SUPPLEMENTARY PROSPECTUS DATED 20 OCTOBER 2008
    
    EXHIBIT 2(b).7.2
 
 National Grid Gas plc
 (incorporated with limited liability in England and Wales on 1 April 1986 under registered number 2006000)
 National Grid Gas Finance (No 1) plc
 (incorporated with limited liability in England and Wales on 3 August 2006 under registered number 5895068)
 Euro 10,000,000,000
Euro Medium Term Note Programme
 
 National Grid Gas plc
 Supplement Prospectus Issuers FSMA Programme
    Terms and Conditions of the Instruments
  4
    
    IndexationThis Condition 4 is applicable only if the relevant Final Terms specifies the Instruments as
Index Linked Instruments.Where the RPI (as defined below) is specified as the Index or Index Figure (each as defined
below) in the relevant Final Terms, the following Conditions 4.1 to 4.6 will apply:
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4.1
    
    DefinitionsBase Index Figure means (subject to Condition 4.3(i)) the base index figure as
specified in the relevant Final Terms;Index or Index Figure means, subject as provided in Condition 4.3(i), the UK Retail
Price Index (RPI) (for all items) published by the Office for National Statistics
(January 1987 = 100) or any comparable index which may replace the RPI for the purpose
of calculating the amount payable on repayment of the Reference Gilt. Any reference to
the Index Figure which is specified in the relevant Final Terms as:
 (i)
    
    applicable to a particular month, shall, subject as provided in
Conditions 4.3 and 4.5, be construed as a reference to the Index Figure published in
the seventh month prior to that particular month and relating to the month before
that of publication; or(ii)
    
    applicable to the first calendar day of any month shall, subject as
provided in Conditions 4.3 and 4.5, be construed as a reference to the Index Figure
published in the second month prior to that particular month and relating to the
month before that of publication; or(iii)
    
    applicable to any other day in any month shall, subject as provided in
Conditions 4.3 and 4.5, be calculated by linear interpolation between (x) the Index
Figure applicable to the first calendar day of the month in which the day falls,
calculated as specified in sub-paragraph (ii) above and (y) the Index Figure
applicable to the first calendar day of the month following, calculated as specified
in sub-paragraph (ii) above and rounded to the nearest fifth decimal place.
 If the Index is replaced, the Issuer will describe the replacement Index in a
supplement to the Prospectus;Index Ratio applicable to any month or date, as the case may be, means the Index
Figure applicable to such month or date, as the case may be, divided by the Base Index
Figure and rounded to the nearest fifth decimal place;Limited Index Ratio means (a) in respect of any month or date, as the case may be,
prior to the relevant Issue Date, the Index Ratio for that month or date, as the case
may be, (b) in respect of any Limited Indexation Date after the relevant Issue Date,
the product of the Limited Indexation Factor for that month or date, as the case may
be, and the Limited Index Ratio as previously calculated in respect of the month or
date, as the case may be, twelve months prior thereto; and (c) in respect of any other
month, the Limited Index Ratio as previously calculated in respect of the most recent
Limited Indexation Month;Limited Indexation Date means any date falling during the period specified in the
relevant Final Terms for which a Limited Indexation Factor is to be calculated;Limited Indexation Factor means, in respect of a Limited Indexation Month or Limited
Indexation Date, as the case may be, the ratio of the Index Figure applicable to that
month or date, as the case may be, divided by the Index Figure applicable to the month
or date, as the case may be, twelve months prior thereto, provided that (a) if such
ratio is greater than the Maximum Indexation Factor specified in the relevant Final
Terms, it shall be deemed to be equal to such Maximum Indexation Factor and (b) if such
ratio is less than the Minimum Indexation Factor specified in the relevant Final Terms,
it shall be deemed to be equal to such Minimum Indexation Factor;Limited Indexation Month means any month specified in the relevant Final Terms for
which a Limited Indexation Factor is to be calculated;Limited Index Linked Instruments means Index Linked Instruments to which a Maximum
Indexation Factor and/or a Minimum Indexation Factor (as specified in the relevant
Final Terms) applies; and
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Reference Gilt means the Treasury Stock specified as such in the relevant Final Terms
for so long as such stock is in issue, and thereafter such issue of index-linked
Treasury Stock
determined to be appropriate by a gilt-edged market maker or other adviser selected by
the Issuer[ or the Guarantor]* (an Indexation Adviser).
 4.2
    
