National Grid Group PLC – ‘U-1/A’ on 7/12/99 – EX-99.4

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Pre-Effective Amendment to Application or Declaration   —   Form U-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: U-1/A       Pre-Effective Amendment to Application or             63    169K 
                          Declaration                                            
 2: EX-99.1     Exhibit D-1.2                                         11±    38K 
 3: EX-99.2     Exhibit D-3.2                                          3     11K 
 4: EX-99.3     Exhibit D-6.2                                         14     32K 
 5: EX-99.4     Exhibit D-7.2                                          6     20K 
 6: EX-99.5     Exhibit J-1                                            5     21K 

EX-99.4   —   Exhibit D-7.2

EX-99.4
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Exhibit D-7.2                                                                   

STATE OF CONNECTICUT

[seal]                                                                          

DEPARTMENT OF PUBLIC UTILITY CONTROL
TEN FRANKLIN SQUARE 
NEW BRITAIN, CT 06051 

DOCKET NO. 99-03-43 APPLICATION   OF  NEW  ENGLAND  POWER   COMPANY   CONCERNING
ACQUISITION BY THE NATIONAL GRID GROUP  

June 30, 1999 

By the following Commissioners: 

Glenn Arthur
Linda Kelly Arnold
Donald W. Downes

DECISION

I.   INTRODUCTION                                                               

A.   APPLICANT'S PROPOSAL                                                       

     By  application  dated March 31,  1999  (Application),  New  England  Power
Company (NEP or Company), requests that the Department of Public Utility Control
(Department) either (1) confirm that Department approval is not required for the
acquisition of NEP's parent, New England Electric System (NEES), by The National
Grid Group plc (National  Grid), or (2) if such  Department  approval is needed,
approve such  acquisition.  By virtue of NEP's ownership in Millstone Unit No. 3
located in  Connecticut,  NEP,  pursuant to the General  Statutes of Connecticut
(Conn. Gen. Stat.)  ss.16-1(4),  is a public service company for all purposes of
Title 16 of the Conn. Gen. Stat.                                                

B.   CONDUCT OF THE PROCEEDING                                                  

There is no statutory requirement for a hearing and none was held.    

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Docket No. 99-03-43                                                       Page 2

C.   PARTIES AND INTERVENORS                                                    

     New England Power Company,  25 Research Drive,  Westborough,  Massachusetts
01582;  The National  Grid Group plc,  National  Grid House,  Kirby Corner Road,
Coventry  CV4 8JY,  United  Kingdom;  and the Office of  Consumer  Counsel,  Ten
Franklin Square,  New Britain,  Connecticut 06051, were recognized as parties to
this proceeding.                                                                

II.  APPLICANT'S EVIDENCE                                                       

     NEP requests that the Department  either (1) confirm the  understanding  of
NEP that the acquisition of NEP's parent,  NEES, by National Grid  (Acquisition)
does not require the approval of the Department;  or (2) approve the Acquisition
if the Department concludes such approval is required.  National Grid has agreed
to acquire  all of the common  shares of NEES,  a  registered  holding  company,
pursuant to a Merger Agreement dated December 11, 1998.                         

     NEES is a  registered  public  utility  holding  company  headquartered  in
Massachusetts. Its subsidiaries are engaged in the transmission and distribution
of  electricity  and the  marketing  of energy  commodities  and  services.  The
electricity  delivery  companies serve  approximately  1.3 million  customers in
Massachusetts,  Rhode Island and New  Hampshire.  NEES does not directly own any
generating or transmission assets located in Connecticut. Application, p. 1.    

     NEP is a foreign  electric  company,  as  defined in the Conn.  Gen.  Stat.
ss.16-246a.  Pursuant to the provisions of Conn. Gen. Stat.  ss.16-246c(c),  NEP
constitutes an electric company and public service company within the meaning of
Conn. Gen. Stat.  ss.16-1 by virtue of minority  ownership interest in Millstone
Unit No. 3, a nuclear generating asset located in Waterford, Connecticut. Id.   

