David J. Manning Executive Vice President, National Grid October 26, 2007 Farmingdale State College Little Theatre 10:30

1. Energy Long Island 2007 ConferenceEnergy Challenges of Today and TomorrowNational Grid Perspective on the Future of Energy on Long Island David J. Manning Executive Vice President, National Grid October 26, 2007 Farmingdale State College Little Theatre 10:30 a.m.

2. Today’s Energy Challenges • Unprecedented prices / volatility • Tight supply / demand balance • Growing global demand • World energy consumption projected to increase 71% 2003-2030 • Geopolitical strife • Energy security • Unstable supply regions • Fuel Diversity • Infrastructure development • Climate Change • Changing public perception • All challenges impact us on Long Island

3. National Grid US Service Territory • A leading international electricity and gas company • Own and operate gas and electricity networks in US and UK • UK – largest utility • US – second largest utility (customers) • Almost 28,000 global employees • Over 18 million gas and electricity customers* * National Grid, under a Management Services Agreement, provides T&D services and power to the Long Island Power Authority’s 1.1 million customers

4. Long Island Generation Facilities and Long Island Transmission Interconnects 286 MW line from Ct. 330 MW DC line from Ct. Y50- 653 MW line from Westchester Southold Port Jefferson Y49- 637 MW line from Westchester Wading River Northport Glenwood Montauk Shoreham East Hampton Holtsville Southampton West Babylon National Grid facilities New York City Steam EF Barrett Gas Turbine Far Rockaway Non-National Grid Long Island Generation With future Caithness Plant expected in 2009 ~1530 MW (only a few units depicted) Diesels 660 MW DC line (Neptune) – from NJ Long Island Total: 4,160 MW Total import capability with Neptune ~2560 MW

5. Long Island Energy Supply Mix is Changing • The introduction of significant increased capacity and import capability on Long Island will continue to curtail the operation of older less, efficient generators and reduce L.I. emissions: Demand Graph 30,000 25,000 20,000 (GWh) 15,000 10,000 • - Caithness 320 MW combined cycle – 2009 5,000 • - 660 MW Neptune transmission line – 2007 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 KeySpan Resources Non-KeySpan LI Resources Imports LIPA Requirements Historic and Projected Long Island Energy Supply Mix

6. National Grid/LIPA Agreement: Condition of LIPA Approval of KeySpan Acquisition • National Grid will invest $100 million to cut emissions at Northport and Port Jefferson at no incremental cost to ratepayers • Northport - install new steam turbine technology (General Electric Dense Pack or equivalent) • Cost ~ $40 to 45 million • Improve efficiency - cut fuel use by equivalent 7 to 11 million gallons of fuel/year • Supports Spitzer 15 by 15 efficiency/conservation proposal • Cut CO2 emissions by 85,000 to 140,000 tons/year • Supports RGGI • Northport and Port Jefferson – install advanced Separated Overfire Air (SOFA) NOx control systems • Cost ~ $10 million per unit (~$55 - $60 million for all six NP and PJ units) • Reduce NOx emission rate by an additional ~20% • Helps relieve ozone air quality problems in NY metro area - addresses NY CAIR • Licensing/permitting underway with NYCDEC Region 1 and Albany staff • Installation 2009-2012 Dense Pack Upgrade (below) Air SOFA NOx controls BOILER Fuel & Air Mixture

7. Historic and Projected CO2 Emissions Northport Power Station Northport Power Station Historic and projected annual emissions after new Long Island capacity and transmission additions and plant modernization investments 7000 6000 5000 4000 Thousand Tons/Year 3000 2000 1000 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year Historic and Projected NOx Emissions Historic and Projected SO2 Emissions Northport Power Station Northport Power Station 9000 8000 35000 7000 30000 6000 25000 5000 Tons/Year 4000 20000 SO2 Tons/Year 3000 15000 2000 10000 1000 0 5000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 0 Year 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

