##### Table of Contents



Exhibit 99.1
  National Grid USA Companies
Incentive Thrift Plan II




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Table of Contents
  
 PageReport of Independent Registered Public Accounting Firm
    
    
    2Financial Statements:Statements Of Net Assets Available For Benefits
    
    
    3Statement Of Changes In Net Assets Available For Benefits
    
    
    4Notes to Financial Statements
    
    
    5Supplemental Schedule:Schedule H, Line 4(i)  Schedule of Assets (Held At End Of Year)
    
    
    23
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Report of Independent Registered Public Accounting Firm
 
     
 
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National Grid USA Companies Incentive Thrift Plan II
 
   2010
    
    
    2009AssetsInvestments, at fair value
    
    $
    1,154,012,067
    
    
    $
    1,277,506,121Plan interest in Master Trust
    
    
    369,153,666
    
    
    
    176,973,591Receivables:Dividends
    
    
    2,354,801
    
    
    
    2,031,386Employee contributions
    
    
    1,202,720
    
    
    
    1,320,180Employer contributions
    
    
    468,391
    
    
    
    393,065Notes receivable from participant loans
    
    
    56,023,353
    
    
    
    52,798,472Total receivables
    
    
    60,049,265
    
    
    
    56,543,103Cash
    
    
    
    
    
    
    51,573Total assets
    
    
    1,583,214,998
    
    
    
    1,511,074,388Liabilities
    
    
    
    
    
    
    Net assets available for benefits at fair value
    
    
    1,583,214,998
    
    
    
    1,511,074,388Adjustments from fair value to contract value
for fully benefit-responsive investment contracts
    
    
    1,482,545
    
    
    
    6,021,580Net assets available for benefits
    
    $
    1,584,697,543
    
    
    $
    1,517,095,968
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National Grid USA Companies Incentive Thrift Plan II
 
   Additions to net assets attributed to:Investment income:Interest and dividend income
    
    $
    49,493,489Net appreciation in fair value of investments
    
    
    64,728,556Total investment income
    
    
    114,222,045Interest income on notes receivable from participant loans
    
    
    2,628,433Contributions:Employer contributions
    
    
    13,724,561Employee contributions
    
    
    82,251,835Rollover contributions
    
    
    10,481,134Total contributions
    
    
    106,457,530Total additions
    
    
    223,308,008Deductions from net assets attributed to:Benefits paid to participants
    
    
    137,915,151Fees
    
    
    262,664Total deductions
    
    
    138,177,815Transfer of assets to Thrift Plan I
    
    
    (17,528,618
    )Net increase
    
    
    67,601,575Net assets available for benefitsBeginning of year
    
    
    1,517,095,968End of year
    
    $
    1,584,697,543
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National Grid USA Companies Incentive Thrift Plan II
 
   1.
    
