Electricity transmission giant National Grid is poised to become a major power in the US, where it soon expects to make most of its profits.
National Grid is completing the £2bn purchase of Niagara Mohawk, an electricity and gas company based in New York State. When the deal goes through the UK-based operator said it will become the leading transmission and distribution-focused electricity business in the US.
National Grid this week unveiled year-end pre-tax profits virtually unchanged at £481m on a turnover that more than doubled to £3.8bn. Its shares rose in early trading following news of the solid results and the company’s ambitious expansion strategy.
Chairman James Ross said National Grid now makes 36% of its electricity operating profits outside the UK, compared to less than 3% a year ago. When Niagara Mohawk comes on stream in 2002, the figure will rise to 60%.
The UK company hopes to save £63m a year by integrating the new business with its existing National Grid USA operations.
Back at home, National Grid said it had offset the impact of tough UK regulatory pressure on its profits through greater operational efficiency. However, Ross said: ‘It is clear that there is limited scope for increasing UK transmission profits. This is why the group embarked on an expansion strategy.’
Alongside its power operations, National Grid hopes to begin earning significant profits from its portfolio of telecoms interests. Services in this area will be expanded this year.