8. Historic and Projected CO2 Emissions - Port Jefferson Power Station 2000 1800 Port Jefferson Power Station Historic and projected annual emissions after new Long Island capacity and transmission additions and plant modernization investments 1600 1400 1200 Tons/year 1000 Thousand 800 600 400 200 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Historic and Projected NOX Emissions - Year Port Jefferson Power Station Base Case Historic and Projected SO2 Emissions - Port Jefferson Power Station 10000 2000 9000 1800 1600 8000 1400 7000 1200 6000 1000 Tons/Year Tons/Year 5000 800 600 4000 400 3000 200 2000 0 1000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 0 Year 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

9. National Grid/LIPA Agreement: Additional Provisions • LIPA granted option to purchase: • At book value: • E.F. Barrett Power station for possible backyard repowering • Retire one or both 185 MW Units – replace with 500 MW combined cycle unit • Far Rockaway Power station for possible backyard repowering • Retire 100MW unit replace with 250MW combined cycle plant • At book value plus 25% • Wading River generating facility for possible hybrid repowering • Hybrid repowering of 240 MW unit to 400 MW • Requires Islander East Pipeline for natural gas supply • Repowering of high feasibility sites will further improve system-wide efficiencies resulting in reduced operation of other lower efficiency, higher emitting plants

10. National Grid/LIPA Agreement: Further Commitment • Conduct comprehensive engineering study for repowering/rebuild of Northport and Port Jefferson • Engineering level of detail to supplement earlier feasibility studies • Northport: National Grid sole expense • Port Jefferson: National Grid/LIPA share expense • Comprehensive scope of work covering: • engineering design • layout • required transmission and fuel infrastructure upgrades • emissions • air quality • capital costs • cooling water options • rate impacts • financing options (all repowering scenarios require long term energy contracts with LIPA) • Approximately one year duration • Power Engineering, Environmental, Generation Operations - to drive the studies • Considering stakeholder communications panel • Provides for regular progress review and comment by representatives from: • Environmental groups, government reps, etc.

11. McKinsey: U.S. Greenhouse Gas Abatement Mapping Initiative • Comprehensive two year study examining over 250 abatement options covering all sectors of the US economy • Expected to provide reliable cost basis for congressional climate debate • Rollout December 4th, 2007 NYC and Dec. 7th Washington DC • CEOs, NGOs, key policy stakeholders, regulators, media, academia • Limited sponsorship National Grid NRDC Environmental Defense PG&E Honeywell Honda Shell DTE Energy

12. Source: WTRG Economics www.wtrg.com

13. Worldwide Energy Consumption Source: BP

14. Clouds on the Horizon • Growing anti-U.S. sentiment • Uncertainty over Iran’s nuclear development program • If Iran’s 2.6 million barrels per day were cut off from the market, it could send oil prices to the $90-$100 per barrel range • Similar impact on gas prices • Venezuela / Exxon Mobil / ConocoPhillips • Militant attacks on Nigerian oil production – September 2006 • Cut flow of crude by nearly 900,000 barrels a day Iran’s Mahmoud Ahmadinejad Venezuela‘s Hugo Chavez

15. National Petroleum Council: Facing The Hard Truths About Energy – July 2007 • Core strategies for meeting future energy challenges: • Moderate growing energy demand by increasing efficiency of transportation, residential, commercial, and industrial uses. • Expand and diversify production from clean coal, nuclear, biomass, other renewables, and unconventional oil and natural gas • Moderate decline of conventional domestic oil and gas production • Increase access for development of new resources • Integrate energy policy into trade, economic, environmental, security, and foreign policies; strengthen global energy trade and investment • Broaden dialogue with both producing and consuming nations to improve global energy security • Enhance science and engineering capabilities and create long-term opportunities for R&D in all phases of the energy supply and demand system. • Develop the legal and regulatory framework to enable carbon capture and sequestration (CCS). • As policymakers consider options to reduce CO2 emissions, provide an effective, global framework for carbon management, including establishment of a transparent, predictable, economy-wide cost for CO2 emissions.