    Description of PlanThe following brief description of the National Grid USA Companies Incentive Thrift Plan II
(the Plan) provides only general information. Participants should refer to the Plan document
for a more complete description of the Plans provisions.Effective as of August 24, 2007, which was the date of the merger of National Grid USA with
KeySpan Corporation, the KeySpan Energy 401(k) Plan for Union Employees (the KeySpan Plan)
merged into the Plan. As of the merger date, KeySpan Corporation and all affiliated KeySpan
entities that were participating employers in the KeySpan Plan immediately prior to the merger
date (the KeySpan Plan Participating Employers) became employers under the Plan and each
participant and beneficiary under the KeySpan Plan became a participant and beneficiary under
the Plan. Also, as of the merger date, all liabilities and assets of the KeySpan Plan were
assumed by, and became part of, the Plan. A different third-party service provider provided
Trustee and recordkeeping services for assets and participant accounts related to the KeySpan
Plans participants and beneficiaries.Most of the provisions of the former KeySpan Plan, which differ from the Plan provisions, were
incorporated by reference into the Plan document effective August 24, 2007, and remained
applicable to former KeySpan Plan participants and beneficiaries as well as newly eligible
employees of a former KeySpan Plan Participating Employer until the Plan Conversion described
below.Plan Conversion
 On July 2, 2010 (the Conversion Date), the Plan underwent a transition (Conversion) to a
common plan administrator, the Vanguard Group (Vanguard). On the Conversion Date a new
investment lineup was implemented in the Plan and many of the Plan provisions were aligned
for all of the former participant groups.Prior to the Conversion Date, participants were given an opportunity to elect how they
wanted their Plan account balance and future contributions invested following the
Conversion. In the absence of a participant election, participant account balances and
future contribution allocations were directed to the Vanguard Target Date Retirement Fund
closest to the year in which the Participant will reach age 65. The Vanguard Target Date
Funds are also designated as the Qualified Default Investment Alternative (QDIA) in the
Plan as defined under Section 404(c)(5) under ERISA. Any participant balances or future
contributions allocated to the National Grid ADR Fund were maintained at the time of the
Conversion. In addition, any participant balances in or future contribution allocations to
the JPMorgan Stable Value Fund, the T.Rowe Price Stable Value Common Trust or the T.Rowe
Price U.S. Treasury Money Market Trust Fund, were transferred to the Galliard Stable Value
Fund at the time of Conversion.The following Plan description outlines, the provisions of the Plan in effect following
the Conversion Date. For a description of the Plan provisions which were in effect prior to
the Conversion Date see the section titled Prior Plan Provisions.
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National Grid USA Companies Incentive Thrift Plan II
 Plan Description
 The Plan was established effective September 1, 1984, pursuant to the authorization of the
Board of Directors of certain subsidiaries of the New England Electric System (NEES), to
provide a long-range program of systematic savings for eligible employees (the
Participants). The Plan was renamed National Grid USA Companies Incentive Thrift Plan II
upon the merger between National Grid plc and NEES on March 22, 2000, at which time NEES was
renamed National Grid USA.Employees of participating subsidiaries of National Grid USA (collectively, the Employers
or the Company) who are covered by a collective bargaining agreement, where participation
in the Plan is pursuant to the terms of that agreement, are immediately eligible to
participate in the Plan upon employment. Various Employers Matching Contribution (Matching
Contribution) formulas and eligibility for Matching Contributions are determined under the
terms of the collective bargaining agreement for each participating union group.The Plan was prepared in conformity with the Employee Retirement Income Security Act of 1974
(ERISA).The Plan administrators are the Benefits Committee and the Investment Committee of National
Grid USA Service Company, Inc. (the Administrator). The Board of Directors of National
Grid plc has the governing authority to amend the Plan, but has delegated certain amending
authority to the Board of Directors of National Grid USA Service Company, Inc. (Service
Company).Vanguard serves as record keeper of the Plan. The Vanguard Fiduciary Trust Company is
trustee and custodian for all assets and Participant accounts with the exception of the
Master Trust. Wells Fargo Bank, N.A. is the Master Trustee and custodian for the assets of
the Plan related to investments in the Galliard Stable Value Fund.The Plans management evaluated subsequent events for recognition or disclosure through
the date the financial statements were issued.
 Contributions
 The Plan is a defined contribution plan. An eligible employee can make Elective
Contributions through Contribution Agreements (also known as Salary Reduction Agreements
or Elective Contributions) to have from 1% to 50% of their eligible compensation,
contributed to the Plan on their behalf. Participants can choose whether their Elective
Contributions to the Plan will be calculated on their Base Pay or All Pay.Base Pay is defined as the Participants regular pay, prior to any salary reductions for
Elective Contributions to the Thrift Plan, and any other salary reductions under the
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National Grid USA Companies Incentive Thrift Plan II
 Health Care Spending Account Plan, Family Day Care Assistance Plan or for Company
health care coverage.Base Pay excludes all other forms of compensation, including supplemental disability income,
amounts deferred under other plans, reimbursements of expenses, bonuses, incentive pay,
commissions, options, payments made in lieu of vacation days or under short- or long-term
disability provisions, awards, overtime, premiums, and any other additional forms of
earnings (including Company contributions to or under any other employee benefit plan, such
as health insurance, pension, or severance pay).All Pay is Base Pay, as defined above, plus overtime, commissions, premium pay, and any
bonus or incentive pay.The annual employee pre-tax Elective Contributions by each Participant were subject to
Internal Revenue Service (IRS) limits of $16,500 in 2010 and 2009 for employees who did
not attain age 50 by the end of the respective Plan year. For employees who did attain age
50 by the last day of the applicable Plan year, the annual maximum pre-tax contribution was
$22,000 for 2010 and 2009.Participants can also elect to contribute up to 15% of their pay on an after-tax basis.
The total amount of Elective Contributions (pre-tax and after-tax) may not exceed 50% of pay
(further subject to the combined IRS annual contribution limit, adjusted periodically by
law, which was $49,000 for 2010).The Employers make Matching Contributions to the Plan in accordance with the terms of
the collective bargaining agreement for each participating union group.All former KeySpan employees who are eligible pursuant to their collective bargaining
agreement and contributing to the Plan will receive Matching Contributions and a 10%
discount on the purchase of National Grid ADRs on the first of the month following
completion of twelve months of service.All Matching Contributions are invested in the same investments elected by the
Participant for their Elective Contributions unless otherwise directed by the Participant.New employees with funds held under a previous employers qualified plan are permitted
to roll over eligible amounts from such funds into the Plan.Contributions are subject to certain limitations.Participants may allocate their account balances in any whole percentage without
restriction on the frequency of subsequent reallocations subject to investment fund
short-term trading restrictions.
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National Grid USA Companies Incentive Thrift Plan II
 Active or former employees who are Participants and who receive a lump sum distribution
from a Company qualified pension plan (National Grid Pension Plan, Niagara Mohawk Pension
Plan, Southern Union Company Providence Energy Pension Plan, Southern Union Company Valley
Pension Plan, KeySpan Retirement Plan, and KeySpan Retirement Income Plan) may roll the lump
sum proceeds into the Plan to the extent the proceeds qualify for rollover under the code.
The total amount rolled over in 2010 was approximately $8,617,077.
 Automatic Enrollment
 Effective as of the Conversion Date, new hires will be auto enrolled 45 days after the
hire date at 6% of their All Pay. Participant contributions will be defaulted to the Plans
QDIA if a Participant does not select their own investments. The auto enrollment election
can be reversed within the first 90 days of the enrollment date and all money in the account
returned to the Participant. After the first 90 days of enrollment the auto enrollment
election can be reversed but any money already contributed to the account cannot be returned
to the Participant.
 Automatic Increase
 Participants may elect an automatic increase of pre-tax Contributions each year. For
Participants who elect an automatic increase and do not customize their elections, pre-tax
contributions will increase by 1% each January. The automatic increase service is not
available for after-tax Contributions.
 Participant Accounts
 Each Participants account is credited with the Participants contribution and allocations
of (a) the Matching Contributions (and discount on the National Grid ADR Fund, if
applicable, for former KeySpan Plan Participants), and (b) allocations of Plan earnings, net
of fees. Allocations are based on Participant earnings or account balances, as defined. The
benefit to which a Participant is entitled is the benefit that can be provided from the
Participants vested account.
 Vesting
 Participants are immediately vested in their elective contributions. Vesting of Matching
Contributions varies and is subject to the terms of the collective bargaining agreement for
each union group.
 Notes Receivable from Participants
 An employee can obtain a loan from the Plan from such Participants account. The minimum
loan allowed is $1,000. A loan cannot exceed the lesser of 50% of the Participants account
balance or $50,000. The $50,000 limit is further limited by the Participants highest
outstanding loan balance within the twelve months preceding the loan request. Loans are
stated at the unpaid principal balance plus accrued but unpaid interest. The loans are
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National Grid USA Companies Incentive Thrift Plan II
 secured by the balance in the Participants account. Loans must be repaid over a period of
one to five years (up to fifteen years for the purchase of a primary residence) by means of
payroll deductions. The loan interest rate is set when at the time Participants apply for a
loan based on the rate established by the Benefits Committee. Interest rates at December 31,
2010 ranged from 3.25% to 10.50%. Notes receivable are stated at their unpaid principal
balance plus accrued unpaid interest. Participants who leave the Company can continue to
repay their outstanding loan balance through the remaining amortization period.A default of the loan will occur if the loan balance is not paid off by the end of the
quarter following the quarter in which the missed payment was due or the loan is not paid in
full within 60 months of the date that the loan was made. In the event of default, the
outstanding balance of the loan and any unpaid accrued interest is deemed to have been
distributed to the Participant. Interest continues to be tracked following a default solely
for determining the amount available for a subsequent loan. Deemed distributions are
included in the Loan Funds investment balance until the employee has been terminated. Upon
termination the defaulted loan balance is deducted from the Plan. There were cumulative
deemed distributions of $821,132 and $134,102 as of December 31, 2010 and 2009,
respectively.
 Payment of Benefits
 Participants qualify for a distribution of their entire account balance when the
Participant ends employment (including at retirement), becomes totally and permanently
disabled or reaches age 591/2. Participants who qualify for a distribution may receive an
immediate lump sum, defer payment, or receive the value of their account in cash
installments. If a Participant defers receipt of benefits, their funds will remain invested
in the investment funds of their choice. They may make investment transfers in the same
manner as any active Participant.Effective March 28, 2005, the Plan was amended to allow automatic lump-sum
distributions if the present value of the Participants vested account balance is less than
$1,000 and is
payable on or after March 28, 2005. The Participant must consent to the distribution if the
present value is more than $1,000.Unless Participants choose otherwise, their account balance remains in the Plan until
they attain age 701/2. At that time Participants are required to receive minimum required
distributions beginning on April 1 of the following year. Participants can elect a total or
partial distribution from their account(s) at any time following separation of service. In
addition, Participants may: 1) Receive account balances in annual, semi-annual, quarterly or
monthly installments, to be paid over a period not to exceed their life expectancy. Once
installments begin, the amount of each payment is determined by dividing the Participant
account balance at the time of payment by the number of installments remaining to be paid;
2) Receive account balances in a series of substantially equal periodic payments (paid at
least annually for their life expectancy); or 3) Elect to receive distributions in any
amount a Participant wishes, beginning and ending at their discretion.
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National Grid USA Companies Incentive Thrift Plan II
 The Plan allows Qualified Nonelective Contributions to the extent such contributions are
necessary to satisfy the nondiscrimination requirement under the Internal Revenue Code
(IRC). Following separation from service prior to age 55, a Participant may elect to
receive a partial distribution from his or her account or a total distribution at any time;
such Participant may also defer receipt of his or her benefit until the latest date
permitted under the IRC.
 Forfeitures
 Forfeiture accounts are maintained to hold any employer contributions and earnings thereon
that were deposited as a result of a Participants separation from service prior to becoming
fully vested. In addition, forfeitures from prior Plan mergers and uncashed Participant
checks are held in the Plan forfeiture accounts.As of December 31, 2010 and 2009, forfeited non-vested accounts totaled $111,539 and
$10,596, respectively. These accounts may be used to reduce future employer contributions
and pay Plan administration expenses as described in the Plan document. During the year
ended December 31, 2010, $1,205 of forfeited non-vested accounts were used to reduce
employer contributions.
 Prior Plan Provisions
 Many of the Plan provisions noted above were effective prior to the Conversion Date, except
as otherwise noted below.
 Plan Description
 Vanguard Fiduciary Trust Company (Vanguard) served as record keeper, trustee and
custodian for the assets and Participant accounts of the former KeySpan Plan Participants
and beneficiaries. T. Rowe Price Retirement Plan Service, Inc. served as record keeper of
the Plan and T. Rowe Price Trust Company served as trustee and custodian of the Plan until
July 2, 2010 when all assets were transferred to Vanguard.
 Automatic Enrollment
 Effective March 15, 2006, newly hired or rehired New England employees without an account
balance were automatically enrolled in the Plan and 6% of their Base Pay was contributed to
the Plan on a pre-tax basis. Additionally, each June, New England employees without an
account balance were automatically enrolled in the Plan as described above. New York and
USWA Locals 12431-01 and 12431-02 union employees did not participate in the automatic
enrollment program. These automatic enrollment provisions were not applicable to
Participants of the former KeySpan Plan.
 Automatic Increase
 Effective March 1, 2006, Participants could elect an automatic increase of pre-tax
contributions each year. For Participants who elected an automatic increase and do not
customize their elections, pre-tax contributions increased by 1% each July until they reach
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National Grid USA Companies Incentive Thrift Plan II
 15%. New York and USWA Locals 12431-01 and 123431-02 Union employees did not participate in
this Plan. This provision was not applicable to Participants of the former KeySpan Plan.
 Notes Receivable from Participants
 The annual interest rate for Participants loans was determined using the prime rate as
reported by the Wall Street Journal on the first business day of the month in which the loan
is obtained, except for loans taken under the former KeySpan Plan in which interest is the
prime rate plus 1%. Notes receivable were stated at their unpaid principal balance plus
accrued unpaid interest.Active Participants in the former KeySpan Plan who failed to make a loan repayment by
its due date, had until the end of the quarter following the quarter in which the payment
was missed to make up the missed payment (Cure Period).
 Payment of Benefits
 In addition to other types of distribution options, Participants in the former KeySpan
Plan had the ability to elect to receive annual installments or partial distributions at any
time.
 Subsequent Events
 Company Core Contributions
 Beginning January 1, 2011, certain union groups, pursuant to their collective bargaining
agreement, have begun make Company Core Contributions for eligible Participants. The Company
calculates a Participants Core Contribution each payroll period, based on actual
compensation for that payroll period. The contribution is a percentage of pay based on the
Participants total points (age plus years of service) as of January 1 of the Plan year.Core Contributions are based on All Pay. Participants will have an account established
for them at Vanguard and Core Contributions will begin with their first paycheck after the
1st of the month following 3 months of service. These contributions will continue
even if Participants do not contribute to the Plan.Unless elected otherwise, Core Contributions will be automatically invested in the QDIA
which is the Vanguard Target Retirement Fund closest to the year in which the Participant
will attain age 65. Once enrolled, Participants can change the investment allocation at any
time.
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National Grid USA Companies Incentive Thrift Plan II
 2.
    
