Exhibit 2(b).12.1
  
 National Grid USA
 (incorporated in the State of Delaware, United States of America)
 Euro 4,000,000,000
 Euro Medium Term Note Programme
 Programme Prospectus Issuer Instruments
 U.K.
Listing Authority FSMA Official List London Stock Exchange Market listed
 Securities Act
 temporary Global
Instrument permanent Global Instrument Global Instruments NGN Common
Safekeeper Euroclear société anonyme Clearstream,
Luxembourg Common
Depositary Classic
Global Notes CGNs
  Prospectus Directive
  Programme Arranger
 HSBC
 Programme Dealers
 Commerzbank
    
    Deutsche BankHSBC
    
    Morgan Stanley




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IMPORTANT NOTICES
 Base Prospectus Group
  Relevant Member States
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Euro Japanese yen £ Sterling U.S. dollars U.S.$ Canadian dollars Australian dollars New
Zealand dollars Swedish krona Danish krone Hong
Kong dollars Swiss francs
 In connection with the issue of any Tranche (as defined in Overview of the Programme  Method
of Issue), the Dealer or Dealers (if any) named as the stabilising manager(s) (the
Stabilising Manager(s)) in the applicable Final Terms (or any person acting on behalf of any
Stabilising Manager(s)) may over-allot Instruments or effect transactions with a view to
supporting the market price of the Instruments at a level higher than that which might
otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or any
person acting on behalf of any Stabilising Manager) will undertake stabilisation action. Any
stabilisation action may begin on or after the date on which adequate public disclosure of the
final terms of the offer of the relevant Tranche is made and, if begun, may be ended at any
time, but it must end no later than the earlier of 30 days after the issue date of the relevant
Tranche and 60 days after the date of the allotment of the relevant Tranche. Any stabilisation
action or over-allotment must be conducted by the relevant Stabilising Manager(s) or person(s)
acting on behalf of any Stabilising Manager(s) in accordance with all applicable laws and
rules.
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TABLE OF CONTENTS
 PageIMPORTANT NOTICES
    
    
    2DOCUMENTS INCORPORATED BY REFERENCE
    
    
    5SUPPLEMENTAL PROSPECTUS
    
    
    6OVERVIEW OF THE PROGRAMME
    
    
    7RISK FACTORS
    
    
    13TERMS AND CONDITIONS OF THE INSTRUMENTS
    
    
    24SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
    
    
    46USE OF PROCEEDS
    
    
    51DESCRIPTION OF NATIONAL GRID USA
    
    
    52TAXATION
    
    
    68PLAN OF DISTRIBUTION
    
    
    71FORM OF FINAL TERMS
    
    
    75GENERAL INFORMATION
    
    
    86
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DOCUMENTS INCORPORATED BY REFERENCE
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SUPPLEMENTAL PROSPECTUS
 Supplemental Prospectus
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OVERVIEW OF THE PROGRAMME
  Issuer
    
    National Grid USADescription
    
    Euro Medium Term Note ProgrammeSize
    
    Up to Euro 4,000,000,000 (or its
equivalent in other currencies at the
date of issue) aggregate nominal amount
of Instruments outstanding at any one
time.Arranger
    
    HSBC Bank plcDealers
    
    Commerzbank Aktiengesellschaft 

Deutsche Bank AG, London Branch 

HSBC Bank plc 

Morgan Stanley & Co. International plcThe Issuer may from time to time
terminate the appointment of any dealer
under the Programme or appoint additional
dealers either in respect of one or more
Tranches or in respect of the whole
Programme. References in this Prospectus
to the Permanent Dealers are to the
persons listed above as Dealers and to
such additional persons that are
appointed as dealers in respect of the
whole Programme (and whose appointment
has not been terminated) and to Dealers
are to all Permanent Dealers and all
persons appointed as a dealer in respect
of one or more Tranches.Trustee
    
    The Law Debenture Trust Corporation p.l.c.Issuing and Paying Agent
    
    The Bank of New York MellonOther Paying Agent
    
    KBL European Private Bankers S.A.Method of Issue
    
    The Instruments will be issued on a
syndicated or non-syndicated basis. The
Instruments will be issued in series
(each a Series) having one or more
issue dates and on terms otherwise
identical (or identical other than in
respect of the first payment of
interest), the Instruments of each Series
being intended to be interchangeable with
all other Instruments of that Series.
Each Series may be issued in tranches
(each a Tranche) on the same or
different issue dates. The specific terms
of each Tranche (which will be completed,
where necessary, with supplemental terms
and conditions and, save in respect of
the issue date, issue price, first
payment of interest and nominal amount of
the Tranche, will be identical to the
terms of other Tranches of the same
Series) will be completed in the final
terms document (the Final Terms).Issue Price
    
    Instruments may be issued at their
nominal amount or at a discount or
premium to their nominal amount. Partly
Paid Instruments may be issued, the issue
price of which will be payable in two or
more instalments.
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Form of Instruments
    
    The Instruments may be issued in bearer
form only. Each Tranche of Instruments
will be represented on issue by a
temporary Global Instrument. The
Temporary Global Instrument may be
deposited on the relevant issue date with
a common depositary for Euroclear and
Clearstream, Luxembourg and/or any other
agreed clearance system. Temporary Global
Instruments will be exchangeable, only in
the manner and upon compliance with the
procedures described herein, (i) for
permanent Global Instruments or (ii) for
Definitive Instruments, in each case not
earlier than 40 days after the issue
date, upon certification of non-U.S.
beneficial ownership. No interest will be
payable in respect of a temporary Global
Instrument except as described under
Summary of Provisions Relating to the
Instruments while in Global Form. Any
permanent Global Instrument shall only be
exchanged for Instruments in definitive
form in the limited circumstances set out
in the permanent Global Instrument.Clearing Systems
    
    Clearstream, Luxembourg, Euroclear and,
in relation to any Tranche, such other
clearing system as may be agreed between
the Issuer, the Issuing and Paying Agent,
the Trustee and the relevant Dealer.Initial Delivery of Instruments
    
    On or before the issue date for each
Tranche, if the relevant Global
Instrument is a NGN, the Global
Instrument will be delivered to a Common
Safekeeper for Euroclear and Clearstream,
Luxembourg. On or before the issue date
for each Tranche, if the relevant Global
Instrument is a CGN, the Global
Instrument representing the relevant
Instruments may be deposited with a
common depositary for Euroclear and
Clearstream, Luxembourg. Global
Instruments may also be deposited with
any other clearing system or may be
delivered outside any clearing system
provided that the method of such delivery
has been agreed in advance by the Issuer,
the Issuing and Paying Agent, the Trustee
and the relevant Dealer.Currencies
    
    Subject to compliance with all relevant
laws, regulations and directives,
Instruments may be issued in Euro,
Japanese yen, Sterling, U.S. dollars,
Canadian dollars, Australian dollars, New
Zealand dollars, Swedish krona, Danish
krone, Hong Kong dollars or Swiss francs
or in other currencies if the Issuer and
the relevant Dealer(s) so agree.
Instruments may, subject to compliance as
above, be issued as Dual Currency
Instruments.Maturities
    
    Subject to compliance with all relevant
laws, regulations and directives, any
maturity from one month to perpetuity.Any Instruments having a maturity of less
than one year from their date of issue
must (a) have a minimum redemption value
of £100,000 (or its equivalent in other
currencies) and be issued only to persons
whose ordinary activities involve them in
acquiring, holding, managing or disposing
of investments (as principal or agent)
for the purposes of their
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businesses or
who it is reasonable to expect will
acquire, hold, manage or dispose of
investments (as principal or agent) for
the purposes of their businesses or (b)
be issued in other circumstances which do
not constitute a contravention of Section
19 of FSMA by the Issuer.Denominations
    
    Definitive Instruments will be in such
denominations as may be specified in the
relevant Final Terms, save that (i) in
the case of any Instruments which are to
be admitted to trading on a regulated
market within the European Economic Area
or offered to the public in a Member
State of the European Economic Area in
circumstances which require the
publication of a prospectus under the
Prospectus Directive, the minimum
denomination shall be 50,000 (or its
equivalent in any other currency as at
the date of issue of the Instruments);
and (ii) unless otherwise permitted by
then current laws and regulations,
Instruments which have a maturity of less
than one year will have a minimum
denomination of £100,000 (or its
equivalent in other currencies).Fixed Rate Instruments
    
    Fixed interest will be payable in arrear
on the date or dates in each year
specified in the relevant Final Terms and
at maturity.Floating Rate Instruments
    
    Floating Rate Instruments will bear
interest set separately for each Series
as follows:
 (a)
    
    on the same basis as the floating
rate under a notional interest rate swap
transaction in the relevant Specified
Currency governed by an agreement
incorporating the 2006 ISDA Definitions
published by the International Swaps and
Derivatives Association, Inc. or(b)
    
    by reference to LIBOR, LIBID, LIMEAN
or EURIBOR (or such other benchmark as
may be specified in the relevant Final
Terms) as adjusted for any applicable
margin. Interest periods will be selected
by the Issuer prior to issue and
specified in the relevant Final Terms.
Floating Rate Instruments may also have a
maximum interest rate, a minimum interest
rate, or both.
 Zero Coupon Instruments
    
    Zero Coupon Instruments may be issued at
their nominal amount or at a discount to
it and will not bear interest.Dual Currency Instruments
    
    Payments (whether in respect of principal
or interest and whether at maturity or
otherwise) in respect of Dual Currency
Instruments will be made in such
currencies, and based on such rates of
exchange as may be specified in the
relevant Final Terms.Interest Periods and Rates of Interest
    
    The length of the interest periods for
the Instruments and the applicable
interest rate or its method of
calculation may differ from time to time
or be constant for any Series.
Instruments may have a maximum interest
rate, a minimum interest rate, or both.
The use of interest accrual periods
permits the
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Instruments to bear interest
at different rates in the same interest
period. All such information will be set
out in the relevant Final Terms.Redemption
    
    The relevant Final Terms will specify the
basis for calculating the redemption
amounts payable, which may be by
reference to a formula or as otherwise
provided in the relevant Final Terms.Unless permitted by then current laws and
regulations, Instruments which have a
maturity of less than one year must have
a minimum redemption amount of £100,000
(or its equivalent in other currencies).Redemption by Instalments
    
    The Final Terms issued in respect of each
issue of Instruments that are redeemable
in two or more instalments will set out
the dates on which, and the amounts in
which, such Instruments may be redeemed.Other Instruments
    
    Terms applicable to high interest
Instruments, low interest Instruments,
step-up Instruments, step-down
Instruments, Dual Currency Instruments,
reverse Dual Currency Instruments,
optional Dual Currency Instruments,
Partly-Paid Instruments and any other
type of Instrument that the Issuer, the
Trustee and any Dealer(s) may agree to
issue under the Programme, subject to
compliance with all relevant laws,
regulations and directives, will be set
out in the relevant Final Terms and (if
applicable) the relevant Supplemental
Prospectus.Optional Redemption
    
    The Final Terms issued in respect of each
issue of Instruments will state whether
such Instruments may be redeemed prior to
their stated maturity at the option of
the Issuer (either in whole or in part)
and/or the Instrumentholders, and if so
the terms applicable to such redemption.The Issuer may elect to redeem all, but
not some only, of the Instruments of any
Series at their Residual Holding
Redemption Amount at any time if the
Residual Holding Percentage or more of
the aggregate nominal amount of such
Instruments originally issued shall have
been redeemed or purchased and cancelled.Status of Instruments
    
    The Instruments will constitute
unsubordinated and unsecured obligations
of the Issuer, all as described in Terms
and Conditions of the Instruments 
Status.Negative Pledge
    
    The Instruments will have the benefit of
a negative pledge as described in Terms
and Conditions of the Instruments 
Status and Negative Pledge.Cross Acceleration
    
    The Instruments will have the benefit of
a cross acceleration provision as
described in Terms and Conditions of the
Instruments  Events of Default.Other Events of Default
    
    The other events of default under the
Instruments are as specified below under
Terms and Conditions of the Instruments
 Events of Default.
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Early Redemption
    
    Except as provided in Optional
Redemption and Redemption above,
Instruments will be redeemable at the
option of the Issuer prior to maturity
only for tax reasons. See Terms and
Conditions of the Instruments 
Redemption, Purchase and Options.Withholding Tax
    
    All payments of principal and interest in
respect of the Instruments, Receipts and
Coupons will be made free and clear of
withholding taxes of the United States of
America or any political sub-division of
the United States of America or any
authority in or of the United States of
America having power to tax, unless
compelled by law. In that event, the
Issuer will, subject to customary
exceptions (including the standard EU
exceptions), pay such additional amounts
as will result in the payment to the
Instrumentholders, Receiptholders or
Couponholders of the amounts which would
otherwise have been received in respect
of the Instruments, Receipts and Coupons
had no withholding or deduction been
made, all as described in Terms and
Conditions of the Instruments 
Taxation.Governing Law
    
    EnglishListing
    
    Each Series may be admitted to the
Official List and admitted to trading on
the Market and/or admitted to listing,
trading and/or quotation by any other
listing authority, stock exchange and/or
quotation system as may be agreed between
the Issuer and the relevant Dealer(s) and
specified in the relevant Final Terms or
may be unlisted.Ratings
    
    Tranches of Instruments (as defined in
Overview of the Programme) may be rated
or unrated. Where a Tranche of
Instruments is rated, such rating will be
specified in the relevant Final Terms. A
rating is not a recommendation to buy,
sell or hold securities and may be
subject to suspension, reduction or
withdrawal at any time by the assigning
rating agency.Selling Restrictions
    
    United States, United Kingdom, the Public
Offer Selling Restriction under the
Prospectus Directive and Japan. See Plan
of Distribution.Category 3 selling restrictions will
apply to the Instruments for the purposes
of Regulation S under the Securities Act.The Instruments will be issued in
compliance with U.S. Treas. Reg.
§1.163-5(c)(2)(i)(D) (the D Rules)
unless the Instruments are issued other
than in compliance with the D Rules but
in circumstances in which the Instruments
will not constitute registration
required obligations under the United
States Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA),
which circumstances will be referred to
in the relevant Final Terms as a
transaction to which TEFRA is not
applicable.
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Terms and Conditions
    