    Application of the Index RatioEach payment of interest and principal in respect of the Instruments shall be the
amount provided in, or determined in accordance with, these Conditions, multiplied by
the Index Ratio or Limited Index Ratio in the case of Limited Index Linked Instruments
applicable to the month or date, as the case may be, on which such payment falls to be
made and rounded in accordance with Condition 3.2.4(e).4.3
    
    Changes in Circumstances Affecting the Index
 (i)
    
    Change in base: If at any time and from time to time the Index is changed
by the substitution of a new base therefor, then with effect from the month from and
including that in which such substitution takes effect or the first date from and
including that on which such substitution takes effect, as the case may be, (1) the
definition of Index and Index Figure in Condition 4.1 shall be deemed to refer
to the new date or month in substitution for January 1987 (or, as the case may be,
to such other date or month as may have been substituted therefor), and (2) the new
Base Index Figure shall be the product of the existing Base Index Figure and the
Index Figure for the date on which such substitution takes effect, divided by the
Index Figure for the date immediately preceding the date on which such substitution
takes effect.(ii)
    
    Delay in publication of Index if sub-paragraph (i) of the definition of
Index Figure is applicable: If the Index Figure which is normally published in the
seventh month and which relates to the eighth month (the relevant month) before
the month in which a payment is due to be made is not published on or before the
fourteenth business day before the date on which such payment is due (the date for
payment), the Index Figure applicable to the month in which the date for payment
falls shall be (1) such substitute index figure (if any) as the Trustee considers
(acting solely on the advice of the Indexation Adviser) to have been published by
the United Kingdom Debt Management Office or the Bank of England, as the case may
be, for the purposes of indexation of payments on the Reference Gilt or, failing
such publication, on any one or more issues of index-linked Treasury Stock selected
by an Indexation Adviser (and approved by the Trustee (acting solely on the advice
of the Indexation Adviser)) or (2) if no such determination is made by such
Indexation Adviser within seven days, the Index Figure last published (or, if later,
the substitute index figure last determined pursuant to Condition 4.3(i)) before the
date for payment.(iii)
    
    Delay in publication of Index if sub-paragraph (ii) and/or (iii) of the
definition of Index Figure is applicable: If the Index Figure relating to any month
(the calculation month) which is required to be taken into account for the
purposes of the determination of the Index Figure for any date is not published on
or before the fourteenth business day before the date on which such payment is due
(the date for payment), the Index Figure applicable for the relevant calculation
month shall be (1) such substitute index figure (if any) as the Trustee considers
(acting solely on the advice of the Indexation Adviser) to have been published by
the United Kingdom Debt Management Office or the Bank of England, as the case may
be, for the purposes of indexation of payments on the Reference Gilt or, failing
such publication, on any one or more issues of index-linked Treasury Stock selected
by an Indexation Adviser (and approved by the Trustee (acting solely on the advice
of the Indexation Adviser)) or (2) if no such determination is made by such
Indexation Adviser within seven days, the Index Figure last published (or, if later,
the substitute index figure last determined pursuant to Condition 4.3(i)) before the
date for payment.
 4.4
    
    Application of ChangesWhere the provisions of Condition 4.3(ii) or Condition 4.3(iii) apply, the
determination of the Indexation Adviser as to the Index Figure applicable to the month
in which the date for payment falls or the date for payment, as the case may be, shall
be conclusive and binding. If, an Index Figure having been applied pursuant to
Condition 4.3(ii)(2) or Condition 4.3(iii)(2), the Index
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Figure relating to the
relevant month or relevant calculation month, as the case may be, is subsequently
published while an Instrument is still outstanding, then:
 (i)
    
    in relation to a payment of principal or interest in respect of such
Instrument other than upon final redemption of such Instrument, the principal or
interest (as the case may be) next payable after the date of such subsequent
publication shall be increased or reduced, as the case may be, by an amount equal to
the shortfall or excess, as the case may be, of the amount of the relevant payment
made on the basis of the Index Figure applicable by virtue of Condition 4.3(ii)(2)
or Condition 4.3(iii)(2) below or above the amount of the relevant payment that
would have been due if the Index Figure subsequently published had been published on
or before the fourteenth business day before the date for payment; and(ii)
    
    in relation to a payment of principal or interest upon final redemption,
no subsequent adjustment to amounts paid will be made.
 4.5
    