    Summary of Significant Accounting PoliciesBasis of Accounting
 The accompanying financial statements have been prepared on the accrual basis of accounting,
in accordance with accounting principles generally accepted in the United States of America.Investment contracts held by a defined contribution plan are required to be reported at fair
value. However, contract value is the relevant measurement attribute for that portion of the
net assets available for benefits of a defined contribution plan attributable to fully
benefit-responsive investment contracts because contract value is the amount Participants
would receive if they were to initiate permitted transactions under the terms of the Plan.
The statement of net assets available for benefits presents the fair value of the investment
contracts as well as the adjustment of the fully benefit responsive investment contracts
from fair value to contract value. The statement of changes in net assets available for
benefits is prepared on a contract value basis.
 Risks and Uncertainties
 The Plan provides for various investment options in various combinations of investment
funds. Investment funds are exposed to various risks, such as interest rate, market and
credit risks. Due to the level of risk associated with certain investment securities, it is
at least reasonably possible that changes in the values of investment securities will occur
in the near term and that such changes could materially affect Participants account
balances and the amounts reported in the statement of net assets available for benefits.
 Use of Estimates
 The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and changes therein,
and disclosure of contingent assets and liabilities. Actual results could differ from those
estimates.
 Investment Valuation and Income Recognition
 Investments are reported at fair value. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. See note 11 for discussion of fair value measurements.Purchases and sales of securities are recorded on a trade-date basis. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net
appreciation includes the plans gains and losses on investments bought and sold as well as
held during the year.Management fees and operating expenses are charged to Plan Participants and are reflected as
a reduction of investment return in each of the investment options of the Plan.
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National Grid USA Companies Incentive Thrift Plan II
 Such management fees and operating expenses are deducted from income earned on a daily basis.
 Payment of Benefits
 Benefit payments to, and withdrawals by Participants, are recorded when paid.
 Reclassifications
 Certain prior period amounts are classified to conform with the current years presentation.
 New Accounting Standards
 In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2010-06 Fair Value Measurements and Disclosures: Improving Disclosures
about Fair Value Measurements, (ASU 2010-06), which provides a greater level of
disaggregated information and more robust disclosures about valuation techniques and inputs
to fair value measurements, transfers in and out of Levels 1 and 2, and the separate
presentation of information in Level 3 reconciliations on a gross basis rather than net. New
disclosures and clarifications of existing disclosures are effective for interim and annual
reporting periods beginning after December 15, 2009. Level 3 disclosures are effective for
fiscal years beginning after December 15, 2010. Adoption of ASU 2010-06 had no material
impact on the Plans financial statements but expanded disclosures about certain fair value
measurements.In September 2010, FASB issued Accounting Standards Update No. 2010-25 Plan
Accounting-Defined Contribution Pension Plans: Reporting Loans to Participants by Defined
Contribution Pension Plans, (ASU 2010-25), which clarifies how loans to Participants
should be classified and measured by Participant defined contribution pension benefit plans.
Loans are required to be classified as notes receivable from Participants, which are
segregated from Plan investments and measured at their unpaid principal balance plus any
accrued but unpaid interest. ASU 2010-25 is applied retrospectively to all prior periods
presented effective for fiscal years ending after December 15, 2010. The Plan adopted ASU
2010-25 and has presented loans to Participants in accordance with this guidance as of
December 31, 2010 and 2009.
 3.
    