    The Terms and Conditions applicable to
each Series will be as agreed between the
Issuer, the Trustee and the relevant
Dealer(s) or other subscriber at or prior
to the time of issuance of such Series
and will be specified in the relevant
Final Terms. The Terms and Conditions
applicable to each Series will therefore
be those as set out in Terms and
Conditions of the Instruments below as
supplemented, modified or replaced by the
relevant Final Terms.
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RISK FACTORS
 The Issuer believes that the following factors may affect its ability to fulfil its
obligations under Instruments issued under the Programme. All of these factors are
contingencies which may or may not occur and the Issuer is not in a position to express a view
on the likelihood of any such contingency occurring.
 Factors which the Issuer believes may be material for the purpose of assessing the market risks
associated with Instruments issued under the Programme are also described below.
 The Issuer believes that the factors described below represent the principal risks inherent in
investing in Instruments issued under the Programme, but the Issuer may be unable to pay
interest, principal or other amounts on or in connection with any Instruments for other
reasons. If this occurs, prospective investors may lose the value of their entire investment or
part of it. Prospective investors should read the detailed information set out elsewhere in
this Prospectus and reach their own views prior to making any investment decision.
 Unless the context requires otherwise, references to National Grid USA or the Issuer in the
Risk Factors and Business Description sections of this Prospectus shall mean National Grid USA
and its principal public utility subsidiaries as appropriate in the context of the disclosure.
 Factors that may affect the Issuers ability to fulfil its obligations under Instruments
issued under the Programme
 Risks relating to the Issuer and its businesses
 Holding company status and changes in law or regulation in the geographies in which the Issuer
operates could have an adverse effect on its results of operations.
  Regulatory Risks
 The Issuer is subject to extensive and complex regulations and legislation that affect the
Issuers business, financial position and results of operations.
 FERC EPA
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Breaches of, or changes in, environmental or health and safety laws or regulations could expose
the Issuer to claims for financial compensation and adverse regulatory consequences, as well as
adversely affecting the Issuers business, financial position, results of operations and
damaging the reputation of the Issuer.
  MGP
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Operational Risk
 Network failure or the inability to carry out critical non-network operations may have
significant adverse impacts on both the Issuers financial position and its reputation.
   The Issuers results of operations depend on a number of factors relating to business and
operational performance including performance against regulatory targets, recovery of incurred
expenditure and the delivery of anticipated cost and efficiency savings from business
development activity.
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The Issuers risk mitigation techniques such as hedging and current regulatory arrangements may
not adequately provide protection.
  The Issuers reputation and long-term financial condition may be harmed if consumers of energy
suffer a disruption to their supply even if this disruption is outside the Issuers control.
  The Issuers financial position may be adversely affected by a number of factors including
restrictions in borrowing and debt arrangements, changes to credit ratings, effective tax rates
and volatility in the global credit markets.
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Future funding requirements of Issuers pension plans could adversely affect the results of
operations of the Issuer.
  New or revised accounting standards, rules and interpretations.
  The Issuers operating results may fluctuate on a seasonal and quarterly basis.
  Customers and counterparties to the Issuers transactions may fail to perform their
obligations, which could harm the Issuers results of operations.
 LIPA
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Prolonged disruptions of our business operations due to work stoppages or strikes could
adversely affect Issuers business.
  A substantial portion of revenues are derived from agreements with LIPA and no assurances can
be made that these arrangements will not be discontinued at some point in the future.
 MSA
 CID DOJ
 Additional risks include, but are not limited to, the following:
 
    
    inflationary trends and increases in prevailing interest rates on the Issuers
borrowings as well as general economic conditions, especially in the northeast United
States;
    
    creditworthiness of counterparties to derivative instruments and commodity contracts;
    
    potential write-down of the Issuers investment in gas properties when gas prices are
depressed or if the Issuer has significant downward revisions in its estimated proved gas
reserves;
    
    a change in the fair market value of the Issuers investments that could cause a
significant change in the carrying value of such investments or the carrying value of
related goodwill;
    
    the Issuers insurance not adequately providing coverage for certain hazards, such as
unexpected outages at critical facilities, damage to pipelines, equipment, properties and
people; and
    
    competition facing the Issuers gas distribution business.
 Description of
National Grid USA
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Factors which are material for the purpose of assessing the market risks associated with
Instruments issued under the Programme
 Instruments may not be a suitable investment for all investors
  (i)
    
    have sufficient knowledge and experience to make a meaningful evaluation of the
relevant Instruments, the merits and risks of investing in the relevant Instruments and
the information contained or incorporated by reference in this Prospectus or any
applicable supplement;(ii)
    
    have access to, and knowledge of, appropriate analytical tools to evaluate, in the
context of its particular financial situation, an investment in the relevant Instruments
and the impact such investment will have on its overall investment portfolio;(iii)
    
    have sufficient financial resources and liquidity to bear all of the risks of an
investment in the relevant Instruments, including where principal or interest is payable
in one or more currencies, or where the currency for principal or interest payments is
different from the potential investors currency;(iv)
    
    understand thoroughly the terms of the relevant Instruments and be familiar with the
behaviour of any relevant indices and financial markets; and(v)
    
    be able to evaluate (either alone or with the help of a financial adviser) possible
scenarios for economic, interest rate and other factors that may affect its investment and
its ability to bear the applicable risks.
  Risks related to the structure of a particular issue of Instruments
  Instruments subject to optional redemption by the Issuer
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Dual Currency Instruments
  (i)
    
    the market price of such Instruments may be volatile;(ii)
    
    they may receive no interest;(iii)
    
    payment of principal or interest may occur at a different time or in a different
currency than expected; and(iv)
    
    the amount of principal payable at redemption may be less than the nominal amount of
such Instruments or even zero;
 Partly-paid Instruments
  Variable rate Instruments with a multiplier or other leverage factor
  Fixed/Floating Rate Instruments
  Instruments issued at a substantial discount or premium
  Risks related to Instruments generally
  Modification, waiver and substitution
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European Monetary Union
  EU Savings Directive
   if implemented in
their current form
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Change of law
  Risks related to the market generally
  The secondary market generally
  The Clearing Systems
     Exchange rate risks and exchange controls
 Investors Currency
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Interest rate risks
  Credit ratings may not reflect all risks
  Legal investment considerations may restrict certain investments
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TERMS AND CONDITIONS OF THE INSTRUMENTS
 The following is the text of the terms and conditions which, save for the text in italics
and subject to completion and amendment and as supplemented or varied in accordance with the
provisions of Part A of the relevant Final Terms, will be endorsed on the Instruments in
definitive form (if any) issued in exchange for the Global Instrument(s) representing each
Series. Either (a) the full text of these terms and conditions together with the relevant
provisions of Part A of the Final Terms or (b) these terms and conditions as so completed,
amended, supplemented or varied (and subject to simplification by the deletion of
non-applicable provisions), shall be endorsed on such Instruments. All capitalised terms which
are not defined in these Conditions will have the meanings given to them in the Trust Deed or
Part A of the relevant Final Terms. Those definitions will be endorsed on the Definitive
Instruments.References in these terms and conditions to Instruments (as defined below) are to the
Instruments of one Series only of the Issuer (as defined below), not to all Instruments that
may be issued under the Programme.National Grid USA (the Issuer) has established a Euro Medium Term Note Programme (the
Programme) for the issuance of up to Euro 4,000,000,000 in aggregate principal amount of debt
instruments (the Instruments). The Instruments are constituted by an amended and restated
Trust Deed (as amended or supplemented from time to time, the Trust Deed) dated 18 December
2009 between the Issuer and The Law Debenture Trust Corporation p.l.c. (the Trustee, which
expression shall include all persons for the time being the trustee or trustees under the Trust
Deed) as trustee for the Instrumentholders (as defined below). These terms and conditions
include summaries of, and are subject to, the detailed provisions of the Trust Deed, which
includes the form of the Definitive Instruments, Receipts, Coupons and Talons referred to
below. An amended and restated Agency Agreement (as amended or supplemented from time to time,
the Agency Agreement) dated 18 December 2009 has been entered into in relation to the
Instruments between the Issuer, the Trustee, The Bank of New York Mellon as initial issuing and
paying agent and the other agent(s) named in it. The issuing and paying agent, the paying
agent(s) and the calculation agent(s) for the time being (if any) are referred to below
respectively as the Issuing and Paying Agent, the Paying Agents (which expression shall
include the Issuing and Paying Agent) and the Calculation Agent(s). Copies of the Trust Deed
and the Agency Agreement are available for inspection by prior appointment during usual
business hours at the registered office of the Trustee (as at 18 December 2009 at Fifth Floor,
100 Wood Street, London EC2V 7EX) and at the specified offices of the Paying Agents.The Instrumentholders, the holders of the interest coupons (the Coupons) appertaining to
interest bearing Instruments and, where applicable in the case of such Instruments, talons for
further Coupons (the Talons) (the Couponholders) and the holders of the receipts for the
payment of instalments of principal (the Receipts) relating to Instruments of which the
principal is payable in instalments are entitled to the benefit of, are bound by, and are
deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of
those provisions of the Agency Agreement applicable to them.1
    
    Form, Denomination and TitleThe Instruments are issued in bearer form in the Specified Denomination(s) specified in
the relevant Final Terms and are serially numbered. Instruments of one Specified Denomination
are not exchangeable for Instruments of another Specified Denomination provided that in the
case of any Instruments which are to be admitted to trading on a regulated market within the
European Economic Area or offered to the public in a Member State of the European Economic Area
in circumstances which require the publication of a prospectus under the Prospectus Directive,
the minimum Specified Denomination shall be 50,000 (or its equivalent in any other currency as
at the date of issue of the relevant Instruments).
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This Instrument is a Fixed Rate Instrument, a Floating Rate Instrument, a Zero Coupon
Instrument, a Perpetual Instrument, an Instalment Instrument, a Dual Currency Instrument or a
Partly Paid Instrument, a combination of any of the preceding or any other kind of Instrument,
depending upon the Interest and Redemption/Payment Basis specified in the relevant Final Terms.Instruments are issued with Coupons (and, where appropriate, a Talon) attached, save in the
case of Zero Coupon Instruments in which case references to interest (other than in relation to
interest due after the Maturity Date), Coupons and Talons in these Conditions are not
applicable.Instalment Instruments are issued with one or more Receipts attached. Title to the Instruments
and the Receipts, Coupons and Talons shall pass by delivery and except as ordered by a court of
competent jurisdiction or as required by law, the Issuer and the Paying Agents shall be
entitled to treat the bearer of any Instrument, Receipt, Coupon or Talon as the absolute owner
of that Instrument, Receipt, Coupon or Talon, as the case may be, and shall not be required to
obtain any proof of ownership as to the identity of the bearer.In these Conditions, Instrumentholder means the bearer of any Instrument of one Series only
of the Issuer and the Receipts relating to it, holder (in relation to an Instrument, Receipt,
Coupon or Talon) means the bearer of any Instrument, Receipt, Coupon or Talon and capitalised
terms have the meanings given to them herein, the absence of any such meaning indicating that
such term is not applicable to the Instruments.2
    
    Status and Negative Pledge
 2.1
    
    StatusThe Instruments and the Receipts and Coupons relating to them constitute direct,
unconditional and unsecured obligations of the Issuer and rank pari passuwithout any
preference or priority among themselves. The payment obligations of the Issuer under the
Instruments, Receipts and Coupons shall, subject to such exceptions as are from time to
time applicable under the laws of England, rank equally with all other present and future
unsecured obligations (other than subordinated obligations, if any) of the Issuer.
 2.2
    
    Negative PledgeSo long as any Instrument, Receipt or Coupon remains outstanding (as defined in the
Trust Deed) the Issuer will not create or permit to subsist any mortgage, charge, pledge,
lien or other form of encumbrance or security interest (Security) upon the whole or any
part of its undertaking, assets or revenues present or future to secure any Relevant
Indebtedness, or any guarantee of or indemnity in respect of any Relevant Indebtedness
unless, at the same time or prior thereto, the Issuers obligations under the
Instruments, the Receipts, the Coupons and the Trust Deed (a) are secured equally and
rateably therewith or benefit from a guarantee or indemnity in substantially identical
terms thereto, as the case may be, in each case to the satisfaction of the Trustee, or
(b) have the benefit of such other security, guarantee, indemnity or other arrangement as
the Trustee in its absolute discretion shall deem to be not materially less beneficial to
the Instrumentholders or as shall be approved by an Extraordinary Resolution (as defined
in the Trust Deed) of the Instrumentholders.For the purposes of these Conditions, Relevant Indebtedness means any present or future
indebtedness in the form of, or represented by, bonds, notes, debentures, loan stock or
other securities which are for the time being, or are intended, with the agreement of the
Issuer, to be quoted, listed or ordinarily dealt in on any stock exchange.
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3
    
    Interest
 3.1
    
    Interest on Fixed Rate InstrumentsEach Fixed Rate Instrument bears interest on its outstanding nominal amount from
the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to
the Rate of Interest, payable in arrear on each Interest Payment Date. The amount of
Interest payable shall be determined in accordance with Condition 3.8.If a Fixed Coupon Amount or a Broken Amount is specified in the relevant Final Terms, the
amount of interest payable on each Interest Payment Date will amount to the Fixed Coupon
Amount, or, if applicable, the Broken Amount so specified and in the case of a Broken
Amount will be payable on the particular Interest Payment Date(s) specified in the
relevant Final Terms.
 3.2
    
