report Corporate Governance Financial Statements Additional Information 259

Our FERC-regulated transmission companies use formula rates

(instead of periodic stated rate cases) to set rates annually that recover

their cost of service. Through the use of annual true-ups, formula rates

recover our actual costs incurred and the allowed RoE based on the

actual transmission rate base each year. We must make annual formula

rate filings documenting the revenue requirement that customers can

review and challenge.

Revenue for our wholesale transmission businesses in New England

and New York is collected from wholesale transmission customers.

These are typically other utilities and include our own New England

electricity distribution businesses. With the exception of upstate New

York, which continues to combine retail transmission and distribution

rates to end-use customers, these wholesale transmission costs are

generally incurred by distribution utilities on behalf of their customers.

They are fully recovered as a pass-through from end-use customers, as

approved by each state commission.

Our Long Island generation plants sell capacity to the LIPA under 15-

year and 25-year power supply agreements and within wholesale tariffs

approved by FERC.

Through the use of cost-based formula rates, these long-term contracts

provide a similar economic effect to cost-of-service rate regulation.

One measure used to monitor the performance of our regulated

businesses is a comparison of achieved RoE to allowed RoE. However,

this measure cannot be used in isolation, as several factors may

prevent us from achieving the allowed RoE. These include financial

market conditions, regulatory lag (e.g. the time period after a rate or

expense is approved for recovery but before we collect the same from

customers) and decisions by the regulator preventing cost recovery in

rates from customers.

We work to increase achieved RoE through:

•productivity improvements;

•positive performance against incentives or earned savings

mechanisms, such as available energy-efficiency programmes; and

•filing a new rate case when achieved returns are lower than those

the Company could reasonably expect to attain through a new rate

case.

US regulatory revenue requirement

US regulatory filings

The objectives of our rate case filings are to make sure we have the

right cost of service and are able to earn a fair and reasonable rate of

return, while providing a safe, reliable and affordable service. To

achieve these objectives and reduce regulatory lag, we have been

successful in many cases in obtaining relief, such as:

•revenue-decoupling mechanisms;

•capital trackers;

•commodity-related bad debt true-ups;

•pension and other post-employment benefit true-ups, separately

from base rates; and

•performance-based frameworks such as incentives and multi-year

plans.

We explain these terms in the table on page 261.

Recent developments in rate filings and the regulatory environment are:

New York

•Niagara Mohawk filed a joint proposal setting forth a three-year rate

plan with the NYPSC in April 2025.

•A joint proposal setting forth a three-year rate plan for KEDNY and

KEDLI was approved by the NYPSC in August 2024.

Massachusetts

•In November 2023, we made a full rate case filing for Massachusetts

Electric Company and Nantucket Electric Company resulting in a

five-year ratemaking plan in September 2024.

•In November 2020, we made a full rate case filing for Boston Gas

Company resulting in a five-year performance-based ratemaking

plan in September 2021.

260	National Grid plc  Annual Report and Accounts 2024/25
The business in detail continued

Massachusetts

Massachusetts Electric Company and Nantucket Electric

Company rate cases

On 30 September 2024, the MADPU issued its order on our petition for

an increase in electric base distribution rates for Massachusetts Electric

Company and Nantucket Electric Company.

The MADPU approved a five-year rate plan with new rates effective 1

October 2024, an allowed Return on Equity of 9.35% on an equity ratio

of 52.83% and a revenue increase of $90.2 million. The order also

introduced a new regulatory recovery mechanism that provides timely

funding for growing capital investment requirements up to a cap,

alongside a performance based ratemaking (PBR-O) recovery

mechanism for operating and maintenance costs.  Additionally, it

approved a multi-tiered low-income discount rate along with

performance incentives for low-income programme enrolment and

distributed energy resources (DER) interconnections.

Boston Gas Company rate case

On 30 September 2021, the MADPU issued an order in Boston Gas

Company’s most recent rate case. The MADPU decision: (1) allowed an

increase in base revenues of $144.86 million, as compared with the

request for $220.74 million; (2) authorised an RoE of 9.7%, raised from

the previous RoE of 9.5%; (3) authorised a capital structure of 53.44%

equity and 46.56% debt; and (4) allowed for recovery of the costs of

133 new, incremental full-time employees. The decision also approved

the Boston Gas Company’s proposed five-year performance-based

ratemaking plan which adjusts distribution rates annually based on

a predetermined formula. Boston Gas Company had also presented its

Future of Heat proposals to address Massachusetts’ ambitious

greenhouse gas emissions reduction goals. These proposals are

innovative programmes and demonstration projects that the Boston

Gas Company has developed to reduce emissions, promote gas

demand response, and encourage the development of sustainable

heating options and new technologies to advance low-carbon heating

solutions. Ultimately, the MADPU elected to remove our Future of Heat

proposals from the rate case without prejudice for their consideration

as part of other proceedings. Subsequently, on 15 December 2021, the

MADPU approved the Boston Gas Company’s geothermal district

energy demonstration programme for five years with a budget of $15.6

million.

New York

Downstate New York 2023 rate cases – KEDNY and KEDLI

KEDNY and KEDLI rate cases approved by the NYPSC on 15 August

2024 updated our allowed revenues to reflect our cost of service more

closely, while maintaining affordable energy for customers. The joint

proposal approved by the NYPSC sets forth a three-year rate plan for

KEDNY and KEDLI sets forth overall annual revenue requirement

increases, including $444 million for KEDNY and $246.5 million for

KEDLI for the year ending on 31 March 2025. The joint proposal reflects

$1.57 billion in capital investments for KEDNY and KEDLI in the first

rate year to modernise KEDNY and KEDLI’s gas infrastructure to

implement safety improvements, enhance reliability and resilience,

replace ageing and leak-prone facilities, and reduce methane

emissions. The joint proposal aligns with our 2050 vision to support a

sustainable and affordable path towards a low-carbon energy future.

Additionally, the joint proposal includes initiatives to expand low-

income and energy-efficiency programmes, fund renewable natural gas

projects, and enhance customer service.

Upstate New York 2024 rate cases – NMPC

NMPC filed a rate case with the NYPSC on 28 May 2024 seeking to

update our allowed revenues to reflect our cost of service more closely,

while maintaining affordable energy for customers. A joint proposal

setting forth a three-year rate plan for NMPC was filed with the NYPSC

on 25 April 2025 setting forth overall annual revenue requirement

increases, including electric revenue increases of $288.4 million for the

Rate Year One ending 31 March 2026, $141.7 million for the Rate Year

Two ending 31 March 2027, and $194.8 million for the Rate Year Three

ending 31 March 2028, and gas revenue increases of $91.1 million for

the Rate Year One ending 31 March 2026, $31.1 million for the Rate

Year Two ending 31 March 2027, $38.6 million for the Rate Year Three

ending 31 March 2028. The joint proposal reflects $1,192.7 million in

electric capital investments and $392.5 million in gas capital

investments in 2024/25 to modernise NMPC electric and gas

infrastructure to ensure the reliability and safe operation of the energy

delivery system that serves 2.3 million Upstate New York residential

and business customers. NMPC’s current rate plan will be applicable

until this rate proceeding concludes.

Strategic Report Corporate Governance Financial Statements Additional Information 261

Summary of US price controls and rate plans

2021

2022

2023

2024

2025

2026

2027

Rate base (31 Mar 2025)

Equity-to-debt ratio

Allowed Return on Equity

Achieved Return on Equity (31 Mar 2025)

Revenue decoupling†

Capital tracker‡

Commodity-related bad debt true-up§

Pensio/OPEB true-up◊

NYPSC

Niagara Mohawk1,6 (upstate, electricity)

$9,232m

48:52

9.0%

7.19%

P

P

P

P

Niagara Mohawk (upstate, gas)

$2,266m

48:52

9.0%

4.64%

P

P

P

P

KEDNY (downstate)2

$7,212m

48:52

9.35%

10.52%

P

P

P

P

KEDU (downstate)3

$4,439m

48:52

9.35%

10.64%

P

P

P

P

Massachusetts Department of Public Utilities

Massachusetts Electric/Nantucket Electric

$3,766m

53:47

9.35%

8.1%

P

P

P

P

Massachusetts Gas5

$5,407m

53:47

9.7%

8.6%

P

P

P

P

Federal Energy Regulatory Commission

Canadian lnterconnector/Other4

$58m

65:35

11.1%

11.1%

n/a

P

n/a

P

New England Power

$2,937m

60:40

10.6%

11.1%

n/a

P

n/a

P

1.Both transmission and distribution, excluding standed costs.

2.KeySpan Energy Delivery New York (the Brooklyn Union Gas Company).

3.KeySpan Energy Delivery Long Island (KeySpan Gas East Corporation).

4.Equity ration and Return on Equity values are for the Canadian Interconnector only.

5.The chart shows the anticipated date rates are to be in effect.

6.National Grid, Department of Public Service Staff, and other settling parties filed a Joint

Proposal for a three-year rate plan beginning 1 May 2025 and ending 31 March 2028. The

settlement was filed on 25 April 2025 with an agreed upon 9.5% return on equity.

A final decision from the NYPSC is expected later this year.

Rate filing made	P	Feature in place
Rare pan dies	P	Feature partially in place
New rates effective
Rates continue indefinitely
Multi-year rate plan

† Revenue decoupling

A mechanism that removes the link between a utility's revenue and sales volume so that the

utility is indifferent to changes in usage. Revenues are reconciled to a revenue target, with

differences billed or credited to customers. This allows the utility to support energy efficiency.

‡ Capital tracker

A mechanism that allows the recovery of the revenue requirement of incremental capital

investment above that embedded in base rates, including depreciation and a return on the

incremental investment.

§ Commodity-related bad debt true-up

A mechanism that allows a utility to reconcile commodity-related bad debt either to actual

commodity-related bad debt or to a specified commodity-related bad debt write-off

percentage. For electricity utilities, this mechanism also includes working capital.

◊ Pension/OPEB true-up

A mechanism that reconciles the actual non-capitalised costs of pension and other post-

employment benefits (OPEB) and the actual amount recovered in base rates. The difference

may be amortised and recovered over a period or deferred for a future rate case.

262	National Grid plc  Annual Report and Accounts 2024/25
Internal control and risk factors

Disclosure controls Our management, including the Chief Executive and Chief Financial Officer, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of 31 March 2025. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives; however, their effectiveness has limitations, including the possibility of human error and the circumvention or overriding of the controls and procedures. Even effective disclosure controls and procedures provide only reasonable assurance of achieving their objectives. Based on the evaluation, the Chief Executive and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance. The information required for disclosure in the reports that we file and submit under the Securities Exchange Act 1934 is recorded, processed, summarised and reported as and when required and that such information is accumulated and communicated to our management, including the Chief Executive and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure. Internal control over financial reporting Our management, including the Chief Executive and Chief Financial Officer, have carried out an evaluation of our internal control over financial reporting pursuant to the Disclosure Guidance and Transparency Rules (DTR) and section 404 of the SOx Act. As required by section 404, management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Rules 13(a) – 5(f) and 15(d) – 15(f) under the Securities Exchange Act 1934). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management’s evaluation of the effectiveness of the Company’s internal control over financial reporting was based on the revised Internal Control – Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. Using this evaluation, management concluded that our internal control over financial reporting was effective as at 31 March 2025. Deloitte LLP, which has audited our consolidated financial statements for the year ended 31 March 2025, has also audited the effectiveness of our internal control over financial reporting. During the year, there were no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Risk factors Management of our risks is an important part of our internal control environment, as we describe on pages 263 – 268. In addition to the principal risks listed, we face a number of inherent risks that could have a material adverse effect on our business, financial condition, results of operations and reputation, as well as the value and liquidity of our securities. Any investment decision regarding our securities and any forward looking statements made by us should be considered in the light of these risk factors and the cautionary statement set out on page 303. An overview of the key inherent risks we face is provided on the pages that follow.

Strategic Report Corporate Governance Financial Statements Additional Information 263

Risk factors

Strategic risks

Law, regulation and political and economic uncertainty
Changes in law or regulation, or decisions by governmental bodies or regulators and increased political and economic uncertainty, could adversely affect us in a material way. Most of our businesses are utilities or networks subject to regulation by governments and other authorities. Changes in law or regulation or regulatory policy and precedent, and decisions of governmental bodies or regulators in the countries or states in which we operate could materially adversely affect us. In addition, regulatory priorities may change following elections, the effects of which remain highly uncertain. This includes the tariffs imposed by the US Federal Government, and its focus on natural gas and pausing of offshore wind leasing, which contrasts with UK policy where further legislation has been introduced to reduce power sector emissions and facilitate the transition to net zero. In the longer term, significant changes to law or regulation regarding usage of electricity or gas in jurisdictions where we operate or on our operating activities could limit the return expected on investment or regulated assets. More widely, the impacts of international political and economic uncertainty and disruption could also have a material adverse consequence on us. We may fail to deliver any one of our customer, investor and wider stakeholder propositions due to increased political and economic uncertainty.	Decisions or rulings concerning the following (as examples) could have a material adverse impact on our results of operations, cash flows, the financial condition of our businesses and the ability to develop those businesses in the future: •the RIIO (revenue = incentives + innovation + outputs) framework established by Ofgem, including the implementation of the RIIO-T2 and RIIO-ED2 price controls and upcoming determination of RIIO-T3 and RIIO-ED3 in the UK; •the implementation of and periodic determination of US rate plans; •whether licences, approvals or agreements to operate or supply are granted, amended or renewed, whether consents for construction projects are granted in a timely manner, or whether there has been any breach of the terms of a licence, approval or regulatory requirement; and •timely recovery of incurred expenditure or obligations, the ability to pass through commodity costs, a decoupling of energy usage and revenue, and other decisions relating to the impact of general economic conditions on us, our markets and customers, implications of climate change and of advancing energy technologies, whether aspects of our activities are contestable, and the level of permitted revenues and dividend distributions for our businesses. In October 2023, Ofgem published its decision on the Future Systems and Networks Regulation consultation, which confirmed Ofgem’s framework for RIIO-3 price controls expected to commence from 1 April 2026, and in March 2024 concluded its Sector Specific Methodology Consultation for the RIIO-T3 price control period. In December 2024, National Grid published its RIIO-T3 five year business plan and Ofgem’s final determinations will be published later this year. The outcome of this process could have a significant impact on our permitted returns in the five years starting on 1 April 2026, our results of operations, cash flows and financial condition. For further information, see pages 256 to 261, which explains our regulatory environment in detail.
Climate change commitments and targets
If we fail to meet our regulatory obligations, commitments or targets in relation to climate change and the energy transition, our reputation and business may be materially and adversely affected. We have set ambitious climate performance targets and commitments, including on reductions to greenhouse gas emissions, and we aim to deliver the critical infrastructure necessary to achieve wider climate change objectives. If we are unable to identify and/or deliver upon actions necessary to meet such targets, including due to third-party action or inaction and/or evolving standards, oversight or other requirements, this could undermine our ability to deliver our clean energy transition strategy, subject us to accusations of (or legal challenges related to) greenwashing, damage our reputation and limit our ability to influence future energy policy. Achievement of our climate commitments and targets is subject to risks and uncertainties, many of which are outside of our control and depend on, among other factors, investment and changes in operating practices by other energy sector participants, in particular risks related to generation of electricity by third parties and advances in technology and regulatory requirements that could impact how individuals and households use electricity, as well as regulatory, commercial and social trends in the jurisdictions where we operate.	These risks and uncertainties include, but are not limited to, the availability and cost of alternative fuels, global electrical charging infrastructure, off-site renewable energy and other materials and components; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis, such as carbon sequestration, hydrogen blending (and other uses of hydrogen) and/or other related processes; labour-related regulations and requirements that restrict or prohibit our ability to impose requirements on third-party contractors; customer acceptance of sustainable supply chain solutions; and the consummation of an acquisition of, or merger with, another company that has not adopted similar goals or whose progress toward reaching its goals is not as advanced as ours. Failure to achieve or maintain our climate performance targets, credentials and leadership may result in significant reputational harm, damage our relationship with key stakeholders, or result in regulatory enforcement and fines. We measure and report on certain climate-related metrics where required by regulation, as well as for strategic and management purposes. The processes involved in formulating and reporting against our climate and emissions targets are complex, and are subject to significant uncertainties, including with respect to the methodology, collection and verification of data, underlying estimates and assumptions, and the use of third-party information. In particular, it is not possible to rely on historical data as a strong indicator of future trajectories, and the climate scenarios employed in relation to climate metrics (and the models that analyse such scenarios) have limitations that are sensitive to key assumptions and parameters, which are themselves subject to some uncertainty and cannot fully capture all of the potential effects of climate, policy and technology driven outcomes. In addition, climate change and emissions data, models and methodologies are relatively new, rapidly evolving and have not historically been subject to the same or equivalent disclosure standards, historical reference points, benchmarks or globally accepted accounting principles as financial and other information. As a result, such data may subsequently be determined to be erroneous, and implementing systems to meet regulatory requirements may be complex, require significant investment or impose additional demands on management time. If our climate-related practices, reporting, regulatory compliance and performance do not meet investor or other stakeholder expectations, we could be subject to significant fines or penalties and our reputation and consequently our financial performance may be materially and adversely affected.

264	National Grid plc  Annual Report and Accounts 2024/25
Internal control and risk factors continued

Growth and business development activity
Failure to respond to external market developments and execute our growth strategy may negatively affect our performance. Conversely, new businesses or activities that we undertake alone or with partners, or the cessation of existing business or activities, may not deliver target outcomes and may expose us to additional operational and financial risk. Failure to grow our core business sufficiently and have viable options for new future business over the longer term, or failure to respond to the threats and opportunities presented by emerging technology or innovation (including for the purposes of adapting our networks to meet the challenges of increasing distributed energy resources), could negatively affect our credibility and reputation and jeopardise the achievement of intended financial returns. Our business development activities (including the delivery of our growth ambition) involve acquisitions, disposals (including the proposed sale of Grain LNG, announced in May 2024 and the sale of NGR, for which an agreement was announced on 24 February 2025 with Brookfield Asset Management), joint ventures, partnering and organic investment opportunities, such as development activities relating to changes to the energy mix and the integration of distributed energy resources and other advanced technologies.	These are subject to a wide range of both external uncertainties (including the availability of potential investment targets and attractive financing and the impact of competition for onshore transmission in both the UK and US) and internal uncertainties (including actual performance of our existing operating companies and our business planning model assumptions and ability to integrate acquired businesses effectively). As a result, we may suffer unanticipated costs and liabilities and other unanticipated effects. We may also be liable for the past acts, omissions or liabilities of companies or businesses we have acquired, which may be unforeseen or greater than anticipated. In the case of joint ventures, we may have limited control over operations and our joint venture partners may have interests that diverge from our own. We may also be required to seek additional licences or permits in connection with any such activities or initiatives, in particular with respect to transmission lines or renewable or other generation projects, which we may not be able to obtain on the timing, or terms anticipated, or at all. The occurrence of any of these events could have a material adverse impact on our results of operations or financial condition, and could also impact our ability to enter into other transactions. We may also be required to undertake certain acquisitions, investments or divestitures as mandated by regulatory bodies in the regions in which we operate. These could create financial or reputational risks or lead to changes to, or limitations being placed on, regulated activities and potentially, over the longer term, result in impairment of regulated assets and anticipated returns. As part of the UK Energy Act 2023, the UK Government announced its intention to create a new, operationally independent system operator and planner (ISOP) to act as the NESO for the UK. The National Grid Electricity Systems Operator (ESO) transferred out of the Group with effect from 1 October 2024. National Grid continues to provide services to the NESO following separation, which could subject the Group to public and/or regulatory scrutiny related to the operational practices of the NESO. This could have a material adverse impact on our results of operations or financial condition.
Business performance
Current and future business performance may not meet our expectations or those of our regulators and shareholders. Earnings maintenance and growth from our regulated gas and electricity businesses will be affected by our ability to meet or exceed efficiency and cost targets and service quality standards set by, or agreed with, our regulators.	If we do not meet these targets and standards, or if we are not able to deliver our price controls and rate plans successfully, we may not achieve the expected returns and benefits, our business may be materially adversely affected and our performance, results of operations and reputation may be materially harmed and we may be in breach of regulatory or contractual obligations.
Employees and others
We may fail to attract, develop and retain employees at all levels with the competencies (including leadership and business capabilities), values and behaviours required to deliver our strategy and vision and ensure they are engaged to act in our best interests. Our ability to implement our strategy depends on the capabilities and performance of our employees and leadership at all levels of the business. Our ability to implement our strategy and vision may be negatively affected by the loss of key personnel or an inability to adequately identify and plan for personnel requirements, including to attract, integrate, engage and retain appropriately qualified personnel (including people with the skills to help us deliver across our investment projects). Our ability to implement our strategy and vision may be negatively affected if significant disputes arise with our employees, such as failure to extend or renegotiate, as and when applicable, agreements with relevant trade unions.	As a result, there may be a material adverse effect on our business, financial condition, results of operations and prospects. There is a risk that an employee, or someone acting on our behalf, may breach our internal controls or internal governance framework, or may contravene applicable laws and regulations. This could have an impact on the results of our operations, our reputation and our relationship with our regulators and other stakeholders.

Strategic Report Corporate Governance Financial Statements Additional Information 265

Operational risks
Cyber or physical security breaches
Cyber or physical security breaches may impact our ability to operate our networks, initiate the loss of critical operating or confidential data and expose us to significant liabilities. As an owner and operator of critical infrastructure assets, we are subject to cyber and physical threats, including from parties who wish to disrupt our operations. In response to the conflict in Ukraine, the UK Government warned of heightened cyber threat to national infrastructure, and there can be no certainty that our security measures will be sufficient to prevent breaches from wherever they originate.	Malicious attack, sabotage or other intentional acts may also damage our assets (which include critical national infrastructure), systems or data or otherwise significantly affect corporate activities and, as a consequence, have a material adverse impact on our reputation, business, results of operations and financial condition. The third-party technology systems, hardware, software, and technical applications and platforms which we use may also be subject to attempts to disrupt the services they provide to us or used as a conduit to attack us. Unauthorised access to, or deliberate breaches of, our IT systems may also lead to manipulation of our proprietary business data or customer information. Unauthorised access to private customer information may make us liable for a violation of data privacy regulations, which may in turn expose us to significant regulatory fines or liabilities. Even where we establish business continuity controls and security against threats to our systems, these may not be sufficient. As threats related to cyber security develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure, which may impact our results of operations and financial condition.
Potentially harmful activities
Aspects of our activities could potentially harm employees, contractors, members of the public or the environment. Various potentially hazardous activities arise in connection with our business. For example, electricity and gas utilities typically use and generate hazardous and potentially hazardous products and by-products. In addition, there may be other aspects of our operations that are not currently regarded or proved to have adverse effects but could become so. A significant safety or environmental incident, a catastrophic failure of our assets or a failure of our safety processes or of our occupational health plans, as well as the breach of our regulatory or contractual obligations or our climate change targets, could materially adversely affect our results of operations and our reputation. Safety is a fundamental priority for us, and we commit significant resources and expenditure to process safety and to monitoring personal safety, occupational health and environmental performance, and to meeting our obligations under negotiated settlements.	We are subject to laws and regulations in the UK and US governing health and safety matters to protect the public and our employees and contractors, who could potentially be harmed by these activities, as well as laws and regulations relating to pollution, the protection of the environment, and the use and disposal of hazardous substances and waste materials, which are subject to change in the future. These expose us to costs and liabilities relating to our operations and properties, including those inherited from predecessor bodies, whether currently or formerly owned by us, and sites used for the disposal of our waste. The cost of future environmental remediation obligations is often inherently difficult to estimate, and uncertainties can include the extent of contamination, the appropriate corrective actions and our share of the liability. We are subject to regulation in relation to climate change and related reporting requirements, which are subject to significant change, and are affected by requirements to reduce our own carbon emissions as well as to enable a reduction in energy use by our customers. If more onerous requirements are imposed on our own operating and reporting requirements or our ability to recover these costs under regulatory frameworks changes, then this could have a material adverse impact on our business, reputation, results of operations and financial position.
Infrastructure and systems
We may suffer a major network failure or interruption, or may not be able to carry out critical operations due to the failure of infrastructure or technology or a lack of supply, including as a result of bulk power system failure. Operational performance could be materially adversely affected by a failure to maintain the health of our assets or networks, inadequate forecasting of demand, inadequate record keeping or control of data, as well as third-party energy generators, including upstream failure or inability to produce adequate or reliable supply. Such events, in turn, could cause us to fail to meet agreed standards of service, incentive and reliability targets, or to be in breach of a licence, approval, regulatory requirement or contractual obligation. Even incidents that do not amount to a breach could result in adverse regulatory and financial consequences, as well as harming our reputation. Where demand for electricity or gas exceeds supply, including where we do not adequately forecast and respond to disruptions in energy supplies, and our balancing mechanisms are not able to mitigate this fully, a lack of supply to consumers may damage our reputation. In addition to these risks, we may be affected by other potential events that are largely outside our control, such as the impact of weather (including as a result of climate change and major storms), unlawful or unintentional acts of third parties, outbreaks of hostilities or terrorist acts, insufficient or unreliable supply, or force majeure.	These items can affect financial performance, and we disclose in our underlying results to reflect, among other items, major storm costs in the US that are recoverable in future periods where these are in excess of $100 million (in aggregate) in the financial year. Severe weather that causes outages or damages infrastructure, together with our actual or perceived response, could materially adversely affect operational and potentially business performance and our reputation. Our insurance coverage may not cover all of the costs and liabilities we incur as the result of any damage or disruptions, including from these types of events outside our control, which in addition to any of the factors mentioned above may materially and adversely impact our business, results of operations and financial condition.