    InvestmentsThe following table presents investments that represent five percent or more of the Plans net
assets at December 31, 2010 and 2009:
 2010
    
    
    2009National Grid plc American Depository Receipts
    
    $
    101,669,681
    
    
    $
    100,794,212Master Trust Investment  Galliard Stable Value Fund
    
    
    370,636,211
    **
    
    
    Vanguard Target Retirement 2015
    
    
    127,880,764
    
    
    
    Vanguard Target Retirement 2020
    
    
    182,662,199
    
    
    
    Vanguard Target Retirement 2025
    
    
    212,666,190
    
    
    
    
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National Grid USA Companies Incentive Thrift Plan II
 2010
    
    
    2009Vanguard Target Retirement 2030
    
    
    148,607,052
    
    
    
    T. Rowe Price Stable Value Common Trust Fund
    
    
    
    *
    
    
    144,603,508SSGA S
& P 500 Index
    
    
    
    *
    
    
    116,169,547Vanguard PRIMECAP Fund
    
    
    
    *
    
    
    97,341,980Master Trust Investment  JP Morgan Stable Value
    
    
    
    *
    
    
    187,472,024Vanguard Life St Mod Growth
    
    
    
    *
    
    
    96,973,532
 
 *
    
    Indicates investments that represent 5% or more of net assets available for benefits only
as of December 31, 2009.**
    