16. We Have Serious Environmental Issues The Earth is warming: • Sea levels have risen 4-8”* • 1997, ‘98, 2001, ‘02, ‘03, hottest years on record • Atmospheric concentrations of CO2 have increased 32% since 1850 • Polar ice caps melting 74,000 sq./km each year (size of Lake Superior) • Average temperature has risen 1O F* * Over the last century

17. No Dispute Among Scientific Bodies

18. Views on the Environment* *Source: New York Times / CBS News Poll; based on nationwide telephone interviews with 1,052 adults, conducted April 20-24, 2007. Americans place a priority on protecting the environment • When a trade off has to be made, which is more important to you: stimulating the economy or protecting the environment • Economy – 36%; Environment – 52%; Both – 8%; No opinion 4% • Which should be a higher priority for government: increasing the production of petroleum, coal and natural gas, or encouraging people to conserve energy? • Increasing production – 21%; Encouraging conservation – 68%; Both – 9%; No opinion – 2% Americans are willing to make sacrifices • In order to cut down on energy consumption and reduce global warming, do you favor or oppose requiring car manufacturers to produce cars that are more energy efficient? • Favor – 92%; Oppose – 6%; No opinion – 2% • In order to reduce global warming, would you be willing or not willing to pay more for electricity if it were generated by renewable energy sources like solar and wind? • Willing – 75%; Not willing – 20%; No opinion – 4%

19. Gaining Government Support • The politics of energy is complex: • International, national, regional, local • Growing anti-U.S. sentiment • Government funding / support promotes: • Next-generation technologies • Public-private partnerships • Consumer benefits

20. Summary of US Senate Climate Bills Source: M.J. Bradley & Associates – September 2007

21. Patchwork Approach to CO2 Reduction – Likely to Lead to Economic and Competitive Inefficiencies Western Regional Climate Action Initiative Regional Greenhouse Gas Initiative (RGGI) Powering the Plains                      • RPS standards [plus VT (goal), MA, RI, CT, NJ, DE, MD, D.C.]   California motor vehicle CO2 emissions standards (plus VT, MA, RI, CT, NJ, ME) Climate Action Plans (includes all states in regional programs except N & S Dakota) States developing greenhouse gas registries 3

22. ME: 30% by 2000 10% by 2017 goal - new RE MN: 25% by 2025 (Xcel: 30% by 2020) VT: RE meets load growth by 2012 *WA: 15% by 2020 • NH: 23.8% in 2025 WI: requirement varies by utility; 10% by 2015 goal MT: 15% by 2015 MA: 4% by 2009 + 1% annual increase OR: 25% by 2025 (large utilities) 5% - 10% by 2025 for smaller utilities RI: 15% by 2020 CT: 23% by 2020 • NV: 20% by 2015 IA: 105 MW • NY: 24% by 2013 • CO: 20% by 2020 (IOUs) *10% by 2020 (co-ops & large munis) IL: 8% by 2013 • NJ: 22.5% by 2021 CA: 20% by 2010 • PA: 18%¹ by 2020 MO: 11% by 2020 • MD: 9.5% in 2022 *NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) • AZ: 15% by 2025 *DE: 10% by 2019 • DC: 11% by 2022 *VA: 12% by 2022 TX: 5,880 MW by 2015 HI: 20% by 2020 State RPS State Goal • Minimum solar or customer-sited RE requirement * Increased credit for solar or customer-sited RE • ¹PA: 8% Tier I / 10% Tier II (includes non-renewables); SWH is a Tier II resource Solar water heating (SWH) eligible Renewable Portfolio Standards (RPS) Source: DSIRE: www.dsireusa.org June 2007

23. 2006 Federal Energy Bill • CAFE (Corporate Average Fuel Economy) standards • Target: at least 35 mpg for light duty vehicles by 2020 (Current: 27 mpg cars; 20 mpg trucks, including SUVs) • Exists in Senate version, not House version • Renewable Fuel Standard (RFS) • Encourage the blending of renewable fuels into the nation’s motor vehicle fuel (plant or animal products or wastes, as opposed to fossil fuels) • Biofuels / Ethanol: E-85 (85% Ethanol, 15% gasoline) • Exists in Senate version, not House version • Attempt to build a national RPS - 15% by 2030 • Concerns about credit for state commitments and definition of renewables (i.e., existing hydropower) • Exists in House version, not Senate version • Pelosi pushing hard for December 22