266	National Grid plc  Annual Report and Accounts 2024/25
Internal control and risk factors continued

Reliance on IT systems
A failure of our information technology infrastructure could adversely impact our business and results of operations. We rely upon the capacity, reliability and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure, including with the increasing use of artificial intelligence (AI) to meet our business requirements. Our systems may be vulnerable to damage from a variety of attacks or disruptions (including cyber-attacks), natural disasters, failures in hardware or software (including disruption to information systems of supporting technology, the possibility of obsolescence and the risk of serial defects on technology implemented by the Group), power fluctuations, unauthorised access to data and systems, loss or destruction of data (including confidential client information), human error, and other similar disruptions. Not all of these sources of threat are within our control, including fraud or malice on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, outbreaks of hostilities, or terrorist acts. Further, the use of AI may expose us to additional risk from cyber events and our employees may not have the experience to identify weaknesses in AI generated data. In addition we rely on third parties to support the operation of our IT hardware, software infrastructure and software-as-a-service applications, and cloud services. The security and privacy measures implemented by such third parties may not be sufficient to identify or prevent disruptions or cyber-attacks.	We cannot give assurance that any security measures we have implemented or may in the future implement will be sufficient to identify and prevent or mitigate such disruptions. Maintenance of these IT systems is important for our ongoing service delivery, and investment may be required in the future to further develop our IT capabilities and to protect against disruptions or security breaches. The failure of our IT systems or those of our vendors to perform as anticipated for any reason or any significant breach of security could disrupt our business and result in numerous adverse consequences, including reduced effectiveness and efficiency of operations, inappropriate disclosure of confidential and proprietary information, potentially significant reputational harm, increased overhead costs and loss of important information, and regulatory fines or other liabilities, any of which could have a material adverse effect on our business and results of operations. In addition, significant disruptions or breaches may require remedial steps to be taken, which could require us to incur significant costs. Although we maintain business continuity and/or disaster recovery plans, they may not in all circumstances be effective to timely resolve issues resulting from a disruption.
Supply chain disruptions
Supply chain disruption may materially and adversely affect our results of operations. We may be impacted by supply chain disruptions and shortages of materials, equipment, labour and other resources that are critical to our business operations, including the delivery of major projects. Such disruptions may be further exacerbated by geopolitical tensions and the imposition of tariffs by the US Federal Government. Long lead times for critical equipment, network components and replacement parts could restrict the availability and delay the construction, maintenance or repair of items that are needed to support our normal operations and may result in prolonged customer outages, which could in turn lead to unrecovered costs for such service interruptions. Demand for electric equipment is increasing due to utilities’ efforts to meet clean energy goals, planned capital expenditure projects and in order to prepare for more frequent extreme weather events at a time when manufacturing capacity and supply are decreasing.	Prices of materials, equipment, transportation and other resources have increased as a result of these supply chain disruptions and shortages and may furthermore continue to increase as a result of inflation. A prolonged continuation or a further increase in the severity of supply chain and inflationary pressures could result in additional increases in the cost of certain goods, services and cost of capital, and may lead to projects delays, which may materially and adversely impact our business, results of operations and financial condition.
Customers, suppliers and counterparties
Customers, suppliers and counterparties may not perform their obligations. Our operations are exposed to the risk that customers, suppliers, banks and other financial institutions, and others with whom we do business, will not satisfy their obligations, which could materially adversely affect our financial position. This risk is significant where our subsidiaries have concentrations of receivables from gas and electricity utilities and their affiliates, as well as industrial customers and other purchasers, and may also arise where customers, including consumers, are unable to pay us as a result of increasing commodity prices or adverse economic conditions impacting affordability.	To the extent that counterparties are contracted with us for physical commodities (gas and electricity) and they experience events that impact their own ability to deliver, we may suffer supply interruption. There is also a risk to us where we invest excess cash or enter into derivatives and other financial contracts with banks or other financial institutions. Banks that provide us with credit facilities may also fail to perform under those contracts.

Strategic Report Corporate Governance Financial Statements Additional Information 267

Investment projects
Our capital investment projects are subject to a number of risks and uncertainties, including availability of supplies and personnel, cost and scheduling oversight, and regulatory requirements, approvals and consents. Our regulated utility businesses are highly capital intensive, and require significant ongoing investments in network infrastructure including generation, transmission and distribution technologies and projects necessary to achieve our own, and wider, environmental goals. The successful completion of any such project depends on, or could be affected by, a variety of factors, including: effective cost and schedule management of the projects; availability of qualified construction personnel, both internal and contracted; changes in commodity and other prices, applicable tariffs, and/or availability of supplies, materials and equipment needed for undertaking such projects and maintaining assets once in use; governmental approvals and consents, permitting and planning; clarity in regulatory requirements and expectations, including open communication with regulators and relevant stakeholders throughout the planning, approval, investment and operational stages; changes in environmental, legislative and regulatory requirements; regulatory cost recovery; inflation, including of labour rates; increases in lead times; and disruptions in supply chain distribution.	In 2022, Ofgem announced its Accelerated Strategic Transmission Investment (ASTI) framework, aimed at achieving the UK government’s ambition of connecting 50 GW of offshore wind by 2030. Delivery of the 17 ASTI projects awarded to National Grid is expected to require an increase in the annual level of capital investment over the next decade. Our capacity to meet our commitments under the ASTI framework depends on a number of factors, including: the timely progression of awarded projects (including the planning stages and receipt of relevant approvals and consents); avoidance of significant supply chain disruptions and the continued availability of critical components; access to necessary labour and our ability to execute the relevant projects in line with regulatory standards and expectations. We are also undertaking significant capital investments in the US, including various renewable investment projects and leak-prone pipe replacements, further electric sector modernisation plans in Massachusetts, the Propel NY Energy Transmission Project in New York, and investments in furtherance of New York’s Climate Leadership and Community Protection Act (CLCPA). Adverse events associated with any of the factors set out above could materially impact our ability to achieve the benefits of such projects, including our ability to comply with licensing and regulatory requirements and to further our own, and the relevant governmental, net zero targets and commitments.
Pandemics and epidemics
We face risks related to health epidemics and other outbreaks. As seen in the context of COVID-19, pandemics and their associated countermeasures may affect countries, communities, supply chains and markets, including the UK and our service territory in the US. The spread of such pandemics could have adverse effects on our workforce, which could affect our ability to maintain our networks and provide service. In addition, disruption of supply chains could adversely affect our systems or networks. Pandemics can also result in extraordinary economic circumstances in our markets which could negatively affect our customers’ ability to pay their invoices in the US or the charges payable to the suppliers for transmission and distribution services in the UK. Measures such as the suspension of debt collection and customer termination activities across our service area in response to such pandemics are likely to result in near-term lower customer collections, and could result in increasing levels of bad debt and associated provisions.	The extent to which pandemics may affect our liquidity, business, financial condition, results of operations and reputation will depend on future developments, which are highly uncertain, and will depend on the severity of the relevant pandemic, the scope, duration, cost to us and overall economic impact of actions taken to contain it or treat its effects.

268	National Grid plc  Annual Report and Accounts 2024/25
Internal control and risk factors continued

Financial risks

Financing and liquidity
An inability to access capital markets on commercially acceptable terms could affect how we maintain and grow our businesses. We have historically financed our growth through a combination of funding sources, including retained operating cashflows, use of scrip dividend programme and issuances of senior and hybrid debt securities. As part of our five-year financial framework, we anticipate making approximately £60 billion of capital investments between 2024/25 and 2028/29, which we intend to finance through a package of funding sources that includes a combination of these sources of liquidity, as well as the net proceeds of the 2024 Rights Issue of around £7 billion, completed in June 2024. As further discussed below, reliance on these sources of liquidity can expose us to the risk of higher financing costs and the imposition of restrictions on our business. Some of the debt we issue is rated by credit rating agencies and changes to these ratings may affect both our borrowing capacity and borrowing costs. In addition, restrictions imposed by regulators, such as limits on debt to equity or regulatory capital values ratios, may also limit how we service the financial requirements of our current businesses or the financing of newly acquired or developing businesses. Financial markets can be subject to periods of volatility, including with respect to interest rates, and shortages of liquidity, for example as a result of unexpected political or economic events (such as pandemics or the conflict in Ukraine). If we were unable to access the capital markets or other sources of finance on commercially acceptable terms, our cost of financing may increase, and the manner in which we implement our strategy may need to be reassessed. Such events could have a material adverse impact on our business, results of operations and prospects. Some of our regulatory agreements and/or specific regulatory entities impose lower limits for the credit ratings that certain companies or securities issued by certain companies within the Group must hold or the amount of equity within their capital structures, including a limit requiring certain entities within the Group or securities issued by them to hold an investment-grade credit rating.	In addition, some of our regulatory arrangements impose restrictions on the way we can operate. These include regulatory requirements for us to maintain adequate financial resources within certain parts of our operating businesses and may restrict the ability of National Grid plc and some of our subsidiaries to engage in certain transactions, including paying dividends, lending cash and levying charges. The inability to meet such requirements, or the occurrence of any such restrictions, may have a material adverse impact on our business and financial condition. Our debt agreements and banking facilities contain covenants, including those relating to the periodic and timely provision of financial information by the issuing entity, restrictions on disposals and financial covenants, such as restrictions on the level of subsidiary indebtedness and minimum credit rating requirements. Failure to comply with these covenants, or to obtain waivers of those requirements, could in some cases trigger a right, at the lender’s discretion, to require repayment of some of our debt and may restrict our ability to draw upon our facilities or access the capital markets.
Exchange rates, interest rates and commodity price indices
Changes in foreign currency rates, interest rates or commodity prices could materially impact our earnings or financial condition. We have significant operations in the US and are therefore subject to the exchange rate risks normally associated with non-UK operations, including the need to translate US assets and liabilities, and income and expenses, into sterling (our reporting currency). As part of our ongoing capital expenditure requirements and investment projects, as well as projects planned under the ASTI programme, we are also exposed to currency fluctuations related to the purchase of equipment and components in currencies other than sterling.	In addition, our results of operations and net debt position may be affected because a significant proportion of our borrowings, derivative financial instruments and commodity contracts are affected by changes in interest rates, commodity price indices and exchange rates, in particular the dollar-to- sterling exchange rate. Furthermore, our cash flow may be materially affected as a result of settling hedging arrangements entered into to manage our exchange rate, interest rate and commodity price exposure (such as those relating to the purchase of electricity and gas in the US), or by cash collateral movements relating to derivative market values, which also depend on the sterling or US dollar exchange rate into euro and other currencies.
Post-retirement benefits
We may be required to make significant contributions to fund pension and other post-retirement benefits. We participate in a number of pension schemes that together cover substantially all our employees. In both the UK and US, such schemes include various large defined benefit schemes where the scheme assets are held independently of our own financial resources. In the US, we also have other post-retirement benefit schemes. Estimates of the amount and timing of future funding for the UK and US schemes are based on actuarial assumptions and other factors, including: the actual and projected market performance of the scheme assets; future long-term bond yields; average life expectancies; and relevant legal requirements.	Actual performance of scheme assets may be affected by volatility in debt and equity markets. Changes in these assumptions or other factors may require us to make additional contributions to these pension schemes which, to the extent they are not recoverable under our price controls or state rate plans, could materially adversely affect the results of our operations and financial condition.

Strategic Report Corporate Governance Financial Statements Additional Information 269

Index to Directors’ Report and other disclosures, as required under the Companies Act 2006
AGM	271	Financial instruments	206–208 and 253
Articles of Association	270	Future developments	16–17, 25–33
Audit information	153–161	Greenhouse gas emissions	20
Board of Directors	99–102	Human rights	56 and 277
Business model	8–10	Important events affecting the Company during the year	11–13
Change of control provisions	276	Internal control	34–35
Code of Ethics	276	Internal control over financial reporting	262
Conflicts of interest	276	Listing Rule 6.6.1 R cross-reference table	278
Directors’ indemnity	276	Material interests in shares	272
Directors’ service contracts and letters of appointment	136	Colleagues	23
Directors’ share interests	132	Political donations and expenditure	278
Diversity	111	Research, development and innovation	278
Dividends	191	Risk management	34–41
Events after the reporting period	271	Share capital	254

270	National Grid plc  Annual Report and Accounts 2024/25
Shareholder information

Articles of Association

The following description is a summary of the

material terms of our Articles of Association

(Articles) and applicable English law. It is

a summary only and is qualified in its entirety

by reference to the Articles.

The Articles set out the Company’s internal

regulations. Copies are available on our

website at nationalgrid.com/corporate-

governance and upon request. Amendments

to the Articles have to be approved by at least

75% of those voting at a general meeting of

the Company. Subject to company law and

the Articles, the Directors may exercise all the

powers of the Company. They may delegate

authorities and decision making and the day-

to-day management to individual Executive

Directors and Committees on page 98.

General

The Company is incorporated under the name

National Grid plc and is registered in England

and Wales with registered number 4031152.

Under the Companies Act 2006, the

Company’s objects are unrestricted.

Directors

Under the Articles, a Director must disclose

any personal interest in a matter and may not

vote in respect of that matter, subject to

certain limited exceptions. As permitted under

the Companies Act 2006, the Articles allow

non-conflicted Directors to authorise a conflict

or potential conflict for a particular matter.

In doing so, the non-conflicted Directors

must act in a way they consider, in good faith,

will most likely promote the success of the

Company for the benefit of the shareholders

as a whole.

The Directors (other than a Director acting in

an executive capacity) are paid fees for their

services. In total, these fees must not exceed

£2 million per year, or any higher sum decided

by an ordinary resolution at a general meeting

of shareholders. In addition, special pay may

be awarded to a Director who acts in an

executive capacity, serves on a committee,

performs services which the Directors

consider to extend beyond the ordinary duties

of a Director, devotes special attention to

the business of the Company, or goes or

lives abroad on the Company’s behalf.

Directors may also receive reimbursement

for expenses properly incurred and may be

awarded pensions and other benefits.

The compensation awarded to the Executive

Directors is determined by the Remuneration

Committee. Further details of Directors’

remuneration are set out in the Directors’

Remuneration Report (see pages 121 - 149).

The Directors may exercise all the powers of

National Grid to borrow money. However, the

aggregate principal amount of all the Group’s

borrowings outstanding at any time must not

exceed £55 billion or any other amount

approved by shareholders by an ordinary

resolution at a general meeting.

Directors can be appointed or removed by the

Board or shareholders at a general meeting.

Directors must stand for election at the first

AGM following their appointment to the Board.

The Articles provide that they must be

recommended by the Board or the Company

must have received written confirmation of

their willingness to act as Director. Under the

Articles, each Director must retire at least

every three years and be eligible for re-

election should they wish to continue to serve.

In accordance with the Code, all Directors

wishing to continue in office currently offer

themselves for re-election annually. No person

is disqualified from being a Director or is

required to vacate that office by reason of

attaining a maximum age.

A Director is not required to hold shares in

National Grid plc in order to qualify as

a Director.

Rights, preferences and restrictions

Dividend rights

National Grid may not pay any dividend

otherwise than out of profits available for

distribution under the Companies Act 2006

and other applicable provisions of English law.

In addition, as a public company, the

Company may only make a distribution if, at

the time of the distribution, the amount of its

net assets is not less than the aggregate of its

called-up share capital and undistributable

reserves (as defined in the Companies Act

2006), and to the extent that the distribution

does not reduce the amount of those assets

to less than that aggregate. Ordinary

shareholders and ADS holders receive

dividends.

Subject to these points, shareholders may,

by ordinary resolution, declare dividends in

accordance with the respective rights of the

shareholders, but not exceeding the amount

recommended by the Board. The Board may

pay interim dividends if it considers that the

Company’s financial position justifies the

payment. Any dividend or interest unclaimed

for 12 years from the date when it was

declared or became due for payment will be

forfeited and revert to the Company, and the

Articles clarify that the Company may use

such unclaimed dividends for the Company’s

benefit as the Directors may think fit.

Voting rights

Subject to any rights or restrictions attached

to any shares and to any other provisions of

the Articles, at any general meeting on a show

of hands, every shareholder who is present

in person will have one vote and, on a poll,

every shareholder will have one vote for every

share they hold. On a show of hands or

poll, shareholders may cast votes either

personally or by proxy. A proxy need not

be a shareholder. Under the Articles, all

substantive resolutions at a general meeting

must be decided on a poll and the Articles

further provide that voting on resolutions at

a general meeting that is held at least in part

using an electronic platform must be decided

on a poll. Ordinary shareholders and ADS

holders can vote at general meetings.

Liquidation rights

In a winding up, a liquidator may (in each case

with the sanction of a special resolution

passed by the shareholders and any other

sanction required under English law): (1) divide

among the shareholders the whole or any part

of National Grid’s assets (whether the assets

are of the same kind or not) – the liquidator

may, for this purpose, value any assets and

determine how the division should be carried

out as between shareholders or different

classes of shareholders; or (2) transfer any

part of the assets to Trustees on trust for the

benefit of the shareholders as the liquidator

determines. In neither case will a shareholder

be compelled to accept assets upon which

there is a liability.

Restrictions

There are no restrictions on the transfer or sale

of ordinary shares. Some of the Company’s

employee share plans, details of which are

contained in the Directors’ Remuneration

Report on pages 121 – 149, include

restrictions on the transfer of ordinary shares

while the ordinary shares are subject to the

plan. Where, under an employee share plan

operated by the Company, participants are the

beneficial owners of the ordinary shares but

not the registered owner, the voting rights may

be exercised by the registered owner at the

direction of the participant. Treasury shares

do not attract a vote or dividends.

Variation of rights

Subject to applicable provisions of English

law, the rights attached to any class of shares

of National Grid may be varied or cancelled.

This must be with the written consent of the

holders of three quarters in nominal value of

the issued shares of that class, or with the

sanction of a special resolution passed at a

separate meeting of the holders of the shares

of that class.

Strategic Report Corporate Governance Financial Statements Additional Information 271

General meetings

AGMs must be convened each year within six months of the Company’s accounting reference date upon 21 clear days’ advance written notice.

Under the Articles, any other general meeting may be convened provided at least 14 clear days’ written notice is given, subject to annual approval

of shareholders. In certain limited circumstances, the Company can convene a general meeting by shorter notice. The notice must specify, among

other things, the nature of the business to be transacted and the place, the date and the time of the meeting. The 2025 AGM will be held as a

combined physical and electronic meeting. Shareholders should monitor our website at nationalgrid.com/investors for any updates to the

arrangements for the AGM.

Rights of non-residents

There are no restrictions under the Articles that would limit the rights of persons not resident in the UK to vote in relation to ordinary shares.

Depositary payments to the Company

The Bank of New York Mellon (the ‘Depositary’) reimburses the Company for certain expenses it incurs in relation to the ADS programme, which

consist of the expenses for the mailing of annual financial reports, printing and distributing dividend cheques, the electronic filing of US federal tax

information, mailing required tax forms, stationery, postage, facsimiles and telephone calls. It also reimburses the Company for certain investor

relationship programmes or special investor relations promotional activities. There are limits on the amount of expenses for which the Depositary

will reimburse the Company, but the amount of reimbursement is not necessarily tied to the amount of fees the Depositary collects from investors.

For the period 22 May 2024 to 14 May 2025, the Company received a total of $1,906,095.88 in reimbursements from the Depositary consisting of

$101,782.80, $1,176,266.82 and $628,046.26 received on 7 August 2024, 22 August 2024 and 24 February 2025 respectively. Fees that are

charged on cash dividends will be apportioned between the Depositary and the Company. Any questions from ADS holders should be directed to

the Depositary at the contact details on page 302.

Description of securities other than equity securities: Depositary fees and charges

The Depositary collects fees by deducting them from the amounts distributed or by selling a portion of distributable property for:

•delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from

intermediaries acting for them; and

•making distributions to investors (including, it is expected, cash dividends).

The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

The Company’s Deposit agreement under which the ADSs are issued allows a fee of up to $0.05 per ADS to be charged for any cash distribution

made to ADS holders, including cash dividends. ADS holders who receive cash in relation to the 2024/25 final dividend will be charged a fee of

$0.02 per ADS by the Depositary prior to distribution of the cash dividend.

Persons depositing or withdrawing shares must pay:	For:
$5.00 per 100 ADSs (or portion of 100 ADSs)	Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property; cancellation of ADSs for the purpose of withdrawal, including if the Deposit agreement terminates; and distribution of securities distributed to holders of deposited securities that are distributed by the Depositary to ADS holders.
Registration or transfer fees	Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when they deposit or withdraw shares.
Expenses of the Depositary	Cable, telex and facsimile transmissions (when expressly provided in the Deposit agreement); and converting foreign currency to dollars.
Taxes and other governmental charges the Depositary or the Custodian has to pay on any ADS or share underlying an ADS - for example, stock transfer taxes, stamp duty or withholding taxes	As necessary.

Documents on display

National Grid is subject to the US SEC reporting requirements for foreign companies. The Company’s Form 20-F and other filings can be viewed

on the website as well as the SEC website at sec.gov.

Events after the reporting period

A post balance sheet event occurred. Please see note 36 on page 247 for details.

Exchange controls

There are currently no UK laws, decrees or regulations that restrict the export or import of capital, including, but not limited to, foreign exchange

control restrictions, or that affect the remittance of dividends, interest or other payments to non-UK resident holders of ordinary shares except as

otherwise set out in Taxation on pages 274 and 275 and except in respect of the governments of and/or certain citizens, residents or bodies of

certain countries (described in applicable Bank of England Notices or European Union Council Regulations in force as at the date of this

document).

272	National Grid plc  Annual Report and Accounts 2024/25
Shareholder information continued

Share information

National Grid ordinary shares are listed on the London Stock Exchange under the symbol NG. The ADSs are listed on the New York Stock

Exchange under the symbol NGG.

As at 14 May 2025, the share capital of the Company consists of 5,132,617,708 ordinary shares of 12204⁄473 pence nominal value each and ADSs,

which represent five ordinary shares each.

Disclosure of interests

Under the Companies Act 2006, National Grid may, by written notice, require a person whom it has reasonable cause to believe to be or to have

been, in the last three years, interested in its shares to provide additional information relating to that interest. Under the Articles, failure to provide

such information may result in a shareholder losing their rights to attend, vote or exercise any other right in relation to shareholders’ meetings.

Other than as stated below as far as we are aware, there are no persons with significant direct or indirect holdings in the Company. Information

provided pursuant to FCA’s DTR is published on the Regulatory Information Service and on the Company’s website.

The UK City Code on Takeovers and Mergers imposes strict disclosure requirements regarding dealings in the securities of an offeror or offeree

company, and also on their respective associates, during the course of an offer period. Other regulators in the UK, US and elsewhere may have,

or assert, notification or approval rights over acquisitions or transfers of shares.

Material interests in shares

As at 31 March 2025, National Grid plc had received notice, under the DTRs, in respect of the following holdings of 3% or more of the voting rights

in its issued ordinary share capital:

	Number of ordinary shares	% of voting rights1	Date of last notification of interest
BlackRock, Inc.	254,134,567	7.55	18 November 2024
Bank of America Corporation	216,654,059	5.89	7 June 2023
The Capital Group Companies, Inc.	182,521,721	4.99	8 September 2022

1.This number is calculated in relation to the issued share capital at the time the holding was disclosed.

As at 14 May 2025, no further notifications have been received.

The rights attached to ordinary shares are detailed on page 270. All ordinary shares and all major shareholders have the same voting rights.

The Company is not, to the best of its knowledge, directly or indirectly controlled.

Authority to purchase shares

Shareholder approval was given at the 2024 AGM to purchase up to 10% of the Company’s share capital (being 372,153,936 ordinary shares).

The Directors will seek shareholder approval to renew this authority at the 2025 AGM.

In some circumstances, the Company may find it advantageous to have the authority to purchase its own shares in the market, where the

Directors believe this would be in the interests of shareholders generally. The Directors believe that it is an important part of the financial

management of the Company to have the flexibility to repurchase issued shares to manage its capital base, including actively managing share

issuances from the operation of the Scrip Dividend Scheme. It is expected that repurchases to manage share issuances under the Scrip Dividend

Scheme will not exceed 2.5% of the issued share capital (excluding treasury shares) per annum.

When purchasing shares, the Company has taken, and will continue to take, into account market conditions prevailing at the time, other

investment and financing opportunities, and the overall financial position of the Company.

At the 2024 AGM, the Company sought authority to purchase ordinary shares in the capital of the Company as part of the management of the

dilutive effect of share issuances under the Scrip Dividend Scheme. During the year, the Company did not purchase any of its own shares, and

does not expect to do so whilst delivering strong asset growth.

	Number of shares	Total nominal value		% of called up share capital
Shares held in Treasury purchased in prior years1	247,391,032	£30,753,895.73	2	6.24	1
Shares purchased and held in Treasury during the year	—	—		—
Shares transferred from Treasury during the year (to employees under employee share plans)	11,897,097	£1,478,962.59		0.23	3
Maximum number of shares held in Treasury during the year4	247,391,032	£30,753,895.73	2	4.82	3

1.Called-up share capital: 3,967,138,214 ordinary shares as at 31 March 2024.

