National Grid sale of Gas Distribution Network business – decision on regulatory aspects and the transfer of assets

On 10 November 2015, National Grid plc (NG) announced it intended to sell a majority of its shares in its gas distribution business. In preparation for this sale, NG intends to transfer its distribution assets and distribution licence from National Grid Gas plc (NGG) to a new subsidiary company (NewCo). The Authority has a role in deciding whether to consent to these transfers.

On 23 June 2016, Ofgem received a notice from NGG requesting permission to transfer its gas distribution transportation assets from NGG to NewCo under Standard Special Condition A27 of the distribution licence. In anticipation of receiving this request from NGG, in May 2016, we published a consultation which described our role in the sale process and sought stakeholder views on issues arising from these potential transfers, ahead of any consent to transfer being given by the Authority.

The linked document:

-summarises responses Ofgem received to the May 2016 consultation;

-sets out decisions in each area;

-sets out the decision to consent to the transfer of assets to NewCo; and

-sets out next steps Ofgem intend to undertake.

In addition to the informal consultation, in May 2016 Ofgem also issued a statutory consultation on proposed new standard special conditions and special conditions in NGG’s National Transmission System (NTS) gas transporter licence. The statutory consultation  proposed modifications to allow Ofgem to maintain certain powers relating to the backstop meter provider of last resort (BMPOLR) obligations on NGG in the event that the transfer of assets and licence were to occur. Ofgem have decided to implement these changes.