    Interest on Floating Rate Instruments
 3.2.1
    
    Interest Payment Dates
 Each Floating Rate Instrument bears interest on its outstanding nominal amount from
the Interest Commencement Date at the rate per annum (expressed as a percentage)
equal to the Rate of Interest, such interest being payable in arrear on each
Interest Payment Date. The amount of Interest payable shall be determined in
accordance with Condition 3.8. Such Interest Payment Date(s) is/are either
specified in the relevant Final Terms as Specified Interest Payment Dates or, if no
Specified Interest Payment Date(s) is/are specified in the relevant Final Terms,
Interest Payment Date shall mean each date which falls the number of months or
other period shown on this Instrument as the Interest Period after the preceding
Interest Payment Date or, in the case of the first Interest Payment Date, after the
Interest Commencement Date.3.2.2
    
    Business Day ConventionIf any date which is specified to be subject to adjustment in accordance with a
Business Day Convention would otherwise fall on a day which is not a Business Day,
then, if the Business Day Convention specified is (a) the Floating Rate Convention,
such date shall be postponed to the next day which is a Business Day unless it
would then fall into the next calendar month, in which event (x) such date shall be
brought forward to the immediately preceding Business Day and (y) each subsequent
such date shall be the last Business Day of the month in which such date would have
fallen had it not been subject to adjustment, (b) the Following Business Day
Convention, such date shall be postponed to the next day which is a Business Day,
(c) the Modified Following Business Day Convention, such date shall be postponed to
the next day which is a Business Day unless it would then fall into the next
calendar month, in that event such date shall be brought forward to the immediately
preceding Business Day or (d) the Preceding Business Day Convention, such date
shall be brought forward to the immediately preceding Business Day.3.2.3
    
    Rate of Interest for Floating Rate InstrumentsThe Rate of Interest in respect of Floating Rate Instruments for each Interest
Accrual Period shall be determined in the manner specified in the relevant Final
Terms and the provisions below relating to either ISDA Determination or Screen Rate
Determination shall apply, depending upon which is specified on this Instrument.
 (a)
    
    ISDA Determination for Floating Rate Instruments: Where ISDA
Determination is specified in the relevant Final Terms as the manner in which
the Rate of Interest is to be determined, the Rate of Interest for each
Interest Accrual Period shall be determined by the Calculation Agent as a rate
equal to the relevant ISDA Rate. For
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the purposes of this sub-paragraph (a), ISDA Rate for an Interest Accrual
Period means a rate equal to the Floating Rate which would be determined by
the Calculation Agent under a Swap Transaction under the terms of an
agreement incorporating the ISDA Definitions and under which:
 (i)
    
    the Floating Rate Option is as specified in the
relevant Final Terms;(ii)
    
    the Designated Maturity is a period specified in
the relevant Final Terms; and(iii)
    
    the relevant Reset Date is the first day of that
Interest Accrual Period unless otherwise specified in the relevant Final
Terms.
 For the purposes of this sub-paragraph (a), Floating Rate, Calculation
Agent, Floating Rate Option, Designated Maturity, Reset Date and Swap
Transaction have the meanings given to those terms in the ISDA Definitions.
 (b)
    
    Screen Rate Determination for Floating Rate Instruments:
 (i)
    
    Where Screen Rate Determination is specified in
the relevant Final Terms as the manner in which the Rate of Interest is
to be determined, the Rate of Interest for each Interest Accrual Period
will, subject as provided below, be either:
 (x)
    
    the offered quotation; or(y)
    
    the arithmetic mean of the offered
quotations,
 (expressed as a percentage rate per annum) for the Reference Rate
which appears or appear, as the case may be, on the Relevant Screen
Page as at either 11.00 a.m. (London time in the case of LIBOR or
Brussels time in the case of EURIBOR) on the Interest Determination
Date in question as determined by the Calculation Agent. If five or
more of such offered quotations are available on the Relevant Screen
Page, the highest (or, if there is more than one such highest
quotation, one only of such quotations) and the lowest (or, if there
is more than one such lowest quotation, one only of such quotations)
shall be disregarded by the Calculation Agent for the purpose of
determining the arithmetic mean of such offered quotations.If the Reference Rate from time to time in respect of Floating Rate
Instruments is specified hereon as being other than LIBOR or EURIBOR,
the Rate of Interest in respect of such Instruments will be determined
as provided hereon.(ii)
    
    if the Relevant Screen Page is not available or
if, sub-paragraph (i)(x) applies and no such offered quotation appears
on the Relevant Screen Page or if sub-paragraph (i)(y) above applies and
fewer than three such offered quotations appear on the Relevant Screen
Page in each case as at the time specified above, subject as provided
below, the Calculation Agent shall request, if the Reference Rate is
LIBOR, the principal London office of each of the Reference Banks or, if
the Reference Rate is EURIBOR, the principal Euro-zone office of each of
the Reference Banks, to provide the Calculation Agent with its offered
quotation (expressed as a percentage rate per annum) for the Reference
Rate if the Reference Rate is LIBOR, at approximately 11.00 a.m. (London
time), or if the Reference Rate is EURIBOR, at approximately 11.00 a.m.
(Brussels time) on the Interest Determination Date in question. If two
or more of the Reference Banks provide the Calculation
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Agent with such offered quotations, the Rate of Interest for such
Interest Period shall be the arithmetic mean of such offered
quotations as determined by the Calculation Agent; and(iii)
    
    if paragraph (ii) above applies and the
Calculation Agent determines that fewer than two Reference Banks are
providing offered quotations, subject as provided below, the Rate of
Interest shall be the arithmetic mean of the rates per annum (expressed
as a percentage) as communicated to (and at the request of) the
Calculation Agent by the Reference Banks or any two or more of them, at
which such banks were offered, if the Reference Rate is LIBOR, at
approximately 11.00 a.m. (London time) or, if the Reference Rate is
EURIBOR, at approximately 11.00 a.m. (Brussels time) on the relevant
Interest Determination Date, deposits in the Specified Currency for a
period equal to that which would have been used for the Reference Rate
by leading banks in, if the Reference Rate is LIBOR, the London
inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone
inter-bank market, as the case may be, or, if fewer than two of the
Reference Banks provide the Calculation Agent with such offered rates,
the offered rate for deposits in the Specified Currency for a period
equal to that which would have been used for the Reference Rate, or the
arithmetic mean of the offered rates for deposits in the Specified
Currency for a period equal to that which would have been used for the
Reference Rate, at which, if the Reference Rate is LIBOR, at
approximately 11.00 a.m. (London time) or, if the Reference Rate is
EURIBOR, at approximately 11.00 a.m. (Brussels time), on the relevant
Interest Determination Date, any one or more banks (which bank or banks
is or are in the opinion of the Trustee and the Issuer suitable for such
purpose) informs the Calculation Agent it is quoting to leading banks
in, if the Reference Rate is LIBOR, the London inter-bank market or, if
the Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the
case may be, provided that, if the Rate of Interest cannot be determined
in accordance with the foregoing provisions of this paragraph, the Rate
of Interest shall be determined as at the last preceding Interest
Determination Date (though substituting, where a different Margin or
Maximum or Minimum Rate of Interest is to be applied to the relevant
Interest Accrual Period from that which applied to the last preceding
Interest Accrual Period, the Margin or Maximum or Minimum Rate of
Interest relating to the relevant Interest Accrual Period, in place of
the Margin or Maximum or Minimum Rate of Interest relating to that last
preceding Interest Accrual Period).
 3.3
    
    Zero Coupon InstrumentsWhere an Instrument, the Interest Basis of which is specified to be Zero Coupon, is
repayable prior to the Maturity Date and is not paid when due, the amount due and payable
prior to the Maturity Date shall be the Early Redemption Amount of such Instrument. As
from the Maturity Date, the Rate of Interest for any overdue principal of such an
Instrument shall be a rate per annum (expressed as a percentage) equal to the
Amortisation Yield (as defined in Condition 4.4.1(b)).
 3.4
    
    Dual Currency InstrumentsIn the case of Dual Currency Instruments, if the rate or amount of interest falls to be
determined by reference to a Rate of Exchange or a method of calculating a Rate of
Exchange, the rate or amount of interest payable shall be determined in the manner
specified in the relevant Final Terms.
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3.5
    
    Partly Paid InstrumentsIn the case of Partly Paid Instruments (other than Partly Paid Instruments which are Zero
Coupon Instruments), interest will accrue as previously stated on the paid-up nominal
amount of such Instruments and otherwise as specified in the relevant Final Terms.3.6
    
    Accrual of InterestInterest shall cease to accrue on each Instrument on the due date for redemption unless,
upon due presentation, payment is improperly withheld or refused, in which event interest
shall continue to accrue (as well after as before judgment) at the Rate of Interest in
the manner provided in this Condition 3 to the Relevant Date (as defined in Condition 6).3.7
    
    Margin, Maximum/Minimum Rates of Interest, Instalment Amounts and Redemption
Amounts and Rounding
 (i)
    
    If any Margin is specified in the relevant Final Terms (either (x)
generally, or (y) in relation to one or more Interest Accrual Periods), an
adjustment shall be made to all Rates of Interest, in the case of (x), or the Rates
of Interest for the specified Interest Accrual Periods, in the case of (y),
calculated in accordance with Condition 3.2.3(b) above, by adding (if a positive
number) or subtracting (if a negative number) the absolute value of such Margin,
subject always to the next paragraph.(ii)
    
    If any Maximum or Minimum Rate of Interest, Instalment Amount or
Redemption Amount is specified in the relevant Final Terms, then any Rate of
Interest, Instalment Amount or Redemption Amount shall be subject to such maximum or
minimum, as the case may be.(iii)
    
    For the purposes of any calculations required pursuant to these
Conditions (unless otherwise specified), (x) all percentages resulting from such
calculations shall be rounded, if necessary, to the nearest one hundred thousandth
of a percentage point (with halves being rounded up), (y) all figures shall be
rounded to seven significant figures (with halves being rounded up) and (z) all
currency amounts that fall due and payable shall be rounded to the nearest unit of
such currency (with halves being rounded up), save in the case of yen, which shall
be rounded down to the nearest yen. For these purposes unit means the lowest
amount of such currency which is available as legal tender in the country of such
currency.
 3.8
    
    CalculationsThe amount of interest payable per Calculation Amount in respect of any Instrument for
any Interest Accrual Period shall be equal to the product of the Rate of Interest, the
Calculation Amount as specified in the relevant Final Terms, and the Day Count Fraction
for such Interest Accrual Period, unless an Interest Amount (or a formula for its
calculation) is applicable to such Interest Accrual Period, in which case the amount of
interest payable per Calculation Amount in respect of such Instrument for such Interest
Accrual Period shall equal such Interest Amount (or be calculated in accordance with such
formula). Where any Interest Period comprises two or more Interest Accrual Periods, the
amount of interest payable per Calculation Amount in respect of such Interest Period
shall be the sum of the Interest Amounts payable in respect of each of those Interest
Accrual Periods. In respect of any other period for which interest is required to be
calculated, the provisions above shall apply save that the Day Count Fraction shall be
for the period for which interest is required to be calculated.
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3.9
    
    Determination and Publication of Rates of Interest, Interest Amounts, Final
Redemption Amounts, Early Redemption Amounts, Optional Redemption Amounts and Instalment
AmountsThe Calculation Agent shall as soon as practicable on each Interest Determination Date or
such other time on such date as the Calculation Agent may be required to calculate any
rate or amount, obtain any quotation or make any determination or calculation, determine
such rate and calculate the Interest Amounts for the relevant Interest Accrual Period,
calculate the Redemption Amount or Instalment Amount, obtain such quote or make such
determination or calculation, as the case may be, and cause the Rate of Interest and the
Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date
and, if required to be calculated, the Final Redemption Amount, Early Redemption Amount,
Optional Redemption Amount or any Instalment Amount to be notified to the Trustee, the
Issuer, each of the Paying Agents, the Instrumentholders, any other Calculation Agent
appointed in respect of the Instruments that is to make a further calculation upon
receipt of such information and, if the Instruments are listed on a stock exchange and
the rules of such exchange so require, such exchange as soon as possible after their
determination but in no event later than (i) the commencement of the relevant Interest
Period, if determined prior to such time, in the case of notification to such exchange of
a Rate of Interest and Interest Amount, or (ii) in all other cases, the fourth Business
Day after such determination. Where any Interest Payment Date or Interest Period Date is
subject to adjustment pursuant to Condition 3.2.3(b)(ii), the Interest Amounts and the
Interest Payment Date so published may subsequently be amended (or appropriate
alternative arrangements made with the consent of the Trustee by way of adjustment)
without notice in the event of an extension or shortening of the Interest Period. If the
Instruments become due and payable under Condition 8, the accrued interest and the Rate
of Interest payable in respect of the Instruments shall nevertheless continue to be
calculated as previously in accordance with this Condition but no publication of the Rate
of Interest or the Interest Amount so calculated need be made unless the Trustee
otherwise requires. The determination of any rate or amount, the obtaining of each
quotation and the making of each determination or calculation by the Calculation Agent(s)
shall (in the absence of manifest error) be final and binding upon all parties.3.10
    
    Determination or Calculation by TrusteeIf the Calculation Agent does not at any time for any reason determine or calculate the
Rate of Interest for an Interest Accrual Period or any Interest Amount, Instalment
Amount, Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount
the Trustee shall do so (or shall appoint an agent on its behalf to do so) and such
determination or calculation shall be deemed to have been made by the Calculation Agent.
In doing so, the Trustee shall apply the preceding provisions of this Condition, with any
necessary consequential amendments, to the extent that, in its opinion, it can do so,
and, in all other respects it shall do so in such manner as it shall deem fair and
reasonable in all the circumstances.3.11
    