2.  Nominal value: 12204⁄473 pence per ordinary share.

3.  Called-up share capital: 5,132,617,708 ordinary shares as at the date of this report.

4.  Maximum number of shares held in Treasury during the year as at 31 March 2025.

As at 14 May 2025, the Company’s issued share capital comprised 5,132,617,708 ordinary shares including 231,181,188 ordinary shares held in

treasury. This represented 4.50% of the Company’s called-up share capital.

Strategic Report Corporate Governance Financial Statements Additional Information 273

Authority to allot shares

Shareholder approval was given at the 2024 AGM to allot shares of up to one third of the Company’s share capital. The Directors are seeking

a similar authority this year. The Directors consider that the Company will have sufficient flexibility with this level of authority to respond to market

developments and that this authority is in line with investor guidelines.

The Directors currently have no intention of issuing new shares, or of granting rights to subscribe for or to convert any security into shares, except

in relation to, or in connection with, the operation and management of the Company’s Scrip Dividend Scheme and the exercise of options under

the Company’s employee share plans. No issue of shares will be made that would effectively alter control of the Company without the sanction of

shareholders in a general meeting.

The Company expects to actively manage the dilutive effect of share issuance arising from the operation of the Scrip Dividend Scheme. In some

circumstances, additional shares may be allotted to the market for this purpose under the authority provided by this resolution. Under these

circumstances, it is expected that the associated allotment of new shares (or rights to subscribe for or convert any security into shares) will not

exceed 1% of the issued share capital (excluding treasury shares) per annum.

Dividend waivers

The Trustee of the National Grid Employee Share Trust, which is independent of the Company, waived the right to dividends paid during the year.

They have also agreed to waive the right to future dividends, in relation to the ordinary shares and ADSs held by the Trust.

Under the Company’s ADS programme, the right to dividends in relation to the ordinary shares underlying the ADSs was waived during the year,

under an arrangement whereby the Company pays the monies to satisfy any dividends separately to the Depositary for distribution to ADS holders

entitled to the dividend. This arrangement is expected to continue for future dividends.

Shareholder analysis

The following table includes a brief analysis of shareholder numbers and shareholdings as at 31 March 2025:

	Number of shareholders	% of shareholders1	Number of shares	% of shares1
1 – 50	126,529	20	395,1473	0
51 – 100	16,0244	25	11,265,974	0.28
101 – 500	273,010	43	57,602,885	1.45
501 – 1,000	39,294	6	27,292,457	0.69
1,001 – 10,000	37,315	6	91,146,916	2
10,001 – 50,000	1,531	0	28,584,621	0.72
50,001 – 100,000	201	0	14,274,195	0.36
100,001 – 500,000	460	0	109,401,059	2.76
500,001 – 1,000,000	135	0	97,580,250	2.46
1,000,001+	310	0	3,526,038,384	88.88
Total	639,029	100	3,967,138,214	100

1.Percentages have been rounded to two decimal places.

274	National Grid plc  Annual Report and Accounts 2024/25
Shareholder information continued

Taxation

This section provides information about

certain US federal income tax and UK tax

consequences for US Holders (defined below)

of owning ADSs and ordinary shares. A US

Holder is the beneficial owner of ADSs or

ordinary shares who:

•is for US federal income tax purposes

(1) an individual citizen or resident of the

US; (2) a corporation created or organised

under the laws of the US, any state thereof

or the District of Columbia; (3) an estate,

the income of which is subject to US

federal income tax without regard to its

source; or (4) a trust, if a court within the

US is able to exercise primary supervision

over the administration of the trust and one

or more US persons have the authority to

control all substantial decisions of the

trust, or the trust has elected to be treated

as a domestic trust for US federal income

tax purposes;

•is not resident in the UK for UK tax

purposes; and

•does not hold ADSs or ordinary shares in

connection with the conduct of a business

or the performance of services in the UK

or otherwise in connection with a branch,

agency or permanent establishment in

the UK.

This section is not a comprehensive

description of all the US federal income tax

and UK tax considerations that may be

relevant to any particular investor (including

consequences under the US alternative

minimum tax or net investment income tax).

Neither does it address state, local or other

tax laws. National Grid has assumed that

shareholders, including US Holders, are

familiar with the tax rules applicable to

investments in securities generally and with

any special rules to which they may be

subject. This discussion deals only with

US Holders who hold ADSs or ordinary shares

as capital assets. It does not address the tax

treatment of investors who are subject to

special rules. Such investors may include:

•financial institutions;

•insurance companies;

•dealers in securities or currencies;

•investors who elect mark-to-market

treatment;

•entities treated as partnerships or other

pass-through entities and their partners;

•individual retirement accounts and other

tax-deferred accounts;

•tax-exempt organisations;

•investors who own (directly or indirectly)

10% or more of our shares (by vote or

value);

•investors who hold ADSs or ordinary

shares as a position in a straddle, hedging

transaction or conversion transaction;

•individual investors who have ceased to be

resident in the UK for a period of five years

or less;

•persons who have ceased to be US

citizens or lawful permanent residents of

the US; and

•US Holders whose functional currency is

not the US dollar.

The statements regarding US and UK tax laws

and administrative practices set forth below

are based on laws, treaties, judicial decisions

and regulatory interpretations that were in

effect on the date of this document. These

laws and practices are subject to change

without notice, potentially with retroactive

effect. In addition, the statements set forth

below are based on the representations of the

Depositary and assume that each party to the

Deposit agreement will perform its obligations

thereunder in accordance with its terms.

US Holders of ADSs generally will be treated

as the owners of the ordinary shares

represented by those ADSs for US federal

income tax purposes. For the purposes of the

Tax Convention, the Estate Tax Convention

and UK tax considerations, this discussion

assumes that a US Holder of ADSs will be

treated as the owner of the ordinary shares

represented by those ADSs. HMRC has stated

that it will continue to apply its longstanding

practice of treating a holder of ADSs as

holding the beneficial interest in the ordinary

shares represented by the ADSs; however, we

note that this is an area of some uncertainty

and may be subject to change.

US Holders should consult their own advisors

regarding the tax consequences of buying,

owning and disposing of ADSs or ordinary

shares depending on their particular

circumstances, including the effect of any

state, local or other tax laws.

Taxation of dividends

The UK does not currently impose

a withholding tax on dividends paid to

US Holders.

US Holders should assume that any cash

distribution paid by the Depositary for ADSs

with respect to ADSs or ordinary shares will be

reported as dividend income for US federal

income tax purposes. While dividend income

received from non-US corporations is

generally taxable to a non-corporate US

Holder as ordinary income for US federal

income tax purposes, dividend income

received by a non-corporate US Holder from

us generally will be taxable at the same

favourable rates applicable to long-term

capital gains provided (1) either: (a) we are

eligible for the benefits of the Tax Convention

or (b) ADSs or ordinary shares are treated as

‘readily tradable’ on an established securities

market in the US; and (2) we are not, for our

taxable year during which the dividend is paid

or the prior year, a passive foreign investment

company for US federal income tax purposes,

and certain other requirements are met. We

expect that our shares will be treated as

‘readily tradable’ on an established securities

market in the US as a result of the trading of

ADSs on the New York Stock Exchange

(NYSE). We also believe we are eligible for the

benefits of the Tax Convention.

Based on our audited financial statements and

the nature of our business activities, we believe

that we were not treated as a Passive Foreign

Investment Company (PFIC) for US federal

income tax purposes with respect to our taxable

year ended 31 March 2025. In addition, based

on our current expectations regarding the value

and nature of our assets, the sources and

nature of our income, and the nature of

our business activities, we do not anticipate

becoming a PFIC in the foreseeable future.

Dividends received by corporate US Holders

with respect to ADSs or ordinary shares will

not be eligible for the dividends-received

deduction that is generally allowed to

corporations.

Taxation of capital gains

Subject to specific rules relating to assets that

derive at least 75% of their value from UK land,

US Holders will not be subject to UK taxation on

any capital gain realised on the sale or other

disposition of ADSs or ordinary shares.

Provided that we are not a PFIC for any

taxable year during which a US Holder holds

their ADSs or ordinary shares, upon a sale or

other disposition of ADSs or ordinary shares, a

US Holder generally will recognise a capital

gain or loss for US federal income tax

purposes that is equal to the difference

between the US dollar value of the amount

realised on the sale or other disposition and

the US Holder’s adjusted tax basis in the

ADSs or ordinary shares. Such capital gain or

loss generally will be long-term capital gain or

loss if the ADSs or ordinary shares were held

for more than one year. For non-corporate US

Holders, long-term capital gain is generally

taxed at a lower rate than ordinary income. A

US Holder’s ability to deduct capital losses is

subject to significant limitations.

US information reporting and backup

withholding tax

Dividend payments made to US Holders and

proceeds paid from the sale, exchange,

redemption or disposal of ADSs or ordinary

shares to US Holders may be subject to

information reporting to the US Internal

Revenue Service. Such payments may be

subject to backup withholding taxes if the US

Holder fails to provide an accurate taxpayer

identification number or certification of exempt

status or fails to comply with applicable

certification requirements.

US Holders should consult their tax advisors

about these rules and any other reporting

obligations that may apply to the ownership

or disposition of ADSs or ordinary shares.

Such obligations include reporting

requirements related to the holding of

certain foreign financial assets.

Strategic Report Corporate Governance Financial Statements Additional Information 275

UK stamp duty and stamp duty

reserve tax (SDRT)

Transfers of ordinary shares

SDRT at the rate of 0.5% of the amount or

value of the consideration will generally be

payable on any agreement to transfer ordinary

shares that is not completed using a duly

stamped instrument of transfer (such as

a stock transfer form).

The SDRT liability will be cancelled where

an instrument of transfer is executed and duly

stamped before the expiry of the six-year

period beginning with the date on which the

agreement is made. If a claim is made within

the specified period, any SDRT which has

been paid will be refunded. SDRT is due

whether or not the agreement or transfer is

made or carried out in the UK and whether or

not any party to that agreement or transfer is

a UK resident.

Purchases of ordinary shares completed using

a stock transfer form will generally result in

a UK stamp duty liability at the rate of 0.5%

(rounded up to the nearest £5) of the amount

or value of the consideration. Paperless

transfers under the CREST paperless

settlement system will generally be liable to

SDRT at the rate of 0.5%, and not stamp duty.

SDRT is generally the liability of the purchaser,

and UK stamp duty is usually paid by the

purchaser or transferee.

Transfers of ADSs

No UK stamp duty will be payable on the

acquisition or transfer of existing ADSs or

beneficial ownership of ADSs (in each case

in the form of ADRs), provided that any

instrument of transfer or written agreement

to transfer is executed outside the UK and

remains at all times outside the UK.

An agreement for the transfer of ADSs in the

form of ADRs will not result in an SDRT

liability. A charge to stamp duty or SDRT may

arise on the transfer of ordinary shares to the

Depositary or The Bank of New York Mellon

as agent of the Depositary (the ‘Custodian’).

The rate of stamp duty or SDRT will generally

be 1.5% of the value of the consideration

or, in some circumstances, the value of the

ordinary shares concerned. However, there is

no 1.5% SDRT charge on the issue of ordinary

shares (or, where a transfer is made in the

course of a “capital raising arrangement”,

being arrangements pursuant to which

securities are issued by a company for the

purpose of raising new capital) to the

Depositary or the Custodian.

The Depositary will generally be liable for the

stamp duty or SDRT. Under the terms of the

Deposit agreement, the Depositary will charge

any tax payable by the Depositary or the

Custodian (or their nominees) on the deposit

of ordinary shares to the party to whom the

ADSs are delivered against such deposits.

If the stamp duty is not a multiple of £5,

the duty will be rounded up to the nearest

multiple of £5.

UK inheritance tax

An individual who is domiciled in the US for

the purposes of the Estate Tax Convention

and who is not a UK national for the purposes

of the Estate Tax Convention will generally

not be subject to UK inheritance tax in respect

of 1) the ADSs or ordinary shares on the

individual’s death or 2) a gift of the ADSs

or ordinary shares during the individual’s

lifetime. This is not the case where the ADSs

or ordinary shares are part of the business

property of the individual’s permanent

establishment in the UK or relate to a fixed

base in the UK of an individual who performs

independent personal services.

Special rules apply to ADSs or ordinary shares

held in trust. In the exceptional case where the

ADSs or shares are subject both to UK

inheritance tax and to US federal gift or estate

tax, the Estate Tax Convention generally

provides for the tax paid in the UK to be

credited against tax paid in the US or vice

versa.

Capital gains tax (CGT) for UK resident

shareholders

You can find CGT information relating

to National Grid shares for UK resident

shareholders on the investors section of our

website nationalgrid/investors Share prices on

specific dates are also available on our

website.

All-employee share plans

The Company has a number of all-employee

share plans as described below, which

operated during the year. These allow UK-

or US-based employees to participate in tax-

advantaged plans and to become

shareholders in National Grid.

UK Sharesave

UK employees are eligible to participate in the

Sharesave Plan. Under this plan, participants

may contribute between £5 and £500 each

month, for a fixed period of three years, five

years, or both. Contributions are taken from

net salary. At the end of the fixed period,

participants may use their savings to purchase

ordinary shares in National Grid plc at a 20%

discounted option price, which is set at the

time of each Sharesave launch.

UK Share Incentive Plan (SIP)

UK employees are eligible to participate in the

SIP. Contributions up to £150 per month are

deducted from participants’ gross salary and

used to purchase National Grid plc ordinary

shares each month. The shares are placed

in a UK resident trust and are available to

the individual with tax advantages after

a five-year period.

US Employee Stock Purchase Plan

(ESPP)

Employees of National Grid’s participating

US companies are eligible to participate in the

ESPP (commonly referred to as a 423b plan).

Eligible employees have the opportunity to

purchase ADSs in National Grid on a monthly

basis at a 15% discounted price of the

Fair Market Value (FMV). Under the plan,

employees may contribute up to 20% of

base pay each year, up to a maximum annual

contribution of $21,250, to purchase $25,000

worth of ADSs at FMV.

US Incentive Thrift Plan

The Thrift Plan is open to all US employees

of participating National Grid companies; this

is a tax-advantaged savings plan (commonly

referred to as a 401(k) plan). This is a defined

contribution pension plan that gives

participants the opportunity to invest up to

applicable federal salary limits. The federal

limits for calendar year 2024 were: for pre-tax

contributions or Roth 401(k) after tax

contributions, a maximum of 50% of salary

limited to $23,000 for those under the age of

50 and $30,500 for those aged 50 and above;

and for post-tax contributions, up to 15%

of salary. The total amount of employee

contributions (pre-tax, Roth 401(k) and after

tax) could not exceed 50% of compensation.

The total amount of employee and employer

contributions collectively were subject to the

federal annual contribution limit of $69,000 for

those under the age of 50 and $76,500 for

those aged 50 and above. For the calendar

year 2025, participants may invest up to the

applicable federal salary limits: for pre-tax

contributions or Roth 401(k) after tax

contributions, this is a maximum of 50% of

salary limited to $23,500 for those under the

age of 50 and a standard limit of $31,000 for

those aged 50 and above. For those who will

be ages 60 to 63 by the end of calendar year

2025, the limit is $34,750 which is $3,750

higher than the standard limit for those 50 and

above. For post-tax contributions, this is up to

15% of salary.

The total amount of employee contributions

(pre-tax, Roth 401(k) and after tax) may not

exceed 50% of compensation. The total

amount of employee and employer

contributions collectively are subject to the

federal annual contribution limit of $70,000 for

those under the age of 50, a standard annual

contribution limit of $77,500 for those aged 50

and above and $81,250 for those who will be

ages 60 to 63 by the end of calendar year

2025. New contributions or exchanges into

the National Grid ADR Fund within the plan

are limited to 20% of a participant’s

account balance.

276	National Grid plc  Annual Report and Accounts 2024/25
Other disclosures

Change of control provisions

No compensation would be paid for loss of

office of Directors on a change of control of

the Company. As at 31 March 2025, the

Company had borrowing facilities of £6 billion

available and loans of £0.2 billion with a

number of banks, which, on a change of

control of the Company following a takeover

bid, may alter or terminate. All of

the Company’s share plans contain provisions

relating to a change of control. Outstanding

awards and options would normally vest and

become exercisable on a change of control,

subject to the satisfaction of any performance

conditions at that time. In the event of

a change of control of the Company, a

number of governmental and regulatory

consents or approvals are likely to be

required, arising from laws or regulations of

the UK or the US. Such consents or approvals

may also be required for acquisitions of equity

securities that do not amount to a change

of control.

No other agreements that take effect, alter

or terminate upon a change of control of the

Company following a takeover bid are

considered to be significant in terms of their

potential impact on the business as a whole.

Code of Ethics

The Board has adopted a Code of Ethics.

The Group’s Code of Ethics is available on

our website nationalgrid.com.

Conflicts of interest

In accordance with the Companies Act 2006,

the Board has a policy and procedure in

place for the disclosure and authorisation

(if appropriate) of actual and potential conflicts

of interest. The Board continues to monitor

and note possible conflicts of interest that

each Director may have, including a review on

appointment. The Directors are regularly

reminded of their continuing obligations in

relation to conflicts, and are required to review

and confirm their external interests annually.

Corporate governance

practices: differences from

NYSE listing standards

The Company is listed on the NYSE and is

therefore required to disclose differences in its

corporate governance practices adopted as

a UK listed company, compared with those of

a US company. The corporate governance

practices of the Company are primarily based

on the requirements of the Code but

substantially conform to those required of

US companies listed on the NYSE.

The following is a summary of the significant

ways in which the Company’s corporate

governance practices differ from those

followed by US companies under section

303A of the Corporate Governance Standards

of the NYSE.

The NYSE rules and the Code apply different

tests for the independence of Board

members.

The NYSE rules require a separate

nominating/corporate governance committee

composed entirely of independent directors.

There is no requirement for a separate

corporate governance committee in the UK.

Under the Company’s corporate governance

policies, all Directors on the Board discuss

and decide upon governance issues, and the

People & Governance Committee makes

recommendations to the Board with regard

to certain responsibilities of a corporate

governance committee.

The NYSE rules require listed companies

to adopt and disclose corporate governance

guidelines. While the Company reports

compliance with the Code in each Annual

Report and Accounts, the UK requirements do

not require the Company to adopt and

disclose separate corporate governance

guidelines.

The NYSE rules require a separate audit

committee composed of at least three

independent members. While the Company’s

Audit & Risk Committee exceeds the NYSE’s

minimum independent Non-executive Director

membership requirements, it should be noted

that the quorum for a meeting of the Audit &

Risk Committee, of two independent Non-

executive Directors, is less than the minimum

membership requirements under the

NYSE rules.

The NYSE rules require a compensation

committee composed entirely of independent

directors, and prescribe criteria to evaluate the

independence of the committee’s members

and its ability to engage external

compensation advisors. While the Code

prescribes different independence criteria, the

Non-executive Directors on the Company’s

Remuneration Committee have each been

deemed independent by the Board under the

NYSE rules. Although the evaluation criteria

for appointment of external advisors differ

under the Code, the Remuneration Committee

is solely responsible for the appointment,

retention and termination of such advisors.

Directors’ indemnity and

Directors’ and Officers’ liability

insurance

The Company has arranged, in accordance

with the Companies Act 2006 and the Articles,

qualifying third-party indemnities against

financial exposure that Directors may incur

in the course of their professional duties.

Equivalent qualifying third-party indemnities

were, and remain, in force for the benefit of

those Directors who stood down from the

Board in prior financial years for matters

arising when they were Directors of the

Company. Alongside these indemnities, the

Company places Directors’ and Officers’

liability insurance cover for each Director. To

the extent appropriate and required, similar

indemnities have also been given to Directors

of subsidiary and other associated companies,

who also benefit from Directors’ and Officers’

liability insurance cover.

Employees

We negotiate with recognised unions.

It is our policy to maintain well-developed

communications and consultation

programmes and there have been no material

disruptions to our operations from labour

disputes during the past four years. National

Grid believes that it can conduct its

relationships with trade unions and employees

in a satisfactory manner. Further details on

the Company’s colleagues can be found

on page 23.

Strategic Report Corporate Governance Financial Statements Additional Information 277

Human rights and modern slavery

As a responsible business, we take pride in

treating all employees and those working on

our behalf fairly and ensuring they thrive in a

respectful, safe, and inclusive environment.

Our commitment to maintaining the highest

standards of ethical conduct is reflected in our

robust policies and procedures. 

Our Supplier Code of Conduct sets out our

expectations to respecting, protecting and

promoting human rights. This aligns with the

UN Guiding Principles on Business and

Human Rights, the 10 Principles of the United

Nations Global Compact (UNGC), the

International Labour Organization (ILO) core

labour standards, the Ethical Trading Initiative

(ETI) Base Code, the UK Modern Slavery Act

2015, the US Victims of Trafficking and

Violence Protection Act 2000, the US

Department of State Guiding Principles to

Combat Human Trafficking, and the

requirements of the Living Wage Foundation

for UK suppliers. Additionally, it adheres to US

wage and hour laws, such as the Fair Labor

Standards Act. This code is updated and

communicated to our suppliers annually to

ensure continued collaboration.

We produce an annual Modern Slavery

Statement which outlines the actions we take

to assess potential risk in our wider operations

and take actions to address this. This includes

working collaboratively in the sector through

several membership organisations to build

awareness and capability in the supply chain.

We publish our Statement on the UK Home

Office modern slavery registry and encourage

our UK suppliers to publish a Statement on

modern slavery, regardless of whether it is

a legal obligation to do so.

We have engaged with Churches, Charities

and Local Authorities (CCLA) Investment

Management Limited, which established ‘Find

it, Fix it, Prevent it’ as a collaborative investor

engagement programme with the aim to use

the leverage of investors to help companies

‘find, fix and prevent’ modern slavery in their

supply chain. We keep engaging with CCLA

on how they can enhance the approach

to developing a benchmarking report of the

FTSE 100 companies and we continue to

improve corporate engagement and drive

positive change.

As a signatory member of UNGC, we

participated in its Business and Human Rights

Accelerator programme to increase our

awareness of the key considerations while

also providing guidance on how an

organisation can develop its strategy for

managing any actual or potential risks

associated with modern slavery.

We have been actively involved in the Supply

Chain Sustainability School (SCSS) Labour

working group and we were the first client

level signatory, alongside many of our main

contractors of the People Matter Charter. We

have also contributed to prioritising the key

focus of the Built Environment Against Slavery

Group in line with our business supply chain

sustainability strategy priorities.

Our People

Our employees are at the heart of what we do,

which is why we participated in the 2024

Workforce Disclosure Initiative (WDI). National

Grid has completed the WDI survey for the

past six years and we continue to enhance our

data year on year, obtaining a scorecard of

85% overall for our 2023 submission, above

the Utilities sector average. We obtained

100% in several sections, including Risk

assessment & human rights due diligence,

Worker voice & Representation, Supply Chain

Transparency, Responsible Sourcing and

Supply Chain Working Conditions.

Our recruitment programme is designed to

provide equal opportunities, comply with local

legislation, and guarantee that all employees

have the appropriate rights to work. We use

employment agency partners for attracting

temporary workers and they are contracted to

uphold the same standards of employment

that we offer our direct employees. Contract

Managers actively oversee these agencies,

ensuring they meet our rigorous employment

requirements, including relevant screenings,

paying the Real Living Wage, and adhering to

the ‘employer pays’ principle, which is a

commitment by employers to cover all costs

associated with the recruitment of workers,

rather than passing these costs on to the

workers themselves. This means that no

employee should ever have to pay towards

becoming a temporary or permanent worker

within our organisation or supply chain.

In the UK, we are committed to paying our

employees, trainees, and contractors working

on our behalf at least the Real Living Wage, as

determined by the Living Wage Foundation. In

the US, we ensure that all our employees

receive at least the minimum wage, with

prevailing wages paid in New York.

We have been actively involved in the SCSS

Labour working group and we were the first

client level signatory, alongside many of our

main contractors of the People Matter Charter.

The People Matter Charter was created to

help organisations and their supply chain

address potential human rights, safety and

inclusion challenges in one workforce

strategy. The Charter has eight commitments

that can apply to any organisation, of any size.

This flexibility provides us with a holistic

approach to addressing potential labour

issues in the industry. We promote the Charter

with our supply chain to provide them with a

framework that can support their due diligence

in their own value chain.

Unresolved SEC staff comments

There are no unresolved SEC staff comments

required to be reported.

Property, plant, equipment and

borrowings

This information can be found in note 13 to

the financial statements (Property, plant and

equipment) on pages 199 – 201, and note 33

(Borrowings) on page 254. The Group does

not have any encumbrances on material

operational assets. At present, environmental

issues are not preventing our UK and US

businesses from utilising any material

operating assets in the course of their

operations. It is inherent in our business that

assets may be affected by environmental

issues, see risk factor included on page 263

on potentially harmful activities.

278	National Grid plc  Annual Report and Accounts 2024/25
Other disclosures continued

UK principal offices

In the UK, our core regulated businesses

focus on electricity transmission and

distribution.

