National Grid Group PLC – ‘U-1/A’ on 8/18/99 – EX-99.2

On:  Wednesday, 8/18/99   ·   Accession #:  898080-99-241   ·   File #:  70-09519

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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       Grid Financing U-1 Ad #1                               5     18K 
 2: EX-99.1     Exhibit C-2                                           11     46K 
 3: EX-99.2     Exhibit D-2                                            8     24K 
 4: EX-99.3     Exhibit D-3                                            5±    25K 

EX-99.2   —   Exhibit D-2

EX-99.2
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                                                                     EXHIBIT D-2

 DESCRIPTION OF NGG COMPANIES AND SUMMARY OF AUTHORITY

The  National  Grid Group plc  ("National  Grid") will be the parent  registered
holding company.                                                                

We are seeking the following authority for National Grid:                       

(i)   external  financing  authority, to issue debt and  equity in an  aggregate
      amount of $7.5 billion, and to engage in currency and interest rate swaps;
(ii)  related intrasystem financing authority;                                  
(iii) authority to use National Grid stock as consideration;                    
(iv)  authority to form financing entities;                                     
(v)   EWG and FUCO financing authority in an amount of up to 50% of consolidated
retained earnings; and                                              
(vi)  authority  to file  financial statements  on a  semi-annual,  rather  than
quarterly, basis, consistent with the requirements of Form 20-F.    

     1.   National  Grid (US)  Holdings  Limited  will serve to  facilitate  the
          formation  of  the  NEES  acquisition   structure  outlined  below  by
          permitting a wholly owned subsidiary to undertake certain transactions
          rather than  National Grid itself.  For example,  under UK company law
          certain of the transactions may require board approval and it would be
          easier to do this at a subsidiary  company  level,  rather than at the
          National  Grid  level.  This  company  will be  incorporated,  and tax
resident, in the UK.                                        

          We are seeking the following authority for National Grid (US) Holdings
Limited:                                                    

(i)  intrasystem financing authority; and                   
(ii) Section 6(a)(2) authority.                             

          1.1  National  Grid (US)  Investments  will  serve to  facilitate  the
               foreign  exchange  hedging for UK tax purposes of National Grid's
               investment in NEES. The company will also function to ensure than
               an  exemption  is obtained  from  Luxembourg  capital duty on the
               formation of the  structure.  This company will be  incorporated,
and tax resident, in the UK.                      

               We are seeking the  following  authority  for National  Grid (US)
Investments:                                      

(i)  intrasystem financing authority; and         
(ii) Section 6(a)(2) authority.                   

               1.1.1 National  Grid  (Ireland)  1 Limited -- UK groups typically
                     hold  non-UK  investments  through  a non-UK,  but European
Union, incorporated                   

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                    company.  National  Grid  (Ireland)  1  Limited  is  such  a
                    company.  The function of National Grid  (Ireland) 1 Limited
                    is to avoid wasting UK tax relief for foreign taxes suffered
                    on profits repatriated to the UK and to minimize withholding
                    taxes on the repatriation of profits to the UK. In addition,
                    National  Grid  (Ireland)  1 Limited  initially  will be tax
                    resident in  Luxembourg  (rather  than  Ireland) in order to
                    minimize  the tax suffered on the  repatriation  of interest
  and dividends from the US group to the UK.

                    We are seeking the  following  authority  for National  Grid
(Ireland) 1 Limited:                    

 (i)  intrasystem financing authority; and
(ii) Section 6(a)(2) authority.         

                    1.1.1.1  National  Grid  (Ireland)  2  Limited  is  required
                             because the top US "entity" is a  Delaware  General
                             Partnership and there must be at least two partners
                             in  the  partnership.  National  Grid  (Ireland)  2
                             Limited   initially   will  be   tax  resident   in
                             Luxembourg  for  the same reasons  as National Grid
(Ireland) 1 Limited.  

                             We are seeking the following authority for National
   Grid (Ireland) 1 Limited:

                   (i)  intrasystem financing authority; and
         (ii) Section 6(a)(2) authority.

                             1.1.1.1.1  National  Grid  General  Partnership,  a
                                        Delaware general partnership will be the
                                        top  US  entity.  National  Grid General
                                        Partnership will  "check the box"  to be
                                        taxed  as a  corporation for  US Federal
                                        tax   purposes.    A   Delaware  general
                                        partnership is used in the  structure in
                                        order  to  eliminate  Luxembourg  tax on
                                        interest payments  made by National Grid
                                        General  Partnership  to  National  Grid
                                        (Ireland) 1  Limited  and National  Grid
                                        (Ireland)  2  Limited.    National  Grid
                                        General  Partnership  will  be  financed
                                        with a mix  of  partnership capital  and
                                        debt (internal only), subject to US thin
                            capitalization requirements.

                                        We are  seeking the  following authority
                                      for National Grid General Partnership:

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                                      (i)   intrasystem financing authority;
                                    (ii)  Section 6(a)(2) authority; and
                                        (iii) approval  of  the  tax  allocation
                      agreement.