    DefinitionsIn these Conditions, unless the context otherwise requires, the following defined terms
shall have the meanings set out below:Business Day means:
 (a)
    
    in the case of a currency other than Euro, a day (other than a Saturday
or Sunday) on which commercial banks and foreign exchange markets settle payments in
the principal financial centre for such currency; and/or(b)
    
    in the case of Euro, a day on which the TARGET System is operating (a
TARGET Business Day); and/or
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(c)
    
    in the case of a currency and/or one or more Business Centres as
specified in the relevant Final Terms, a day (other than a Saturday or a Sunday) on
which commercial banks and foreign exchange markets settle payments in such currency
or, if no currency is indicated, generally in each of the Business Centres.
 Day Count Fraction means, in respect of the calculation of an amount of interest on any
Instrument for any period of time (from and including the first day of such period to but
excluding the last) (whether or not constituting an Interest Period or Interest Accrual
Period, the Calculation Period):
 (a)
    
    if Actual/Actual or Actual/Actual-ISDA is specified in the relevant
Final Terms, the actual number of days in the Calculation Period divided by 365 (or,
if any portion of that Calculation Period falls in a leap year, the sum of (i) the
actual number of days in that portion of the Calculation Period falling in a leap
year divided by 366 and (ii) the actual number of days in that portion of the
Calculation Period falling in a non-leap year divided by 365);(b)
    
    if Actual/365 (Fixed) is specified in the relevant Final Terms, the
actual number of days in the Calculation Period divided by 365;(c)
    
    if Actual/360 is specified in the relevant Final Terms, the actual
number of days in the Calculation Period divided by 360;(d)
    
    if 30/360, 360/360 or Bond Basis is specified in the relevant Final
Terms, the number of days in the Calculation Period divided by 360 calculated on a
formula basis as follows:
 
 where:Y1 is the year, expressed as a number, in which the first day of the Calculation
Period falls;Y2 is the year, expressed as a number, in which the day immediately following the
last day included in the Calculation Period falls;M1 is the calendar month, expressed as a number, in which the first day of the
Calculation Period falls;M2 is the calendar month, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;D1 is the first calendar day, expressed as a number, of the
Calculation Period, unless such number would be 31, in which case D1
will be 30; andD2 is the calendar day, expressed as a number, immediately following
the last day included in the Calculation Period, unless such number would be 31 and
D1 is greater than 29, in which case D2 will be 30;(e)
    
    if 30E/360 or Eurobond Basis is specified in the relevant Final
Terms, the number of days in the Calculation Period divided by 360 calculated on a
formula basis as follows:
 
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where:Y1 is the year, expressed as a number, in which the first day of the Calculation
Period falls;Y2 is the year, expressed as a number, in which the day immediately following the
last day included in the Calculation Period falls;M1 is the calendar month, expressed as a number, in which the first day of the
Calculation Period falls;M2 is the calendar month, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;D1 is the first calendar day, expressed as a number, of the Calculation Period,
unless such number would be 31, in which case D1 will be 30; andD2 is the calendar day, expressed as a number, immediately following the last day
included in the Calculation Period, unless such number would be 31, in which case
D2 will be 30;(f)
    
    if 30E/360 (ISDA) is specified in the relevant Final Terms, the number
of days in the Calculation Period divided by 360, calculated on a formula basis as
follows:
 
 where:Y1 is the year, expressed as a number, in which the first day of the Calculation
Period falls;Y2 is the year, expressed as a number, in which the day immediately following the
last day included in the Calculation Period falls;M1 is the calendar month, expressed as a number, in which the first day of the
Calculation Period falls;M2 is the calendar month, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;D1 is the first calendar day, expressed as a number, of the Calculation Period,
unless (i) that day is the last day of February or (ii) such number would be 31, in
which case D1 will be 30; andD2 is the calendar day, expressed as a number, immediately following the last day
included in the Calculation Period, unless (i) that day is the last day of February
but not the Maturity Date or (ii) such number would be 31, in which case
D2 will be 30; and(g)
    
    if Actual/Actual-ICMA is specified in the relevant Final Terms:
 (i)
    
    if the Calculation Period is equal to or shorter than the
Determination Period during which it falls, the actual number of days in the
Calculation Period divided by the product of (x) the actual number of days in
such Determination Period and (y) the number of Determination Periods in any
year; and(ii)
    
    if the Calculation Period is longer than one Determination
Period, the sum of:
 (A)
    
    the actual number of days in such Calculation
Period falling in the Determination Period in which it begins divided by
the product of (a) the
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actual number of days in such Determination Period and (b) the number
of Determination Periods in any year; and(B)
    
    the actual number of days in such Calculation
Period falling in the next Determination Period divided by the product
of (a) the actual number of days in such Determination Period and (b)
the number of Determination Periods in any year,where:Determination Period means the period from and including a
Determination Date in any year to but excluding the next Determination
Date; andDetermination Date means the date specified as such in the relevant
Final Terms or, if none is so specified, the Interest Payment Date.
 Euro-zone means the region comprising of member states of the European Union that adopt
the single currency in accordance with the Treaty establishing the European Community as
amended.Interest Accrual Period means the period beginning on (and including) the Interest
Commencement Date and ending on (but excluding) the first Interest Period Date and each
successive period beginning on (and including) an Interest Period Date and ending on (but
excluding) the next succeeding Interest Period Date.Interest Amount means:
 (a)
    
    in respect of an Interest Accrual Period, the amount of interest payable
per Calculation Amount for that Interest Accrual Period and which, in the case of
Fixed Rate Instruments, and unless otherwise specified in the relevant Final Terms,
shall mean the Fixed Coupon Amount or Broken Amount specified in the relevant Final
Terms as being payable on the Interest Payment Date ending the Interest Period of
which such Interest Accrual Period forms part; and(b)
    
    in respect of any other period, the amount of interest payable per
Calculation Amount for that period.
 Interest Commencement Date means the Issue Date or such other date as may be specified
in the relevant Final Terms.Interest Determination Date means, with respect to a Rate of Interest and Interest
Accrual Period, the date specified as such in the relevant Final Terms or, if none is so
specified, (a) the first day of such Interest Accrual Period if the Specified Currency is
Sterling or (b) the day falling two Business Days in London prior to the first day of
such Interest Accrual Period if the Specified Currency is neither Sterling nor Euro or
(c) the day falling two TARGET Business Days prior to the first day of such Interest
Accrual Period if the Specified Currency is Euro.Interest Payment Date means the date or dates specified as such in, or determined in
accordance with the provisions of, the relevant Final Terms and, if a Business Day
Convention is specified in the relevant Final Terms, as the same may be adjusted in
accordance with the relevant Business Day Convention.Interest Period means the period beginning on (and including) the Interest Commencement
Date and ending on (but excluding) the first Interest Payment Date and each successive
period beginning on (and including) an Interest Payment Date and ending on (but
excluding) the next succeeding Interest Payment Date.
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Interest Period Date means each Interest Payment Date unless otherwise specified in the
relevant Final Terms.ISDA Definitions means the 2006 ISDA Definitions as published by the International
Swaps and Derivatives Association, Inc., unless otherwise specified in the relevant Final
Terms.Rate of Interest means the rate of interest payable from time to time in respect of
this Instrument and that is either specified on, or calculated in accordance with the
provisions of, the relevant Final Terms.Redemption Amount means, as appropriate, the Final Redemption Amount, the Early
Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption
Amount (Put), the Early Termination Amount or such other amount in the nature of a
redemption amount as may be specified in, or determined in accordance with the provisions
of the relevant Final Terms.Reference Banks means, in the case of a determination of LIBOR, the principal London
office of four major banks in the London inter-bank market and, in the case of a
determination of EURIBOR, the principal Euro-zone office of four major banks in the
Euro-zone inter-bank market, in each case selected by the Calculation Agent or as
specified in the relevant Final Terms.Reference Rate means the rate specified as such in the relevant Final Terms.Relevant Screen Page means such page, section, caption, column or other part of a
particular information service as may be specified in the relevant Final Terms.Specified Currency means the currency specified as such in the relevant Final Terms or,
if none is specified, the currency in which the Instruments are denominated.TARGET System means the Trans-European Automated Real-Time Gross Settlement Express
Transfer (known as TARGET2) System which was launched on 19 November 2007 or any
successor to it.3.12
    
    Calculation AgentThe Issuer shall procure that there shall at all times be one or more Calculation
Agents if provision is made for them in the relevant Final Terms and for so long as any
Instrument is outstanding. Where more than one Calculation Agent is appointed in respect
of the Instruments, references in these Conditions to the Calculation Agent shall be
construed as each Calculation Agent performing its respective duties under these
Conditions. If the Calculation Agent is unable or unwilling to act as such or if the
Calculation Agent fails duly to establish the Rate of Interest for an Interest Period or
Interest Accrual Period or to calculate any Interest Amount, Instalment Amount, Final
Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as the case may
be, or to comply with any other requirement, the Issuer shall (with the prior approval of
the Trustee) appoint a leading bank or financial institution engaged in the interbank
market (or, if appropriate, money, swap or over-the-counter index options market) which
is most closely connected with the calculation or determination to be made by the
Calculation Agent (acting through its principal London office or any other office
actively involved in such market) to act as such in its place. The Calculation Agent may
not resign its duties without a successor having been appointed as specified in this
paragraph.
 4
    
    Redemption, Purchase and Options
 4.1
    
    Final RedemptionUnless previously redeemed, purchased and cancelled as provided below, this
Instrument will be redeemed at its Final Redemption Amount (which, unless otherwise
provided, is its nominal
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amount) on the Maturity Date specified in the relevant Final Terms provided, however,
that if this Instrument is a Perpetual Instrument it will only be redeemable and
repayable in accordance with the following provisions of this Condition 4.4.2
    
    Redemption for Taxation ReasonsIf, on the occasion of the next payment in respect of the Instruments the Issuer
satisfies the Trustee immediately before the giving of the notice referred to below that
it would be unable to make such payment without having to pay additional amounts as
described in Condition 6, and such requirement to pay such additional amounts arises by
reason of a change in the laws of the United States of America or any political
sub-division of the United States of America or any authority in or of the United States
of America having power to tax or in the interpretation or application of the laws of the
United States of America or any political sub-division of the United States of America or
any authority in or of the United States of America having power to tax or in any
applicable double taxation treaty or convention, which change becomes effective on or
after the date on which agreement is reached to issue the first Tranche of the
Instruments, and such requirement cannot be avoided by the Issuer taking reasonable
measures (such measures not involving any material additional payments by, or expense
for, the Issuer), the Issuer may, at its option, at any time, having given not less than
30 nor more than 45 days notice to the Instrumentholders in accordance with Condition
13, redeem all, but not some only, of the Instruments at their Early Redemption Amount
together with interest accrued to the date of redemption provided that the date fixed for
redemption shall not be earlier than 90 days prior to the earliest date on which the
Issuer would be obliged to pay such additional amounts or make such withholding or
deduction, as the case may be, were a payment in respect of the Instruments then due.
Prior to the publication of any notice of redemption pursuant to this Condition 4.2, the
Issuer shall deliver to the Trustee a certificate signed by two directors of the Issuer
stating that the requirement referred to above cannot be avoided by the Issuer taking
reasonable measures available to it and the Trustee shall be entitled to accept such
certificate as sufficient evidence of the satisfaction of the condition precedent set out
above in which event it shall be conclusive and binding on Instrumentholders and
Couponholders.4.3
    
    PurchasesThe Issuer and any of its Subsidiaries may at any time purchase Instruments
(provided that all unmatured Receipts and Coupons and unexchanged Talons appertaining to
them are attached or surrendered with them) in the open market or otherwise at any price.Subsidiary means any corporation a majority of the outstanding voting stock of which is
owned, directly or indirectly, by the Issuer.4.4
    
    Early Redemption
 4.4.1
    
    Zero Coupon Instruments
 (a)
    
    The Early Redemption Amount payable in respect of any Zero
Coupon Instrument, the Early Redemption Amount of which is not linked to a
formula, upon redemption of such Instrument pursuant to Condition 4.2 or upon
it becoming due and payable as provided in Condition 8 shall be the Amortised
Face Amount (calculated as provided below) of such Instrument unless otherwise
specified in the relevant Final Terms.(b)
    
    Subject to the provisions of sub-paragraph (c) below, the
Amortised Face Amount of any such Instrument shall be the scheduled Final
Redemption Amount of such Instrument on the Maturity Date discounted at a rate
per annum (expressed as a percentage) equal to the Amortisation Yield (which,
if none is specified in the relevant Final Terms, shall be such rate as would
produce an Amortised Face
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Amount equal to the issue price of the Instruments if they were discounted
back to their issue price on the Issue Date) compounded annually.(c)
    
    If the Early Redemption Amount payable in respect of any such
Instrument upon its redemption pursuant to Condition 4.2 or, if applicable,
Condition 4.5 or upon it becoming due and payable as provided in Condition 8,
is not paid when due, the Early Redemption Amount due and payable in respect
of such Instrument shall be the Amortised Face Amount of such Instrument as
defined in sub-paragraph (b) above, except that such sub-paragraph shall have
effect as though the reference in that sub-paragraph to the date on which the
Instrument becomes due and payable was replaced by a reference to the Relevant
Date as defined in Condition 6. The calculation of the Amortised Face Amount
in accordance with this sub-paragraph shall continue to be made (as well after
as before judgment) until the Relevant Date, unless the Relevant Date falls on
or after the Maturity Date, in which case the amount due and payable shall be
the scheduled Final Redemption Amount of such Instrument on the Maturity Date
together with any interest that may accrue in accordance with Condition 3.2.
 Where such calculation is to be made for a period of less than one year, it shall
be made on the basis of the Day Count Fraction specified in the relevant Final
Terms.
 4.4.2
    
    Other InstrumentsThe Early Redemption Amount payable in respect of any Instrument (other than
Instruments described in Condition 4.4.1), upon redemption of such Instrument
pursuant to this Condition 4.4 or upon it becoming due and payable as provided in
Condition 8, shall be the Final Redemption Amount unless otherwise specified in the
relevant Final Terms.
 4.5
    