•Owned office space: Bristol, Cardiff, Castle

Donnington, Plymouth and Warwick

•Leased office space: London

US principal offices

In North America, our core regulated

businesses focus on transmission, distribution

and retail of gas and electricity.

•Owned office space: Syracuse, Buffalo,

Albany, Hicksville and Melville in New York.

Northborough in Massachusetts.

•Leased office space: Waltham and Boston

in Massachusetts.

•Brooklyn in New York.

Listing Rule 6.6.1 R cross-

reference table

Information required to be disclosed by LR

6.6.1 R (starting on page indicated):

Interest capitalised	Page 185
Publication of unaudited financial information	Page 279
Details of long-term incentive schemes	Page 141
Waiver of emoluments by a Director	Not applicable
Waiver of future emoluments by a Director	Not applicable
Non-pre-emptive issues of equity for cash	Not applicable
Item (7) in relation to major subsidiary undertakings	None
Parent participation in a placing by a listed subsidiary	Not applicable
Contracts of significance	Page 278
Provision of services by a controlling shareholder	Not applicable
Shareholder waivers of dividends	Page 273
Shareholder waivers of future dividends	Page 273
Agreements with controlling shareholders	Not applicable

Political donations

and expenditure

At this year’s AGM, the Directors will again

seek authority from shareholders, on

a precautionary basis, for the Company and

its subsidiaries to make donations to

registered political parties and other political

organisations and/or incur political

expenditure as such terms are defined in the

Companies Act 2006. In each case, donations

will be in amounts not exceeding £125,000 in

aggregate. The definitions of these terms in

the Companies Act 2006 are very wide. As a

result, this can cover bodies such as those

concerned with policy review, law reform and

the representation of the business community

(for example, trade organisations). It could

include special interest groups, such as those

involved with the environment, which the

Company and its subsidiaries might wish to

support, even though these activities are not

designed to support or influence support for a

particular party. The Companies Act 2006

states that all-party parliamentary groups are

not political organisations for these purposes,

meaning the authority to be sought from

shareholders is not relevant to interactions

with such groups. The Company has no

intention of changing its current practice of not

making political donations or incurring political

expenditure within the ordinary meaning of

those words. This authority is, therefore, being

sought to ensure that none of the Company’s

activities inadvertently infringe these rules.

National Grid made no political donations and

did not incur any political expenditure during

the year, as such terms are defined for the

purposes of the Companies Act 2006 and the

Political Parties, Elections and Referendums

Act 2000. In the US, we have established two

Political Action Committees, funded voluntarily

by employees, to support candidates who

share our vision, have positive impacts on the

communities we serve and are making a

difference, as set out in our Global Corporate

Policy on Political Contributions. National Grid

US’s affiliated New York and federal political

action committees (PAC) made political

contributions in the US totalling $76,650

during the year.

National Grid US’s affiliated New York PAC

(NYPAC) and National Grid US’s affiliated

federal PAC were funded wholly by voluntary

employee contributions. Neither PAC received

any corporate contributions during the past

fiscal year.

Material contracts

Each of our Executive Directors has a service

agreement and each Non-executive Director

has a letter of appointment. Apart from these,

no contract (other than contracts entered into

in the ordinary course of business) has been

entered into by the Group within the two years

immediately preceding the date of this report

that is, or may be, material; or which contains

any provision under which any member of the

Group has any obligation or entitlement which

is material to the Group at the date of this

report.

Research, development

and innovation activity

Indications of our activities in the field of

research and development and innovation are

provided throughout the Strategic Report and

the Directors’ report, including:

•In our business unit sections on pages 25 –

33.

•Within UK ET, in December, we submitted

our five-year business plan to Ofgem. This

plan is the largest overhaul of the UK

electricity grid in generations and will

significantly reduce the UK’s reliance on

fossil fuels. The UK ET plan sets out

investment of up to £35 billion between

2026 and 2031, around two and a half times

UK ET’s investment over the previous

period (RIIO-T2).

•In US NE, our ESMP, or Future Grid Plan,

was approved as a strategic roadmap by

the MADPU. The plan outlines c.$2 billion in

anticipatory investments in the electrical

distribution system that are foundational to

meeting energy demand that is projected to

more than double by 2050.

•In US NY, we commissioned the largest

dynamic line rating (DLR) project in the US

and the first in New York State, using 26

LineVision sensors on four 115 kV lines in

Western New York. This allows us to reduce

curtailment of renewable energy and

congestion in constrained areas, limiting

unnecessary transmission upgrades and

new builds.

•National Grid Partners, in 2024/25, invested

more than $50 million in start ups – and

committed to invest an additional $100

million in AI startups.

Further examples of our innovation activity can

be found as examples of our strategy priorities

on pages 14 and 15.

Investment in research and development

during the year for the Group was £43 million

(2023/24: £32 million). We only disclose

directly incurred expenditure, and not those

amounts our partners contribute to joint

or collaborative projects. Collaborating across

the industry has played a crucial role in our

ability to develop new programmes and deliver

value to our stakeholders throughout 2024/25.

	Strategic Report	Corporate Governance	Financial Statements		Additional Information		279
Other unaudited financial information

Alternative performance measures/non-IFRS reconciliations

Within the Annual Report, a number of financial measures are presented. These measures have been categorised as alternative performance

measures (APMs), as per the European Securities and Markets Authority (ESMA) guidelines and the Securities and Exchange Commission (SEC)

conditions for use of non-GAAP financial measures.

An APM is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined

under IFRS. The Group uses a range of these measures to provide a better understanding of its underlying performance. APMs are reconciled to

the most directly comparable IFRS financial measure where practicable.

Following the Rights Issue and the restatement of prior year earnings per share to reflect the impact of the bonus element within the IFRS results,

the same restatement has been applied to all our earnings per share APM metric comparatives. We have also changed the methodology used to

calculate our Group RoE metric, as noted in the detailed calculation. Comparative amounts have been restated accordingly.

The Group has defined the following financial measures as APMs derived from IFRS: net revenue, the various adjusted operating profit, earnings

and earnings per share metrics detailed in the ‘adjusted profit measures’ section below, net debt, funds from operations (FFO), FFO interest cover

and retained cash flow (RCF)/adjusted net debt. For each of these we present a reconciliation to the most directly comparable IFRS measure.

We present ‘constant currency’ comparative period performance and capital investment by applying the current year average exchange rate

to the relevant US dollar amounts in the comparative periods presented, to remove the year-on-year impact of foreign exchange translation.

We also have a number of APMs derived from regulatory measures which have no basis under IFRS; we call these Regulatory Performance

Measures (RPMs). They comprise: Group RoE, operating company RoE, regulated asset base, regulated financial performance, regulatory gearing,

asset growth and regulated asset growth. These measures include the inputs used by utility regulators to set the allowed revenues for many of

our businesses.

In previous years, we additionally used Value Added and Value Growth APMs to monitor the performance of the Group. These metrics were linked

to Executive LTPP incentive awards that fully vested in 2023/24. On the basis that the Group no longer uses these measures, the disclosure of

these additional Group APMs has been discontinued in 2024/25.

We use RPMs to monitor progress against our regulatory agreements and certain aspects of our strategic objectives. Further, targets for certain

of these performance measures are included in the Company’s Annual Performance Plan (APP) and LTPP and contribute to how we reward our

employees. As such, we believe that they provide close correlation to the economic value we generate for our shareholders and are therefore

important supplemental measures for our shareholders to understand the performance of the business and to ensure a complete understanding

of Group performance.

As the starting point for our RPMs is not IFRS, and these measures are not governed by IFRS, we are unable to provide meaningful reconciliations

to any directly comparable IFRS measures, as differences between IFRS and the regulatory recognition rules applied have built up over many

years. Instead, for each of these we present an explanation of how the measure has been determined and why it is important, and an overview

as to why it would not be meaningful to provide a reconciliation to IFRS.

Alternative performance measures

Net revenue and underlying net revenue

‘Net revenue’ is revenue less pass-through costs, such as UK system balancing costs and gas and electricity commodity costs in the US. Pass-

through costs are fully recoverable from our customers and are recovered through separate charges that are designed to recover those costs with

no profit. Where revenue received or receivable exceeds the maximum amount permitted by our regulatory agreement, adjustments will be made

to future prices to reflect this over-recovery. No liability is recognised, as such an adjustment to future prices relates to the provision of future

services. Similarly, no asset is recognised where a regulatory agreement permits adjustments to be made to future prices in respect of an under-

recovery. ‘Underlying net revenue’ further adjusts net revenue to remove the impact of ‘timing’, i.e. the in-year difference between allowed and

collected revenues, including revenue incentives, as governed by our rate plans in the US or regulatory price controls in the UK (but excluding

totex-related allowances and adjustments).

Year ended 31 March 2025	Gross revenue £m	Pass- through costs £m	Net revenue £m	Timing £m	Underlying net revenue £m
UK Electricity Transmission	2,619	(455)	2,164	151	2,315
UK Electricity Distribution	2,424	(185)	2,239	(407)	1,832
UK Electricity System Operator	1,029	(1,217)	(188)	479	291
New England	4,306	(1,658)	2,648	(61)	2,587
New York	6,689	(2,487)	4,202	343	4,545
National Grid Ventures	1,397	—	1,397	—	1,397
Other	122	—	122	—	122
Sales between segments	(208)	—	(208)	—	(208)
Total – continuing operations	18,378	(6,002)	12,376	505	12,881
Discontinued operations	—	—	—	—	—
Total	18,378	(6,002)	12,376	505	12,881

280	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Year ended 31 March 2024	Gross revenue £m	Pass- through costs £m	Net revenue £m	Timing £m	Underlying net revenue £m
UK Electricity Transmission	2,735	(225)	2,510	(363)	2,147
UK Electricity Distribution	1,795	(233)	1,562	159	1,721
UK Electricity System Operator	3,788	(2,605)	1,183	(800)	383
New England	3,948	(1,653)	2,295	69	2,364
New York	6,094	(2,057)	4,037	20	4,057
National Grid Ventures	1,389	—	1,389	—	1,389
Other	244	—	244	—	244
Sales between segments	(143)	—	(143)	—	(143)
Total – continuing operations	19,850	(6,773)	13,077	(915)	12,162
Discontinued operations	—	—	—	—	—
Total	19,850	(6,773)	13,077	(915)	12,162

Year ended 31 March 2023	Gross revenue1 £m	Pass- through costs £m	Net revenue £m	Timing £m	Underlying net revenue £m
UK Electricity Transmission	1,987	(217)	1,770	112	1,882
UK Electricity Distribution	2,045	(418)	1,627	139	1,766
UK Electricity System Operator	4,690	(4,152)	538	(207)	331
New England	4,427	(2,095)	2,332	39	2,371
New York	6,994	(2,957)	4,037	(53)	3,984
National Grid Ventures	1,341	—	1,341	—	1,341
Other	317	—	317	—	317
Sales between segments	(142)	—	(142)	—	(142)
Total – continuing operations	21,659	(9,839)	11,820	30	11,850
Discontinued operations	1,604	(658)	946	(12)	934
Total	23,263	(10,497)	12,766	18	12,784

1.Excluding exceptional income.

Adjusted profit measures

In considering the financial performance of our business and segments, we use various adjusted profit measures in order to aid comparability

of results year-on-year. The various measures are presented on pages 79 – 89 and reconciled below.

Adjusted results – these exclude the impact of exceptional items and remeasurements that are treated as discrete transactions under IFRS

and can accordingly be classified as such. This is a measure used by management that is used to derive part of the incentive target set annually

for remunerating certain Executive Directors, and further details of these items are included in note 5 to the financial statements.

Underlying results – further adapts our adjusted results for continuing operations to take account of volumetric and other revenue timing differences

arising due to the in-year difference between allowed and collected revenues, including revenue incentives, as governed by our rate plans in the

US or regulatory price controls in the UK (but excluding certain totex-related allowances in NGET and adjustments or allowances for pension

deficit contributions). For 2024/25, as highlighted below, our underlying results exclude £505 million (2023/24: £915 million) of timing differences

as well as £87 million (2023/24: £226 million) of major storm costs (as costs, net of in-year allowances and deductibles exceeded our $100 million

threshold in both years). We expect to recover major storm costs incurred through regulatory mechanisms in the US. Underlying results also exclude

deferred tax in our UK regulated businesses (NGET and NGED). Our UK regulated revenues contain an allowance for current tax, but not for

deferred tax, so excluding the IFRS deferred tax charge aligns our underlying results APM more closely with our regulatory performance measures.

Constant currency – the adjusted profit measures are also shown on a constant currency basis to show the year-on-year comparisons excluding

any impact of foreign currency translation movements.

Strategic Report Corporate Governance Financial Statements Additional Information 281

Reconciliation of statutory, adjusted and underlying profits from continuing operations at actual exchange rates

Year ended 31 March 2025	Statutory £m	Exceptionals and remeasurements £m	Adjusted £m	Timing £m	Major storm costs £m	Deferred tax on underlying profits in NGET and NGED £m	Underlying £m
UK Electricity Transmission	1,277	—	1,277	151	—	—	1,428
UK Electricity Distribution	1,598	12	1,610	(407)	—	—	1,203
UK Electricity System Operator	(213)	(151)	(364)	479	—	—	115
New England	1,008	(26)	982	(61)	3	—	924
New York	1,269	(246)	1,023	343	84	—	1,450
National Grid Ventures	5	375	380	—	—	—	380
Other	(10)	(133)	(143)	—	—	—	(143)
Total operating profit	4,934	(169)	4,765	505	87	—	5,357
Net finance costs	(1,357)	(4)	(1,361)	—	—	—	(1,361)
Share of post-tax results of joint ventures and associates	73	2	75	—	—	—	75
Profit before tax	3,650	(171)	3,479	505	87	—	4,071
Tax	(821)	(40)	(861)	(133)	(23)	401	(616)
Profit after tax	2,829	(211)	2,618	372	64	401	3,455

Year ended 31 March 2024	Statutory £m	Exceptionals and remeasurements £m	Adjusted £m	Timing £m	Major storm costs £m	Deferred tax on underlying profits in NGET and NGED £m	Underlying £m
UK Electricity Transmission	1,674	3	1,677	(363)	—	—	1,314
UK Electricity Distribution	975	18	993	159	—	—	1,152
UK Electricity System Operator	382	498	880	(800)	—	—	80
New England	641	2	643	69	90	—	802
New York	362	498	860	20	136	—	1,016
National Grid Ventures	558	(89)	469	—	—	—	469
Other	(117)	57	(60)	—	—	—	(60)
Total operating profit	4,475	987	5,462	(915)	226	—	4,773
Net finance costs	(1,464)	(15)	(1,479)	—	—	—	(1,479)
Share of post-tax results of joint ventures and associates	37	64	101	—	—	—	101
Profit before tax	3,048	1,036	4,084	(915)	226	—	3,395
Tax	(831)	(152)	(983)	227	(61)	302	(515)
Profit after tax	2,217	884	3,101	(688)	165	302	2,880

Year ended 31 March 2023	Statutory £m	Exceptionals and remeasurements £m	Adjusted £m	Timing £m	Major storm costs £m	Deferred tax on underlying profits in NGET and NGED £m	Underlying £m
UK Electricity Transmission	993	2	995	112	—	—	1,107
UK Electricity Distribution	1,069	22	1,091	139	—	—	1,230
UK Electricity System Operator	237	1	238	(207)	—	—	31
New England	1,132	(424)	708	39	72	—	819
New York	541	200	741	(53)	186	—	874
National Grid Ventures	957	(467)	490	—	—	—	490
Other	(50)	81	31	—	—	—	31
Total operating profit	4,879	(585)	4,294	30	258	—	4,582
Net finance costs	(1,460)	(54)	(1,514)	—	—	—	(1,514)
Share of post-tax results of joint ventures and associates	171	19	190	—	—	—	190
Profit before tax	3,590	(620)	2,970	30	258	—	3,258
Tax	(876)	241	(635)	(4)	(70)	178	(531)
Profit after tax	2,714	(379)	2,335	26	188	178	2,727

282	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Reconciliation of adjusted and underlying earnings from continuing operations at constant currency

		At constant currency
	Adjusted at actual exchange rate £m	Constant currency adjustment £m	Adjusted £m	Timing £m	Major storm costs £m	Deferred tax on underlying profits in NGET and NGED £m	Underlying £m
Year ended 31 March 2024
UK Electricity Transmission	1,677	—	1,677	(363)	—	—	1,314
UK Electricity Distribution	993	—	993	159	—	—	1,152
UK Electricity System Operator	880	—	880	(800)	—	—	80
New England	643	(2)	641	69	90	—	800
New York	860	(3)	857	20	136	—	1,013
National Grid Ventures	469	—	469	—	—	—	469
Other	(60)		(60)	—	—	—	(60)
Total operating profit	5,462	(5)	5,457	(915)	226	—	4,768
Net finance costs	(1,479)	2	(1,477)	—	—	—	(1,477)
Share of post-tax results of joint ventures and associates	101	—	101	—	—	—	101
Profit before tax	4,084	(3)	4,081	(915)	226	—	3,392
Tax	(983)	1	(982)	227	(61)	302	(514)
Profit after tax	3,101	(2)	3,099	(688)	165	302	2,878
Attributable to non-controlling interests	(1)	—	(1)	—	—	—	(1)
Earnings	3,100	(2)	3,098	(688)	165	302	2,877
Earnings per share (pence)1	77.7	(0.1)	77.6	(17.2)	4.1	7.6	72.1

1.Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue.

		At constant currency
	Adjusted at actual exchange rate £m	Constant currency adjustment £m	Adjusted £m	Timing £m	Major storm costs £m	Deferred tax on underlying profits in NGET and NGED £m	Underlying £m
Year ended 31 March 2023
UK Electricity Transmission	995	—	995	112	—	—	1,107
UK Electricity Distribution	1,091	—	1,091	139	—	—	1,230
UK Electricity System Operator	238	—	238	(207)	—	—	31
New England	708	(26)	682	37	69	—	788
New York	741	(27)	714	(51)	179	—	842
National Grid Ventures	490	(1)	489	—	—	—	489
Other	31	—	31	—	—	—	31
Total operating profit	4,294	(54)	4,240	30	248	—	4,518
Net finance costs	(1,514)	22	(1,492)	—	—	—	(1,492)
Share of post-tax results of joint ventures and associates	190	(1)	189	—	—	—	189
Profit before tax	2,970	(33)	2,937	30	248	—	3,215
Tax	(635)	8	(627)	(4)	(68)	178	(521)
Profit after tax	2,335	(25)	2,310	26	180	178	2,694
Attributable to non-controlling interests	—	—	—	—	—	—	—
Earnings	2,335	(25)	2,310	26	180	178	2,694
Earnings per share (pence)1	59.0	(0.6)	58.4	0.7	4.6	4.5	68.1

1.Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue.

Strategic Report Corporate Governance Financial Statements Additional Information 283

Earnings per share calculations from continuing operations

The table below reconciles the profit after tax from continuing operations as per the previous tables back to the earnings per share from continuing

operations for each of the adjusted profit measures.

	Profit after tax £m	Non- controlling interest £m	Profit after tax attributable to shareholders £m	Weighted average number of shares millions	Earnings per share pence
Year ended 31 March 2025
Statutory	2,829	(3)	2,826	4,707	60.0
Adjusted	2,618	(3)	2,615	4,707	55.6
Underlying	3,455	(3)	3,452	4,707	73.3

	Profit after tax £m	Non- controlling interest £m	Profit after tax attributable to shareholders £m	Weighted average number of shares millions1	Earnings per share pence1
Year ended 31 March 2024
Statutory	2,217	(1)	2,216	3,991	55.5
Adjusted	3,101	(1)	3,100	3,991	77.7
Underlying	2,880	(1)	2,879	3,991	72.1
Underlying at constant currency	2,878	(1)	2,877	3,991	72.1

1.Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue.

	Profit after tax £m	Non- controlling interest £m	Profit after tax attributable to shareholders £m	Weighted average number of shares millions1	Earnings per share pence1
Year ended 31 March 2023
Statutory	2,714	—	2,714	3,956	68.6
Adjusted	2,335	—	2,335	3,956	59.0
Underlying	2,727	—	2,727	3,956	68.9
Underlying at constant currency	2,694	—	2,694	3,956	68.1

1.Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue.

284	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Reconciliation of total Group statutory operating profit to adjusted earnings (including and excluding the impact of timing,

major storm costs and deferred tax on underlying profits in NGET and NGED)

Year ended 31 March	Including timing, major storm costs and deferred tax on underlying profits in NGET and NGED			Excluding timing, major storm costs and deferred tax on underlying profits in NGET and NGED
	2025	2024	2023	2025	2024	20231
	£m	£m	£m	£m	£m	£m
Continuing operations
Adjusted operating profit	4,765	5,462	4,294	5,357	4,773	4,582
Adjusted net finance costs	(1,361)	(1,479)	(1,514)	(1,361)	(1,479)	(1,514)
Share of post-tax results of joint ventures and associates	75	101	190	75	101	190
Adjusted profit before tax	3,479	4,084	2,970	4,071	3,395	3,258
Adjusted tax	(861)	(983)	(635)	(616)	(515)	(531)
Adjusted profit after tax	2,618	3,101	2,335	3,455	2,880	2,727
Attributable to non-controlling interests	(3)	(1)	—	(3)	(1)	—
Adjusted earnings from continuing operations	2,615	3,100	2,335	3,452	2,879	2,727
Exceptional items after tax	118	(852)	619	118	(852)	619
Remeasurements after tax	93	(32)	(240)	93	(32)	(240)
Earnings from continuing operations	2,826	2,216	2,714	3,663	1,995	3,106
Discontinued operations
Adjusted operating profit	—	—	714	—	—	702
Adjusted net finance costs	5	17	(295)	5	17	(295)
Share of post-tax results of joint ventures and associates	—	—	—	—	—	—
Adjusted profit before tax	5	17	419	5	17	407
Adjusted tax	(1)	(4)	(99)	(1)	(4)	(97)
Adjusted profit after tax	4	13	320	4	13	310
Attributable to non-controlling interests	—	—	—	—	—	—
Adjusted earnings from discontinued operations	4	13	320	4	13	310
Exceptional items and gain on disposal after tax	25	(4)	4,811	25	(4)	4,811
Remeasurements after tax	47	65	(48)	47	65	(48)
Earnings from discontinued operations	76	74	5,083	76	74	5,073
Total Group (continuing and discontinued operations)
Adjusted operating profit	4,765	5,462	5,008	5,357	4,773	5,284
Adjusted net finance costs	(1,356)	(1,462)	(1,809)	(1,356)	(1,462)	(1,809)
Share of post-tax results of joint ventures and associates	75	101	190	75	101	190
Adjusted profit before tax	3,484	4,101	3,389	4,076	3,412	3,665
Adjusted tax	(862)	(987)	(734)	(617)	(519)	(628)
Adjusted profit after tax	2,622	3,114	2,655	3,459	2,893	3,037
Attributable to non-controlling interests	(3)	(1)	—	(3)	(1)	—
Adjusted earnings from continuing and discontinued operations	2,619	3,113	2,655	3,456	2,892	3,037
Exceptional items after tax	143	(856)	5,430	143	(856)	5,430
Remeasurements after tax	140	33	(288)	140	33	(288)
Total Group earnings from continuing and discontinued operations	2,902	2,290	7,797	3,739	2,069	8,179

Reconciliation of adjusted EPS to statutory earnings (including and excluding the impact of timing, major storm costs and

deferred tax on underlying profits in NGET and NGED)

Year ended 31 March	Including timing, major storm costs and deferred tax on underlying profits in NGET and NGED			Excluding timing, major storm costs and deferred tax on underlying profits in NGET and NGED
	2025	20241	20231	2025	20241	20231
	pence	pence	pence	pence	pence	pence
Adjusted EPS from continuing operations	55.6	77.7	59.0	73.3	72.1	68.9
Exceptional items and remeasurements after tax from continuing operations	4.4	(22.2)	9.6	4.4	(22.2)	9.6
EPS from continuing operations	60.0	55.5	68.6	77.7	49.9	78.5
Adjusted EPS from discontinued operations	—	0.3	8.1	—	0.3	7.8
Exceptional items and remeasurements after tax from discontinued operations	1.6	1.6	120.4	1.6	1.6	120.4
EPS from discontinued operations	1.6	1.9	128.5	1.6	1.9	128.2
Total adjusted EPS from continuing and discontinued operations	55.6	78.0	67.1	73.3	72.4	76.7
Total exceptional items and remeasurements after tax from continuing and discontinued operations	6.0	(20.6)	130.0	6.0	(20.6)	130.0
Total Group EPS from continuing and discontinued operations	61.6	57.4	197.1	79.3	51.8	206.7

1.Comparative amounts have been restated to reflect the impact of the bonus element of the Rights Issue.

Strategic Report Corporate Governance Financial Statements Additional Information 285

Timing and regulated revenue adjustments

As described on pages 256 – 261, our allowed revenues are set in accordance with our regulatory price controls or rate plans. We calculate

the prices we charge our customers based on the estimated volume of energy we expect will be delivered during the coming period. The actual

volumes delivered will differ from the estimate. Therefore, our total actual revenue will be different from our total allowed revenue. These

differences are commonly referred to as timing differences. If we collect more than the allowed revenue, adjustments will be made to future

prices to reflect this over‑recovery, and if we collect less than the allowed level of revenue, adjustments will be made to future prices to reflect

the under-recovery. In the US, a substantial portion of our costs are pass-through costs (including commodity and energy-efficiency costs) and

are fully recoverable from our customers. Timing differences between costs of this type being incurred and their recovery through revenue are

also included in timing. The amounts calculated as timing differences are estimates and subject to change until the variables that determine

allowed revenue are final. 