     National Grid is a holding  company  incorporated  in England and Wales. It
owns all the shares of The National Grid Company plc, a corporation  that is the
world's largest privately-owned,  independent electric transmission company. The
National Grid Company owns,  operates and maintains the high voltage  network in
England and Wales that connects power stations with distribution  networks.  The
National  Grid  Company  is also  responsible  for  scheduling  and  dispatching
generation  to meet demand and manages and controls  the software  systems to do
so.  Additionally,  The National Grid Company owns and operates  interconnectors
that enable  electricity to be transferred  between the England and Wales market
and Scotland and France. Application, p. 2.                                     

     The  Company  admits  that  because of NEP's  status as a foreign  electric
company and NEES status as a holding company parent,  Conn. Gen. Stat.  ss.16-47
may be applicable. As provided under ss.16-47(c):                               

     [N]o  corporation,  association  . . . or person shall take any action that
     causes it to become a holding  company with  control over a gas,  electric,
     electric distribution . . . or community antenna television company engaged
     in the  business of supplying  service  within this state . . . or acquire,
directly or                                                           

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Docket No. 99-03-43                                                       Page 3

     indirectly,  control  over such a holding  company,  without  first  making
written application to and obtaining the approval of the department.  

The  Company  argues  that  neither  NEES nor NEP  engages  in the  business  of
supplying  service within the state;  therefore,  the  requirements  of approval
under Conn. Gen. Stat. ss.16-47 do not apply. Id.                               

     The  second  statute   potentially   applicable  to  the  proposed   merger
transaction is Conn. Gen. Stat. ss.16-43, which provides that:                  

     [A] public  service  company shall obtain the approval of the Department to
     directly or indirectly (1) merge, consolidate or make common stock with any
     other company, or (2) sell, lease, assign . . . or otherwise dispose of any
     essential  part  of  its  franchise,  plant  equipment  or  other  property
necessary or useful in the performance of its duty to the public.     

The Company argues that since the proposed transaction does not involve NEP, the
public service company,  but NEES, a registered  utility holding company parent,
the provisions of Conn. Gen. Stat. ss.16-43 do not apply.  However,  the Company
admits that it could be argued that the phrase  "directly or  indirectly" in the
opening  section of that statute covers the acquistion of a holding company that
owns a public service company. Application, p. 3.                               

     The  proposed  transaction  is subject to  approval by the  Securities  and
Exchange  Commision  (SEC),  among other  agencies,  and the SEC has requested a
statement from the  Massachusetts  Department of  Telecommunications  and Energy
(MDTE)  that the MDTE  will  have,  after the  merger,  adequate  authority  and
resources  to protect  customers  subject to the  MDTE's  jurisdiction  and will
continue to exercise  that  authority.  Jesanis  PFT, p. 10.  Additionally,  the
proposed  transaction  is being  scrutinized  by the Federal  Energy  Regulatory
Commission,  the Nuclear Regulatory Commission, and the state utility regulatory
agency of the State of Vermont.  A representation of no net harm to customers is
required in New Hampshire.  The proposed  transaction also requires a Hart Scott
Rodino filing with the U.S.  Justice  Department.1  Finally,  although no formal
approval is required by the MDTE, it is reviewing the proposed  transaction  and
intends to exercise its authority. Application, pp. 3 and 4.                    

     Enclosed with the Application is a copy of the informational  filing to the
MDTE by NEES and National Grid, dated March 8, 1999, with accompanying testimony
and supporting  exhibits (MDTE Filing).  Copies of the Merger Agreement  between
NEES and National Grid were included in this filing.                            

III. DEPARTMENT ANALYSIS                                                        

     The Department  has reviewed NEP's request for any necessary  authorization
to proceed with the acquisition of its parent holding company,  NEES by National
Grid, to                                                                        

--------                                                                        
1    The  Hart-Scott-Rodino  Antitrust  Improvement Act of 1976, PUB. L. 94-435,
     Sept.  30, 1976,  requires a filing with the Federal Trade  Commission  and
     Assistant  Attorney  General  prior to the subject  acquisition.  15 U.S.C.
ss.18a.                                                               

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Docket No. 99-03-43                                                       Page 4

determine if prior  approval by the  Department is required.  By virtue of NEP's
minority ownership interest in Millstone Unit No. 3 located in Connecticut,  NEP
is defined as an "electric  company" and "public  service  company"  under Conn.
Gen. Stat. ss.16-43. Conn. Gen. Stat. ss.16-246c(c) allows for the waiver of:   

     [T]he  requirements  of  ss.16-43  with  respect to any  borrowings  or the
     issuance  of any  notes,  bonds  or  other  evidences  of  indebtedness  or
     securities  of any nature,  upon  determination  that  authority  over such
     borrowing  or issue has been  exercised  by the state of  domicile  of such
foreign electric company.                                             

Conn. Gen. Stat. ss.16-246c(c) does not empower the Department to grant a waiver
with regard to NEP's proposal for the acquisition of its parent holding company.