    Redemption at the Option of the Issuer and Exercise of Issuers Options
 4.5.1
    
    If (i) Residual Holding Call Option is specified in the relevant Final
Terms, and (ii) if at any time the Residual Holding Percentage or more of the
aggregate nominal amount of Instruments originally issued shall have been redeemed
or purchased and cancelled, the Issuer shall have the option to redeem such
outstanding Instruments in whole, but not in part, at their Residual Holding
Redemption Amount. Unless otherwise specified in the relevant Final Terms, the
Residual Holding Redemption Amount will be calculated by the Calculation Agent by
discounting the outstanding nominal amount of the Instruments and the remaining
interest payments (if applicable) to the Maturity Date by a rate per annum
(expressed as a percentage to the nearest one hundred thousandth of a percentage
point (with halves being rounded up)) equal to the Benchmark Yield, being the yield
on the Benchmark Security at the close of business on the third Business Day prior
to the date fixed for such redemption, plus the Benchmark Spread. Where the
specified calculation is to be made for a period of less than one year, it shall be
calculated using the Benchmark Day Count Fraction. The Issuer will give not less
than 15 nor more than 30 days irrevocable notice to the Instrumentholders and the
Trustee of any such redemption pursuant to this Condition 4.5.1.4.5.2
    
    If Call Option is specified in the relevant Final Terms, the Issuer
may, on giving not less than 15 nor more than 30 days irrevocable notice to the
Instrumentholders (or such other notice period as may be specified in the relevant
Final Terms), redeem, or exercise any Issuers option in relation to, all or, if so
provided, some of such Instruments on any Optional Redemption Date or Option
Exercise Date, as the case may be. Any such redemption of Instruments shall be at
their Optional Redemption Amount together with interest accrued to the date fixed
for redemption. Any such redemption or exercise must relate to Instruments of a
nominal amount at least equal to the minimum nominal amount (if
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any) permitted to be redeemed specified hereon and no greater than the maximum
nominal amount (if any) permitted to be redeemed specified on this Instrument.
 All Instruments in respect of which any such notice is given shall be redeemed, or the
Issuers option shall be exercised, on the date specified in such notice in accordance
with this Condition.In the case of a partial redemption or a partial exercise of the Issuers option, the
notice to Instrumentholders shall also contain the serial numbers of the Instruments to
be redeemed, which shall have been drawn in such place as the Trustee may approve and in
such manner as it deems appropriate, subject to compliance with any applicable laws,
listing authority and stock exchange requirements.4.6
    
    Redemption at the Option of InstrumentholdersIf Put Option is specified in the relevant Final Terms, the Issuer shall, at the
option of any Instrumentholder, upon such Instrumentholder giving not less than 15 nor
more than 30 days notice to the Issuer (or such other notice period as may be specified
on this Instrument) redeem such Instrument on the Optional Redemption Date(s) (as
specified in the Final Terms) at its Optional Redemption Amount (as specified in the
Final Terms) together with interest accrued to the date fixed for redemption.To exercise such option (which must be exercised on an Option Exercise Date) the holder
must deposit such Instrument with any Paying Agent at its specified office, together with
a duly completed option exercise notice (Exercise Notice) in the form obtainable from
any Paying Agent within the Instrumentholders Option Period (as specified in the Final
Terms). No Instrument so deposited and option exercised may be withdrawn (except as
provided in the Agency Agreement) without the prior consent of the Issuer.4.7
    
    Partly Paid InstrumentsPartly Paid Instruments will be redeemed, whether at maturity, early redemption or
otherwise, in accordance with the provisions of this Condition and the provisions
specified in the relevant Final Terms.4.8
    
    Redemption by InstalmentsUnless previously redeemed, purchased and cancelled as provided in this Condition
4, each Instrument which provides for Instalment Dates and Instalment Amounts will be
partially redeemed on each Instalment Date at the Instalment Amount specified in the
relevant Final Terms. The outstanding nominal amount of each such Instrument shall be
reduced by the Instalment Amount (or, if such Instalment Amount is calculated by
reference to a proportion of the nominal amount of such Instrument, such proportion) for
all purposes with effect from the related Instalment Date, unless payment of the
Instalment Amount is improperly withheld or refused on presentation of the related
Receipt, in which case, such amount shall remain outstanding until the Relevant Date
relating to such Instalment Amount.4.9
    
    CancellationAll Instruments redeemed pursuant to any of the foregoing provisions will be
cancelled forthwith together with all unmatured Receipts and Coupons and unexchanged
Talons attached thereto. All Instruments purchased by or on behalf of the Issuer or any
of its Subsidiaries may, at the option of the Issuer be held by or may be surrendered
together with all unmatured Receipts and Coupons and all unexchanged Talons attached to
them to a Paying Agent for cancellation, but may not be resold and when held by the
Issuer or any of its Subsidiaries shall not entitle the holder to vote at any meeting of
Instrumentholders and shall not be deemed to be outstanding for the purposes of
calculating quorums at meetings of Instrumentholders or for the purposes of Condition 10.
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5
    
    Payments and Talons
 5.1
    
    PaymentsPayments of principal and interest in respect of Instruments will, subject as
mentioned below, be made against presentation and surrender of the relevant Receipts (in
the case of payments of Instalment Amounts other than on the due date for redemption and
provided that the Receipt is presented for payment together with its relative
Instrument), Instruments (in the case of all other payments of principal and, in the case
of interest, as specified in Condition 5.5.6) or Coupons (in the case of interest, save
as specified in Condition 5.5.6), as the case may be, at the specified office of any
Paying Agent outside the United States by a cheque payable in the currency in which such
payment is due drawn on, or, at the option of the holder, by transfer to an account
denominated in that currency with, a bank in the principal financial centre for that
currency; provided that in the case of Euro, the transfer shall be in a city in which
banks have access to the TARGET System.5.2
    
    Payments in the United StatesNotwithstanding the above, if any Instruments are denominated in U.S. dollars,
payments in respect of them may be made at the specified office of any Paying Agent in
New York City in the same manner as specified above if (a) the Issuer shall have
appointed Paying Agents with specified offices outside the United States with the
reasonable expectation that such Paying Agents would be able to make payment of the
amounts on the Instruments in the manner provided above when due, (b) payment in full of
such amounts at all such offices is illegal or effectively precluded by exchange controls
or other similar restrictions on payment or receipt of such amounts and (c) such payment
is then permitted by United States law, without involving, in the opinion of the Issuer,
any adverse tax consequence to the Issuer.5.3
    
    Payments subject to Fiscal Laws etc.All payments are subject in all cases to any applicable fiscal or other laws,
regulations and directives, but without prejudice to the provisions of Condition 6. No
commission or expenses shall be charged to the Instrumentholders or Couponholders in
respect of such payments.5.4
    
    Appointment of AgentsThe Issuing and Paying Agent, the Paying Agents and the Calculation Agent initially
appointed by the Issuer and their respective specified offices are listed below. The
Issuing and Paying Agent, the Paying Agents and the Calculation Agent act solely as
agents of the Issuer and do not assume any obligation or relationship of agency or trust
for or with any holder. The Issuer reserves the right at any time with the approval of
the Trustee to vary or terminate the appointment of the Issuing and Paying Agent, any
other Paying Agent or the Calculation Agent and to appoint additional or other Paying
Agents, provided that the Issuer shall at all times maintain (a) an Issuing and Paying
Agent, (b) a Paying Agent having its specified office in a major European city, (c) a
Calculation Agent where the Conditions so require one, (d) so long as the Instruments are
listed on any stock exchange or admitted to listing by any other relevant authority, a
Paying Agent having a specified office in such place as may be required by the rules and
regulations of any other relevant stock exchange or other relevant authority and (e) to
the extent that the Issuer is able to do so and not provided for by the foregoing
provisions of this Condition 5.4, a Paying Agent with a specified office in a European
Union member state that will not be obliged to withhold or deduct tax pursuant to any law
implementing European Council Directive 2003/48/EC or any other Directive implementing
the conclusions of the ECOFIN Council meeting of 26-27 November 2000. As used in these
Conditions, the terms Issuing and Paying Agent, Calculation Agent, and Paying Agent
include any additional or replacement Issuing and Paying Agent, Calculation Agent or
Paying Agent appointed under this Condition.
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In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in
respect of any Instruments denominated in U.S. dollars in the circumstances described in
Condition 5.2.Notice of any such change or any change of any specified office shall promptly be given
to the Instrumentholders in accordance with Condition 13.5.5
    
    Unmatured Coupons and Receipts and unexchanged Talons
 5.5.1
    
    Unless the Instrument provides that the relevant Coupons are to become
void upon the due date for redemption of those Instruments, Instruments should be
surrendered for payment together with all unmatured Coupons (if any) appertaining to
them, failing which an amount equal to the face value of each missing unmatured
Coupon (or, in the case of payment not being made in full, that proportion of the
amount of such missing unmatured Coupon that the sum of principal so paid bears to
the total principal due) will be deducted from the Final Redemption Amount, Early
Redemption Amount or Optional Redemption Amount, as the case may be, due for
payment. Any amount so deducted shall be paid in the manner mentioned above against
surrender of such missing Coupon within a period of 10 years from the Relevant Date
for the payment of such principal (whether or not such Coupon has become void
pursuant to Condition 7).5.5.2
    
    If the relevant Instrument so provides, upon the due date for
redemption of any Instrument, unmatured Coupons relating to such Instrument (whether
or not attached) shall become void and no payment shall be made in respect of them.5.5.3
    
    If the relevant Instrument so provides, upon the due date for
redemption of any Instrument, any unexchanged Talon relating to such Instrument
(whether or not attached) shall become void and no Coupon shall be delivered in
respect of such Talon.5.5.4
    
    Upon the due date for redemption of any Instrument which is redeemable
in instalments, all Receipts relating to such Instrument having an Instalment Date
falling on or after such due date (whether or not attached) shall become void and no
payment shall be made in respect of them.5.5.5
    
    Where any Instrument which provides that the relevant Coupons are to
become void upon the due date for redemption of those Instruments is presented for
redemption without all unmatured Coupons and any unexchanged Talon relating to it,
and where any Instrument is presented for redemption without any unexchanged Talon
relating to it, redemption shall be made only against the provision of such
indemnity as the Issuer may require.5.5.6
    
    If the due date for redemption of any Instrument is not a due date for
payment of interest, interest accrued from the preceding due date for payment of
interest or the Interest Commencement Date, as the case may be, shall only be
payable against presentation (and surrender if appropriate) of the relevant
Instrument. Interest accrued on an Instrument that only bears interest after its
Maturity Date shall be payable on redemption of that Instrument against presentation
of that Instrument.
 5.6
    
    Non-business daysIf any date for payment in respect of any Instrument, Receipt or Coupon is not a
business day, the holder shall not be entitled to payment until the next following
business day nor to any interest or other sum in respect of such postponed payment. In
this paragraph, business day means a day (other than a Saturday or a Sunday) on which
banks and foreign exchange markets are open for business in the relevant place of
presentation, in such jurisdictions as shall be specified as Financial Centres in the
relevant Final Terms and:
 5.6.1
    
    (in the case of a payment in a currency other than Euro) where payment
is to be made by transfer to an account maintained with a bank in the relevant
currency, on which foreign
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exchange transactions may be carried on in the relevant currency in the principal
financial centre of the country of such currency; or5.6.2
    
    (in the case of a payment in Euro) which is a TARGET Business Day.
 5.7
    
    TalonsOn or after the Interest Payment Date for the final Coupon forming part of a Coupon
sheet issued in respect of any Instrument, the Talon forming part of such Coupon sheet
may be surrendered at the specified office of the Issuing and Paying Agent in exchange
for a further Coupon sheet (but excluding any Coupons which may have become void pursuant
to Condition 7).
 6
    
    TaxationAll payments of principal and interest by or on behalf of the Issuer in respect of the
Instruments, the Receipts and the Coupons will be made without withholding or deduction for or
on account of, any present or future taxes or duties of whatever nature imposed or levied by or
on behalf of the United States of America or any political sub-division of the United States of
America or any authority in or of the United States of America having power to tax, unless such
withholding or deduction is compelled by law. In that event, the Issuer will pay such
additional amounts of principal and interest as will result in the payment to the
Instrumentholders, Receiptholders or, as the case may be, the Couponholders of the amounts
which would otherwise have been receivable in respect of the Instruments, Receipts or Coupons
had no withholding or deduction been made, except that no such additional amounts shall be
payable in respect of any Instrument, Receipt or Coupon presented for payment:
 (a)
    
    by or on behalf of, a person who is liable to such taxes or duties in respect of such
Instrument, Receipt or Coupon by reason of his having some connection with the United
States of America other than the mere holding of such Instrument, Receipt or Coupon; or(b)
    
    by or on behalf of a person who would not be liable or subject to such deduction or
withholding by making a declaration of non-residence or other claim for exemption to a tax
authority; or(c)
    
    more than 30 days after the Relevant Date except to the extent that the holder would
have been entitled to such additional amounts on presenting the same for payment on such
30th day; or(d)
    
    where such withholding or deduction is imposed on a payment to an individual and is
required to be made pursuant to any law implementing European Council Directive 2003/48/EC
or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27
November 2000; or(e)
    
    by a holder which is or was a controlled foreign corporation, personal holding
company or passive foreign investment company with respect to the United States or a
corporation that accumulates earnings to avoid United States federal income tax; or(f)
    
    if such tax is an estate, inheritance, gift, sales, transfer or personal property tax
or any similar tax, assessment, or governance charge; or(g)
    
    by a holder which is or has been a 10 per cent. shareholder of the obligor of the
Instruments as defined in Section 871(h)(3) of the United States Internal Revenue Code or
any successor provisions; or(h)
    
    by or on behalf of a holder who would have been able to avoid such withholding or
deduction (i) by presenting the relevant Instrument, Receipt or Coupon to another Paying
Agent in a Member State of the European Union; or (ii) by satisfying any statutory or
procedural requirements (including, without limitation, the provision of information); or(i)
    
    in the case of any combination of items (a) to (h) above.
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As used in these Conditions, Relevant Date in respect of any Instrument, Receipt or Coupon
means the date on which payment in respect of it first becomes due or (if any amount of the
money payable is improperly withheld or refused) the date on which payment in full of the
amount outstanding is made or (if earlier) the date on which notice is duly given to the
Instrumentholders in accordance with Condition 13 that, upon further presentation of the
Instrument, Receipt or Coupon being made in accordance with the Conditions, such payment will
be made, provided that payment is in fact made upon such presentation. References in these
Conditions to (a) principal shall be deemed to include any premium payable in respect of the
Instruments, all Instalment Amounts, Final Redemption Amounts, Early Redemption Amounts,
Optional Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of
principal payable pursuant to Condition 4 or any amendment or supplement to it, (b) interest
shall be deemed to include all Interest Amounts and all other amounts payable pursuant to
Condition 3 or any amendment or supplement to it and (c) principal and/or interest shall be
deemed to include any additional amounts which may be payable under this Condition or any
undertaking given in addition to or in substitution for it under the Trust Deed.7
    