    Cessation of or Fundamental Changes to the Index
 (i)
    
    If (1) the Trustee and the Issuer [and the Guarantor]* have been notified
by the Calculation Agent that the Index has ceased to be published or (2) any change
is made to the coverage or the basic calculation of the Index which constitutes a
fundamental change which would, in the opinion of (A) the Issuer be materially
prejudicial to the interests of the Issuer,[ or the Guarantor]* or (B) the Trustee
acting solely on the advice of an Indexation Adviser, be materially prejudicial to
the interests of the Instrumentholders, the Trustee will give written notice of such
occurrence to the Issuer in the case of (B), and the Issuer[, the Guarantor]* and
the Trustee (acting solely on the advice of the Indexation Adviser) together shall
seek to agree for the purpose of the Instruments one or more adjustments to the
Index or a substitute index (with or without adjustments) with the intention that
the same should leave the Issuer[, the Guarantor]* and the Instrumentholders in no
better and no worse position than they would have been had the Index not ceased to
be published or the relevant fundamental change not been made.(ii)
    
    If the Issuer[, the Guarantor]* and the Trustee (acting solely on the
advice of the Indexation Adviser) fail to reach agreement as mentioned above within
20 business days following the giving of notice as mentioned in paragraph (i), a
bank or other person in London shall be appointed by the Issuer[, the Guarantor]*
and the Trustee or, failing agreement on and the making of such appointment within
20 business days following the expiry of the 20 day period referred to above, by the
Trustee (acting solely on the advice of the Indexation Adviser) (in each case, such
bank or other person so appointed being referred to as the Expert), to determine
for the purpose of the Instruments one or more adjustments to the Index or a
substitute index (with or without adjustments) with the intention that the same
should leave the Issuer[, the Guarantor]* and the Instrumentholders in no better and
no worse position than they would have been had the Index not ceased to be published
or the relevant fundamental change not been made. Any Expert so appointed shall act
as an expert and not as an arbitrator and all fees, costs and expenses of the Expert
and of any Indexation Adviser and of any of the Issuer[, the Guarantor]* and the
Trustee in connection with such appointment shall be borne by the Issuer[ or the
Guarantor]*.(iii)
    
    The Index shall be adjusted or replaced by a substitute index as agreed
by the Issuer[, the Guarantor]* and the Trustee (acting solely on the advice of the
Indexation Adviser) or as determined by the Expert pursuant to the foregoing
paragraphs, as the case may be, and references in these Conditions to the Index and
to any Index Figure shall be deemed amended in such manner as the Trustee (acting
solely on the advice of the Indexation Adviser)[, the Guarantor]* and the Issuer
agree are appropriate to give effect to such adjustment or replacement. Such
amendments shall be effective from the date of such notification and binding upon
the Issuer,[ the Guarantor and]* the Trustee and the Instrumentholders, and the
Issuer [and the Guarantor]* shall give notice to the Instrumentholders in accordance
with Condition 14 of such amendments as promptly as practicable following such
notification.
 4.6
    
    Redemption for Index Reasons
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If either (i) the Index Figure for three consecutive months is required to be
determined on the basis of an Index Figure previously published as provided in
Condition 4.3(ii)(2) and the Trustee has been notified by the Calculation Agent that
publication of the Index has ceased or (ii) notice is published by Her Majestys
Treasury, or on its behalf, following a change in relation to the
Index, offering a right of redemption to the holders of the Reference Gilt, and (in
either case) no amendment or substitution of the Index shall have been advised by the
Indexation Adviser to the Issuer [and the Guarantor]* and such circumstances are
continuing, the Issuer may, upon giving not more than 60 nor less than 30 days notice
to the Instrumentholders in accordance with Condition 14, redeem all, but not some
only, of the Instruments at their principal amount together with interest accrued but
unpaid up to and including the date of redemption (in each case adjusted in accordance
with Condition 4.2).
  4.7
    