    This represents contract value and therefore, differs from the fair value of $369,153,666 as
noted in the statements of net assets available for benefits. During the year ended December 31, 2010, the Plans investments (including gains and losses on
investments bought, sold and held during the year) appreciated in value as follows:
 Mutual funds
    
    $
    81,638,863Common stock
    
    
    (16,816,066
    )Common/Collective Trusts
    
    
    (94,241
    )Net appreciation in fair value
    
    $
    64,728,556
 During the year ended December 31, 2010, the Plans dividend and interest income included
proceeds from a rights issue. In June 2010, National Grid plc (parent of the Company)
successfully raised approximately £3.2 billion (net of expenses) by way of a fully underwritten
rights issue. In general, shareholders and ADR holders with a registered address in the United
States were not eligible to participate in the rights issue. Instead, for ADRs owned through the
National Grid ADR Fund in the Plan, Bank of New York Mellon sold the rights on behalf of
impacted holders and delivered the sale proceeds (less fees) to Vanguard. Participants who held
shares in the National Grid ADR Fund at close of business on June 14, 2010, received a
Miscellaneous Earnings credit equal to $4.233004 per ADR in their Plan account. This credit
was invested in the National Grid ADR Fund at an average share price of $37.74. Vanguard
deposited the additional shares of the National Grid ADR Fund in Participants accounts on July
9, 2010.4.
    
    Plan TerminationAlthough it has not expressed any intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, any unallocated assets of the Plan will be allocated to
Participant accounts and distributed in such a manner as the Company may determine.5.
    
    Tax StatusThe Plan obtained its latest determination letter on July 17, 2002, in which the IRS stated that
the Plan, as then designed, was in compliance with the applicable requirements of the IRC. The
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National Grid USA Companies Incentive Thrift Plan II
 Plan has been amended and restated since receiving the determination letter. Additionally, the
Plan filed for a new determination letter in January 30, 2011 which is currently pending
approval. However, the Plan administrator and the Plans counsel believe that the Plan is
designed and currently being operated in compliance with the applicable requirements of the IRC.
Therefore, no provision for income taxes has been included in the Plans financial statements.
To the best of its knowledge, the Company believes that the Plan is currently in compliance with
the provisions of the IRC.6.
    
    Related-Party TransactionsSection 3(14) of ERISA defines a party-in-interest to include among others, fiduciaries or
employees of the Plan, any person who provides services to the Plan or an employer whose
employees are covered by the Plan. Accordingly, loans to Participants and investments in
American Depositary Receipts of National Grid plc are considered party-in-interest transactions.
Moreover, the Plans investment options include mutual funds and trust funds managed by T. Rowe
Price Associates, Inc. and Vanguard Fiduciary Trust Company, affiliates of the Trustees.7.
    
    Administration of Plan AssetsThe trustees of the Plan hold the Plans assets. Contributions are held and managed by the
trustees, who invest cash received, interest and dividend income and make distributions to
Participants.Certain administrative functions are performed by officers or employees of the Company. No such
officer or employee receives compensation from the Plan.8.
    
    Plan Administrative ExpensesSome administrative expenses for the Plan are paid by the Company. The trustees were not paid
administration fees for administering the Plan for the year ended December 31, 2010.9.
    