    PrescriptionInstruments, Receipts and Coupons (which, for this purpose, shall not include Talons)
shall be prescribed and become void unless presented for payment within 10 years (in the case
of principal) or five years (in the case of interest) from the appropriate Relevant Date in
respect of them.8
    
    Events of DefaultIf any of the following events (each an Event of Default) occurs and is continuing, the
Trustee at its discretion may, and if so requested by the holders of at least one-quarter in
nominal amount of the Instruments then outstanding or if so directed by an Extraordinary
Resolution shall, give notice to the Issuer at its registered office that the Instruments are,
and they shall accordingly immediately become due and repayable at their Redemption Amount
together with accrued interest (if any) to the date of payment:
 (a)
    
    Non-Payment:there is default for more than 30 days in the payment of any principal
or interest due in respect of the Instruments; or(b)
    
    Breach of Other Obligations:there is default in the performance or observance by the
Issuer of any other obligation or provision under the Trust Deed or the Instruments (other
than any obligation for the payment of any principal or interest in respect of the
Instruments) which default is incapable of remedy or, if in the opinion of the Trustee
capable of remedy, is not remedied within 90 days after notice of such default shall have
been given to the Issuer by the Trustee; or(c)
    
    Cross-Acceleration:if (i) any other present or future Relevant Indebtedness of the
Issuer or a Principal Subsidiary becomes due and payable prior to its stated maturity by
reason of any actual event of default or (ii) any amount in respect of such Relevant
Indebtedness is not paid when due or, as the case may be, within any applicable grace
period, provided that the aggregate amount of the Relevant Indebtedness in respect of
which one or more of the events mentioned above in this paragraph (c) have occurred equals
or exceeds U.S.$100,000,000 for the period up to and including 31 March 2017, and
thereafter U.S.$200,000,000 or(d)
    
    Winding-up:a resolution is passed, or a final order of a court in the United States
of America is made and, where possible, not discharged or stayed within a period of 90
days, that the Issuer be wound up or dissolved; or(e)
    
    Enforcement Proceedings:attachment is made of the whole or substantially the whole
of the assets or undertakings of the Issuer and such attachment is not released or
cancelled within 90 days or an encumbrancer takes possession or an administrative or other
receiver or similar officer is appointed of the whole or substantially the whole of the
assets or undertaking of the Issuer or
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an administration or similar order is made in relation to the Issuer and such taking of
possession, appointment or order is not released, discharged or cancelled within 90 days;
or(f)
    
    Insolvency:the Issuer ceases to carry on all or substantially all of its business or
is unable to pay its debts; or(g)
    
    Bankruptcy:the Issuer is adjudged bankrupt or insolvent by a court of competent
jurisdiction in the United States of America,
 provided that in the case of paragraph (b) the Trustee shall have certified that in its opinion
such event is materially prejudicial to the interests of the Instrumentholders.For the purposes of this Condition 8, Principal Subsidiary means KeySpan Corporation, KeySpan
Energy Delivery New York, KeySpan Energy Delivery Long Island, Niagara Mohawk Power Corporation
and New England Power Company, and includes any successor entity thereto or any member of the
group of companies comprising National Grid USA and each of its subsidiaries (the Group)
which the Auditors have certified to the Trustee as being a company to which all or
substantially all of the assets of a Principal Subsidiary are transferred. In the event that
all or substantially all of the assets of a Principal Subsidiary are transferred to a member of
the Group as described above, the transferor of such assets shall cease to be deemed to be a
Principal Subsidiary for the purposes of this Condition.9
    
    EnforcementThe Trustee may, at its discretion and without further notice, institute such proceedings
against the Issuer as it may think fit to enforce any obligation, condition or provision
binding on the Issuer under the Instruments or under the Trust Deed, but shall not be bound to
do so unless:
 (a)
    
    it has been so directed by an Extraordinary Resolution or in writing by the holders
of at least one-quarter of the principal amount of the Instruments outstanding; and(b)
    
    it has been indemnified to its satisfaction.
 No Instrumentholder, Receiptholder or Couponholder shall be entitled to institute proceedings
directly against the Issuer unless the Trustee, having become bound to proceed as specified
above, fails to do so within a reasonable time and such failure is continuing.
 10
    
    Meetings of Instrumentholders, Modifications and Substitution
 10.1
    
    Meetings of InstrumentholdersThe Trust Deed contains provisions for convening meetings of Instrumentholders to
consider any matter affecting their interests, including the sanctioning by Extraordinary
Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or
any provisions of the Trust Deed. An Extraordinary Resolution duly passed at any such
meeting shall be binding on Instrumentholders (whether or not they were present at the
meeting at which such resolution was passed) and on all Couponholders, except that any
Extraordinary Resolution proposed, inter alia, (a) to amend the dates of maturity or
redemption of the Instruments, any Instalment Date or any date for payment of interest on
the Instruments, (b) to reduce or cancel the nominal amount of, or any Instalment Amount
of, or any premium payable on redemption of, the Instruments, (c) to reduce the rate or
rates of interest in respect of the Instruments or to vary the method or basis of
calculating the rate or rates or amount of interest or the basis for calculating any
Interest Amount in respect of the Instruments, (d) if a Minimum and/or a Maximum Rate of
Interest is shown on the face of the Instrument, to reduce any such Minimum and/or
Maximum Rate of Interest, (e) to vary any method of calculating the Final Redemption
Amount, the Early Redemption Amount or the Optional Redemption Amount, (f) to take any
steps that as specified in this Instrument may only be taken following approval by an
Extraordinary Resolution to which the special quorum provisions apply, and (g) to modify
the provisions concerning the quorum required at any meeting
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of Instrumentholders or the majority required to pass the Extraordinary Resolution will
only be binding if passed at a meeting of the Instrumentholders (or at any adjournment of
that meeting) at which a special quorum (as defined in the Trust Deed) is present. A
resolution in writing signed by the holders of not less than 95 per cent. in nominal
amount of the Instruments will be binding on all Instrumentholders and Couponholders. The
Issuer may convene a meeting of Instrumentholders jointly with the holders of all other
instruments issued pursuant to the Agency Agreement and not forming a single series with
the Instruments to which meeting the provisions referred to above apply as if all such
instruments formed part of the same series, provided that the proposals to be considered
at such meeting affect the rights of the holders of the instruments of each series
attending the meeting in identical respects (save insofar as the Conditions applicable to
each such series are not identical).10.2
    
    Modification of the Trust DeedThe Trustee may agree, without the consent of the Instrumentholders or
Couponholders, to (a) any modification of any of the provisions of the Trust Deed that is
of a formal, minor or technical nature or is made to correct a manifest error, and (b)
any other modification (except as mentioned in the Trust Deed), and any waiver or
authorisation of any breach or proposed breach, of any of the provisions of the Trust
Deed that is in the opinion of the Trustee not materially prejudicial to the interests of
the Instrumentholders. Any such modification, authorisation or waiver shall be binding on
the Instrumentholders and the Couponholders and, if the Trustee so requires, such
modification shall be notified to the Instrumentholders as soon as practicable.10.3
    
    SubstitutionThe Trust Deed contains provisions permitting the Trustee to agree, subject to such
amendment of the Trust Deed and such other conditions as the Trustee may require, but
without the consent of the Instrumentholders or the Couponholders, to the substitution of
any other company in place of the Issuer or of any previous substituted company, as
principal debtor under the Trust Deed and the Instruments. In the case of such a
substitution the Trustee may agree, without the consent of the Instrumentholders or the
Couponholders, to a change of the law governing the Instruments, the Receipts, the
Coupons, the Talons and/or the Trust Deed provided that such change would not in the
opinion of the Trustee be materially prejudicial to the interests of the
Instrumentholders.10.4
    
    Entitlement of the TrusteeIn connection with the exercise of its functions (including but not limited to
those referred to in this Condition) the Trustee shall have regard to the interests of
the Instrumentholders as a class and shall not have regard to the consequences of such
exercise for individual Instrumentholders or Couponholders and the Trustee shall not be
entitled to require, nor shall any Instrumentholder or Couponholder be entitled to claim,
from the Issuer any indemnification or payment in respect of any tax consequence of any
such exercise upon individual Instrumentholders or Couponholders.
 11
    
    Replacement of Instruments, Receipts, Coupons and TalonsIf an Instrument, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or
destroyed, it may be replaced, subject to applicable laws, listing authority and stock exchange
regulations, at the specified office of such other Paying Agent as may from time to time be
designated by the Issuer for the purpose and notice of whose designation is given to
Instrumentholders in accordance with Condition 13 on payment by the claimant of the fees and
costs incurred in connection with that replacement and on such terms as to evidence, security
and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed
Instrument, Receipt, Coupon or Talon is subsequently presented for payment or, as the case may
be, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount
payable by the Issuer in respect of such Instruments, Receipts, Coupons or further Coupons)
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and otherwise as the Issuer may require. Mutilated or defaced Instruments, Receipts, Coupons or
Talons must be surrendered before replacements will be issued.12
    
    Further IssuesThe Issuer may from time to time without the consent of the Instrumentholders or
Couponholders create and issue further instruments having the same terms and conditions as the
Instruments and so that such further issue shall be consolidated and form a single series with
such Instruments.References in these Conditions to the Instruments include (unless the context requires
otherwise) any other instruments issued pursuant to this Condition and forming a single series
with the Instruments. Any such further instruments forming a single series with Instruments
constituted by the Trust Deed or any deed supplemental to it shall, and any other instruments
may (with the consent of the Trustee), be constituted by the Trust Deed.The Trust Deed contains provisions for convening a single meeting of the Instrumentholders and
the holders of instruments of other series if the Trustee so decides.13
    
    NoticesAll notices to the Instrumentholders will be valid if published in a daily English
language newspaper of general circulation in the United Kingdom (which is expected to be the
Financial Times). If in the opinion of the Trustee any such publication is not practicable,
notice shall be validly given if published in another leading daily English language newspaper
with general circulation in Europe. Any such notice shall be deemed to have been given on the
date of such publication or, if published more than once or on different dates, on the first
date on which publication is made, as provided above.Couponholders shall be deemed for all purposes to have notice of the contents of any notice
given to the holders of Instruments in accordance with this Condition.14
    
    Indemnification of TrusteeThe Trust Deed contains provisions for the indemnification of the Trustee and for its
relief from responsibility, including but not limited to provisions relieving it from any
obligation to (a) appoint an independent financial adviser and (b) take proceedings to enforce
repayment unless indemnified to its satisfaction. The Trustee is entitled to enter into
business transactions with the Issuer or any of its subsidiary undertakings, parent
undertakings, joint ventures or associated undertakings without accounting for any profit
resulting from these transactions and to act as trustee for the holders of any other securities
issued by the Issuer or any of its subsidiary undertakings, parent undertakings, joint ventures
or associated undertakings.15
    
    Contracts (Rights of Third Parties) Act 1999No person shall have any right to enforce any term or condition of the Instruments under
the Contracts (Rights of Third Parties) Act 1999.
 16
    
    Governing Law and Jurisdiction
 16.1
    
    Governing LawThe Instruments and any non-contractual obligations arising out of or in connection
with the Instruments are governed by, and shall be construed in accordance with, English
law.16.2
    
    JurisdictionThe courts of England have exclusive jurisdiction to settle any dispute (a
Dispute), arising from or connected with the Instruments. The Issuer agrees that the
courts of England are the most appropriate and convenient courts to settle any Dispute
and, accordingly, that it will not argue to
 44




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the contrary. Nothing in this Condition 16 prevents the Trustee or any
Instrumentholder from taking proceedings relating to a Dispute (Proceedings) in any
other courts with jurisdiction. To the extent allowed by law, the Trustee or
Instrumentholders may take concurrent Proceedings in any number of jurisdictions.16.3
    
    Process AgentThe Issuer has irrevocably appointed National Grid plc at its registered office for
the time being, currently at 1-3 Strand, London WC2N 5EH as its agent in England to
receive, for it and on its behalf, service of process in any Proceedings in England.
Nothing herein or in the Trust Deed shall affect the right to serve process in any other
manner permitted by law.
 45