In addition to the timing adjustments described above, as part of the RIIO price controls in the UK, outperformance against allowances as a

result of the totex incentive mechanism, together with changes in output-related allowances included in the original price control, will almost

always be adjusted in future revenue recoveries, typically starting in two years’ time. We also receive revenues in relation to certain costs incurred

or expected to be incurred (for example pension deficit contributions), with differences between revenues received and cost incurred adjusted

in future revenue recoveries, e.g. after a triennial actuarial pension funding valuation has been concluded. Our current IFRS revenues and

earnings include these amounts that relate to certain costs incurred in prior years or that will need to be repaid or recovered in future periods.

Such adjustments will form an important part of the continuing difference between reported IFRS results and underlying economic performance

based on our regulatory obligations. 

In the US, accumulated regulatory entitlements cover a range of different areas, with the most significant being environmental remediation

and pension assets, as well as deferred storm costs. All regulatory entitlements are recoverable (or repayable) over different periods, which

are agreed with the regulators to match the expected payment profile for the liabilities. New England and New York in-year over/(under)-

recovery and all New England and New York balances have been translated using the average exchange rate of $1.27 for the year ended

31 March 2025.

	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	Continuing £m	Discontinued £m	Total £m
1 April 2024 opening balance1	160	(282)	941	(452)	662	1,029	—	1,029
(Under)/over-recovery	(151)	407	(479)	61	(343)	(505)	—	(505)
Disposal	—	—	(462)	—	—	(462)	—	(462)
31 March 2025 closing balance to (recover)/return2	9	125	—	(391)	319	62	—	62

	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	Continuing £m	Discontinued £m	Total £m
1 April 2023 opening balance1	(213)	(124)	77	(383)	682	39	—	39
(Under)/over-recovery	363	(159)	800	(69)	(20)	915	—	915
31 March 2024 closing balance to (recover)/return2	150	(283)	877	(452)	662	954	—	954

	UK Electricity Transmission £m	UK Electricity Distribution £m	UK Electricity System Operator £m	New England £m	New York £m	Continuing £m	Discontinued £m	Total £m
1 April 2022 opening balance1	(95)	22	(129)	(329)	631	100	(160)	(60)
(Under)/over-recovery	(112)	(139)	207	(37)	51	(30)	12	(18)
Disposals	—	—	—	(17)	—	(17)	148	131
31 March 2023 closing balance to (recover)/return2	(207)	(117)	78	(383)	682	53	—	53

1.Opening balances have been restated to reflect the finalisation of calculated over/(under)-recoveries in both the UK and the US and also adjusted for the regulatory time value of money

impact on opening balances, where appropriate, in the UK.

2.The closing balance at 31 March 2025 was £65 million over-recovered (translated at the closing rate of $1.29:£1). 31 March 2024 was £954 million over-recovered (including discontinued

operations and translated at the closing rate of $1.26:£1). 31 March 2023 was £59 million under-recovered (including discontinued operations and translated at the closing rate of $1.23:£1).

286	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Capital investment at constant currency

Capital investment measures are presented at actual exchange rates, but are also shown on a constant currency basis to show the year-on-year

comparisons excluding any impact of foreign currency translation movements.

Year ended 31 March	At actual exchange rates			At constant currency
	2025	2024	change	2025	2024	change
	£m	£m		£m	£m
UK Electricity Transmission	2,999	1,912	57%	2,999	1,912	57%
UK Electricity Distribution	1,426	1,247	14%	1,426	1,247	14%
UK Electricity System Operator	—	85	(100%)	—	85	(100%)
New England	1,751	1,673	5%	1,751	1,668	5%
New York	3,289	2,654	24%	3,289	2,645	24%
Capital investment (regulated networks)	9,465	7,571	25%	9,465	7,557	25%
National Grid Ventures	378	662	(43%)	378	661	(43%)
Other	4	2	100%	4	2	100%
Group capital investment – continuing	9,847	8,235	20%	9,847	8,220	20%
Discontinued operations	—	—	—%	—	—	—%
Group capital investment – total	9,847	8,235	20%	9,847	8,220	20%

Capital expenditure

Capital expenditure (for the purposes of measuring green capex aligned to the EU Taxonomy) comprises additions to property, plant and

equipment and intangible assets, but excludes capital prepayments and equity contributions to joint ventures and associates during the period.

	2025	2024
	£m	£m
Asset type:
Property, plant and equipment	8,894	7,124
Non-current intangible assets	478	481
Transfers from prepayments	87	43
Group capital expenditure – continuing	9,459	7,648
Equity investments in joint ventures and associates	116	332
Capital expenditure prepayments	359	298
Transfers to capital expenditure additions	(87)	(43)
Group capital investment – continuing	9,847	8,235

Cash flow statement used in credit metric calculation below

The table below re-analyses our IFRS operating cash flows for the purposes of facilitating calculation of certain measures of credit worthiness –

being RCF/adjusted net debt and FFO/adjusted net debt as described further below. The differences between this table and the consolidated cash

flow statement relate to the disaggregation of cash flows relating to items considered ‘exceptional’ as described in note 5, as explained within the

footnotes below:

		2025	2024	2023
	Notes	£m	£m	£m
Cash flows from operating activities
Total operating profit from continuing operations	2(b)	4,934	4,475	4,879
Adjustments for:
Exceptional items and remeasurements	5	(169)	987	(585)
Other fair value movements		66	(16)	21
Depreciation, amortisation and impairment		2,175	2,061	1,984
Share-based payments		37	37	48
Changes in working capital		104	(49)	286
Changes in provisions		10	(154)	23
Changes in pensions and other post-retirement benefit obligations		(90)	31	(46)
Cash flows relating to exceptional items		(76)	(91)	(178)
Cash generated from operations – continuing operations		6,991	7,281	6,432
Tax paid		(183)	(342)	(89)
Net cash inflow from operating activities – continuing operations		6,808	6,939	6,343
Net cash inflow from operating activities – discontinued operations		—	—	555

Strategic Report Corporate Governance Financial Statements Additional Information 287

Net debt

See note 29 of the financial statements on page 225 for the definition and reconciliation of net debt.

Funds from operations and interest cover

FFO are the cash flows generated by the operations of the Group. Credit rating metrics, including FFO, are used as indicators of balance

sheet strength.

	2025	2024¹	2023¹
Year ended 31 March	£m	£m	£m
Interest expense (income statement)	1,810	1,723	1,680
Hybrid interest reclassified as dividend	(37)	(38)	(39)
Capitalised interest	294	251	249
Pensions interest adjustment	13	9	11
Unwinding of discount on provisions	(130)	(102)	(88)
Pension interest	—	94	85
Interest charge (discontinued operations)	—	—	—
Adjusted interest expense	1,950	1,937	1,898
Net cash inflow from operating activities	6,808	6,939	6,343
Interest received on financial instruments	332	148	65
Interest paid on financial instruments	(1,920)	(1,627)	(1,430)
Dividends received	126	176	190
Working capital adjustment	(104)	49	(286)
Excess employer pension contributions	26	27	116
Hybrid interest reclassified as dividend	37	38	39
Add back accretions	152	208	483
Difference in net interest expense in income statement to cash flow	(45)	(253)	(395)
Difference in current tax in income statement to cash flow	145	(24)	(281)
Current tax related to prior periods	—	—	—
Cash flow from discontinued operations	—	—	555
Funds from operations (FFO)	5,557	5,681	5,399
FFO interest cover ((FFO + adjusted interest expense)/adjusted interest expense)	3.8x	3.9x	3.8x

1.Numbers for 2024 and 2023 reflect the calculations for the total Group as based on the published accounts for the respective years. 

Retained cash flow/adjusted net debt

RCF/adjusted net debt is one of two credit metrics that we monitor in order to ensure the Group is generating sufficient cash to service its debts,

consistent with maintaining a strong investment-grade credit rating. We calculate RCF/adjusted net debt applying the methodology used by

Moody’s, as this is one of the most constrained calculations of credit worthiness. The net debt denominator includes adjustments to take account

of the equity component of hybrid debt.

	2025	20241	20231
Year ended 31 March	£m	£m	£m
Funds from operations (FFO)	5,557	5,681	5,399
Hybrid interest reclassified as dividend	(37)	(38)	(39)
Ordinary dividends paid to shareholders	(1,529)	(1,718)	(1,607)
RCF	3,991	3,925	3,753
Borrowings	47,539	47,072	42,985
Less:
50% hybrid debt	(814)	(1,034)	(1,049)
Cash and cash equivalents	(1,178)	(578)	(126)
Financial and other investments	(5,156)	(3,084)	(1,764)
Underfunded pension obligations	247	266	292
Borrowings in held for sale	—	13	—
Collateral – cash received under collateral agreements2	—	—	—
Adjusted net debt (includes pension deficit)	40,638	42,655	40,338
RCF/adjusted net debt	9.8%	9.2%	9.3%

1.Numbers for 2024 and 2023 reflect the calculations for the total Group as based on the published accounts for that year.

2.Below agency threshold to adjust in 2024, 2023 and 2022.

288	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Regulatory performance measures

Regulated financial performance – UK

Regulatory financial performance is a pre-interest and tax measure, starting at segmental operating profit and making adjustments (such as

the elimination of all pass-through items included in revenue allowances and timing) to approximate regulatory profit for the UK regulated activities.

This measure provides a bridge for investors between a well-understood and comparable IFRS starting point and through the key adjustments

required to approximate regulatory profit. This measure also provides the foundation to calculate Group RoE.

Under the UK RIIO regulatory arrangements the Company is incentivised to deliver efficiencies against cost targets set by the regulator. In total,

these targets are set in terms of a regulatory definition of combined total operating and capital expenditure, also termed ‘totex’. The definition

of totex differs from the total combined regulated controllable operating costs and regulated capital expenditure as reported in this statement

according to IFRS accounting principles. Key differences are capitalised interest, capital contributions, exceptional costs, costs covered by

other regulatory arrangements and unregulated costs.

For the reasons noted above, the table below shows the principal differences between the IFRS operating profit and the regulated financial

performance, but is not a formal reconciliation to an equivalent IFRS measure.

UK Electricity Transmission

	2025	2024	2023
Year ended 31 March	£m	£m	£m
Adjusted operating profit	1,277	1,677	995
Movement in regulatory ‘IOUs’	256	(363)	107
UK regulatory notional deferred taxation adjustment	238	219	73
RAV indexation – 2% CPIH long-run inflation	368	343	309
Regulatory vs IFRS depreciation difference	(575)	(553)	(536)
Fast money/other	(261)	(119)	37
Pensions	—	(2)	(44)
Performance RAV created	65	68	68
Regulated financial performance	1,368	1,270	1,009

UK Electricity Distribution

	2025	2024	2023
Year ended 31 March	£m	£m	£m
Adjusted operating profit	1,610	993	1,091
Less non-regulated profits	(7)	(8)	(46)
Movement in regulatory ‘IOUs’	(417)	158	88
UK regulatory notional deferred taxation adjustment	15	38	65
RAV indexation – 2% CPIH (2023 and 2022: 3% RPI) long-run inflation	230	216	277
Regulatory vs IFRS depreciation difference	(547)	(555)	(506)
Fast money/other	(46)	(36)	11
Pensions	—	—	(157)
Performance RAV created	(1)	50	22
Regulated financial performance	837	856	845

UK Electricity System Operator

	2025	2024	2023
Year ended 31 March	£m	£m	£m
Adjusted operating profit	(364)	880	238
Movement in regulatory ‘IOUs’	479	(800)	(223)
UK regulatory notional deferred taxation adjustment	3	2	(4)
RAV indexation – 2% CPIH long-run inflation	9	7	7
Regulatory vs IFRS depreciation difference	(50)	(19)	32
Fast money/other	(44)	(29)	(2)
Pensions	—	—	(11)
Performance RAV created	—	—	—
Regulated financial performance	33	41	37

Strategic Report Corporate Governance Financial Statements Additional Information 289

UK Gas Transmission

	2025	2024	2023
Year ended 31 March	£m	£m	£m
Adjusted operating profit	—	—	714
Less non-regulated profits	—	—	(129)
Movement in regulatory ‘IOUs’	—	—	(24)
UK regulatory notional deferred taxation adjustment	—	—	28
RAV indexation – 2% CPIH (2021: 3% RPI) long-run inflation	—	—	109
Regulatory vs IFRS depreciation difference	—	—	(331)
Fast money/other	—	—	(1)
Pensions	—	—	(9)
Performance RAV created	—	—	5
Regulated financial performance	—	—	362

Regulated financial performance – US

New England

	2025	2024	2023
Year ended 31 March	£m	£m	£m
Adjusted operating profit	982	643	708
Major storm costs	3	90	72
Timing	(61)	69	39
Depreciation adjustment1	—	—	(18)
US GAAP pension adjustment and other2	60	29	34
Regulated financial performance	984	831	835

1.The depreciation adjustment relates to the impact of the cessation of depreciation for NECO under IFRS following reclassification as held for sale.

2.£2 million unfavourable COVID-19 bad debt provision adjustment included in 2025 other.

New York

	2025	2024	2023
Year ended 31 March	£m	£m	£m
Adjusted operating profit	1,023	860	741
Provision for bad and doubtful debts (COVID-19), net of recoveries1	(47)	(34)	(21)
Major storm costs	84	136	186
Timing	343	20	(53)
US GAAP pension adjustment	48	42	11
Regulated financial performance	1,451	1,024	864

1.New York financial performance includes an adjustment reflecting our expectation for future recovery of COVID-19 related provisions for bad and doubtful debts.

290	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Total regulated financial performance

	2025	2024	2023
Year ended 31 March	£m	£m	£m
UK Electricity Transmission	1,368	1,270	1,009
UK Electricity Distribution	837	856	845
UK Electricity System Operator	33	41	37
UK Gas Transmission	—	—	362
New England	984	831	835
New York	1,451	1,024	864
Total regulated financial performance	4,673	4,022	3,952

New England and New York timing, major storms costs and movement in UK regulatory ‘IOUs’ – Revenue related to performance in one year may

be recovered in later years. Where revenue received or receivable exceeds the maximum amount permitted by our regulatory agreement,

adjustments will be made to future prices to reflect this over-recovery. No liability is recognised under IFRS, as such an adjustment to future prices

relates to the provision of future services. Similarly, no asset is recognised under IFRS where a regulatory agreement permits adjustments to be

made to future prices in respect of an under-recovery. In the UK, this is calculated as the movement in other regulated assets and liabilities.

Performance RAV – UK performance efficiencies are in part remunerated by the creation of additional RAV which is expected to result in future

earnings under regulatory arrangements. This is calculated as in-year totex outperformance multiplied by the appropriate regulatory capitalisation

ratio and multiplied by the retained company incentive sharing ratio.

Pension adjustment – Cash payments against pension deficits in the UK are recoverable under regulatory contracts. In US regulated operations,

US GAAP pension charges are generally recoverable through rates. Revenue recoveries are recognised under IFRS but payments are not charged

against IFRS operating profits in the year. In the UK this is calculated as cash payments against the regulatory proportion of pension deficits in the

UK regulated business, whereas in the US it is the difference between IFRS and US GAAP pension charges.

2% CPIH and 3% RPI RAV indexation – Future UK revenues are expected to be set using an asset base adjusted for inflation. This is calculated

as UK RAV multiplied by 2% long-run CPIH inflation assumption under RIIO-2 and a 3% long-run RPI inflation assumption under RIIO-1.

UK regulatory notional deferred taxation adjustment – Future UK revenues are expected to recover cash taxation cost including the unwinding

of deferred taxation balances created in the current year. This is the difference between: (1) IFRS underlying EBITDA less other regulatory

adjustments; and (2) IFRS underlying EBITDA less other regulatory adjustments less current taxation (adjusted for interest tax shield) then

grossed up at full UK statutory tax rate.

Regulatory depreciation – US and UK regulated revenues include allowance for a return of regulatory capital in accordance with regulatory

assumed asset lives. This return does not form part of regulatory profit.

Fast/slow money adjustment – The regulatory remuneration of costs incurred is split between in-year revenue allowances and the creation of

additional RAV. This does not align with the classification of costs as operating costs and fixed asset additions under IFRS accounting principles.

This is calculated as the difference between IFRS classification of operating costs versus fixed asset additions and the regulatory classification.

Regulated asset base

The regulated asset base is a regulatory construct, based on predetermined principles not based on IFRS. It effectively represents the invested

capital on which we are authorised to earn a cash return. By investing efficiently in our networks, we add to our regulated asset base over the

long term, and this in turn contributes to delivering shareholder value. Our regulated asset base comprises our regulatory asset value in the

UK plus our rate base in the US.

Maintaining efficient investment in our regulated asset base ensures we are well positioned to provide consistently high levels of service to

our customers and increases our revenue allowances in future years. While we have no specific target, our overall aim is to achieve around

10% growth in regulated asset base each year through continued investment in our networks in both the UK and US.

In the UK, the way in which our transactions impact RAV is driven by principles set out by Ofgem. In a number of key areas these principles differ

from the requirements of IFRS, including areas such as additions and the basis for depreciation. Further, our UK RAV is adjusted annually for

inflation. RAV in each of our retained UK businesses has evolved over the period since privatisation in 1990 and, as a result, historical differences

between the initial determination of RAV and balances reported under UK GAAP at that time still persist. In the case of UK ED, differences arise as

the result of acquisition fair value adjustments (where PP&E at acquisition has been valued above RAV). Due to the above, substantial differences

exist in the measurement bases between RAV and an IFRS balance metric, and therefore it is not possible to provide a meaningful reconciliation

between the two.

In the US, rate base is a regulatory measure determined for each of our main US operating companies. It represents the value of property and

other assets or liabilities on which we are permitted to earn a rate of return, as set out by the regulatory authorities for each jurisdiction. The

calculations are based on the applicable regulatory agreements for each jurisdiction and include the allowable elements of assets and liabilities

from our US companies. For this reason, it is not practical to provide a meaningful reconciliation from the US rate base to an equivalent IFRS

measure. However, we include the calculation on page 291.

‘Total regulated and other balances’ for our UK regulated businesses include the under- or over-recovery of allowances that those businesses

target to collect in any year, which are based on the regulator’s forecasts for that year. Under the UK price control arrangements, revenues will be

adjusted in future years to take account of actual levels of collected revenue, costs and outputs delivered when they differ from those regulatory

forecasts. In the US, other regulatory assets and liabilities include regulatory assets and liabilities which are not included in the definition of rate

base, including working capital where appropriate.

‘Total regulated and other balances’ for NGV and other businesses includes assets and liabilities as measured under IFRS, but excludes certain

assets and liabilities such as pensions, tax, net debt and goodwill.

Strategic Report Corporate Governance Financial Statements Additional Information 291

Year ended 31 March (£m at constant currency)	RAV, rate base or other business assets		Total regulated and other balances
	2025	2024¹	20252,3	20241,2,3
	£m	£m	£m	£m
UK Electricity Transmission	20,570	18,388	20,290	17,886
UK Electricity Distribution	12,235	11,497	11,954	11,633
UK Electricity System Operator	—	425	—	(466)
New England	9,422	8,512	11,329	10,325
New York	17,923	16,015	19,752	17,029
Total regulated	60,150	54,837	63,325	56,407
National Grid Ventures and other business balances	7,352	7,509	5,942	6,533
Total Group regulated and other balances	67,502	62,346	69,267	62,940

1.Figures relating to prior periods have, where appropriate, been re-presented at constant currency, for segmental reorganisation, opening balance adjustments following the completion

of the UK regulatory reporting pack process and finalisation of US balances.

2.Includes totex-related regulatory IOUs of £250 million (2024: £514 million) and over-recovered timing balances of £62 million (2024: £744 million over-recovered).

3.Includes assets for construction work-in-progress of £2,528 million (2024: £2,068 million), other regulatory assets related to timing and other cost deferrals of £1,113 million (2024:

£1,279 million) and net working capital assets of £95 million (2024: £455 million net working capital liabilities).

New England and New York rate base and other total regulated and other balances for 31 March 2024 have been re-presented in the table above

at constant currency. At actual currency the values were £10.6 billion and £17.4 billion respectively.

Group RoE

Group RoE provides investors with a view of the performance of the Group as a whole compared with the amounts invested by the Group in assets

attributable to equity shareholders. It reflects the regulated activities as well as the contribution from our non-regulated businesses together with

joint ventures and non‑controlling interests. We use Group RoE to measure our performance in generating value for our shareholders, and targets

for Group RoE are included in APP and LTPP incentive mechanisms for Executive members. Group RoE is underpinned by our regulated asset

base. This year, to improve how the metric reflects business performance, we updated our calculation to ‘amortise’ goodwill and indefinite-lived

intangible assets in the denominator over 20 years, to reflect the estimated period over which the value related to the premium paid on acquisition

would be realised. For the reasons noted above, no reconciliation to IFRS has been presented, as we do not believe it would be practical.

Calculation: Regulatory financial performance including a long-run inflation assumption (3% RPI for RIIO-1; 2% CPIH for RIIO-2), less adjusted

interest and adjusted taxation divided by equity investment in assets:

•adjusted interest removes accretions above long-run inflation rates, interest on pensions, capitalised interest in regulated operations and

unwind of discount rate on provisions;

•adjusted taxation adjusts the Group taxation charge (before exceptional items and remeasurements) for differences between IFRS profit

before tax and regulated financial performance less adjusted interest; and

•equity investment in assets is calculated as opening UK RAV, opening US rate base, goodwill and indefinite-lived intangibles (adjusted

for ‘asset swap’ transactions and the ‘value realisation’ of goodwill over 20 years), plus opening net book value of NGV and other activities

(excluding certain pensions, tax and commodities balances) and our share of JVs and associates, minus opening net debt as reported

under IFRS restated to the weighted average sterling–dollar exchange rate for the year.

Year ended 31 March	2025	2024	2023
	£m	£m	£m
Regulated financial performance	4,673	4,022	3,952
Operating profit of other activities – continuing and discontinued operations	275	467	708
Group financial performance	4,948	4,489	4,660
Share of post-tax results of joint ventures and associates1	100	174	202
Non-controlling interests	(3)	(1)	—
Adjusted total Group interest charge (including discontinued)	(1,590)	(1,613)	(1,546)
Total Group tax charge (including discontinued)	(861)	(983)	(734)
Tax on adjustments	8	270	7
Total Group financial performance after interest and tax	2,602	2,336	2,589
Opening rate base/RAV	55,326	50,806	55,558
Opening other balances	8,223	7,973	5,410
Opening RAV, rate base and other balances	63,549	58,779	60,968
Opening goodwill	11,430	11,444	12,253
Opening goodwill adjustment (realisation of value over 20 years)2	(4,441)	(4,053)	(4,257)
Opening strategic pivot (asset swap) adjustment3	(3,450)	(3,464)	—
Opening capital employed	67,088	62,706	68,964
Opening net debt	(43,509)	(40,505)	(49,691)
Rights Issue adjustment (£6.8 billion net proceeds pro-rated from June 2024)	5,471	—	—
Opening equity	29,050	22,201	19,273
Group RoE	9.0%	10.5%	13.4%

1.2025 includes £25 million (2024: £73 million; 2023: £12 million) in respect of the Group’s minority interest in National Gas Transmission, which was fully divested during 2024/25.

2.Calculation methodology updated in 2024/25 to ‘amortise’ goodwill and intangibles on a straight-line basis over 20 years, resulting in an increase of 120bps in 2024/25 (2024: 160bps; 2023:

240bps) in the Group RoE metric.

3.The regulatory gains on disposal of NECO and UK Gas Transmission (proceeds received less RAV, rate base and other related balances used to calculate the Group RoE denominator)

deducted against IFRS goodwill and indefinite-lived intangibles recognised on acquisition of NGED. For this metric, the purchase of NGED and sales of NECO and UK Gas Transmission

were deemed to be linked transactions with the opening equity reflecting the impact of these as asset swaps rather than as unrelated transactions.

292	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Group RoE three-year average calculation

The Group RoE metrics for each of the years 2024/25, 2023/24 and 2022/23 are provided in the table above, resulting in a historical three-year

average Group RoE of 11.0%. With regards to the 2022 LTPP, the reported three year average includes impacts of exceptional macro-economic

factors which were not anticipated when the 2022 LTPP targets were set. To address these impacts for the 2022 LTPP both the numerator and

denominator in Group RoE have been normalised for these impacts. This involves adjusting revenues and interest costs in the numerator to align

with macro-economic assumptions used to set the 2022 LTPP targets, resulting in a small reduction of £20 million (three-year average). In addition,

the denominator has been adjusted to reflect the impact of higher indexation, resulting in a reduction of £1.7 billion (three-year average). The

overall impact is a three-year normalised Group RoE of 11.4% for the 2022 LTPP outturn.