    Guaranteed Investment ContractsPrior to the Conversion Date, the Plan provided a stable value investment option,
the JP Morgan Stable Value Fund, to former KeySpan Plan Participants that included a Synthetic GIC which was made up
of wrapper contracts that guaranteed principal and accumulate interest and a portfolio of
financial instruments that were owned by the Plan. The Synthetic GIC contract included
underlying assets and was held in the Master Trust of which the Plan has an undivided interest
and utilizes benefit-responsive wrapper contracts issued by AIG Financial Products Corp., Royal
Bank of Canada, State Street Bank and Trust Company, and ING, proportionately. The contracts
provide that Participants execute Plan transactions at contract value. Contract value represents
contributions made to the funds, plus earnings, less Participant withdrawals. The interest rates
are reset quarterly, or on a more frequent basis as needed, based on the current yield of the
underlying investments and the spread between the fair value and contract
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National Grid USA Companies Incentive Thrift Plan II
 value, but the rate
could be less than 0%. The crediting interest rates of the wrapper contracts was 2.22% as of
December 31, 2009.On the Conversion Date assets in the JPMorgan Stable Value Fund, the T.Rowe Price Stable Value
Common Trust or the T.Rowe Price U.S. Treasury Money Market Trust Fund, were transferred to the
Galliard Stable Value Fund (the Galliard Fund), which primarily invests in traditional
guaranteed investment contracts (GICs) and security-backed contracts issued by insurance
companies and other financial institutions.Traditional GICs are backed by the general account of the contract issuer. The Fund deposits a
lump sum with the issuer and receives a guaranteed interest rate for a specified period.
Interest is accrued on either a simple or fully compounded basis, and is paid either
periodically or at the end of the contract term. The issuer guarantees that all qualified
Participant withdrawals will be at contract value (principal plus accrued interest).A security-backed contract is an investment contract issued by an insurance company or other
financial institution, backed by a portfolio of bonds that are owned by the Galliard Fund.
Security-backed contracts are considered either targeted benchmark (underlying investments are
managed to a specific benchmark) or targeted duration (underlying investments are managed to a
specific duration). The portfolio underlying the contract is maintained separately from the
contract issuers general assets, usually by a third party custodian. The interest crediting
rate of a security-backed contract is based on the contract value, and the fair value, duration,
and yield to maturity of the underlying portfolio. These contracts typically allow for realized
and unrealized gains and losses on the underlying assets to be amortized, usually over the
duration of the underlying investments, through adjustments to the future interest crediting
rate, rather than reflected immediately in the net assets of the Galliard Fund. The issuer
guarantees that all qualified Participant withdrawals will be at contract value.The Galliard Fund enters into participating or hybrid contracts. In a participating contract,
the contract holder participates in asset and liability risks. Therefore, these risks transfer
from the contract issuer to the Galliard Fund. However, in the case of a full liquidation event,
the issuer is responsible for covering any amount by which the contract value exceeds the fair
value of the underlying portfolio. A hybrid contract is a combination of participating and non
participating contracts. In a non participating contract, the contract holder does not
participate in asset and liability risks. Typically, hybrid contracts are 20% participating and
80% non participating, and each component is reset over a 12 month cycle. Hybrid contracts
generally have a higher contract fee compared to participating contracts. No payments related to
participating or hybrid contracts were made during the year ended December 31, 2010.Risks arise when entering into any investment contract due to the potential inability of the
issuer to meet the terms of the contract. In addition, security-backed contracts have the risk
of default or the lack of liquidity of the underlying portfolio assets.GICs provide a fixed rate of interest over the term to maturity of the contract, and therefore
do not experience fluctuating crediting rates. The net crediting rate reflects fees paid to
security-backed contract issuers. The security-backed contracts are designed to reset their
respective crediting rates on a quarterly basis. GIC crediting rates are not reset.
Security-backed contracts cannot credit an interest rate that is less than zero percent. The
crediting rate of security-backed contracts will track current market yields on a trailing
basis. The rate reset allows the contract
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National Grid USA Companies Incentive Thrift Plan II
 value to converge with the fair value of the
underlying portfolio over time, assuming the portfolio continues to earn the current yield for a
period of time equal to the current portfolio duration.To the extent that the underlying portfolio of a security-backed contract has unrealized and/or
realized losses, a positive adjustment is made to the adjustment from fair value to contract
value under contract value accounting. As a result, the future crediting rate may be lower over
time than the then current market rates. Similarly, if the underlying portfolio generates
unrealized and/or realized gains, a negative adjustment is made to the adjustment from fair
value to contract value, and the future crediting rate may be higher than the then current
market rates.The yield earned by the Galliard Fund at December 31, 2010 was 2.81%. The yield earned by the
Galliard Fund with an adjustment to reflect the actual interest rate credited to Participants in
the Galliard Fund at December 31, 2010 was 2.34%.GICs and security-backed contracts generally provide for withdrawals associated with certain
events which are not in the ordinary course of Galliard Fund operations. These withdrawals are
paid with a market value adjustment applied to the withdrawal as defined in the investment
contract. Each contract issuer specifies the events which may trigger a market value adjustment
At this time, the Galliard Fund does not believe that the occurrence of any such market value
event, which would limit the Galliard Funds ability to transact at contract value with
Participants, is probable.GICs generally do not permit issuers to terminate the agreement prior to the scheduled maturity
date. Security-backed contracts generally are evergreen contracts that contain termination
provisions, allowing the Galliard Fund or the contract issuer to terminate with notice, at any
time at fair value, and providing for automatic termination of the contract if the contract
value or the fair value of the underlying portfolio equals zero. The issuer is obligated to pay
the excess contract value when the fair value of the underlying portfolio equals zero.In addition, if the Galliard Fund defaults in its obligations under the security-backed contract
(including the issuers determination that the agreement constitutes a non exempt prohibited
transaction as defined under ERISA), and such default is not corrected within the time permitted
by the contract, then the contract may be terminated by the issuer and the Galliard Fund will
receive the fair value as of the date of termination.Certain events such as Plan termination or a Plan merger initiated by the Company which
results in a material and adverse effect on the wrapper contract may limit the ability of the
Plan to transact on contract value or may allow for the termination of the wrapper contracts at
less than contract value. At this time, the Company believes that any events that may limit the
ability of the Plan to transact at contract value are remote.10.
    
    Master TrustA Master Trust exists for the sole purpose of holding the Galliard Stable Value Fund and prior
to the Conversion Date, the JPMorgan Stable Value Fund (Stable Value Funds) assets of the Plan
and those of the National Grid USA Companies Incentive Thrift Plan I. The Stable Value Funds
through the Master Trust are Participant-directed. Prior to the Conversion Date, the Master
Trust
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National Grid USA Companies Incentive Thrift Plan II
 was comprised of of the JPMorgan Stable Value Fund which included a Synthetic Guaranteed
Investment Contract (Synthetic GIC) whose underlying investments are stated at fair value. Following the Conversion Date, the Master Trust is comprised of the Galliard Stable Value Fund
which includes Traditional Guaranteed Investment Contracts (Traditional GICs) and security-
backed contracts issued by insurance companies and other financial institutions, whose
underlying investments are stated at fair value.At December 31, 2010, Wells Fargo is the master trustee of the Galliard Stable Value Fund and
holds the investment assets of the Master Trust as a commingled fund in which each separate Plan
is deemed to have a proportionate undivided interest in the investments in which they
participate. Previously, The Vanguard Fiduciary Trust Company was the master trustee of the JP
Morgan Stable Value Fund. At December 31, 2010 and 2009, the Plans interest in the net assets
of the Master Trust was approximately 55% and 57%, respectively.The following presents the net assets of the Master Trust as of December 31, 2010 and 2009:
 2010
    
    
    2009INVESTMENTSGalliard Stable Value Fund, at fair value
    
    $
    671,813,556
    
    
    $
    JP Morgan Stable Value Fund, at fair value
    
    
    
    
    
    
    311,791,944Adjustment from fair value to contract
value for fully-benefit responsive investment
contracts
    
    
    2,698,047
    
    
    
    18,496,132NET ASSETS IN THE MASTER TRUST AT CONTRACT VALUE
    
    $
    674,511,603
    
    
    $
    330,288,076
 Investment income for the Master Trust for the year ended December 31, 2010 is as follows:
 INVESTMENT INCOMEInterest income
    
    $
    7,639,160
 11.
    