    DefinitionsBase Index Level means the base index level as specified in the relevant Final Terms;Index or Index Level means (subject as provided in Condition 4.9) the Non-revised
Index of Consumer Prices excluding tobacco or relevant Successor Index (as defined in
Condition 4.9 (i)), measuring the rate of inflation in the European Monetary Union
excluding tobacco, expressed as an index and published by Eurostat (the HICP). The
first publication or announcement of a level of such index for a calculation month (as
defined in Condition 4.9 (i)) shall be final and conclusive and later revisions to the
level for such calculation month will not be used in any calculations. Any reference to
the Index Level which is specified in these Conditions as applicable to any day (d)
in any month (m) shall, subject as provided in Condition 4.9, be calculated as
follows:(EQUATION)where:Id is the Index Level for the day dHICPm-2 is HICP for month m-2HICPm-3 is HICP for month m-3nbdis the actual number of days from and excluding the first day of month m to but
including day d; andqm is the actual number of days in month m,provided that if Condition 4.9 applies, the Index Level shall be the Substitute Index
Level determined in accordance with such Condition.If the Index is replaced, the Issuer will describe the replacement Index in a
supplement to the Prospectus;Index Business Day means a day on which the TARGET System is operating;Index Determination Date means in respect of any date for which the Index Level is
required to be determined, the fifth Index Business Day prior to such date;Index Ratio applicable to any date means the Index Level applicable to the relevant
Index Determination Date divided by the Base Index Level and rounded to the nearest
fifth decimal place, 0.000005 being rounded upwards;
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Related Instrument means an inflation-linked bond selected by the Calculation Agent
that is a debt obligation of one of the governments (but not any government agency) of
France, Italy, Germany or Spain and which pays a coupon or redemption amount which is
calculated by reference to the level of inflation in the European Monetary Union with a
maturity date which falls on (a) the same day as the Maturity Date, (b) the next
longest maturity date after the Maturity
Date if there is no such bond maturing on the Maturity Date, or (c) the next shortest
maturity before the Maturity Date if no bond defined in (a) or (b) is selected by the
Calculation Agent. The Calculation Agent will select the Related Instrument from such
of those inflation-linked bonds issued on or before the relevant Issue Date and, if
there is more than one such inflation-linked bond maturing on the same date, the
Related Instrument shall be selected by the Calculation Agent from such of those bonds.
If the Related Instrument is redeemed the Calculation Agent will select a new Related
Instrument on the same basis, but selected from all eligible bonds in issue at the time
the originally selected Related Instrument is redeemed (including any bond for which
the redeemed originally selected Related Instrument is exchanged).4.8
    
    Application of the Index RatioEach payment of interest and principal in respect of the Instruments shall be the
amount provided in, or determined in accordance with, these Conditions, multiplied by
the Index Ratio applicable to the date on which such payment falls to be made and
rounded in accordance with Condition 3.2.4(e).4.9
    
    Changes in Circumstances Affecting the Index
 (i)
    
    Delay in publication of Index
 (a)
    
    If the Index Level relating to any month (the
calculation month) which is required to be taken into account for the
purposes of the determination of the Index Level for any date (the
Relevant Level) has not been published or announced by the day that is
five Business Days before the date on which such payment is due (the
Affected Payment Date), the Calculation Agent shall determine a
Substitute Index Level (as defined below) (in place of such Relevant
Level) by using the following methodology:
 (1)
    
    if applicable, the Calculation Agent
will take the same action to determine the Substitute Index Level
for the Affected Payment Date as that taken by the calculation
agent (or any other party performing the function of a calculation
agent (whatever such partys title)) pursuant to the terms and
conditions of the Related Instrument;(2)
    
    if (1) above does not result in a
Substitute Index Level for the Affected Payment Date for any
reason, then the Calculation Agent shall determine the Substitute
Index Level as follows:Substitute Index Level = Base Level x (Latest Level / Reference
Level)Where:Base Level means the level of the Index (excluding any flash
estimates) published or announced by Eurostat (or any successor
entity which publishes such index) in respect of the month which
is 12 calendar months prior to the month for which the Substitute
Index Level is being determined;Latest Level means the latest level of the Index (excluding any
flash estimates) published or announced by Eurostat (or any
successor entity which publishes such index) prior to the month in
respect of which the Substitute Index Level is being calculated;
and
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Reference Level means the level of the Index (excluding any
flash estimates) published or announced by Eurostat (or any
successor entity which publishes such index) in respect of the
month that is 12 calendar months prior to the month referred to in
Latest Level above.
 (b)
    
    If a Relevant Level is published or announced at any
time after the day that is five Business Days prior to the next Interest
Payment Date, such Relevant Level will not be used in any calculations.
The Substitute Index Level so determined pursuant to this Condition 4.9(i)
will be the definitive level for that calculation month.
 (ii)
    
