Chief Executive Steve Holliday says that National Grid is to perform analysis on the value it exchanges with other EU countries ahead of a British referendum in 2017 on whether to remain in the European Union.

Although the analysis has yet to be done, the National Grid chief believes a withdrawal from Europe would be negative for the company.

“We cannot afford to lose the access to (European) energy supplies and interconnection, whatever the framework is eventually,” Holliday told Reuters.
Steve Holliday
“Being part of the European energy market is unquestionably essential for the UK.”

National Grid analysis will attempt to demonstrate how membership benefits the UK’s energy security.

National Grid, one of the top 20 UK companies by market capitalisation, is investing heavily in building new power lines to the continent and manages Britain’s gas and power exchanges with its neighbours on a daily basis.

National Grid reported an 11 per cent rise in annual pretax profit on Thursday and Ken Odeluga, market analyst at told Power Engineering International, “NG will publish its findings (on the value of remaining in the EU) in a couple of months, aiming to ensure the side of the ‘in/out’ debate that relates to UK utilities is heard.”

“After £3.5bn in investments in infrastructure in its last financial year, NG still managed to turn a higher-than-expected profit of £2.9bn. One might suspect Mr Holliday is concerned that leaving the EU might threaten synergistic benefits of scale that derive from proximity to Europe.”

“However, the bulk of NG’s revenues derive not from Europe, nor from the UK—43 per cent are from its US Distribution segment. On a strictly geographic basis, the percentage of sales from the US rises to 61 per cent.

“This suggests NG’s real worry concerns the maturity of its businesses in the US, where further expansion might be relatively taxing. Europe, where the energy transmission landscape remains dominated by relatively few players, may look more promising.”

NG net debt is forecast to rise to £27.3bn by 2019 from £23.9bn at end of NG’s last financial year. Return on equity on the other hand is continuing its 5-year-plus slide, and could slip below 17 per cent in 2017, from 26 per cent in 2011.

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