UK and US regulated RoE

Year ended 31 March	Regulatory Debt: Equity assumption	Achieved Return on Equity		Base or Allowed Return on Equity
		2025	2024	2025	2024
		%	%	%	%
UK Electricity Transmission	55/45	8.3	8.0	7.3	7.0
UK Electricity Distribution	60/40	7.9	8.5	7.7	7.4
New England	Avg. 45/55	9.1	9.2	9.9	9.9
New York	Avg. 52/48	8.7	8.5	9.2	8.9

UK businesses’ regulated RoEs

UK regulated businesses’ RoEs are a measure of how the businesses are performing against the assumptions used by our UK regulator. These

returns are calculated using the assumption that the businesses are financed in line with the regulatory adjudicated capital structure, at the cost of

debt assumed by the regulator, and that inflation is equal to a long-run assumption of 3% RPI under RIIO-1 and 2% CPIH under RIIO-2. They are

calculated by dividing elements of out/under-performance versus the regulatory contract (i.e. regulated financial performance disclosed above) by

the average equity RAV in line with the regulatory assumed capital structure and adding to the base allowed RoE.

These are important measures of UK regulated businesses’ performance, and our operational strategy continues to focus on these metrics. These

measures can be used to determine how we are performing under the RIIO framework and also help investors to compare our performance with

similarly regulated UK entities. Reflecting the importance of these metrics, they are also key components of the APP scheme.

The respective businesses’ UK RoEs are underpinned by their RAVs. For the reasons noted above, no reconciliation to IFRS has been presented,

as we do not believe it would be practical.

US businesses’ regulated RoEs

US regulated businesses’ RoEs are a measure of how the businesses are performing against the assumptions used by the US regulators.

This US operational return measure is calculated using the assumption that the businesses are financed in line with the regulatory adjudicated

capital structure and allowed cost of debt. The returns are divided by the average rate base (or where a reported rate base is not available, an

estimate based on rate base calculations used in previous rate filings) multiplied by the adjudicated equity portion in the regulatory adjudicated

capital structure.

These are important measures of our New England and New York regulated businesses’ performance, and our operational strategy continues to

focus on these metrics. This measure can be used to determine how we are performing and also helps investors compare our performance with

similarly regulated US entities. Reflecting the importance of these metrics, they are also key components of the APP scheme.

The New England and New York businesses’ returns are based on a calculation which gives proportionately more weighting to those businesses

which have a greater rate base. For the reasons noted above, no reconciliations to IFRS for the RoE measures have been presented, as we do not

believe it would be practical to reconcile our IFRS balance sheet to the equity base.

The table below shows the principal differences between the IFRS result of the New England and New York segments, and the ‘returns’ used to

derive their respective US jurisdictional RoEs. In outlining these differences, we also include the aggregated business results under US GAAP for

New England and New York jurisdictions.

In respect of 2023/24 and 2022/23, this measure is the aggregate operating profit of our US OpCo entities’ publicly available financial statements

prepared under US GAAP for the New England and New York jurisdictions respectively. For 2024/25, this measure represents our current

estimate, since local financial statements have yet to be prepared.

	2025	2024	2023
	£m	£m	£m
Underlying IFRS operating profit for New England segment	924	802	819
Underlying IFRS operating profit for New York segment	1,450	1,016	874
Weighted average £/$ exchange rate	$1.266	$1.262	$1.216

Strategic Report Corporate Governance Financial Statements Additional Information 293

	New England			New York
	2025	2024	2023	2025	2024	2023
	$m	$m	$m	$m	$m	$m
Underlying IFRS operating profit for US segments	1,170	1,013	995	1,836	1,283	1,060
Adjustments to convert to US GAAP as applied in our US OpCo entities
Adjustment in respect of customer contributions	(30)	(29)	(26)	(51)	(37)	(34)
Pension accounting differences1	78	43	39	61	63	12
Environmental charges recorded under US GAAP	5	10	(3)	(144)	21	58
Storm costs and recoveries recorded under US GAAP	(59)	(56)	(54)	(7)	6	(39)
Removal of partial year Rhode Island in year of disposal	—	—	(65)	—	—	—
Other regulatory deferrals, amortisation and other items	(314)	(139)	(217)	(518)	(155)	86
Results for US regulated OpCo entities, aggregated under US GAAP2	850	842	669	1,177	1,181	1,143
Adjustments to determine regulatory operating profit used in US RoE
Adjustment for COVID-19-related provision for bad and doubtful debts3	—	—	—	—	—	(171)
Net other	96	14	113	374	151	171
Regulatory operating profit	946	856	782	1,551	1,332	1,143
Pensions1	70	60	(17)	169	159	219
Regulatory interest charge	(219)	(199)	(176)	(459)	(374)	(339)
Regulatory tax charge	(218)	(196)	(159)	(351)	(305)	(279)
Regulatory earnings used to determine US RoE	579	521	430	910	812	744

1.Following a change in US GAAP accounting rules, an element of the pensions charge is reported outside operating profit with effect from 2019.

2.Based on US GAAP accounting policies as applied by our US regulated OpCo entities.

3.US RoE included an adjustment reflecting our expectation for future recovery of COVID-19-related bad and doubtful debt costs in 2020/21. The adjustment is being unwound as regulated

assets are recognised in respect of the same debts in our US GAAP accounts.

In addition to the regulatory earnings used to determine US RoE, our US regulated businesses also earn a return on assets outside of rate base

(principally construction work-in-progress) of $2.5 billion (2024: $2.3 billion) in New England and $2.4 billion (2024: $1.3 billion) in New York.

In 2024/25, this additional return amounted to $75 million (2024: $66 million) in New England and $119 million (2024: $79 million) in New York.

The aggregate of regulatory earnings used to determine US RoE and the return on assets outside of rate base for the year was $654 million

(2024: $587 million) for New England and $1,029 million (2024: $891 million) for New York.

	New England			New York
	2025	2024	2023	2025	2024	2023
	$m	$m	$m	$m	$m	$m
US equity base (average for the year)	6,352	5,645	5,155	10,512	9,517	8,670
US jurisdiction RoE	9.1%	9.2%	8.3%	8.7%	8.5%	8.6%

Information on differences between IFRS and regulatory balances

There are certain significant assets and liabilities included in our IFRS balance sheet, which are treated differently in the analysis below and to

which we draw readers’ attention. Our UK OpCo RAVs are different to the IFRS carrying value of PP&E and intangibles in these entities. For

example the annual indexation (inflationary uplift) adjustment applied to RAV compared with the IFRS value of these assets (which are held at

amortised cost) or in the case of UK ED, the result of acquisition fair value adjustments (where PP&E at acquisition has been valued above RAV).

In addition, under IFRS we recognise liabilities in respect of US environmental remediation costs, and pension and OPEB costs. For regulatory

purposes, these are not shown as obligations because we are entitled to full recovery of costs through our existing rate plans. The impact of US

tax reform in 2017/18 which resulted in a reduction in IFRS deferred tax liabilities, and from a regulatory perspective remains as a future obligation,

results in a regulatory liability within US rate base. Regulatory IOUs which reflect net over- or under-recoveries compared with our regulatory

allowances are treated within this table as obligations (or rights) but do not qualify for recognition as liabilities (or assets) under IFRS. The decrease

in regulatory assets as a result of the disposal of our UK Electricity System Operator business is excluded from our asset growth and regulated

asset growth calculations. However, the associated balances are included within amounts reported as at 31 March 2024. Within our asset growth

calculation, total assets and other balances exclude the impact of reclassifications to held for sale.

294	National Grid plc  Annual Report and Accounts 2024/25
Other unaudited financial information continued

Asset growth and regulated asset growth

To help readers’ assessment of the financial position of the Group, the table below shows an aggregated position for the Group, as viewed from

a regulatory perspective. The asset growth and regulated asset growth measures included in the table below are calculated in part from financial

information used to derive measures sent to and used by our regulators in the UK and US, and accordingly inform certain of the Group’s regulatory

performance measures, but are not derived from, and cannot be reconciled to, IFRS. These alternative performance measures include regulatory

assets and liabilities and certain IFRS assets and liabilities of businesses that were classified as held for sale under IFRS 5.

Asset growth is the annual percentage increase in our RAV and US rate base and other non-regulated business balances (including our

investments in NGV, UK property and other assets and US other assets) calculated at constant currency.

Regulated asset growth is the annual percentage increase in our RAV and US rate base (calculated at constant currency), but does not include

other non-regulated business balances.

	2024/25
£m	31 March 2025	Sale of ESO	31 March 2024	Increase	Asset growth
UK RAV	32,805	(469)	30,310	2,964	9.8%
US rate base	27,345	—	24,527	2,818	11.5%
Total RAV and rate base (used to calculate regulated asset growth)	60,150	(469)	54,837	5,782	10.5%
National Grid Ventures and other	7,352	—	7,509	(157)	(2.1)%
Total assets (used to calculate asset growth)	67,502	(469)	62,346	5,625	9.0%

For 2024/25, asset growth and regulated asset growth are calculated excluding the reduction in RAV as a result of the sale of the UK Electricity

System Operator business, based on an estimated RAV value as at 1 October 2024 (the date of disposal).

	2023/24
£m	31 March 2024	31 March 2023	Increase	Asset growth
UK RAV	30,356	28,292	2,064	7.3%
US rate base	25,097	22,517	2,580	11.5%
Total RAV and rate base (used to calculate regulated asset growth)	55,453	50,809	4,644	9.1%
National Grid Ventures and other	7,593	6,639	954	14.4%
Total assets (used to calculate asset growth)	63,046	57,448	5,598	9.7%

Figures relating to prior periods have, where appropriate, been re-presented at constant currency, for opening balance adjustments following

the completion of the UK regulatory reporting pack process and finalisation of US balances.

Regulatory gearing

Regulatory gearing is a measure of how much of our investment in RAV and rate base and other elements of our invested capital (including our

investments in NGV, UK property and UK other assets and US other assets) is funded through debt. Comparative amounts as at 31 March 2024

are presented at historical exchange rates and have not been restated for opening balance adjustments.

	2025	2024
As at 31 March	£m	£m
UK RAV	32,805	30,356
US rate base	27,345	25,097
Other invested capital included in gearing calculation	7,352	7,593
Total assets included in gearing calculation	67,502	63,046
Net debt (including 100% of hybrid debt and held for sale)	(41,316)	(43,584)	change
Group gearing (based on 100% of net debt including held for sale)	61%	69%	(8% pts)
Group gearing (excluding 50% of hybrid debt from net debt) including held for sale	60%	67%	(7% pts)

Rebased dividend per share

The table below reconciles the actual dividend per share paid with a ‘rebased dividend per share’ calculated using a hypothetical assumption that

all of the additional shares from the Rights Issue existed for previous reporting periods. Using this methodology the ‘rebased dividend per share’

equates to 45.264p per share.

	Total dividend	Number of shares	Actual dividend per share	Rights Issue additional shares	Total number of shares (rebased)	Rebased dividend per share
	£m	millions	pence	millions	millions	pence
Final dividend in respect of the year ended 31 March 2024	1,454	3,717	39.12p	1,085	4,802	30.28p
Interim dividend in respect of the year ended 31 March 2024	713	3,676	19.40p	1,085	4,761	14.98p
Total dividend for the year ended 31 March 2024	2,167	n/a	58.52p	1,085	n/a	45.26p

	Strategic Report	Corporate Governance	Financial Statements		Additional Information		295
Commentary on consolidated financial statements
for the year ended 31 March 2024

In compliance with SEC rules, we present a summarised analysis of movements in the income statement and an analysis of movements

in adjusted operating profit (for the continuing Group) by operating segment. This should be read in conjunction with the 31 March 2024

Financial review included on pages 61 – 67.

Analysis of the income statement for the year ended

31 March 2024 

Revenue

Revenue from continuing operations for the year ended 31 March 2024

decreased by £1,809 million to £19,850 million. Lower revenues were

primarily the result of lower pass-through costs. The decrease includes

decreases in UK Electricity System Operator balancing service costs

and lower US commodity pass-through costs in New York and New

England and the disposal of our Rhode Island business. Other activities

revenues decreased, driven by £201 million lower property site sales.

Operating costs

Operating costs from continuing activities for the year ended 31 March

2024 of £14,400 million were £2,978 million lower than prior year. This

decrease in costs excludes the exceptional items and remeasurements

impacts, which is discussed below. Operating costs were driven by

lower UK Electricity System Operator balancing service pass-through

costs down £1,566 million and decreased gas and electricity purchases

(mostly on behalf of our US customers) down £1,412 million, with the

underlying cause of both of these being lower global energy prices.

Higher depreciation as a result of continued asset investment was

up £77 million compared with 2022/23. Provisions for bad and doubtful

debts of £179 million were recorded in the year, £41 million lower than

2022/23, principally as a result of the non-recurrence of the COVID

arrears reviews.

Net finance costs

Net finance costs (excluding remeasurements) for 2023/24 were

£1,479 million, down from £1,514 million in the prior year, driven by

a £275 million impact of lower inflation on index-linked debt along

with adverse non-debt interest income (discount unwind, tax interest),

compared with 2022/23.

Tax

The tax charge on profits before exceptional items and remeasurements

of £983 million was £348 million higher than 2022/23. This is driven

by higher taxable profits (primarily driven by timing over-collections

compared with 2022/23) along with the impact of the increase in the

UK corporation tax rate to 25% in 2023/24 (19% in the prior year).

Exceptional items and remeasurements 

Exceptional items in 2023/24 included £496 million of charges for

environmental provisions (2022/23: £176 million credit), a £498 million

provision for the return of over-collected revenues related to UK

electricity balancing costs, insurance recoveries of £92 million relating

to the IFA1 fire (2022/23: £130 million). Transaction, separation and

integration costs decreased from £117 million to £44 million in 2023/24,

with cost efficiency programme costs also decreasing to £65 million

in 2023/24 from £100 million in 2022/23. In 2022/23, exceptional items

also included £511 million of gains related to disposal of NECO and

£335 million of gain relating to the disposal of Millennium Pipeline

Company LLC.

Remeasurement losses of £24 million were recognised on commodity

contracts in 2023/24 compared with losses of £350 million in 2022/23.

Finance costs for the year ended 31 March 2024 included a net gain

of £15 million on financial remeasurements of derivative financial

instruments and financial assets at fair value through profit or loss,

compared to a net gain of £54 million on financial remeasurements

in 2022/23.

Joint ventures and associates

Share of post-tax results of joint ventures and associates before

exceptional items for 2023/24 were £101 million compared with

£190 million in 2022/23, principally due to lower revenues in our

BritNed interconnector joint venture in the UK and the disposal

of our interest in Millennium Pipeline Company LLC.

Profit after tax from discontinued operations

Adjusted profit after tax from discontinued operations was lower

at £13 million in 2023/24 compared with £320 million in 2022/23

principally as a result of our disposal of our majority interest in the

UK Gas Distribution business in January 2023. On 11 March 2024

the FAA option was partially exercised. Statutory profit after tax

from discontinued operations also included exceptional operating

costs and remeasurement losses of £62 million in 2023/24 compared

with remeasurement gains of £46 million in 2022/23.

Adjusted earnings and EPS from continuing operations

Adjusted earnings and adjusted EPS, which exclude exceptional items

and remeasurements, are provided to reflect the Group’s results on

an ‘adjusted profit’ basis, described further in note 8. See page 190

for a reconciliation of adjusted basic EPS to EPS.

The above earnings performance translated into adjusted EPS

in 2023/24 of 77.7p, compared with 59.0p in 2022/23. Including

discontinued operations, adjusted EPS in 2023/24 of 78.0p,

compared with 67.1p in 2022/23. All comparative period EPS figures

have been restated to reflect the impact of the bonus element of

the Rights Issue.

Exchange rates

Our financial results are reported in sterling. Transactions for our

US operations are denominated in dollars, so the related amounts

that are reported in sterling depend on the dollar to sterling exchange

rate. The table below shows the average and closing exchange rates

of sterling to US dollars.

	2023/24	2022/23	% change
Weighted average (income statement)	1.26	1.22	3%
Year end (statement of financial position)	1.26	1.23	3%

The movement in foreign exchange during 2023/24 has resulted

in a £405 million decrease in revenue, a £52 million decrease in

adjusted operating profit and a £62 million decrease in underlying

operating profit.

296	National Grid plc  Annual Report and Accounts 2024/25
Commentary on consolidated financial statements continued
for the year ended 31 March 2024

Analysis of the adjusted operating profit by segment

for the year ended 31 March 2024

UK Electricity Transmission

For 2023/24, revenue in the UK Electricity Transmission segment

increased by £748 million to £2,735 million, and adjusted operating

profit increased by £682 million to £1,677 million. Revenue was higher

due to favourable timing, the non-repeat of the return of allowances for

Western Link liquidated damages and increased inflation. Regulated

controllable costs including pensions were higher as a result of higher

energy costs which more than offset efficiency savings. The increase

in depreciation and amortisation is a result of having higher asset base

and asset commissioning. Other costs were also higher, due to higher

Network Innovation Allowance costs.

Capital investment increased by £611 million compared with

2022/23 to £1,912 million primarily due to the ASTI projects

(including capacity payments to secure the supply chain), and

Customer Connections.

UK Electricity Distribution

For 2023/24 revenue in UK Electricity Distribution segment decreased

by £250 million compared with 2022/23 as a result of lower incentives.

Regulated controllable costs were higher due to inflationary and

workload increases. Other costs were higher, primarily due to no

repeat of benefit from sale of smart metering in prior year.

Capital investment for the period 2023/24 was £1,247 million, an

increase of £27 million from 2022/23 due to additional asset health

funding in ED-2 including overhead line clearance, growth in

connections partly offset by lower reinforcement capital expenditure.

UK Electricity System Operator

For 2023/24, revenue in the UK Electricity System Operator segment

decreased by £902 million to £3,788 million principally as a result of

lower pass-through costs. Net underlying revenue was £52 million

higher, as the result of higher totex spend and an updated revenue

assumption for Future System Operator spend. During 2023/24 UK

Electricity System Operator had a timing over-recovery as a result of

higher revenues collected through BSUoS fixed price tariffs compared

with total system balancing costs incurred for the year. Regulated

controllable costs including pensions were £41 million higher due to

higher volume of work under RIIO-2 and additional NESO costs ahead

of separation. Depreciation and amortisation was £40 million lower due

to the business being classified as ‘held for sale’ (HFS) in October

2023, partially offset by a higher asset base from ongoing investment.

Capital investment was £23 million in 2023/24 compared to 2022/23

as a result of the business being classified as HFS and therefore only 7

months of capex is captured. On a like-for-like basis (12 months),

capex would have been over 50% higher.

New England 

Revenue in the New England segment decreased by £479 million to

£3,948 million. Of this decrease, £162 million was due to the sale of the

Rhode Island business partway through the prior year and £164 million

reflects the US dollar weakening. Adjusted operating profit decreased

by £65 million to £643 million. Excluding pass-through costs, timing

swings and the impact of the Rhode Island disposal, underlying net

revenue increased by £176 million principally reflecting increased rate

case increments in Massachusetts Gas and Massachusetts Electric.

Regulated controllable costs decreased by £54 million as a result of the

sale of Rhode Island and efficiency savings, partially offset by inflation

and increased workload. Provisions for bad and doubtful debts

were £25 million higher at a constant currency and excluding the

Rhode Island impact, due to higher accounts receivable in 2023/24.

Depreciation and amortisation was £41 million higher at a constant

currency and excluding the Rhode Island impact, as a result of

increased capital investment. Other costs were £54 million higher at

a constant currency and excluding the impact of Rhode Island due

to increases in environmental reserves and capital-related operating

and maintenance costs partially offset by the benefit of a gain on a

pension buyout.

Capital investment increased by £203 million to £1,673 million, at a

constant currency and excluding the impact of Rhode Island reflecting

higher electric investment driven by transmission asset conditioning

and gas investment driven by the Gas System Enhancement Plan.

New York 

Revenue in the New York segment decreased by £900 million to

£6,094 million. Adjusted operating profit increased by £119 million

to £860 million. Excluding pass-through costs and timing swings,

underlying net revenue increased by £221 million (at constant currency)

predominately driven by increased rates in KEDNY/KEDLI. Regulated

controllable costs were lower due to workload and inflation increases

being more than offset by cost efficiency savings and one-off items

from 2022/23 not recurring. Provisions for bad and doubtful debts

decreased by £61 million, driven by non-recurrence of write-offs related

to phase 1 and 2 of the Arrears Management Programme. Depreciation

and amortisation increased due to the growth in assets. Other costs

(on an underlying basis) increased due to higher energy efficiency

programmes and increased property taxes (offset by rate increases).

Capital investment increased by £291 million to £2,654 million, as

a result of higher electricity network reinforcement and gas capital

investment driven by main replacement work.

National Grid Ventures (NGV)

Revenue in the NGV segment increased by £48 million to

£1,389 million, driven by improved availabilities in our North Sea Link

interconnector (which benefited from an increase in the revenue cap

following Ofgem review).

Capital investment in NGV was £293 million lower than 2022/23,

following higher capital investment in 2022/23 on projects completed

in that year.

Other activities

In 2023/24, adjusted operating profit decreased by £91 million to

a £60 million loss, primarily driven by St William property sales not

recurring in 2023/24.

Capital investment was £11 million lower than 2022/23 due to lower

investment following the St William property sale.

Discontinued operations – UK Gas Transmission

and Metering

Following the Group’s disposal of a 60% controlling stake in the

UK Gas Transmission business in the year ended 31 March 2023,

the Group completed the sale of a further 20% of its retained interest

in the business (held through GasT TopCo Limited) on 11 March 2024.

The remaining interest was classified as a business held for sale. The

Group has not applied equity accounting in relation to the retained

interest, resulting in no subsequent profits being recognised from the

date of sale of our 60% interest onwards.

	Strategic Report	Corporate Governance	Financial Statements		Additional Information		297
Definitions and glossary of terms

Our aim is to use plain English in this Annual Report and Accounts. However,

where necessary, we do use a number of technical terms and abbreviations.

We summarise the principal ones below, together with an explanation of their

meanings. The descriptions below are not formal legal definitions. Alternative

and regulatory performance measures are defined on pages 280 – 295.

A

Adjusted interest

A measure of the interest charge of the Group,

calculated by making adjustments to the

Group reported interest charge.

Adjusted net debt

A measure of the indebtedness of the Group,

calculated by making adjustments to the

Group reported borrowings, including

adjustments made to include elements of

pension deficits and exclude elements of

hybrid debt financing.

Adjusted results (also referred to as

headline results)

Financial results excluding the impact of

exceptional items and remeasurements that

are treated as discrete transactions under

IFRS and can accordingly be classified as

such.

American Depositary Shares (ADSs)

Securities of National Grid listed on the NYSE

each of which represents five ordinary shares.

They are evidenced by American Depositary

Receipts or ADRs.

Annual General Meeting (AGM)

Meeting of shareholders of the Company held

each year to consider ordinary and special

business as provided in the Notice of AGM.

ASTI

The Accelerated Strategic Transmission

Investment framework to connect 50GW of

offshore generation by 2030, announced by

Ofgem in December 2022.

B

bps

Basis point (bp) is a unit that is equal to

1/100th of 1% and is typically used to denote

the movement in a percentage-based metric

such as interest rates or RoE. A 0.1% change

in a percentage represents 10 basis points.

Board

The Board of Directors of the Company

(for more information, see pages 99 and 102).

BritNed

BritNed Development Limited, a joint venture

company in which National Grid and TenneT,

the Dutch national transmission system

operator, each hold 50% of the shares.

BSUoS

Balancing Service Use of System (charges)

are revenues collected by UK Electricity

System and regulated by Ofgem.

C

Called-up share capital

Shares (common stock) that have been issued

and have been fully paid for.

Capital tracker

In the context of our US rate plans, this is

a mechanism that allows the recovery of the

revenue requirement of incremental capital

investment above that embedded in base

rates, including depreciation, property taxes

and a return on the incremental investment.

Carbon capture usage and storage

(CCUS)

The process of capturing carbon dioxide (CO2)

for the purpose of recycling it for further usage

and/or determining safe and permanent

storage options for it.

Carrying value

The amount at which an asset or a liability is

recorded in the Group’s statement of financial

position and the Company’s balance sheet.

Child risk

A management team or directorate level

owned or managed risk that has a supportive

or contributing relationship to a GPR or other

risk at a higher escalation level.

Clean Energy

Clean energy is energy that, when used,

creates little or no GHG emissions.

Climate Transition Plan (CTP)

The plan sets out our actions to meet our

Group greenhouse gas reduction targets by

2030. We have committed to update the plan

every three years (minimum).

The Company, the Group, National

Grid, we, our or us

We use these terms to refer to either National

Grid plc itself or to National Grid plc and/or

all or certain of its subsidiaries, depending

on context.

Consolidated financial statements

Financial statements that include the results

and financial position of the Company and

its subsidiaries together as if they were

a single entity.

Constant currency

Constant currency basis refers to the reporting

of the actual results against the results for the

same period last year, which, in respect of any

US$ currency denominated activity, have been

translated using the average US$ exchange

rate for the year ended 31 March 2025, which

was $1.26637 to £1. The average rate for the

year ended 31 March 2024 was $1.2624 to £1,

for the year ended 31 March 2023 was

$1.2156 to £1, and for the year ended 31

March 2022 was $1.3483 to £1. Assets and

liabilities as at 31 March 2024 have been

retranslated at the closing rate at 31 March

2025 of $1.29160 to £1. The closing rate for

the balance sheet date 31 March 2024 was

$1.26225 to £1.