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SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS
WHILE IN GLOBAL FORM
 Initial Issue of InstrumentsUpon the initial deposit of a Global Instrument with a common depositary for Euroclear
and Clearstream, Luxembourg (the Common Depositary), Euroclear or Clearstream, Luxembourg
will credit each subscriber with a nominal amount of Instruments equal to the nominal amount of
those Instruments for which it has subscribed and paid.If the Global Instruments are stated in the applicable Final Terms to be issued in NGN form,
the Global Instruments will be delivered on or prior to the original issue date of the Tranche
to a Common Safekeeper. Depositing the Global Instruments with the Common Safekeeper does not
necessarily mean that the Instruments will be recognised as eligible collateral for Eurosystem
monetary policy and intra-day credit operations by the Eurosystem either upon issue, or at any
or all times during their life. Such recognition will depend upon satisfaction of the
Eurosystem eligibility criteria.Global Instruments which are issued in CGN form may be delivered on or prior to the original
issue date of the Tranche to a Common Depositary.If the Global Instrument is a CGN, upon the initial deposit of a Global Instrument with the
Common Depositary, Euroclear or Clearstream, Luxembourg will credit each subscriber with a
nominal amount of Instruments equal to the nominal amount of those Instruments for which it has
subscribed and paid. If the Global Instrument is a NGN, the nominal amount of the Instruments
shall be the aggregate amount from time to time entered in the records of Euroclear or
Clearstream, Luxembourg. The records of such clearing system shall be conclusive evidence of
the nominal amount of Instruments represented by the Global Instrument and a statement issued
by such clearing system at any time shall be conclusive evidence of the records of the relevant
clearing system at that time.Instruments which are initially deposited with the Common Depositary may also be credited to
the accounts of subscribers with (if indicated in the relevant Final Terms) other clearing
systems through direct or indirect accounts with Euroclear and Clearstream, Luxembourg held by
such other clearing systems. Conversely, Instruments that are initially deposited with another
clearing system may similarly be credited to the accounts of subscribers with Euroclear,
Clearstream, Luxembourg or other clearing systems.Relationship of Accountholders with Clearing SystemsEach of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any
other clearing system as the holder of an Instrument represented by a Global Instrument must
look solely to Euroclear, Clearstream, Luxembourg or such clearing system (as the case may be)
for his share of each payment made by the Issuer to the bearer of such Global Instrument and in
relation to all other rights arising under the Global Instruments, subject to and in accordance
with the respective rules and procedures of Euroclear, Clearstream, Luxembourg or such clearing
systems (as the case may be). Such persons shall have no claim directly against the Issuer in
respect of payments due on the Instruments for so long as the Instruments are represented by
such Global Instrument and such obligations of the Issuer will be discharged by payment to the
bearer of such Global Instrument in respect of each amount so paid.The Trustee may call for any certificate or other document to be issued by Euroclear,
Clearstream, Luxembourg or any other clearing system as to the principal amount of Instruments
represented by a Global Instrument standing to the account of any person. Any such certificate
or other document shall, in the absence of manifest error, be conclusive and binding for all
purposes. Any such certificate or other document may comprise any form of statement or print
out of electronic records provided by the relevant
 46




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clearing system (including Euroclears EUCLID or Clearstream, Luxembourgs Cedcom system) in
accordance with its usual procedures and in which the holder of a particular principal amount
of any other clearing system is clearly identified together with the amount of such holding.
The Trustee shall not be liable to any person by reason of having accepted as valid or not
having rejected any certificate or other document to such effect purporting to be issued by
Euroclear, Clearstream, Luxembourg or any other clearing system and subsequently found to be
forged or not authentic.Exchange
 1
    
    Temporary Global InstrumentsEach temporary Global Instrument will be exchangeable, free of charge to the holder, on
or after its Exchange Date:
 1.1
    
    if the relevant Final Terms indicates that such Global Instrument is issued in
a transaction to which TEFRA is not applicable (as to which, see Summary of the Programme
 Selling Restrictions), in whole, but not in part, for the Definitive Instruments
defined and described below; and1.2
    
    if the relevant Final Terms indicates that such Global Instrument is issued in
compliance with the D Rules, in whole or in part upon certification as to non-U.S.
beneficial ownership in the form set out in the Agency Agreement for interests in a
permanent Global Instrument or, if so provided in the relevant Final Terms, for Definitive
Instruments.
 2
    
    Permanent Global InstrumentsEach permanent Global Instrument will be exchangeable, free of charge to the holder, on
or after its Exchange Date in whole but not, except as provided under Partial Exchange of
Permanent Global Instruments, in part for Definitive Instruments (i) if the holder of an
Instrument gives notice to the Issuing and Paying Agent of its election for such exchange and
(ii) otherwise, if the permanent Global Instrument is held on behalf of Euroclear or
Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System) and any
such clearing system is closed for business for a continuous period of 14 days (other than by
reason of holidays, statutory or otherwise) or announces an intention permanently to cease
business or in fact does so.3
    
    Partial Exchange of Permanent Global InstrumentsFor so long as a permanent Global Instrument is held on behalf of a clearing system and
the rules of that clearing system permit, such permanent Global Instrument will be exchangeable
in part on one or more occasions for Definitive Instruments (a) if principal in respect of any
Instruments is not paid when due or (b) if so provided in, and in accordance with, the
Conditions (which will be set out in the relevant Final Terms) relating to Partly Paid
Instruments.4
    
    Delivery of InstrumentsIf the Global Instrument is a CGN, on or after any due date for exchange the holder of a
Global Instrument may surrender such Global Instrument or, in the case of a partial exchange,
present it for endorsement to or to the order of the Issuing and Paying Agent. In exchange for
any Global Instrument, or the part of that Global Instrument to be exchanged, the Issuer will
(a) in the case of a temporary Global Instrument exchangeable for a permanent Global
Instrument, deliver, or procure the delivery of, a permanent Global Instrument in an aggregate
nominal amount equal to that of the whole or that part of a temporary Global Instrument that is
being exchanged or, in the case of a subsequent exchange, endorse, or procure the endorsement
of, a permanent Global Instrument to reflect such exchange or (b) in the case of a Global
Instrument exchangeable for Definitive Instruments, deliver, or procure the delivery of, an
equal aggregate nominal amount of duly executed and authenticated Definitive Instruments or if
the Global Instrument is a NGN, the Issuer will procure that details of such exchange be
 47




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entered pro ratain the records of the relevant clearing system. In this Prospectus,
Definitive Instruments means, in relation to any Global Instrument, the Definitive
Instruments for which such Global Instrument may be exchanged (if appropriate, having attached
to them all Coupons and Receipts in respect of interest or Instalment Amounts that have not
already been paid on the Global Instrument and a Talon). Definitive Instruments will be
security printed in accordance with any applicable legal and stock exchange requirements in or
substantially in the form set out in the Schedules to the Trust Deed. On exchange in full of
each permanent Global Instrument, the Issuer will, if the holder so requests, procure that it
is cancelled and returned to the holder together with the relevant Definitive Instruments.5
    
    Exchange DateExchange Date means, in relation to a temporary Global Instrument, the day falling
after the expiry of 40 days after its issue date and, in relation to a permanent Global
Instrument, a day falling not less than 60 days, or in the case of failure to pay principal in
respect of any Instruments when due 30 days, after that on which the notice requiring exchange
is given and on which banks are open for business in the city in which the specified office of
the Issuing and Paying Agent is located and in the city in which the relevant clearing system
is located.6
    
    Amendment to ConditionsThe temporary Global Instruments and permanent Global Instruments contain provisions that
apply to the Instruments which they represent, some of which modify the effect of the terms and
conditions of the Instruments set out in this Prospectus. The following is a summary of certain
of those provisions:7
    
    PaymentsNo payment falling due after the Exchange Date will be made on any Global Instrument
unless exchange for an interest in a permanent Global Instrument or for Definitive Instruments
is improperly withheld or refused. Payments on any temporary Global Instrument issued in
compliance with the D Rules before the Exchange Date will only be made against presentation of
certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement.
All payments in respect of Instruments represented by a Global Instrument will be made against
presentation for endorsement and, if no further payment falls to be made in respect of the
Instruments, surrender of that Global Instrument to or to the order of the Issuing and Paying
Agent or such other Paying Agent as shall have been notified to the Instrumentholders for such
purpose. If the Global Instrument is a CGN, a record of each payment so made will be endorsed
on each Global Instrument, which endorsement will be prima facieevidence that such payment has
been made in respect of the Instruments. If the Global Instrument is a NGN, the Issuer shall
procure that details of each such payment shall be entered pro ratain the records of the
relevant clearing system and in the case of payments of principal, the nominal amount of the
Instruments recorded in the records of the relevant clearing system and represented by the
Global Instrument will be reduced accordingly. Payments under the NGN will be made to its
holder. Each payment so made will discharge the Issuers obligations in respect thereof. Any
failure to make the entries in the records of the relevant clearing system shall not affect
such discharge.8
    
    PrescriptionClaims against the Issuer in respect of Instruments which are represented by a permanent
Global Instrument will become void unless it is presented for payment within a period of 10
years (in the case of principal) and five years (in the case of interest) from the appropriate
Relevant Date (as defined in Condition 6).9
    
    MeetingsThe holder of a permanent Global Instrument shall (unless such permanent Global
Instrument represents only one Instrument) be treated as being two persons for the purposes of
any quorum requirements of a
 48




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meeting of Instrumentholders and, at any such meeting, as having one vote in respect of each
integral currency unit of the Specified Currency of the Instruments for which it may be
exchanged in accordance with its terms.10
    
    CancellationCancellation of any Instrument represented by a permanent Global Instrument which is
required by the Conditions to be cancelled (other than upon its redemption) will be effected by
reduction in the nominal amount of the relevant permanent Global Instrument.11
    
    PurchaseInstruments represented by a permanent Global Instrument may only be purchased by the
Issuer or any of its subsidiary undertakings if they are purchased together with the right to
receive all future payments of interest and Instalment Amounts (if any) on those Instruments.12
    
    Issuers OptionAny option of the Issuer provided for in the Conditions of any Instruments while such
Instruments are represented by a permanent Global Instrument shall be exercised by the Issuer
giving notice to the Instrumentholders within the time limits set out in and containing the
information required by the Conditions, except that the notice shall not be required to contain
the serial numbers of Instruments drawn in the case of a partial exercise of an option and
accordingly no drawing of Instruments shall be required. In the event that any option of the
Issuer is exercised in respect of some but not all of the Instruments of any Series, the rights
of accountholders with a clearing system or Approved Intermediary in respect of the Instruments
will be governed by the standard procedures of Euroclear and/or Clearstream, Luxembourg (to be
reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a
reduction in nominal amount, at their discretion) or any other Alternative Clearing System (as
the case may be).13
    
    Instrumentholders OptionsAny option of the Instrumentholders provided for in the Conditions of any Instruments
while such Instruments are represented by a permanent Global Instrument may be exercised by the
holder of the permanent Global Instrument giving notice to the Issuing and Paying Agent within
the time limits relating to the deposit of Instruments with a Paying Agent set out in the
Conditions substantially in the form of the notice available from any Paying Agent stating the
nominal amount of Instruments in respect of which the option is exercised and at the same time,
where the permanent Global Instrument is a CGN, presenting the permanent Global Instrument for
notation. Where the Global Instrument is a NGN, the Issuer shall procure that details of such
exercise shall be entered pro ratain the records of the relevant clearing system and the
nominal amount of the Instruments recorded in those records will be reduced accordingly.14
    
    NGN nominal amountWhere the Global Note is a NGN, the Issuer shall procure that any exchange, payment,
cancellation, exercise of any option or any right under the Instruments, as the case may be, in
addition to the circumstances set out above shall be entered in the records of the relevant
clearing systems and upon any such entry being made, in respect of payments of principal, the
nominal amount of the Instruments represented by such Global Instrument shall be adjusted
accordingly.15
    
    Trustees PowersIn considering the interests of Instrumentholders while any Global Instrument is held on
behalf of a clearing system, the Trustee may have regard to any information provided to it by
such clearing system or its operator as to the identity (either individually or by category) of
its accountholders with entitlements
 49




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to such Global Instrument and may consider such interests as if such accountholders were the
holders of the Instruments represented by such Global Instrument.16
    
    Events of DefaultEach Global Instrument provides that the Trustee, at its discretion, may, and if so
requested by holders of at least one-quarter in nominal amount of the Instruments then
outstanding or if so directed by an Extraordinary Resolution, shall cause such Global
Instrument to become due and repayable in the circumstances described in Condition 8 by stating
in the notice to the Issuer the principal amount of such Global Instrument which is becoming
due and repayable. If principal in respect of any Instrument is not paid when due, only the
Trustee may enforce the rights of the Instrumentholders against such Issuer under the terms of
the Trust Deed unless the Trustee, having become bound to proceed, fails to do so within a
reasonable time and such failure is continuing.17
    
    NoticesSo long as any Instruments are represented by a Global Instrument and such Global
Instrument is held on behalf of a clearing system, notices to the holders of Instruments of
that Series may be given by delivery of the relevant notice to that clearing system for
communication by it to entitled accountholders in substitution for publication as required by
the Conditions or by delivery of the relevant notice to the holder of the Global Instrument.18
    
    Partly Paid InstrumentsThe provisions relating to Partly Paid Instruments are not set out in this Prospectus,
but will be contained in the relevant Final Terms and so in the Global Instruments. While any
instalments of the subscription moneys due from the holder of Partly Paid Instruments are
overdue, no interest in a Global Instrument representing such Instruments may be exchanged for
an interest in a permanent Global Instrument or for Definitive Instruments (as the case may
be). If any Instrumentholder fails to pay any instalment due on any Partly Paid Instruments
within the time specified, the Issuer may forfeit such Instruments and shall have no further
obligation to their holder in respect of them.
 50




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USE OF PROCEEDS
  51




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DESCRIPTION OF NATIONAL GRID USA
 Overview
       
    
    Electricity transmission;
    
    Gas distribution;
    
    Electricity distribution and generation; and
    
    Non-regulated businesses.
  