24. Comparison of Economy-wide Climate Change Proposals - 110th Congress 1990 - 2050

25. States and Cities are Raising the Bar New York State – ‘15 by 15’ New York City - PlaNYC 2030

26. A Message From the ‘Governator’ • Sept. 2006: Governor signs two landmark climate change bills • AB 32: directs the State Air Resources Board to establish a GHG emissions limit • 1990 levels by 2020 • 80% below 1990 levels by 2050 • SB 1368: instructs State PUC / State Energy Commission to implement regulation to that prohibits Load Serving Entities in the state from entering into long-term commitments for baseload generation • Feb. 2007: signed agreement with Gov’s of Arizona, New Mexico, Oregon and Washington to reduce GHG in the Western U.S. • Challenged the Federal Government to initiate national market-based cap and trade systems for GHG emissions; nationwide Low-Carbon Fuel Standard

27. Heed the “Goracle” Winners 2007 Nobel Peace Prize: Intergovernmental Panel on Climate Change (IPCC) and Al Gore “… for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change"

28. Power Plant Evolution … Ravenswood 40 In Operation: 2004 CO2-851 lb/MWhr NOx-44.8 tons Data Year 2006 Free-flow Hydropower Coming Soon 0 emissions Big Allis – Unit 30 In Operation: 1965 CO2-1,445 lb/MWhr NOx- 782 tons Data year - 2006

29. New York City / State Opportunity Free-flow, Kinetic Hydropower Systems • More than 1,000 MW * potential • Potential local sites include East River, Governor’s Island, United Nations Area, Hell Gate, Hudson River and Long Island Sound • Could displace equivalent annual consumption of over: • 2,000,000 tons of coal • 6,800,000 barrels of oil • 43 Bcf of natural gas • Could eliminate emissions: • 10,000 tons of NOX • 3,300,000 tons of CO2 • 16,600 tons of SOX *According to NYSERDA

30. Energy Efficiency Will Play A Critical Role • Concerns about climate change and higher rates have pushed energy efficiency into the spotlight • Rapid increase in funding is expected – both here and abroad • Incorporation of efficiency into resource mix • More cost effective than other resources for meeting future demand • Customers benefit: • Enhanced service • Reduced operating costs • Trusted technical expertise • Financial assistance • Helps meet environmental objectives

31. Rate Regulation / Decoupling Will Encourage Energy Efficiency • Traditional regulation: • Rewards sales / encourages consumption • Discourages utility support for efficiency • Recovery of fixed costs uncertain • Rate decoupling: • Severs link between profit and sales • Rewards safe, reliable service, public goals (the environment) • Better aligns consumer, shareholder interests • Promotes investment in least cost efficiency • Assures recovery of fixed costs • Reduces energy prices by reducing demand • Improves reliability – less stress on energy systems • NYS PSC calls for electric and gas utilities to develop proposals for decoupling (4/18/07)

32. New Technologies / Collaboration: A Big Part of the Solution • Distributed Generation • Fuel Cells, microturbines, CHP options, reciprocating engines • Biofuels • National Grid-NYSERDA bioresidual fuel program uses heat and chemical processed animal and vegetable byproducts to generate electricity • Alternative fuel vehicles • Smart Grids • Superconductors • Nanotechnologies • New ethanol solutions • Clean coal technology • Partnerships: Private / Public / Academia • Advanced Energy Research and Technology Center – Stony Brook University

33. 3500 3000 2500 2000 $ Million 1500 1000 500 0 1998 2002 2003 1984 1985 1986 1988 1989 1990 1993 1995 1996 1997 1999 2001 1982 1987 1991 2004 1992 1994 2005 1981 1983 2000 Year GROUP 1: ENERGY EFFICIENCY GROUP II: FOSSIL FUELS II.3 Total CO2 Capture and Storage GROUP III: RENEWABLE ENERGY SOURCES GROUP IV: NUCLEAR FISSION and FUSION GROUP V: HYDROGEN and FUEL CELLS GROUP VI: OTHER POWER and STORAGE TECHS GROUP VI: TOTAL OTHER TECH./RESEARCH US R&D Expenditures - 1981 - 2005 Source: IEA R&D database http://www.iea.org/Textbase/stats/rd.asp