                               1.1.1.1.1.1.1  NGG Holdings Inc. has already been
                                              formed to hold the 99.99% interest
                                              in NGG Holdings LLC,  which is the
                                              transitory  merger vehicle  formed
                                              to facilitate the acquisition with
                                              NEES.  The acquisition  of NEES is
                                              structured     as    a    "reverse
                                              triangular  merger"   under  which
                                              NEES will merge  with NGG Holdings
                                              LLC  with  NEES  as the  surviving
                                              "entity".       Following      the
                                              acquisition,  NGG  Holdings,  Inc.
                                              will   be   the   "local   holding
                                              company" for  National  Grid's  US
                              utility interests.

For NEES and its subsidiary companies, we are seeking:                          

(i)   continuation of all outstanding authority;                      
(ii)  Section 6(a)(2) authority;                                      
(iii) authority to add new NEES entities to the system money pool;    
(iv)  approval of tax allocation agreement; and                       
     (v)   authority to pay dividends from capital or unearned surplus,  subject
to certain conditions.                                    

     2.   National Grid Holdings  Limited  ("NGH") is the  intermediate  holding
          company for all of National Grid's non-NEES related operations.  On or
          prior  to  consummation  of the  Merger,  NGH will be  qualified  as a
          "foreign  utility company" within the meaning of the Act. As a result,
          it and  all of its  subsidiaries  may be  retained  by  National  Grid
pursuant to the provisions of Section 33(c) of the Act.     

Because NGH will be a FUCO, no further authority is needed for the operations of
NGH and its subsidiary companies as such.  Transactions involving other entities
in the  National  Grid system  will,  however,  continue  to be  jurisdictional.
Accordingly,  as noted above, National Grid is seeking financing authority in an
amount equal to up to 50% of its consolidated retained earnings.  The applicants
will seek such other authority as may be required for any additional intrasystem
transactions  including,  for example, any "across-the-wall"  service, sales and
construction contracts.                                                         

          2.1  The  National  Grid  Company  plc  is the  electric  transmission
               company in England and Wales.  The  National  Grid Company plc is
organized under the                               

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               laws of England and Wales and is subject to  regulatory  controls
               overseen by the Director  General of Electricity  Supply.  It has
seven active subsidiaries, as follows:            

               2.1.1 NGC Nominees Limited  serves as a shareholder  for a number
                     of National Grid Group entities,  as it is customary in the
                     UK to have  more than one  shareholder  in  most  corporate
                     entities.   This  company  is  not  otherwise  an operating
entity.                               

2.1.1.1 Dormant subsidiaries.         

               2.1.2 Datum Solutions  Limited is engaged in  providing  metering
                     services in the United  Kingdom at entry and exit points of
                     the U.K. transmission  system, and more widely to customers
in the competitive market.            

               2.1.3 Energy  Settlements   and  Information   Services   Limited
                     operates  the  computer systems  needed to calculate prices
                     and payments due as a result of the daily trading  of power
across England and Wales.             

               2.1.4 NGC Properties  Limited owns and develops  property that is
                     not used  for the  operation  of the  transmission  system,
   usually with a view toward eventual sale.

               2.1.5 Energy Pool  Funds   Administration   Limited  manages  the
              transfer of funds in payments for the energy traded.

2.1.6 NGC Two Ltd is an inactive shell company.   

                     2.1.6.1 The  National  Grid   Investments  Company   is  an
 inactive shell company.

               2.1.7 NGC Leasing  Limited  is  engaged  in the  leasing of motor
                    vehicles for use by employees of the National Grid system.

               2.1.8 NGC Employee Shares  Trustee  Limited  serves as trustee in
                     respect of the  National  Grid  Profit  Sharing  Scheme and
                     Employee Benefit  Trust,   which  are  trusts  set  up  for
                     employees of National Grid.  This company does not have any
independent operations.               

          2.2  NatGrid Finance Holdings Limited is a holding company for NatGrid
               Finance Limited,  NG Investment  Limited and Natgrid  Investments
               Limited,  which are Jersey  corporations  that provide  financial
management services                               

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               to  National  Grid.  For  example,  this  group of  companies  is
               currently  involved in investing  and managing the proceeds  from
               the recent public  offering by National Grid Group of some of its
interest in the ordinary shares of Energis plc.   

2.2.1 Natgrid Finance Limited                     

2.2.2 NG Investments Limited [Jersey]             

2.2.3 Natgrid Investments Limited                 

          2.3  National Grid International  Limited is the holding company for a
               number of the group's non-U.K. investments,  including operations
               in  South  America,  India,  Africa  and the U.S.  National  Grid
               International was formed has four direct and a number of indirect
subsidiaries, as follows:                         

               2.3.1 National Grid Overseas Limited is an  intermediate  holding
                     company  above  most  of  the  South  American,  Indian and
African interests held by the NGG.    

                     2.3.1.1 National  Grid  Holdings  BV  is  organized  in the
                             Netherlands and is a holding company for operations
in Brazil and India.  

                             2.3.1.1.1 National  Grid  Indus  BV is an  inactive
            shell company.

                             2.3.1.1.2 National   Grid    India   BV,    another
                                       Netherlands organized company,  organizes
                                       and  controls  National   Grid    Group's
                   investments in India.