    Cessation of publication: If the Index Level has not been published
or announced for two consecutive months or Eurostat announces that it will no
longer continue to publish or announce the Index then the Calculation Agent shall
determine a successor index in lieu of any previously applicable Index (the
Successor Index) by using the following methodology:
 (a)
    
    if at any time (other than after an Early Termination
Event (as defined below) has been designated by the Calculation Agent
pursuant to paragraph (e) below) a successor index has been designated by
the calculation agent (or any other party performing the function of a
calculation agent (whatever such partys title)) pursuant to the terms and
conditions of the Related Instrument, such successor index shall be
designated the Successor Index for the purposes of all subsequent
Interest Payment Dates, notwithstanding that any other Successor Index may
previously have been determined under paragraphs (b), (c) or (d) below; or(b)
    
    if a Successor Index has not been determined under
paragraph (a) above (and there has been no designation of an Early
Termination Event pursuant to paragraph (e) below), and a notice has been
given or an announcement has been made by Eurostat (or any successor
entity which publishes such index) specifying that the Index will be
superseded by a replacement index specified by Eurostat (or any such
successor), and the Calculation Agent determines that such replacement
index is calculated using the same or substantially similar formula or
method of calculation as used in the calculation of the previously
applicable Index, such replacement index shall be the Index from the date
that such replacement index comes into effect; or(c)
    
    if a Successor Index has not been determined under
paragraphs (a) or (b) above (and there has been no designation of an Early
Termination Event pursuant to paragraph (e) below), the Calculation Agent
shall ask five leading independent dealers to state what the replacement
index for the Index should be. If between four and five responses are
received, and of those four or five responses, three or more leading
independent dealers state the same index, this index will be deemed the
Successor Index. If three responses are received, and two or more
leading independent dealers state the same index, this index will be
deemed the Successor Index. If fewer than three responses are received,
the Calculation Agent will proceed to paragraph (d) below;(d)
    
    if no Successor Index has been determined under
paragraphs (a), (b) or (c) above on or before the fifth Index Business Day
prior to the next Affected Payment Date the Calculation Agent will
determine an appropriate alternative index for such Affected Payment Date,
and such index will be deemed the Successor Index;(e)
    
    if the Calculation Agent determines that there is no
appropriate alternative index, the Issuer and the Instrumentholders shall,
in conjunction with the Calculation Agent, determine an appropriate
alternative index. If the Issuer and the Instrumentholders, in conjunction
with the
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Calculation Agent, do not reach agreement on an appropriate
alternative index within a period of ten Business
Days, then an Early Termination Event will be deemed to have occurred
and the Issuer will redeem the Instruments pursuant to Condition 4.10.
 (iii)
    
    Rebasing of the Index: If the Calculation Agent determines that the
Index has been or will be rebased at any time, the Index as so rebased (the
Rebased Index) will be used for the purposes of determining each relevant Index
Level from the date of such rebasing; provided, however, that the Calculation
Agent shall make such adjustments as are made by the calculation agent (or any
other party performing the function of a calculation agent (whatever such partys
title)) pursuant to the terms and conditions of the Related Instrument to the
levels of the Rebased Index so that the Rebased Index levels reflect the same rate
of inflation as the Index before it was rebased. Any such rebasing shall not
affect any prior payments made.(iv)
    
    Material Modification Prior to Interest Payment Date: If, on or prior
to the day that is five Business Days before an Interest Payment Date, Eurostat
announces that it will make a material change to the Index then the Calculation
Agent shall make any such adjustments to the Index consistent with adjustments
made to the Related Instrument .(v)
    
    Manifest Error in Publication: If, within thirty days of publication,
the Calculation Agent determines that Eurostat (or any successor entity which
publishes such index) has corrected the level of the Index to remedy a manifest
error in its original publication, the Calculation Agent will notify the parties
of (A) that correction, (B) the amount that is payable as a result of that
correction and (C) take such other action as it may deem necessary to give effect
to such correction.
 4.10
    
    Redemption for Index ReasonsIf an Early Termination Event as described under Condition 4.9(ii)(e) is deemed to have
occurred, the Issuer will, upon giving not more than 60 nor less than 30 days notice
to the Instrumentholders in accordance with Condition 14, redeem all, but not some
only, of the Instruments at their principal amount together with interest accrued but
unpaid up to and including the date of redemption (in each case adjusted in accordance
with Condition 4.8).
 Description of National Grid Gas plc
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