34. National Grid: A Strong Commitment to R&D • National Grid is undertaking a number of innovative research projects to improve the operation of our electricity and gas systems • Focus on climate change • On target to deliver a 60% reduction in greenhouse gas emissions from our operations and offices across the company well before 2050 • US and UK financial commitment of more than $45 million per year (US)

35. The Breadth and Impact of New Technologies in the Utility Business is Significant Years to Maturity Less than 2 years 2 to 5 years 5 to 10 years More than 10 years Distributed Generation Microgrids Transformational Nuclear Fusion Hydrogen Economy Liquefied Coal, Methane Zero Energy Homes Fuel Cells CHP Superconductivity CO2 Sequestration Garbage Incineration Plug-in hybrid vehicles Advanced Energy Storage Self Healing Grid Network Optimization LNG Expansion High Flywheel Smart / Intelli Grid Clean Coal PDA AMI & Smart Metering Pipe Relining Materials Flexible Piping SF6 Replacement Gas Home Energy Storage Low Loss Transmission Gas Quality Turbo Expander Nanotechnology Tidal/Wave generation Substation on a Lorry Solid State Technology Soil Remediation Network Topologies Intelligent PIGS High Efficiency Appliances Control & Protection Technologies Moderate Repowering Wind Generation Broadband in Gas Pipes Intermittent Generation Broadband over Power Lines Super Capacitors DC Networks Waste Energy Conversion Batteries Advanced Leak Detection & Repair Alternative Oils Ground Penetrating Radar X-Ray Inspection Low RFID Reactive Power Management Impact Current perspective on T&I response: Lead Track Prototype Trial

36. “Conservation may be a sign of personal virtue, but it is not a sufficient basis all by itself for a sound, comprehensive energy policy.” - Vice President Dick Cheney April 30, 2001

37. Cautionary Statement This presentation may contain 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 National Grid’s financial condition, National Grid’s results of operations and businesses, strategy, plans and objectives. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, “continue”, “project” and similar expressions, as well as statements in the future tense, identify forward-looking statements. These forward-looking statements are not guarantees of National Grid’s 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. Many of these assumptions, risks and uncertainties relate to factors that are beyond National Grid's ability to control or estimate precisely, such as delays in obtaining, or adverse conditions contained in, regulatory approvals and contractual consents, unseasonable weather affecting the demand for electricity and gas, competition and industry restructuring, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in energy market prices, changes in historical weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, the impact of changes to accounting standards and technological developments. Other factors that could cause actual results to differ materially from those described in this presentation include the ability to integrate the businesses relating to announced acquisitions with our existing business to realize the expected synergies from such integration, the availability of new acquisition opportunities and the timing and success of future acquisition opportunities, the timing and success or other impact of the sales of National Grid’s non-core businesses, the failure for any reason to achieve reductions in costs or to achieve operational efficiencies, the failure to retain key management, the behavior of UK electricity market participants on system balancing, the timing of amendments in prices to shippers in the UK gas market, the performance of National Grid's pension schemes and the regulatory treatment of pension costs, the exercise of LIPA of its right to acquire National Grid’s Long Island generation operations and the deployment of the proceeds received in connection therewith, and any adverse consequences arising from outages on or otherwise affecting energy networks, including gas pipelines, owned or operated by National Grid. For a more detailed description of some of these assumptions, risks and uncertainties, together with any other risk factors, please see National Grid's filings with and submissions to the US Securities and Exchange Commission (the “SEC”) (and in particular the "Risk Factors" and "Operating and Financial Review" sections in its most recent Annual Report on Form 20-F and the “Risk Factors” section in its Registration Statement on Form F-3 filed with the SEC). Except as may be required by law or regulation, National Grid undertakes no obligation to update any of its forward-looking statements. The effects of these factors are difficult to predict. New factors emerge from time to time and National Grid cannot assess the potential impact of any such factor on its activities or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

38. Energy Long Island 2007 ConferenceEnergy Challenges of Today and TomorrowNational Grid Perspective on the Future of Energy on Long Island David J. Manning Executive Vice President, National Grid October 26, 2007 Farmingdale State College Little Theatre 10:30 a.m.