                                       2.3.1.1.2.1 Karnataka  Translink  Limited
                                 [need info]

                             2.3.1.1.3 NGC  do  Brasil  Participacoes  Ltda,   a
                                       Brazilian  company,  and   National  Grid
                                       Brazil BV, a Netherlands  company,  serve
                                       to  organize  and  control  National Grid
                                       Group's   investments  in  Brazil.   They
                                       currently own three entities formed under
                             the laws of  Brazil as follows:

                                       2.3.1.1.3.1 JVCO Participacoes Ltda  is a
                                                   joint venture vehicle for NGG
                                and Sprint

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                                       2.3.1.1.3.2 Holdco Participacoes Ltda  is
                                                   an intermediate joint venture
                                                   vehicle   pursuant to   which
                                                   other investors are  involved
                                                   in      Brazilian     telecom
                                 operations.

                                             2.3.1.1.3.2.1 Bonari  Holding  Ltda
                                                           is    an    operating
                                                           company  engaged   in
                                                        telecommunications
                                                           operations in Brazil.

                             2.3.1.1.4 National Grid Zambia  BV, which is formed
                                       under   the  laws  of  the   Netherlands,
                                       organizes  and  controls  National Grid's
                    investments in Zambia.

                                       2.3.1.1.4.1 Copperbelt Energy Corporation
                                                   plc is a  Zambian corporation
                                                   that is  some  40%  owned  by
                                                   National Grid  and is engaged
                                                   in   buying,    selling   and
                                                   transmitting  electricity  to
                                                   meet the needs  of the copper
                                                   mining regions of Zambia. NGC
                                                   Zambia  and   National   Grid
                                                   Zambia  were  formed  for the
                                                   purpose    of    facilitating
                                                   National Grid's ownership and
                                                   operations     of     African
                                                   operations.           Another
                                                   registered  holding  company,
                                                   CINergy,    also    owns    a
                                                   significant    interest    in
                                 Copperbelt.

                             2.3.1.1.5 National Grid  Finance BV  is  a  company
                                       formed under the laws  of the Netherlands
                                       that serves  as  a  holding  company  for
                                       operations  in Argentina.   National Grid
                                       Overseas holds  a  one third  interest in
                                       National Grid  Finance directly.  Through
                                       subsidiaries,   National  Grid   owns  an
                                       interest  in   the  primary  transmission
                                       system that  services Argentina  and acts
                  as operator thereof.

               2.3.2 The Electricity Transmission Company Limited is an inactive
shell company.                        

 2.3.3 NGC Zambia Ltd. is an inactive shell company.

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               2.3.4 Teldata International  Limited is a holding  company for US
                     billing and energy  service operations.  Teldata  Inc. is a
                     Delaware corporation  that provides  complete,  end-to-end,
                     automated metering and billing solutions for electric,  gas
           and water utilities and energy service providers.

2.3.5 National Grid International Limited         

                     2.3.5.1 First  Point  Services  Inc.  [US]  is  a  Delaware
                             corporation engaged in  providing  billing software
                             solutions for electric, gas and water utilities and
   energy service providers.

               2.3.6 National Grid USA Inc. is a Delaware corporation  formed to
                     investigate  potential opportunities in the U.S. market for
National Grid.                        

               2.3.7 National Grid  Investment  Holdings  Limited is an inactive
shell company.                        

        2.3.7.1 Grid One is an inactive shell company.

                             2.3.7.1.1 Grid Investment  Company Ltd  [Jersey] is
                        an inactive shell company.

               2.3.8 National Grid (Isle of Man)  Limited  is a holding  company
                     for operations on the Isle and is organized  under the laws
of the Isle of Man.                   

                     2.3.8.1 Manx Cable Company (Isle of Man) is organized under
                             the laws  of  the  Isle of Man  for the  purpose of
                             developing an  undersea connector  between  England
and the Isle of Man.  

          2.4  National  Grid  Insurance  Limited  [Guernsey]  was  organized in
               Guernsey in connection with the  self-insured  retention of NGC's
               transmission  assets.  National Grid holds all of the outstanding
               ordinary  shares of National  Grid  Insurance  and Barclays  Bank
holds its outstanding preference shares.          

          2.5  The National Grid Group Quest Trustee  Company  Limited serves as
               trustee with respect to the National Grid Group  Qualifying Share
               Trust,  which is a trust  established  for  employees of National
          Grid. This company does not have any independent operations.

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          2.6  NGG Telecoms  Holdings  Limited is a holding company for National
       Grid's interest in certain telecommunications operations.

               2.6.1 NGG Telecoms  Limited also serves to hold  National  Grid's
          interest in these telecommunications operations.

                     2.6.1.1 Energis plc is the  publicly-traded  parent company
                             of Energis Communications.   National Grid  holds a
        48.3% interest in Energis plc.

               2.6.2 NGG Telecoms  Investment  Limited  is an  internal  holding
                     company  for part of  National Grid's  interest in  Energis
plc.