    Fair Value of Financial InstrumentsThe Plan measures on a recurring basis its investments at fair value in accordance with FASB
codification Fair Value Measurements and Disclosures, which provides the framework for
measuring fair value. That framework provides fair value hierarchy used to classify the inputs
used in measuring fair value. That hierarchy prioritizes the inputs used in determining
valuations into three levels. The levels of fair value hierarchy are as follows:
 Level 1  Inputs to the valuation methodology are unadjusted quoted prices in active
markets that are accessible to the Plan for identical assets. These generally provide the
most reliable evidence and are used to measure fair value whenever available.Level 2  Inputs to the valuation methodology include significant inputs, other than Level
1 inputs, that are observable either directly or indirectly for substantially the full term
of the asset through corroboration with observable market data. Level 2 inputs include
quoted
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National Grid USA Companies Incentive Thrift Plan II
 market prices in active markets for similar assets, quoted market prices in markets
that are not active for identical or similar assets, and other observable inputs.Level 3  Inputs to the valuation methodology are unobservable inputs and significant to the
fair value measurement.
 The asset or liabilitys fair value measurement level within the fair value hierarchy is based
on the lowest level of any input that is significant to the fair value measurement. Valuation
techniques used need to maximize the use of observable inputs and minimize the use of
unobservable inputs.
  Assets at fair value as of December 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    

TotalCommon stock, energy
    
    $
    101,669,681
    
    
    $
    
    
    
    $
    
    
    
    $
    101,669,681Mutual funds:Index funds
    
    
    100,288,569
    
    
    
    
    
    
    
    
    
    
    
    100,288,569Balanced funds
    
    
    854,983,127
    
    
    
    
    
    
    
    
    
    
    
    910,177,654Fixed income fund
    
    
    41,876,163
    
    
    
    
    
    
    
    
    
    
    
    41,876,163Total mutual funds
    
    
    997,147,859
    
    
    
    
    
    
    
    
    
    
    
    997,147,859Common/collective trusts:Balanced funds
    
    
    
    
    
    
    55,194,527
    
    
    
    
    
    
    
    55,194,527Total
    
    $
    1,098,817,540
    
    
    $
    55,194,527
    
    
    $
    
    
    
    $
    1,154,012,067
 Assets at fair value as of December 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    

TotalCommon stock, energy
    
    $
    100,794,212
    
    
    $
    
    
    
    $
    
    
    
    $
    100,794,212Mutual funds:Index funds
    
    
    106,215,014
    
    
    
    
    
    
    
    
    
    
    
    106,215,014Balanced funds
    
    
    195,598,262
    
    
    
    
    
    
    
    
    
    
    
    195,598,262Growth funds
    
    
    372,606,897
    
    
    
    
    
    
    
    
    
    
    
    372,606,897Fixed income fund
    
    
    69,125,592
    
    
    
    
    
    
    
    
    
    
    
    69,125,592Other funds
    
    
    136,821,129
    
    
    
    
    
    
    
    
    
    
    
    136,821,129Total mutual funds
    
    
    880,366,894
    
    
    
    
    
    
    
    
    
    
    
    880,366,894Common/collective trusts:Stable value fund
    
    
    
    
    
    
    149,080,361
    
    
    
    
    
    
    
    149,080,361Money market
    
    
    
    
    
    
    31,095,107
    
    
    
    
    
    
    
    31,095,107Equity fund
    
    
    
    
    
    
    116,169,547
    
    
    
    
    
    
    
    116,169,547Total common/collective
trusts
    
    
    
    
    
    
    296,345,015
    
    
    
    
    
    
    
    296,345,015Total
    
    $
    981,161,106
    
    
    $
    296,345,015
    
    
    $
    
    
    
    $
    1,277,506,121
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National Grid USA Companies Incentive Thrift Plan II
  Assets at fair value as of December 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    

TotalGalliard Stable Value Fund
    
    $
    
    
    
    $
    671,813,556
    
    
    $
    
    
    
    $
    671,813,556
 Assets at fair value as of December 31, 2009JP Morgan Stable Value
    
    $
    
    
    
    $
    311,791,944
    
    
    $
    
    
    
    $
    311,791,944
 The following is a description of the valuation methodologies used for assets measured at
fair value. There have been no changes in methodologies used at December 31, 2010 or 2009.
 Cash: Valued at cost, which approximates fair value due to short term nature.Common stock: Investments in the National Grid plc American Depositary Receipts (which
trades on the New York Stock Exchange NYSE under the symbol NGG) are valued according to
the closing price on the NYSE.Mutual funds: Valued at the net asset value (NAV) of shares held by the Plan at year end.Stable value funds  Plans interest in master trust: Fair value of the underlying
investments is determined taking into account values supplied by reputable pricing or
quotation service or quotations furnished by one or more reputable sources, such as
securities brokers, dealers or investment bankers, mutual fund administrators or other
relevant information. Fair value of the insurance contracts, known as wrapper contracts, is
based on quoted market prices at the time of valuation versus actual costs of the contracts.
The fair value of wrapper contracts for the Stable Value Funds as of December 31, 2010 was
$97,612 and zero at December 31, 2009.Common/collective trusts: Valued based upon the unit values of such collective trust
funds held by the Plan at year end. Unit values are based on the fair value of the
underlying assets of the fund derived from inputs principally from or corroborated by
observable market data by correlation or other means.The methods described above may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future values. Furthermore, while the
Plan believes its valuation methods are appropriate and consistent with other market
participants, the use of different methodologies or assumptions to determine the fair value
of certain financial instruments could result in a different fair value measurement at the
reporting date.
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National Grid USA Companies Incentive Thrift Plan II
 The following is a description of the nature and risks of the common/collective trust
investments at December 31, 2010 and 2009:The Wellington common/collective trust funds (Balanced Funds) seek to provide growth and a
level of risk appropriate for a particular retirement date, while preserving capital during
retirement. There are no unfunded commitments or withdrawal restrictions.The objective of the SSGA S&P 500 Index Fund (Equity Fund), a common/collective trust, is to
match, as closely as possible, the return of the S&P 500® Index. There are no unfunded
commitments; however the Company was subject to a withdrawal schedule for a full liquidation
at the time of Conversion.The objective of the T. Rowe Price Stable Value Common Trust Fund (Stable Value Fund), a
common/collective trust, is to maximize current income consistent with the maintenance of
principal and to provide for withdrawals for certain Participant-initiated transactions
without penalty or adjustment. There are no unfunded commitments and the Company provided 12
months advance notice in order to withdraw some or all of its investment.The objective of the T. Rowe Price U.S. Treasury Money Market Trust (Money Market
Fund), a common/collective trust, is to maximize safety of capital, liquidity, and,
consistent with these objectives, the highest available current income. The trust will
invest substantially all of its assets in short-term U.S. Treasury obligations and
repurchase agreements collateralized by U.S. Treasury obligations. There are no unfunded
commitments or withdrawal restrictions.
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National Grid USA Companies Incentive Thrift Plan II
 12.
    