Contingent liabilities

Possible obligations or potential liabilities

arising from past events for which no provision

has been recorded, but for which disclosure in

the financial statements is made.

COP29

The 29th UN Climate Change Conference of

the Parties held in Baku, in Azerbaijan, in

November 2024 at which the Company gave

various keynote speeches.

CPIH

The UK Consumer Prices Index including

Owner Occupiers’ Housing Costs as

published by the Office for National Statistics.

D

DB

Defined benefit, relating to our UK or US (as

the context requires) final salary pension

schemes.

298	National Grid plc  Annual Report and Accounts 2024/25
Definitions and glossary of terms continued

Deferred tax

For most assets and liabilities, deferred tax

is the amount of tax that will be payable or

receivable in respect of that asset or liability

in future tax returns as a result of a difference

between the carrying value for accounting

purposes in the statement of financial position

or balance sheet and the value for tax

purposes of the same asset or liability.

Deposit agreement

The amended and restated Deposit agreement

entered into between National Grid plc, the

Depositary and all the registered holders of

ADRs, pursuant to which ADSs have been

issued, dated 23 May 2013, and any

related agreement.

Depositary

The Bank of New York Mellon acting as

ADS Depositary.

Derivative

A financial instrument or other contract where

the value is linked to an underlying index, such

as exchange rates, interest rates or

commodity prices. In most cases, we exclude

contracts for the sale or purchase of

commodities that are used to supply

customers or for our own needs from this

definition.

DESNZ

The Department for Energy Security and

Net Zero, the UK Government department

established in February 2023 and focused

on the energy portfolio of the former

Department for Business, Energy and

Industrial Strategy (BEIS).

Directors/Executive Directors/

Non-executive Directors

The Directors/Executive Directors and

Non-executive Directors of the Company,

whose names are set out on pages 99 - 103 of

this document.

Distributed energy resources (DER)

Decentralised assets, generally located behind

the meter, covering a range of technologies

including solar, storage, electric vehicle

charging, district heating, smart street lighting

and combined heat and power.

Dollars or $

Except as otherwise noted, all references to

dollars or $ in this Annual Report and

Accounts relate to the US currency.

DSO

Distribution System Operator.

Dth

Decatherm, being an amount of energy equal

to 1 million British thermal units (BTUs),

equivalent to approximately 293 kWh.

E

Earnings per share (EPS)

Profit for the year attributable to equity

shareholders of the Company allocated to

each ordinary share.

Employee engagement

A key performance indicator (KPI), based on

the percentage of favourable responses to

certain indicator questions repeated in each

employee survey. It is used to measure how

employees think, feel and act in relation to

National Grid. Research shows that a highly

engaged workforce leads to increased

productivity and employee retention. We use

employee engagement as a measure of

organisational health in relation to

business performance.

Employee Resource Group (ERG)

A voluntary, employee-led group whose aim is

to foster an inclusive workplace, aligned with

the organisations they serve.

Estate Tax Convention

The convention between the US and the UK

for the avoidance of double taxation with

respect to estate and gift taxes.

Exchange Act

The US Securities Exchange Act 1934,

as amended.

F

FERC

The US Federal Energy Regulatory

Commission.

Finance lease

A lease where the asset is treated as if it was

owned for the period of the lease, and the

obligation to pay future rentals is treated as

if they were borrowings. Also known as

a capital lease.

Financial year

For National Grid this is an accounting

year ending on 31 March. Also known as

a fiscal year.

FRS

A UK Financial Reporting Standard as issued

by the UK Financial Reporting Council (FRC).

It applies to the Company’s individual financial

statements on pages 248 to 254, which are

prepared in accordance with FRS 101.

Funds from Operations (FFO)

A measure used by the credit rating agencies

of the operating cash flows of the Group after

interest and tax but before capital investment.

G

Grain LNG

National Grid Grain LNG Limited, which was

classified as held for sale at 30 September

2024.

Great Britain (GB)

England, Wales and Scotland.

Green capital investment (green

capex)

Capital expenditure invested in

decarbonisation of energy systems and

considered to be aligned with the principles of

the EU Taxonomy legislation at the date of

reporting.

Green

Green refers to any economic activity aligned

to the EU Taxonomy Climate Change

Delegation Act, which includes climate change

adaptation and mitigation requirements. (Full

alignment assessment can be found in our EU

Taxonomy report in 2023/24).

Grid for Good

Our flagship programme wherein we work with

our supply chain partners to provide training

and employment opportunities for young

people aged 16–25 from disadvantaged

backgrounds.

Gridtern

This is the term we use to describe our paid

summer interns who work for the Company in

the US from May/June through till August

each year.

Group Principal Risk (GPR)

A principal risk faced by the Company as

monitored and assessed by the Board, details

of which are set out on pages 35 to 40.

Group Value Growth

Group Value Growth is Group-wide Value

Added expressed as a proportion of Group

equity.

Group-wide Value Added

Normalised for assumed long-run inflation

expressed as a proportion of Group equity.

GW

Gigawatt, an amount of power equal to

1 billion watts (109 watts).

GWh

Gigawatt hours, an amount of energy

equivalent to delivering 1 billion watts (109

watts) of power for a period of one hour.

H

HMRC

HM Revenue & Customs, the UK tax authority.

HVDC

High-voltage, direct-current electric power

transmission that uses direct current for the

bulk transmission of electrical power, in

contrast to the more common alternating

current systems.

Strategic Report Corporate Governance Financial Statements Additional Information 299

I

IAS or IFRS

An International Accounting Standard (IAS)

or International Financial Reporting Standard

(IFRS), as issued by the International

Accounting Standards Board (IASB). IFRS is

also used as the term to describe international

generally accepted accounting principles as

a whole.

Individual financial statements

Financial statements of a company on its own,

not including its subsidiaries or joint ventures

and associates.

Interest cover

A measure used by the credit rating agencies,

calculated as FFO plus adjusted interest,

divided by adjusted interest.

J

Joint venture (JV)

A company or other entity that is controlled

jointly with other parties.

K

KEDLI

KeySpan Gas East Corporation, also known

as KeySpan Energy Delivery Long Island.

KEDNY

The Brooklyn Union Gas Company, also

known as KeySpan Energy Delivery New York.

KPI

Key performance indicator.

kW

Kilowatt, an amount of power equal to

1,000 watts.

L

LIPA

The Long Island Power Authority.

LNG

Liquefied natural gas is natural gas that has

been condensed into a liquid form, typically

at temperatures at or below -161°C (-258°F).

Lost time injury (LTI)

An incident arising out of National Grid’s

operations that leads to an injury where the

employee or contractor normally has time

off for the following day or shift following the

incident. It relates to one specific (acute)

identifiable incident which arises as a result

of National Grid’s premises, plant or activities,

and was reported to the supervisor at the time

and was subject to appropriate investigation.

Lost time injury frequency rate (LTIFR)

The number of lost time injuries (LTIs) per

100,000 hours worked in a 12-month period.

M

MADPU

The Massachusetts Department of

Public Utilities.

Meaningful skills development

Our measure of meaningful skills development

is classed as one interactive upskilling session

with a person in the community lasting a

minimum of one hour.

MW

Megawatt, an amount of power equal to

1 million watts (106 watts).

MWh

Megawatt hours, an amount of energy

equivalent to delivering 1 million watts

(106 watts) of power for a period of one hour.

N

National Energy System Operator

(NESO)

The party responsible for the long-term

strategy and planning of electricity and gas

systems and the real-time operation

(balancing supply and demand) of the

electricity system in Great Britain. NESO,

formerly National Grid Electricity System

Operator Limited, was divested by National

Grid to the UK Government, effective 1

October 2024.

National Grid Electricity Distribution

(NGED/UK ED)

National Grid’s UK electricity distribution

business, formerly known as WPD, comprising

Western Power Distribution Holding Company

Limited and its subsidiaries.

National Grid Electricity Transmission

(NGET/UK ET)

National Grid’s UK electricity transmission

business.

National Grid Renewables (NGR)

This business, which was classified as held for

sale at 30 September 2024 and for which an

agreement for sale to Brookfield Asset

Management was reached on 24 February

2024, includes the renewables development

company formerly known as Geronimo, is a

leading developer of wind and solar

generation based in Minneapolis in the US.

National Grid Ventures (NGV)

The Group’s division that operates outside

its core UK and US Regulated businesses,

comprising a broad range of activities in the

UK and US, including National Grid

Renewables, electricity interconnectors, the

Grain LNG terminal and energy metering, as

well as being tasked with investment in

adjacent businesses and distributed energy

opportunities.

Net zero

Net zero means that a person, legal entity

(such as a company), country or other body’s

own emissions of greenhouse gases are either

zero or that its remaining greenhouse gas

emissions are balanced by schemes to offset,

through the removal of an equivalent amount

of greenhouse gases from the atmosphere,

such as planting trees or using technology like

carbon capture and storage.

New England

The term refers to a region within the

Northeastern US that includes the states

of Connecticut, Maine, Massachusetts,

New Hampshire, Rhode Island and Vermont.

National Grid’s New England operations are

primarily in the state of Massachusetts.

NGT Sale

The sale, agreed by the Company and

announced on 27 March 2022, of the equity in

its UK Gas Transmission and legacy metering

businesses (now National Gas Transmission

plc or NGT) to a consortium comprising, inter

alia, Macquarie Asset Management and British

Columbia Investment Management

Corporation the final stake of which

completed in September 2024.

Northeastern US

The Northeastern region of the US,

comprising the states of Connecticut, Maine,

Massachusetts, New Hampshire, New Jersey,

New York, Pennsylvania, Rhode Island

and Vermont.

NYPSC

The New York Public Service Commission.

O

Ofgem

The UK Office of Gas and Electricity Markets

is part of the UK Gas and Electricity Markets

Authority (GEMA), which regulates the energy

markets in the UK.

OPEB

Other post-employment benefits.

Ordinary shares

Voting shares entitling the holder to part

ownership of a company. Also known as

common stock. National Grid’s ordinary

shares have a nominal value of 12204⁄473 pence.

P

Paris Agreement

The agreement, also known as the Paris

Climate Accord, within the United Nations

Framework Convention on Climate Change,

dealing with greenhouse gas emissions

mitigation, adaptation and finance starting

in 2020, and adopted by consensus on

12 December 2015.

Price control

The mechanism by which Ofgem sets

restrictions on the amounts of revenue we are

300	National Grid plc  Annual Report and Accounts 2024/25
Definitions and glossary of terms continued

allowed to collect from customers in our UK

businesses. The allowed revenues are

intended to cover efficiently incurred

operational expenditure, capital expenditure

and financing costs, including a Return on

Equity invested.

R

Rate base

The base investment on which the utility is

authorised to earn a cash return. It includes

the original cost of facilities, minus

depreciation, an allowance for working capital

and other accounts.

Rate plan

The term given to the mechanism by which

a US utility regulator sets terms and conditions

for utility service, including, in particular, tariffs

and rate schedules. The term can mean

a multi-year plan that is approved for

a specified period, or an order approving

tariffs and rate schedules that remain in effect

until changed as a result of future regulatory

proceedings. Such proceedings can be

commenced through a filing by the utility

or on the regulator’s own initiative.

Regulated controllable costs

Total operating costs under IFRS less

depreciation and certain regulatory costs

where, under our regulatory agreements,

mechanisms are in place to recover such

costs in current or future periods.

Regulatory asset value (RAV)

The value ascribed by Ofgem to the capital

employed in the relevant licensed business.

It is an estimate of the initial market value of

the regulated asset base at privatisation, plus

subsequent allowed additions at historical

cost, less the deduction of annual regulatory

depreciation. Deductions are also made to

reflect the value realised from the disposal

of certain assets that formed part of the

regulatory asset base. It is also indexed to

the RPI to allow for the effects of inflation.

Regulatory IOUs

Net under/over-recoveries of revenue from

output-related allowance changes, the totex

incentive mechanism, legacy price control

cost true-up and differences between allowed

and collected revenues.

Renewable energy

Renewable energy is usable energy derived

from replenishable sources such as the sun

(solar energy), wind (wind power), rivers

(hydroelectric power), hot springs (geothermal

energy), tides (tidal power) and biomass

(biofuels).

Retained cash flow (RCF)

A measure of the cash flows of the Group

used by the credit rating agencies. It is

calculated as funds from operations less

dividends paid and costs of repurchasing

scrip shares.

Revenue decoupling

The term given to the elimination of the

dependency of a utility’s revenue on the

volume of gas or electricity transported.

The purpose of decoupling is to encourage

energy-efficiency programmes by eliminating

the disincentive a utility otherwise has to

such programmes.

Rights Issue

On 23 May 2024, the Company announced a

capital raising of c.£7 billion by way of a fully

underwritten Rights Issue of 1,085,448,980

new shares at 645 pence per new share on

the basis of 7 new shares for every 24 existing

shares. The Rights Issue Price of 645 pence

represented a 34.7% discount to the

theoretical ex-rights price of 988 pence per

ordinary share based on the closing middle-

market price on 22 May 2024, adjusted for the

recommended final dividend for 2023/24 of

39.12 pence per ordinary share. The Rights

Issue completed successfully and the new

shares commenced trading on the London

Stock Exchange plc’s main market on 12 June

2024.

RIIO

Revenue = Incentives + Innovation + Outputs,

the regulatory framework for energy networks

issued by Ofgem.

RIIO-ED1

The eight-year regulatory framework for

electricity distribution networks issued by

Ofgem which started on 1 April 2015.

RIIO-ED2

The five-year regulatory framework for

electricity distribution networks issued by

Ofgem which started on 1 April 2023.

RIIO-T1

The eight-year regulatory framework for

transmission networks that was implemented

in the eight-year price controls started on

1 April 2013.

RIIO-T2

The five-year regulatory framework for

transmission networks issued by Ofgem

which started on 1 April 2021.

RIIO-T3

The five-year regulatory framework for

transmission networks expected to be issued

by Ofgem and to start on 1 April 2026

RPI

The UK retail price index as published by the

Office for National Statistics.

S

Science-Based Targets (SBTs)

SBTs provide companies with a clearly

defined path to reduce greenhouse gas

emissions in line with the Paris Agreement

goals. More than 4,000 businesses around the

world are already working with the Science

Based Targets initiative (SBTi).

Science-Based Targets initiative (SBTi)

Validation

To achieve SBTi validation, a company’s

emissions reduction targets must align with

the latest climate science, be ambitious in

contributing to limiting global warming, and

use a robust methodology. The SBTi reviews

submissions to assess compliance, and

validated targets receive official recognition.

This validation showcases the company’s

commitment to addressing climate change

and aligning with global climate goals.

Scope 1 greenhouse gas emissions

Scope 1 emissions are direct greenhouse

gas emissions that occur from sources that

are owned or controlled by the Company.

Examples include emissions from combustion

in owned or controlled boilers, furnaces,

vehicles, etc.

Scope 2 greenhouse gas emissions

Scope 2 emissions are greenhouse gas

emissions from the generation of purchased

electricity consumed by the Company.

Purchased electricity is defined as electricity,

heat, steam or cooling that is purchased or

otherwise brought into the organisational

boundary of the Company. Scope 2 emissions

physically occur at the facility where electricity

is generated.

Scope 3 greenhouse gas emissions

Scope 3 emissions are indirect greenhouse

gas emissions as a consequence of the

operations of the Company, but are not

owned or controlled by the Company, such as

emissions from third-party logistics providers,

waste management suppliers, travel suppliers,

employee commuting and combustion of

sold gas by customers.

SEC

The US Securities and Exchange Commission,

the financial regulator for companies with

registered securities in the US, including

National Grid and certain of its subsidiaries.

SF6

Sulphur hexafluoride is an inorganic,

colourless, odourless and non-flammable

greenhouse gas. SF6 is used in the electricity

industry as a gaseous dielectric medium for

high-voltage circuit breakers, switchgear and

other electrical equipment. The Kyoto Protocol

estimated that the global warming potential

over 100 years of SF6 is 23,900 times more

potent than that of CO2.

Strategic Report Corporate Governance Financial Statements Additional Information 301

Share premium

The difference between the amount shares

are issued for and the nominal value of

those shares.

Strategic Infrastructure (SI)

The Group’s business unit, established

1 April 2023, which will deliver UK ET projects

through the ASTI framework.

Subsidiary

A company or other entity that is controlled by

National Grid plc.

Sustainable Development Goals

(SDGs)

The United Nations SDGs are 17 goals,

established by the United Nations General

Assembly in 2015, that are aimed at improving

the planet and the quality of human life around

the world by 2030. The goals clearly define the

world we want, and they apply to all nations to

ensure no one is left behind.

Swaption

A swaption gives the buyer, in exchange for

an option premium, the right, but not the

obligation, to enter into an interest-rate swap

at some specified date in the future. The terms

of the swap are specified on the trade date of

the swaption.

T

Task Force on Climate-related

Financial Disclosures (TCFD)

A body established in 2015 comprising

31 members from across the G20. In 2017

the TCFD released its climate-related

disclosure recommendations and in 2022

TCFD disclosures became mandatory for

UK premium listed companies. In 2023 the

Taskforce disbanded with its monitoring

responsibilities taken over by the IFRS

Foundation, whose role is to develop

recommendations for more informed

investment and enable stakeholders to better

understand the concentrations of carbon-

related assets in the financial sector and the

financial system’s exposures to climate-

related risk.

Tax Convention

The income tax convention between the

US and the UK.

Taxes borne

Those taxes that represent a cost to the

Company and are reflected in our results.

Taxes collected

Those taxes that are generated by our

operations but do not affect our results. We

generate the commercial activity giving rise to

these taxes and then collect and administer

them on behalf of tax authorities.

TCFD recommendations or

recommended disclosures

The 11 recommended disclosures set out

in the June 2017 TCFD report entitled

‘Recommendations of the Task Force on

Climate-related Financial Disclosures’.

Tonne

A unit of mass equal to 1,000 kilogrammes,

equivalent to approximately 2,205 pounds.

Tonnes carbon dioxide equivalent

(tCO2e)

A measure of greenhouse gas emissions

in terms of the equivalent amount of

carbon dioxide.

Totex

Total expenditure, comprising capital and

operating expenditure.

Treasury shares

Shares that have been repurchased but not

cancelled. These shares can then be allotted

to meet obligations under the Company’s

employee share schemes.

TWh

Terawatt hours, an amount of energy

equivalent to delivering 1 trillion watts

(10^12 watts) of power for a period of one hour.

U

UK

The United Kingdom, comprising England,

Wales, Scotland and Northern Ireland.

UK Corporate Governance Code

(the ‘Code’)

Guidance, issued by the Financial Reporting

Council in 2018, on how companies should be

governed, applicable to UK listed companies,

including National Grid, in respect of reporting

periods starting on or after 1 January 2019.

UK Corporate Governance Code (the

‘2024 Code’)

Guidance, issued by the Financial Reporting

Council in 2024, on how companies should be

governed, applicable to UK listed companies,

including National Grid, in respect of reporting

periods starting on or after 1 January 2025.

UK Electricity Distribution (UK ED/

NGED)

National Grid’s UK electricity distribution

business, formerly known as WPD, comprising

Western Power Distribution Holding Company

Limited and its subsidiaries.

UK Electricity Transmission (UK ET/

NGET)

National Grid’s UK electricity transmission

business.

UK GAAP

Generally accepted accounting practices in

the UK. These differ from IFRS and from US

GAAP.

Underlying Earnings per Share

Underlying results for the year attributable to

equity shareholders of the Company allocated

to each ordinary share.

Underlying results

The financial results of the Company, adjusted

to exclude the impact of exceptional items

and remeasurements that are treated as

discrete transactions under IFRS and can

accordingly be classified as such, and to take

account of volumetric and other revenue

timing differences arising due to the in-year

difference between allowed and collected

revenues, major storm costs (where these are

above $100 million threshold in a given year)

as well as excluding deferred tax on

underlying profits in our UK regulated

businesses (NGET and NGED).

US

The United States of America, its territories

and possessions; any state of the United

States and the District of Columbia.

US GAAP

Generally accepted accounting principles in

the US. These differ from IFRS and from UK

GAAP.

US state regulators

(state utility commissions)

In the US, public utilities’ retail transactions

are regulated by state utility commissions,

including the New York Public Service

Commission (NYPSC) and the Massachusetts

Department of Public Utilities.

302	National Grid plc  Annual Report and Accounts 2024/25
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Financial calendar The following dates have been announced or are indicative:
15 May 2025	2024/25 full-year results
29 May 2025	Ex-dividend date for 2024/25 final dividend
30 May 2025	Record date for 2024/25 final dividend
5 June 2025	Scrip reference price announced for 2024/25 final dividend
19 June 2025 (5.00 pm London time)	Scrip election date for 2024/25 final dividend
9 July 2025	2025 AGM
17 July 2025	2024/25 final dividend paid to qualifying shareholders
06 November 2025	2025/26 half-year results
20 November 2025	Ex-dividend date for 2025/26 interim dividend
21 November 2025	Record date for 2025/26 interim dividend
27 November 2025	Scrip reference price announced for 2025/26 interim dividend
11 December 2025 (5.00 pm London time)	Scrip election date for 2025/26 interim dividend
13 January 2026	2025/26 interim dividend paid to qualifying shareholders

For queries about ordinary shares:

	0800 169 7775 This is a Freephone number from landlines within the UK; mobile costs may vary. Lines are open 8.30am to 5.30pm, Monday to Friday, excluding public holidays. If calling from outside the UK: +44 (0) 800 169 7775. Calls from outside the UK will be charged at the applicable international rate.
	Visit help.shareview.co.uk for information regarding your shareholding (from here you will also be able to email a query securely).
	National Grid Share Register Equiniti Aspect House Spencer Road, Lancing West Sussex BN99 6DA

The Bank of New York Mellon

For queries about ADSs:

	1-888-269-2377 If calling from outside the US: +1-201-680-6825
	computershare.com/investor Email: shrrelations@cpushareownerservic es.com
	BNY Shareowner Services P.O. Box 43006 Providence RI 02940-3078

Further information about National Grid,

including share price and interactive

tools, can be found on our website

nationalgrid.com/investors

Beware of share fraud

Investment scams are often sophisticated and

difficult to spot. Shareholders are advised to

be wary of any unsolicited advice or offers,

whether over the telephone, through the post

or by email. If you receive any unsolicited

communication, please check that the

company or person contacting you is properly

authorised by the Financial Conduct Authority

(FCA) before getting involved. Be ScamSmart

and visit fca.org.uk/scamsmart.You can

report calls from unauthorised firms to the

FCA by calling 0800 111 6768.

Dividends

The Directors are recommending a final

dividend of 30.88 pence per ordinary share

($2.0545 per ADS) to be paid on 17 July 2025

to shareholders on the register as at 30 May

2025. Further details on dividend payments

can be found on page 92. If you live outside

the UK, you may be able to request that your

dividend payments are converted into your

local currency.

Under the Deposit agreement, a fee of up to

$0.05 per ADS can be charged for any cash

distribution made to ADS holders, including

cash dividends. ADS holders who receive

cash in relation to the 2024/25 final dividend

will be charged a fee of $0.02 per ADS by the

Depositary prior to the distribution of the

cash dividend.

Chequeless dividends: Since August 2022, all

National Grid dividends will be paid directly

into bank or building society accounts for

ordinary shareholders. Please make sure you

have completed and returned a bank mandate

form.

Benefits include the following:

•Your dividend reaches your account

on the payment day;

•It is a more efficient and secure way

of receiving your payment;

•It helps reduce the volume of paper

in dividend mailing.

Scrip dividends: Elect to receive your

dividends as additional shares:

Join our scrip dividend scheme; no stamp

duty or commission to pay.

Electronic communications

Please register at shareview.co.uk. It only

takes a few minutes to register – just have

your 11-digit Shareholder Reference Number

to hand. You will be sent an Activation Code

to complete registration. Once you have

registered, you can elect to receive your

shareholder communications electronically.

Registered office

National Grid plc was incorporated on 11 July

2000. The Company is registered in England

and Wales No. 4031152, with its registered

office at 1–3 Strand, London WC2N 5EH.

Share dealing

Postal share dealing: Equiniti offers

our European Economic Area resident

shareholders a share dealing service by post.

This service is available to private

shareholders resident within the European

Economic Area, the Channel Islands or the Isle

of Man. If you hold your shares in CREST, you

are not eligible to use this service. For more

information and to obtain a form, please visit

shareview.co.uk or call Equiniti on

0800 169 7775.

Internet and telephone share dealing:

Equiniti also offers telephone and online share

dealing at live prices. For full details, together

with terms and conditions, please visit

shareview.co.uk. You can call Equiniti on

0345 603 7037 for further details, or to arrange

a trade. Lines are open Monday to Friday,

8:00am to 4:30pm for dealing, and until

6:00pm for enquiries.

ShareGift: If you only have a small number

of shares that would cost more for you to sell

than they are worth, you may wish to consider

donating them to ShareGift. ShareGift is

a registered charity (No. 1052686) which

specialises in accepting such shares as

donations. For more information, visit

sharegift.org or contact Equiniti.