     The Company argues that the  Department  does not have  jurisdiction  under
either Conn. Gen. Stat. ss.ss. 16-47 or 16-43 because:  (1) neither NEP nor NEES
engage in the  business of  supplying  service  within the state as required for
Department  jurisdiction to apply under ss.16-47; and, (2) since the transaction
proposed does not involve NEP, the public service company, but NEES, the utility
holding  company parent,  the provisions of ss.16-43 do not apply.  Application,
pp. 2-3.  The  Department  agrees that it does not have  jurisdiction  over this
transaction  under ss.16-47.  However,  the Company  admits,  and the Department
agrees,  that since the transaction  proposed does  indirectly  involve NEP, the
public service  company,  Conn.  Gen.  Stat.  ss.16-43  arguably may apply.  The
Department determines that it does have jurisdiction under ss.16-43.            

     The Department has reviewed NEP's  application,  including the MDTE Filing,
and finds that the  proposed  transaction  will not  adversely  affect  electric
service in  Connecticut.  NEP and NEES have no ratepayers in Connecticut and are
regulated by the jurisdiction of  Massachusetts,  where they are domiciled.  The
acquisition  of NEES by National Grid would not affect  Connecticut  ratepayers.
Therefore,  under Conn.  Gen.  Stat.  ss.16-43,  the  Department  approves NEP's
request for the  acquisition of NEES by National Grid,  subject to the Company's
compliance with all the  requirements  by the SEC and by MDTE,  which intends to
exercise authority over the proposed transaction.                               

IV.  FINDINGS OF FACT                                                           

1.   National Grid has agreed to acquire all of the common  shares of NEES,  the
parent holding company of NEP.                                        

2.   NEP has a minority  ownership  interest in Millstone  Unit No. 3 located in
Waterford, Connecticut.                                               

3.   Neither NEP nor the parent holding company, NEES, engage in the business of
supplying service within Connecticut.                                 

4.   NEP provided the Department with a copy of the informational filing by NEES
and National Grid dated March 8, 1999, filed with the MDTE.           

5.   NEP has no ratepayers in Connecticut.                                      

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Docket No. 99-03-43                                                       Page 5

V.   CONCLUSION AND ORDER                                                       

A.   CONCLUSION                                                                 

     Pursuant to Conn.  Gen.  Stat.  ss.16-43,  the  Department  approves  NEP's
request for the  acquisition  of NEES by National Grid. The sale of NEP's parent
holding  company to  National  Grid would  have no  adverse  impact on  electric
service or ratepayers in Connecticut.  The  Department's  approval is subject to
the Company's compliance with all the requirements by the SEC and by MDTE, which
intends to exercise authority over the proposed transaction.                    

B.   ORDER                                                                      

1.   NEP  shall  file  with the  Department  any  decisions  issued  by the MDTE
     relating  to the merger of the  holding  companies  that are subject of the
instant docket within 30 days after each decision becomes available.  

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DOCKET NO. 99-03-43 Application   of  New  England  Power   Company   Concerning
Acquisition by The National Grid Group  

This Decision is adopted by the following Commissioners:                        

Glenn Arthur            

Linda Kelly Arnold      

Donald W. Downes        

CERTIFICATE OF SERVICE

     The  foregoing  is a true and correct  copy of the  Decision  issued by the
Department of Public Utility Control, State of Connecticut, and was forwarded by
Certified  Mail  to all  parties  of  record  in  this  proceeding  on the  date
indicated.                                                                      

                                                               July 01, 1999
                       --------------------------------------   --------------
             Louise E. Rickard                        Date
Acting Executive Secretary      
    Department of Public Utility Control

Dates Referenced Herein

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		3/31/99		1
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		12/11/98		2
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