Quote:
Originally Posted by dooper786
That is exactly the problem, the big parent companies such as national grid are making big profits,nothing wrong with that,they are public companies and succesfull ones at that BUT,and I'll repeat myself, UK Distribution,a subsidiary of National Grid is ring fenced and is not allowed to be cross subsidised by its parent >National Grid. UK distribution is the bit that is regulated by OFGEM which is forcing a 30% plus cut in operating costs for the next review period. So even though National Grid made 800 plus m profit,it cant bail out its UK distrubtion bit becuase OFGEM wont allow it. UKdistribution is therefore starved of investment and income,it manages urban gas distribution and gas emergencies,its being throttled by the regulator and there in lies the danger.. The same is repeated across the other distribution networks such as the others you mention. Also becuase of the squeeze, people are leaving to find jobs elsewhere and not being replaced. There is almost zero recruitment. Perhaps they will eventually get some Polish gasmen and they can do the job 24/7 for £5 an hour? Thats what OFGEM would like.
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National Grid Gas Holdings (who own and operate the Gas Transmission Network for Great Britain (their words, not mine)) would disagree with you (re their last Annual Report).
If you look at page 40 of the annual report, you will see that National Grid Gas Holdings made a profit of £2,683 million 2005/2006 - not National Grid, but National Grid Gas Holdings.
NationalGridGasHoldings
Our regulatory controls provide significant incentives towards improving operational efficiency by permitting the sharing of the benefits of increased efficiencies between energy users and shareholders. This year we have added to our impressive cost efficiency track record when UK gas distribution achieved its cost-efficiency target one year early.
On 1 June 2005 we completed the sales of four of our regional gas distribution networks for a total cash consideration of £5.8 billion. This creates, what is in effect, a new gas distribution market in the UK. We have retained four of the networks, which together represent the largest of the UK gas distribution businesses.
Our safety performance has continued to improve through the implementation of best practice with a further 44% reduction in lost time injuries. Once again, we exceeded all our safety related standards of service.
Investment
Investment in our networks remains a priority for the Group. Total investment reached £0.9 billion this year, up by 50% on last year’s £0.6 billion. We expect it will stay at or above £1.0 billion each year over the medium term.
Investment in UK gas transmission is primarily due to new infrastructure required to meet the changing gas supply pattern as the UK becomes a net importer of gas. This includes our largest ever project, connecting the new LNG (liquefied natural gas) terminals currently being built at Milford Haven. This will require investment of more than £750 million over the next two years.
Outlook
Our priority remains to create value for National Grid’s shareholders through the efficient delivery of our regulatory contracts, while maintaining the drive for continuous improvement in safety, reliability, efficiency and responsibility.
"UK gas distribution invested £444 million in the reinforcement, extension and replacement of the UK gas distribution network in 2005/06 compared with £359 million in 2004/05 (this excludes the investment in the four regional gas distribution networks that were sold on 1 June 2005). Replacement expenditure increased from £255 million in 2004/05 to £295 million in 2005/06"