    Reconciliation of Financial Statements to Form 5500The following is a reconciliation of net assets available benefits per the financial statements
to the Form 5500 as of December 31, 2010 and 2009:
 2010
    
    
    2009Net assets available for benefits per the
financial statements
    
    $
    1,584,697,543
    
    
    $
    1,517,095,968Less deemed distributions
    
    
    (821,132
    )
    
    
    (314,790
    )Adjustment from contract value to fair value for
fully benefit-responsive investment contracts not
included as an asset in the Form 5500
    
    
    (1,482,545
    )
    
    
    (6,021,580
    )Net assets available for benefits per the Form 5500
    
    $
    1,582,393,866
    
    
    $
    1,510,759,598
 The following is reconciliation of the changes in net assets per the financial statements
to the Form 5500 for the year ended December 31, 2010:
 Change in net assets available for
benefits per the financial statements
    
    $
    67,601,575Change in cumulative deemed loans
    
    
    (506,342
    )Change in adjustment from fair
value to contract value for fully
benefit-responsive investment
contracts not included in the Form
5500
    
    
    4,539,035Change in net assets available
for benefits per the Form 5500
    
    $
    71,634,268
 13.
    
    Plan AmendmentsThe Plan was amended and restated as of July 2, 2010. The description of the Plan in Note
1 has been updated to discuss the primary amendments to the Plan.
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National Grid USA Companies Incentive Thrift Plan II
 
 
 (a)
    
    
    Identity of Issue (b)
    
    Description of Investment (c)
    
    
    Cost (d)
    
    
    Current Value (e)*
    
    
    National Grid plc
    
    National Grid American Depository Receipts
    
    
    N/R
    
    
    $
    101,669,681*
    
    
    Vanguard
    
    Vanguard Extended Market Index Institution
    
    
    N/R
    
    
    
    36,296,827*
    
    
    
    
    Vanguard Institution Index Fund
    
    
    N/R
    
    
    
    43,456,110*
    
    
    
    
    Vanguard Target Retirement 2005
    
    
    N/R
    
    
    
    8,864,392*
    
    
    
    
    Vanguard Target Retirement 2010
    
    
    N/R
    
    
    
    46,907,919*
    
    
    
    
    Vanguard Target Retirement 2015
    
    
    N/R
    
    
    
    127,880,764*
    
    
    
    
    Vanguard Target Retirement 2020
    
    
    N/R
    
    
    
    182,662,199*
    
    
    
    
    Vanguard Target Retirement 2025
    
    
    N/R
    
    
    
    212,666,190*
    
    
    
    
    Vanguard Target Retirement 2030
    
    
    N/R
    
    
    
    148,607,052*
    
    
    
    
    Vanguard Target Retirement 2035
    
    
    N/R
    
    
    
    63,188,548*
    
    
    
    
    Vanguard Target Retirement 2040
    
    
    N/R
    
    
    
    24,867,572*
    
    
    
    
    Vanguard Target Retirement 2045
    
    
    N/R

    
    
    
    16,062,301*
    
    
    
    
    Vanguard Target Retirement 2050
    
    
    N/R
    
    
    
    15,103,810*
    
    
    
    
    Vanguard Target Retirement 2055
    
    
    N/R
    
    
    
    578,122*
    
    
    
    
    Vanguard Target Retirement, Inc.
    
    
    N/R
    
    
    
    7,594,258*
    
    
    
    
    FTSE All-World ex-US lst
    
    
    N/R
    
    
    
    20,535,632Wellington
    
    Wellington Trust Target 2000
    
    
    N/R
    
    
    
    45,211Wellington Trust Target 2010
    
    
    N/R
    
    
    
    2,145,041Wellington Trust Target 2020
    
    
    N/R
    
    
    
    17,430,102Wellington Trust Target 2030
    
    
    N/R
    
    
    
    15,506,854Wellington Trust Target 2040
    
    
    N/R
    
    
    
    9,251,126Wellington Trust Target 2050
    
    
    N/R
    
    
    
    9,969,319Wellington Trust Target Retirement Income
    
    
    N/R
    
    
    
    846,874PIMCO
    
    PIMCO Total Return Fund
    
    
    N/R
    
    
    
    41,876,163*
    
    
    Participant Loans
    
    Participant loans with various maturities and rates of interest from 3.25% to 10.50%
    
    $
    0
    
    
    
    56,023,353Total
    
    
    
    
    
    $
    1,210,035,420
 
 *
    
    A party-in-interest as defined by ERISAN/R  cost omitted for participant directed investments 23