Individual Savings Accounts (ISAs): ISAs

for National Grid shares are available from

Equiniti. For more information, call Equiniti

on 0345 0700 720 or visit eqi.co.uk.

	Strategic Report	Corporate Governance	Financial Statements		Additional Information		303
Cautionary statement

This document comprises the Annual Report

and Accounts for the year ended 31 March

2025 for National Grid plc and its subsidiaries.

It contains the Directors’ Report and Financial

Statements, together with the independent

auditor’s report thereon, as required by the

Companies Act 2006. The Directors’ Report,

comprising pages 1 – 149 and 255 – 303

has been drawn up in accordance with the

requirements of English law, and liability in

respect thereof is also governed by English

law. In particular, the liability of the Directors

for these reports is solely to National Grid.

This document contains certain statements

that are neither reported financial results nor

other historical information. These statements

are forward-looking statements within the

meaning of section 27A of the Securities Act

of 1933, as amended, and section 21E of the

Securities Exchange Act of 1934, as

amended. These statements include

information with respect to our financial

condition, our results of operations and

businesses, strategy, plans and objectives.

Words such as ‘aims’, ‘anticipates’, ‘expects’,

‘should’, ‘intends’, ‘plans’, ‘believes’, ‘outlook’,

‘seeks’, ‘estimates’, ‘targets’, ‘may’, ‘will’,

‘continue’, ‘project’ and similar expressions,

as well as statements in the future tense,

identify forward-looking statements.

This document also references climate-related

targets and climate-related risks which differ

from conventional financial risks in that they

are complex, novel and tend to involve

projection over long-term scenarios which are

subject to significant uncertainty and change.

These forward-looking statements and targets

are not guarantees of our future performance

and are subject to assumptions, risks and

uncertainties that could cause actual future

results to differ materially from those

expressed in or implied by such forward-

looking statements and targets. Many of these

assumptions, risks and uncertainties relate to

factors that are beyond our ability to control or

estimate precisely, such as changes in laws or

regulations; and decisions by governmental

bodies or regulators, including those relating

to current and upcoming price controls in the

UK and rate cases in the US; the timing

of construction and delivery by third parties of

new generation projects requiring connection;

breaches of, or changes in, environmental,

climate change, and health and safety laws

or regulations, including breaches or other

incidents arising from the potentially harmful

nature of our activities; network failure or

interruption, the inability to carry out critical

non-network operations, and damage to

infrastructure, due to adverse weather

conditions, including the impact of major

storms as well as the results of climate

change, or due to counterparties being unable

to deliver physical commodities; reliability of

and access to IT systems, including due to the

failure of or unauthorised access to or

deliberate breaches of our systems and

supporting technology; failure to adequately

forecast and respond to disruptions in energy

supply; performance against regulatory targets

and standards and against our peers with the

aim of delivering stakeholder expectations

regarding costs and efficiency savings, as well

as against targets and standards designed to

support our role in the energy transition; and

customers and counterparties (including

financial institutions) failing to perform their

obligations to the Company.

Other factors that could cause actual results

to differ materially from those described in this

document include fluctuations in exchange

rates, interest rates and commodity price

indices; restrictions and conditions (including

filing requirements) in our borrowing and debt

arrangements, funding costs and access to

financing; regulatory requirements for us to

maintain financial resources in certain parts

of our business and restrictions on some

subsidiaries’ transactions, such as paying

dividends, lending or levying charges; the

delayed timing of recoveries and payments in

our regulated businesses and whether aspects

of our activities are contestable; the funding

requirements and performance of our pension

schemes and other post-retirement benefit

schemes; the failure to attract, develop and

retain employees with the necessary

competencies, including leadership and

business capabilities, and any significant

disputes arising with our employees or

breaches of laws or regulations by our

employees; the failure to respond to market

developments, including competition for

onshore transmission; the threats and

opportunities presented by emerging

technology; the failure by the Company to

respond to, or meet its own commitments

as a leader in relation to, climate change

development activities relating to energy

transition, including the integration of

distributed energy resources; and the need to

grow our business to deliver our strategy, as

well as incorrect or unforeseen assumptions

or conclusions (including unanticipated costs

and liabilities) relating to business

development activity, including the proposed

sale of certain of our businesses, our Strategic

Infrastructure projects and joint ventures.

For further details regarding these and other

assumptions, risks and uncertainties that may

affect National Grid, please read the Strategic

Report and the risk factors on pages 1 – 93 of

this document. In addition, new factors

emerge from time to time, and we cannot

assess the potential impact of any such factor

on our activities or the extent to which any

factor, or combination of factors, may cause

actual future results to differ materially from

those contained in any forward-looking

statement. Except as may be required by law

or regulation, the Company undertakes no

obligation to update any of its forward-looking

statements, which speak only as of the date of

this document.

The contents of any website references in this

document do not form part of this document.

Printed by a CarbonNeutral® Company

certified to ISO 14001 environmental

management system.

Printed on material from well-managed, FSC®

certified forests and other controlled sources. 

100% of the inks used are vegetable oil

based, 95% of press chemicals are recycled

for further use and, on average 99% of any

waste associated with this production will be

recycled and the remaining 1% used to

generate energy.

The paper is Carbon Balanced with World

Land Trust, an international conservation

charity, who offset carbon emissions through

the protection and preservation of high

conservation value land. Through protecting

standing forests under threat of clearance,

carbon is locked-in that would otherwise

be released.

306

People & Governance Committee report

National Grid plc

1–3 Strand

London WC2N 5EH

United Kingdom

nationalgrid.com

Further Information

Share ownership

At 27 May2025, the latest practicable date, none of the directors had an individual beneficial interest amounting to greater than 1% of the Company’s shares.

Material interests in shares

The following summarises significant changes in the percentage ownership held by our major shareholders since 1 April 2024. The disclosure of certain major and significant shareholdings in the share capital of the company is governed by applicable legal requirements. The following disclosure is derived from notifications made under the Companies Act 2006, the UK Financial Conduct Authority’s Disclosure Guidance, Transparency Rules (DTR) and, where more timely, the US Securities Exchange Act of 1934.

BlackRock, Inc. held 6.88% of our outstanding share capital as at 1 April 2024. Such holdings increased to 7.55% as at 18 November 2024. As noted on page 272 of the Annual Report, such holdings remained unchanged as at 31 March 2025. Such holdings increased to 8.5% as at 23 April 2025 and remained unchanged as at 27 May 2025.

Bank of America corporation held 5.89% of our outstanding share capital as at 1 April 2024. As noted on page 272 of the Annual Report, such holdings remained unchanged as at 31 March 2025. Such holdings decreased to 5.60% as at 27 May 2025.

Since 31 March 2025, we have not been notified of any other significant change in the percentage ownership held by our major shareholders.

Material interest in American Depositary Shares

As at 27 May 2025, we had 10,778 registered holders of our American Depositary Shares (ADSs) representing ownership of 8.60% of our issued and outstanding share capital, excluding ordinary shares held in treasury. As at 27 May 2025, based on information available to us, we believe that approximately 7.86% of our issued and outstanding share capital (whether in the form of shares or ADSs), excluding shares held in treasury, was held beneficially in the United States.

Insider Trading Policy

We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees, which policies and procedures are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and any listing standards applicable to us. A copy of the policy is filed as Exhibit 11(b) to this Annual Report.

Subsequent Events

National Grid North America (NGNA) priced a EUR1.2bn bond issue from its EMTN programme on 27 May 2025 consisting of EUR500m 5-year 3.15% notes and EUR700m 3.917% 10-year notes. Settlement is scheduled to take place on 3 June, 2025.

Representations and Warranties in the Exhibits

Pursuant to the rules and regulations of the SEC, the Company has filed certain agreements as exhibits to this Annual Report on Form 20-F. These agreements may contain representations and warranties by the parties to them. These representations and warranties have been made solely for the benefit of the other party or parties to such agreement and (i) may be intended not as statements of fact, but rather as a way of allocating the risk to one of the parties to such agreements if those statements turn out to be inaccurate, (ii) may have been qualified by disclosures that were made to such other party or parties and that either have been reflected in the company’s filings or are not required to be disclosed in those filings, (iii) may apply materiality standards different from what may be viewed as material to investors and (iv) were made only as of the date of such agreements or such other date or dates as may be specified in such agreements.

In accordance with the instructions to Item 2(b)(i) of the Instructions to Exhibits to the Form 20-F, National Grid agrees to furnish to the SEC, upon request, a copy of any instrument relating to long-term debt that does not exceed 10 percent of the total assets of National Grid and its subsidiaries on a consolidated basis.

Reports of Independent Registered Public Accounting Firms—Audit opinions for Form 20-F

In addition to the financial information set forth on the pages referenced under Item 18 in the Form 20-F Cross Reference Table on page vii, the reports of Deloitte LLP (PCAOB ID 1147), Independent Registered Public Accounting Firm, are presented below:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of National Grid plc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of National Grid plc. and its subsidiaries (together the “Group”) as at 31 March 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended 31 March 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as at 31 March 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended 31 March 2025, in conformity with “IFRS” Accounting Standards as issued by the International Accounting Standards Board ("IASB").

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as at 31 March 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated 14 May 2025, expressed an unqualified opinion on the Group’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Group's management. Our responsibility is to express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit and Risk Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

US environmental provisions – Refer to notes 1F, 26 and 35 to the financial statements

Critical Audit Matter Description

At 31 March 2025, the Group has £2,065 million of environmental provisions in the United States (“US”) relating to a number of sites owned and managed by the Group together with certain sites which are no longer owned.

We have identified the US environmental provisioning at certain sites as a key audit matter due to the complexities in estimating the future cost of remediation and the judgement involved in the determination of the discount rate applied.

The sites with the highest level of estimation uncertainty were identified as those with significant contamination (“Superfund” sites) and certain other legacy Manufactured Gas Plant (“MGP”) sites based on factors including the presence of regulatory correspondence in the year and the level of change in the provision amount. These sites represent the majority of the total US environmental provisions.

Environmental provisions are calculated based on management’s best estimate of the cash flows that will be required to settle the obligation, discounted at a real discount rate, calculated based on the US government bond yield curve and the weighted average life of the provisions.

There are various complexities and uncertainties that exist in relation to the cash flows including:

•the impact of changes in regulation or the environmental agencies’ interpretation and implementation of the regulations;

•the extent of contamination identified and modelled from ongoing exploratory and remediation works;

•the form, timing, extent, and associated cost of remediation needed;

•the methods and technologies used in remediation; and

•the allocation of responsibility for remediation.

Management is required to make judgements in selecting an appropriate discount rate which reflects changes in US treasury rates as current market assessments of the time value of money. The Group has increased their real discount rate to 2.0% for the undiscounted cash flows to reflect current market rates. As described in note 35, the change in discount rate has reduced the environmental provision balance by £82 million.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future cash flows of the Superfund and certain legacy MGP sites and the selection of the discount rate for US environmental provisions included the following, among others:

•We tested the effectiveness of controls over management’s compilation of forecast cash flows and determination of the discount rate.

•With regard to the estimated cash outflows:

◦We agreed the proposed remediation activities to technical engineering studies agreed with the environmental agencies where available, or considered latest correspondence with the environmental agencies where remediation plans are yet to be agreed. The associated costings of these activities were agreed to third-party contracts and estimates. We worked with our environmental specialists to assist us in evaluating management’s key assumptions;

◦We read relevant correspondence and meeting minutes with the environmental agencies,working with our specialists to evaluate management’s position where significant estimation uncertainty exists;

◦In order to assess the completeness of the year end liabilities we completed public domain searches on federal databases across all Group subsidiaries to determine whether any relevant costs or applicable sites were omitted. We further checked for the latest regulatory changes at the federal and local level, and precedent from remediation plans recently agreed with the environmental agencies, to determine any indication of changing requirements;

◦We evaluated the results of ongoing environmental testing for potential non-compliance or evidence that the existing or planned remediation activities would require revision or enhancement;

◦We evaluated information obtained from the Group’s internal legal counsel in our evaluation of the recorded provisions; and

◦We performed additional procedures regarding the uncertainty over the allocation of responsibilities between the Potentially Responsible Parties (“PRPs”);

▪We made enquiries of the US internal legal counsel and obtained analysis directly from external legal counsel to understand any potential changes to the previously determined positions.

▪We evaluated settlements in the period with PRPs and compared the results to their assumed shares.

▪We evaluated publicly available financial statement information and disclosures for a selection of PRPs to identify contradictory evidence in their share percentage and test financial viability.

▪We assessed the extent to which the evidence obtained demonstrated that the allocations will be substantially followed by all parties.

•To evaluate the discount rate chosen by management, we evaluated the methodology that management has adopted for calculating the discount rate and independently calculated an appropriate discount rate which we used to assess management’s rate.

We assessed management’s disclosures in notes 1F, 26 and 35.

/s/ Deloitte LLP

London, United Kingdom

14 May 2025

We have served as the Group's auditor since 2018.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of National Grid plc

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of National Grid plc and subsidiaries (together the “Group”) as of 31 March 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of 31 March 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended 31 March 2025, of the Group and our report dated 14 May 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying internal control over financial reporting section appearing on page 262 of the Additional Information section. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte LLP

London, United Kingdom

14 May 2025

	Description
1.1	Articles of Association of National Grid plc as amended by Special Resolution passed on 26 July 2021. (Exhibit 1.1 to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
2(a)	Amended and restated Deposit Agreement dated as of 23 May 2013 among National Grid plc and The Bank of New York Mellon, as Depository, and all Owners and Holders from time to time of American Depositary Shares issued thereunder. (Exhibit 1 to National Grid plc Form F-6 dated 15 May 2013 File No. 333-178045)	Incorporated by reference
2(b).1	Amended and Restated Trust Deed dated 22 February 2012 among National Grid Gas plc, National Grid Gas Finance (No 1) plc and the Law Debenture Trust Corporation p.l.c. relating to a €10,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).3 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958)	Incorporated by reference
2(b).2	Amended and Restated Trust Deed dated 2 August 2011 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).5 to National Grid plc Form 20-F dated 12 June 2012 File No. 1-14958)	Incorporated by reference
2(b).3	Amended and Restated Trust Deed dated 10 September 2012 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).6 to National Grid plc Form 20-F dated 10 June 2013 File No. 1-14958)	Incorporated by reference
2(b).4	Amended and Restated Trust Deed dated 12 September 2014 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to National Grid plc and National Grid Electricity Transmission plc €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).9 to National Grid plc Form 20-F dated 5 June 2015 File No. 1-14958)	Incorporated by reference
2(b).5	Amended and Restated Trust Deed dated 18 December 2014 among National Grid USA, National Grid North America Inc. and the Law Debenture Trust Corporation p.l.c. relating to National Grid USA €4,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).10 to National Grid plc Form 20-F dated 5 June 2015 File No. 1-14958)	Incorporated by reference
2(b).6	Amended and Restated Trust Deed dated 21 September 2015 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to National Grid plc and National Grid Electricity Transmission plc €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).13 to National Grid plc Form 20-F dated 7 June 2016 File No. 1-14958)	Incorporated by reference
2(b).7	Amended and Restated Trust Deed dated 9 December 2015 among National Grid USA, National Grid North America Inc. and the Law Debenture Trust Corporation p.l.c. relating to National Grid USA €4,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).14 to National Grid plc Form 20-F dated 7 June 2016 File No. 1-14958)	Incorporated by reference
2(b).8	Amended and Restated Trust Deed dated 30 July 2019 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to National Grid plc and National Grid Electricity Transmission plc €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).8 to National Grid plc Form 20-F dated 25 June 2020 File No. 1-14958)	Incorporated by reference
2(b).9	Amended and Restated Trust Deed dated 30 July 2019 among National Grid Gas plc and the Law Debenture Trust Corporation p.l.c. relating to a €10,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).9 to National Grid plc Form 20-F dated 25 June 2020 File No. 1-14958)	Incorporated by reference

2(b).10	Trust Deed dated 5 September 2019 among NGG Finance plc, National Grid plc and the Law Debenture Trust Corporation p.l.c. relating to a €500,000,000 Fixed Rate Resettable Capital Securities due 2079. (Exhibit 2(b).9 to National Grid plc Form 20-F dated 25 June 2020 File No. 1-14958)	Incorporated by reference
2(b).11	Trust Deed dated 5 September 2019 among NGG Finance plc, National Grid plc and the Law Debenture Trust Corporation p.l.c. relating to a €750,000,000 Fixed Rate Resettable Capital Securities due 2082. (Exhibit 2(b).9 to National Grid plc Form 20-F dated 25 June 2020 File No. 1-14958)	Incorporated by reference
2(b).12	Trust Deed dated 7 August 2020 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b). to National Grid plc Form 20-F dated 8 June 2021 File No. 1-14958)	Incorporated by reference
2(b).13	Trust Deed dated 22 October 2020 between National Grid North America and the Law Debenture Trust Corporation p.l.c. relating to a €8,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b). to National Grid plc Form 20-F dated 8 June 2021 File No. 1-14958)	Incorporated by reference
2(b).14	Amended and Restated Trust Deed dated 16 August 2021 among National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a €15,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).14. to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
2(b).15	Amended and Restated Trust Deed dated 22 October 2021 between National Grid North America and the Law Debenture Trust Corporation p.l.c. relating to a €8,000,000,000 Euro Medium Term Note Programme (Exhibit 2(b).15. to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
2(b).16	Amended and Restated Trust Deed dated 11 August 2022 between National Grid plc, National Grid Electricity Transmission plc and the Law Debenture Trust Corporation p.l.c. relating to a €20,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).16 to National Grid plc Form 20-f dated 6 June 2023 File No. 1-14958)	Incorporated by reference
2(b).17	Amended and Restated Trust Deed dated 24 August 2022 among Western Power Distribution (East Midlands) plc, Western Power Distribution (South Wales) plc, Western Power Distribution (West Midlands) plc and HSBC Corporate Trustee Company (UK) Limited relating to a €6,000,000,000 Euro Medium Term Note Programme. (Exhibit 2(b).17 to National Grid plc Form 20-f dated 6 June 2023 File No. 1-14958)	Incorporated by reference
2(b).18	Amended and Restated Trust Deed dated 4 August 2023 between National Grid North America Inc. and The Law Debenture Trust Corporation p.l.c. relating to a €8,000,000,000 Euro Medium Term Note Programme.	Incorporated by reference
2(b).19	Amended and Restated Trust Deed dated 10 August 2023 among National Grid Electricity Distribution (East Midlands) plc, National Grid Electricity Distribution (South Wales) plc, National Grid Electricity Distribution (South West) plc, National Grid Electricity Distribution (West Midlands) plc and HSBC Corporate Trustee Company (UK) Limited relating to a €6,000,000,000 Euro Medium Term Note Programme.	Incorporated by reference
2(c)	Description of Securities Registered Under Section 12 of the Exchange Act	Incorporated by Reference
4(a).1*	Underwriting Agreement dated as of 23 May 2024 among National Grid plc and the underwriting banks named therein.	Incorporated by reference

4(b).1*	Amended and Restated Further Acquisition Agreement dated 19 July 2023 between Lattice Group Limited and Luppiter Bidco Limited relating to the acquisition of shares in GasT TopCo.	Incorporated by reference
4(b).2*	Remaining Acquisition Agreement dated 19 July 2023 between Lattice Group Limited and Luppiter Bidco Limited relating to the acquisition of shares in GasT TopCo.	Incorporated by reference
4(c).2	Service Agreement among National Grid Electricity Transmission plc and John Mark Pettigrew dated 2 November 2014. (Exhibit 4(c).5 to National Grid plc Form 20-F dated 5 June 2014 File No. 1-14958)	Incorporated by reference
4(c).3	Amendment to Service Agreement among National Grid Electricity Transmission plc and John Mark Pettigrew dated 2 November 2015. (Exhibit 4(c).4 to National Grid plc Form 20-F dated 5 June 2014 File No. 1-14958)	Incorporated by reference
4(c).4	Service Agreement among National Grid Electricity Transmission plc and Nicola Shaw dated 23 March 2016. (Exhibit 4(c).4 to National Grid plc Form 20-F dated 6 June 2017 File No. 1-14958)	Incorporated by reference
4(c).5	Service Agreement among National Grid plc and Andrew Agg dated 21 December 2018. (Exhibit 4(c).5 to National Grid plc Form 20-F dated 4 June 2019 File No. 1-14958)	Incorporated by reference
4(c).6	Letter of Appointment—Jacqui Ferguson	Incorporated by reference
4(c).7	Letter of Appointment—Therese Esperdy. (Exhibit 4(c).14 to National Grid plc Form 20-F dated 10 June 2013 File No. 1-14958)	Incorporated by reference
4(c).8	Letter of Appointment—Earl Shipp. (Exhibit 4(c).15 to National Grid plc Form 20-F dated 4 June 2019 File No. 1-14958)	Incorporated by reference
4(c).9	Letter of Appointment—Jonathan Silver. (Exhibit 4(c).15 to National Grid plc Form 20-F dated 25 June 2020 File No. 1-14958)	Incorporated by reference
4(c).10	Letter of Appointment—Elizabeth (Liz) Hewitt. (Exhibit 4(c).16 to National Grid plc Form 20-F dated 25 June 2020 File No. 1-14958)	Incorporated by reference
4(c).11	Letter of Appointment—Paula Rosput Reynolds. (Exhibit 4(c).17 to National Grid plc Form 20-F dated 8 June 2021 File No. 1-14958)	Incorporated by reference
4(c).12	Letter of Appointment—Lord Ian Livingston. (Exhibit 4(c).18 to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
4(c).13	Letter of Appointment—Anne Robinson. (Exhibit 4(c).19 to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
4(c).14	Letter of Appointment—Tony Wood. (Exhibit 4(c).20 to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
4(c).15	Letter of Appointment—Martha Wyrsch (Exhibit 4(c).21 to National Grid plc Form 20-F dated 7 June 2022 File No. 1-14958)	Incorporated by reference
4(c).16	Letter of Appointment —Iain Mackay (exhibit 4(c).17 to National Grid plc Form 20-F dated 6 June 2023 File No. 1-14958)	Incorporated by reference

4(c).17	National Grid plc Deferred Share Plan. (Exhibit 4.2 to National Grid plc S-8 dated 28 July 2011 File No. 333-175852)	Incorporated by reference
4(c).18	National Grid Executive Share Option Plan 2002. (Exhibit 4 (c) to National Grid Group Form 20-F dated 21 June 2002 File No. 1-14958)	Incorporated by reference
4(c).19	National Grid Group Share Matching Plan 2002. (Exhibit 4 (c) to National Grid Group Form 20-F dated 21 June 2002 File No. 1-14958)	Incorporated by reference
4(c).20	National Grid Transco Performance Share Plan 2002 (as approved 23 July 2002 by a resolution of the shareholders of National Grid Group plc, adopted 17 October 2002 by a resolution of the Board of National Grid Group plc, amended 26 June 2003 by the Share Schemes Sub-Committee of National Grid Transco plc, and amended 5 May 2004 by the Share Schemes Sub-Committee of National Grid Transco plc). (Exhibit 4.19 to National Grid Transco Form 20-F dated 16 June 2004 File No. 1-14958)	Incorporated by reference
4(c).21	National Grid Executive Share Option Scheme. (Exhibit 4D to National Grid Group S-8 dated 26 July 2001 File No. 333-65968)	Incorporated by reference
4(c).22	Lattice Group Short Term Incentive Scheme (approved by a resolution of the shareholders of BG Group plc effective 23 October 2000; approved by a resolution of the Board of National Grid Transco plc on 30 April 2004; amended by resolutions of the Board of Lattice Group plc effective on 21 October 2002 and 13 May 2004). (Exhibit 4.23 to National Grid Transco Form 20-F dated 16 June 2004 File No. 1-14958)	Incorporated by reference
4(c).23	National Grid USA Companies’ Defined Contribution Supplemental Executive Retirement Plan. (Exhibit 4.2 to National Grid plc S-8 dated 23 October 2012 File No. 333-184558)	Incorporated by reference
8	List of subsidiaries - The list of the Company’s significant subsidiaries as of 31 March 2025 is incorporated by reference to “Financial Statements—Notes to the consolidated financial statements—34. Subsidiary undertakings, joint venture and associates—Subsidiary undertakings” on pages 242-245 included in the Annual Report on Form 20-F for the financial year ended 31 March 2025. This list excludes subsidiaries that do not, in aggregate, constitute a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X as at 31 March 2025.	Filed herewith
11(b)	Share Dealing Policy	Filed herewith
12.1	Certification of John Pettigrew pursuant to Rule 13a-14(a) of the Exchange Act.	Filed herewith
12.2	Certification of Andrew Agg pursuant to Rule 13a-14(a) of the Exchange Act.	Filed herewith
13.1	Certifications of John Pettigrew and Andrew Agg furnished pursuant to Rule 13a-14(b) of the Exchange Act (such certifications are not deemed filed for purpose of Section 18 of the Exchange Act and not incorporated by reference in any filing under the Securities Act).	Filed herewith
15.1	Consent of Deloitte LLP, independent registered public accounting firm to National Grid plc.	Filed herewith
17.1	Subsidiary guarantors and issuers of guaranteed securities	Incorporated by reference
97.1	US Clawback Policy	Incorporated by reference

* Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.

NATIONAL GRID PLC

By: /s/ Andrew Agg

Andrew Agg

Chief Financial Officer

London, England

29 May 2025