    
    KeySpan Corporation (collectively KeySpan) directly and indirectly owns public
utilities consisting of:
 
    
    The Brooklyn Union Gas Company d/b/a/ National Grid NY (Brooklyn Union)  New
York;
    
    KeySpan Gas East Corporation d/b/a National Grid (Gas East)  New York;
    
    Colonial Gas Company (Colonial Gas) New England;
    
    Boston Gas Company (Boston Gas)  New England;
    
    Essex Gas Company (Essex Gas)  New England; and
    
    EnergyNorth Natural Gas, Inc. (EnergyNorth)  New England;
 
    
    Niagara Mohawk Power Corporation (NMPC)  New York;
 52




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##### 




    
    New England Power Company (NEP)  New England;
    
    Massachusetts Electric Company (MECO)  Massachusetts;
    
    The Narragansett Electric Company (Narragansett)  Rhode Island
    
    Granite State Electric Company (Granite State)  New Hampshire
    
    Nantucket Electric Company (NEC)  Massachusetts
    
    New England Electric Transmission Corporation (NEET)  Massachusetts and New
Hampshire;
    
    New England Hydro-Transmission Corporation (N.H. Hydro)  New Hampshire; and
    
    New England Hydro-Transmission Electric Company, Inc. (Mass. Hydro)  Massachusetts.
  LIPA
 Electricity Transmission
  ISOs
 53




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##### 



Gas Distribution
   LNG
 Electricity Distribution and Generation
  54




---



##### 



LIPA
 ROE
 Other
 Interconnection
  55




---



##### 



Non Regulated Activity
   DTH
  Regulatory Environment
 SEC
    56




---



##### 



Overview of Rate Plans
 General
 Transmission Rate Plans
  Electric and Gas Distribution Rate Plans
   57




---



##### 



Electricity Distribution Rate Plans
 New York
 NYPSC
  58




---



##### 



Massachusetts
 MDPU PBOP
 Rhode Island
 RIPUC
 59




---



##### 



New Hampshire
 NHPUC 2007 Settlement
 Gas Rate Plans
 New York
   60




---



##### 



Brooklyn Union Gas East
 Massachusetts
   Rhode Island
 RIPUC
 61




---



##### 



New Hampshire
 NHPUC
 Market and Regulatory Developments
 U.S. Electricity Transmission
 New England
 PTO ISO-NE RTO ISO-NE OATT NETO
 NEEWS
 62




---



##### 



CTC
 New York
 NYISO
  Energy Markets
  63




---



##### 



Federal Regulatory Policy Developments
 Reinvestment Act
 State Regulatory Policy Developments
 Massachusetts
   64




---



##### 



MOU
 New York
  Rhode Island
 Deepwater
 65




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##### 



KeySpan Department of Justice Investigation
 CID DOJ
 Environmental Regulation
    Board of Directors
  Principal activities outsideNational Grid USA and theName
    
    Title
    
    National Grid Group*
    
    Business AddressTom King
    
    Director and President
    
    Director of Jobs for Mass.;
    
    40 Sylvan RoadAlliance to Save Energy;
    
    Waltham, MA 02451,Edison Electric Institute;
    
    United Statesand Energy Association ofNew York State.
 66




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Principal activities outsideNational Grid USA and theName
    
    Title
    
    National Grid Group*
    
    Business AddressEllen Smith
    
    Director and Chief
    
    None
    
    40 Sylvan RoadOperating Officer
    
    
    
    Waltham, MA 02451,United StatesLisa Crutchfield
    
    Director and
    
    None
    
    40 Sylvan RoadExecutive Vice President
    
    
    
    Waltham, MA 02451,United StatesNikolas Stavropoulos
    
    Director and
    
    Director of Enterprise Bank
    
    40 Sylvan RoadExecutive Vice President
    
    and Trust Company; Dynamics
    
    Waltham, MA 02451,Research Corporation;
    
    United StatesAmerican Gas Association(Second Vice Chair);Greater Boston Chamber ofCommerce; United Way ofMassachusetts Bay. Trusteeof Bentley University.Andrew Sloey
    
    Director and Senior
    
    None
    
    One MetroTech CenterVice President
    
    
    
    Brooklyn New York 11201United StatesColin Owyang
    
    Director, General
    
    Board Member of New England
    
    40 Sylvan RoadCounsel and Secretary
    
    Legal Foundation
    
    Waltham, MA 02451,United States
 
 *
    
    The National Grid Group means National Grid plc and each of its subsidiary
undertakings.  67




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TAXATION
 United States Taxation
 CIRCULAR 230
   (a)
    
    Payments of principal, original issue discount (OID), and interest by the Issuer or
any paying agent to any holder of an Instrument who is a United States Alien (as defined
below) will not be subject to U.S. federal withholding tax, provided that, in the case of
amounts treated as interest or OID with respect to Instruments with a maturity of more
than 183 days, (i) the amount of the payment is not determined by reference to any
receipts, sales or other cash flow, income or profits, change in value of any property of,
or dividend or similar payment made by, the Issuer or a person related to the Issuer (a
Contingent Payment), (ii) the holder does not actually or constructively own 10 per
cent. or more of the total combined voting power of all classes of stock of the Issuer
entitled to vote, (iii) the holder is not for U.S. federal income tax purposes a
controlled foreign corporation related to the Issuer through stock ownership, and (iv) the
holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Internal
Revenue Code of 1986, as amended (the Code).(b)
    
    A United States Alien holder of an Instrument or coupon will not be subject to U.S.
federal income tax on any gain or income realised upon the sale, exchange, retirement or
other disposition of an Instrument or coupon, provided that (i) in the case of Instruments
with a maturity of more than 183 days, the Instruments do not provide for any Contingent
Payments, and (ii) neither the holder, nor a partner, fiduciary, settler or beneficiary of
the holder if the holder is a partnership or an estate or trust, or a person holding a
power over an estate or trust administered by a fiduciary holder, is considered as:
 (i)
    
    being or having been present or engaged in a trade or business in the
United States or having or having had a permanent establishment therein;(ii)
    
    having a current or former relationship with the United States, including
a relationship as a citizen or resident thereof;(iii)
    
    being or having been for U.S. federal income tax purposes a personal
holding company, a passive foreign investment company, a controlled foreign
corporation or a corporation that has accumulated earnings to avoid U.S. federal
income tax; or
 68




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(iv)
    
    in the case of Instruments with a maturity of more than 183 days,
actually or constructively owning or having owned 10 per cent. or more of the total
combined voting power of all classes of stock of the Issuer entitled to vote.
 (c)
    
    An Instrument or coupon held by an individual who is a United States Alien at the
time of death will not be subject to U.S. federal estate tax as a result of the
individuals death if (i) at the time of the individuals death payments with respect to
the Instrument would not have been effectively connected with a U.S. trade or business of
the individual, and (ii) with respect to Instruments with a maturity of more than 183
days, (A) the holder does not own, actually or constructively, 10 per cent. or more of the
total combined voting power of all classes of stock of the Issuer entitled to vote, and
(B) the Instrument does not provide for any Contingent Payments.(d)
    
    A beneficial owner of an Instrument or coupon that is a United States Alien will not
be required to disclose its nationality, residence, or identity to the Issuer, a paying
agent, or any U.S. governmental authority in order to receive payment on the Instrument or
coupon from the Issuer or a paying agent outside the United States (although the
beneficial owner of an interest in the temporary Global Instrument will be required to
provide a Certificate of Non-U.S. Beneficial Ownership to Euroclear or Clearstream,
Luxembourg in order to receive a beneficial interest in a Permanent Global Instrument or
Definitive Instruments and coupons and interest thereon, as described in Summary of
Provisions Relating to the Instruments while in Global Form  Exchange).
 United States Alien
 Backup Withholding and Information Reporting
    U.S. Controlled Person
 69




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EU Savings Directive
   if implemented in
their current form
 70




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##### 



PLAN OF DISTRIBUTION
 Summary of Agreement
 Dealer Agreement
 Selling Restrictions
 United States
      Public Offer Selling Restriction under the Prospectus Directive
 Relevant Member State
 71




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Relevant Implementation Date
 (a)
    
    if the Final Terms in relation to the Instruments specify that an offer of those
Instruments may be made other than pursuant to Article 3(2) of the Prospectus Directive in
that Relevant Member State (a Non-Exempt Offer), following the date of publication of a
prospectus in relation to those Instruments which has been approved by the competent
authority in that Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in that Relevant Member
State, provided that any such prospectus has subsequently been completed by the Final
Terms contemplating such Non-Exempt Offer, in accordance with the Prospectus Directive, in
the period beginning and ending on the dates specified in such prospectus or Final Terms,
as applicable;(b)
    
    at any time to legal entities which are authorised or regulated to operate in the
financial markets or, if not so authorised or regulated, whose corporate purpose is solely
to invest in securities;(c)
    
    at any time to any legal entity which has two or more of (i) an average of at least
250 employees during the last financial year; (ii) a total balance sheet of more than
43,000,000 and (iii) an annual net turnover of more than 50,000,000, as shown in its
last annual or consolidated accounts;(d)
    
    at any time to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to obtaining the prior consent
of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or(e)
    
    at any time in any other circumstances falling within Article 3(2) of the Prospectus
Directive,
  offer of Instruments to the public
 United Kingdom
  (a)
    
    in relation to any Instruments which have a maturity of less than one year, (i) it is
a person whose ordinary activities involve it in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of its business and (ii) it has
not offered or sold and will not offer or sell any Instruments other than to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or as agent) for the purposes of their businesses or who it is
reasonable to expect will acquire, hold, manage or dispose of investments (as principal or
agent) for the purposes of their businesses where the issue of the Instruments would
otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;
 72




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##### 



(b)
    
    it has only communicated or caused to be communicated and will only communicate or
cause to be communicated an invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the FSMA) received by it in connection with the issue
or sale of any Instruments in circumstances in which Section 21(1) of the FSMA does not
apply to the Issuer; and(c)
    
    it has complied and will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to any Instruments in, from or otherwise
involving the United Kingdom.
 Japan
 Financial Instruments and Exchange Act resident of Japan
 General
    73




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##### 



FORM OF FINAL TERMS
 The Final Terms in respect of each Tranche of Instruments will be substantially in the
following form, duly supplemented (if necessary), amended (if necessary) and completed to
reflect the particular terms of the relevant Instruments and their issue. Text in this section
appearing in italics does not form part of the form of the Final Terms but denotes directions
for completing the Final Terms.
 Final Terms dated []
 NATIONAL GRID USA
 PART A  CONTRACTUAL TERMS
 Prospectus Directive
 The following alternative language applies if the first tranche of an issue which is being
increased was issued under a Prospectus with an earlier date.
 Conditions  Prospectus Directive 
 [Include whichever of the following apply or specify as Not Applicable (N/A). Note that the
numbering should remain as set out below, even if Not Applicable is indicated for individual
paragraphs or sub-paragraphs. Italics denote guidance for completing the Final Terms.]
 [When completing final terms or adding any other final terms or information consideration
should be given as to whether such terms or information constitute significant new factors
and consequently trigger the need for a supplement to the Prospectus under Article 16 of the
Prospectus Directive.]
 1.
    
    Issuer:
    
    National Grid USA2.
    
    (i)  Series Number:
    
    [    ](ii)  Tranche Number:
    
    [    ](If fungible with an existing Series,
details of that Series, including the
date on which the Instruments become
fungible).]
 74




---



##### 



3.
    
    Specified Currency or Currencies:
    
    [     ]4.
    
    Aggregate Nominal Amount:
    
    [     ][(i)] Series:
    
    [     ][(ii)] Tranche:
    
    [     ]5.
    
    Issue Price:
    
    [     ] per cent of the
Aggregate Nominal Amount
[plus accrued interest
from [insert date] ( if
applicable)]6.
    
    (i)   Specified Denominations:
    
    [     ]*(ii)   Calculation Amount:
    
    [If only one Specified
Denomination, insert the
Specified Denomination.
If more than one
Specified Denomination,
insert the highest common
factor] [Note: There must
be a common factor in the
case of two or more
Specified Denominations]7.
    
    [(i)] Issue Date:
    
    [     ]][(ii)] Interest Commencement Date:
    
    [Specify/Issue Date/Not Applicable]8.
    
    Maturity Date:
    
    [specify date or (for Floating
Rate Instruments) Interest Payment
Date falling in or nearest to the
relevant month and year]9.
    
    Interest Basis:
    
    [[] per cent. Fixed Rate][[specify reference rate] +/ [] per cent. Floating Rate][Zero Coupon][Other (specify)](further particulars specified below)10.
    
    Redemption/Payment Basis:
    
    [Redemption at par][Dual Currency][Partly Paid][Instalment][Other (specify)]11.
    
    Change of Interest or
Redemption/Payment
Basis:
    
    [Specify details of any provision for
 convertibility of Instruments into another
interest or redemption/ payment basis]12.
    
    Put/Call Options:
    
    [Investor Put][Issuer Call][(further particulars specified below)]13.
    
    (i) Status of the Instruments:
    
    Senior(ii) Date [Board] approval for issuance of
    
    [     ] [and [     ], respectively]]Instruments obtained:
    
    (N.B Only relevant where Board (or similar)authorisation is required for
the particular tranche of Instruments)]14.
    
    Method of distribution:
    
    [Syndicated/Non-syndicated]
 
 *
    
    Instruments which have a maturity of less than
one year must have a minimum denomination of £100,000 (or it equivalent in
other currencies) 75




---



##### 



PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
 15.
    
    Fixed Rate Instrument Provisions
    
    [Applicable/Not Applicable]
(If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Rate[(s)] of Interest:
    
    [     ] per cent. per annum [payable
[annually/semi-annually/quarterly/monthly]
in arrear](ii)
    
    Interest Payment Date(s):
    
    [ ] in each year(iii)
    
    Fixed Coupon Amount[(s)]:
    
    [] per Calculation Amount(iv)
    
    Broken Amount(s):
    
    [] per Calculation Amount, payable on the
Interest Payment Date falling [in/on] [](v)
    
    Day Count Fraction (Condition 3.11):
    
    [30/360 / Actual/Actual ([ICMA]/ISDA)/other](vi)
    
    Determination Dates (Condition 3.11):
    
    [  ] in each year (insert regular interest
payment dates, ignoring issue date or
maturity date in the case of a long or
short first or last coupon. N.B. only
relevant where Day Count Fraction is
Actual/Actual ([ICMA]))(vii)
    
    Other terms relating to the method
of calculating interest for Fixed Rate
Instruments:
    
    [Not Applicable/give details]16.
    
    Floating Rate Instrument Provisions
    
    [Applicable/Not Applicable]

(If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Interest Period(s):
    
    [ ](ii)
    
    Specified Interest Payment Dates:
    
    [ ](iii)
    
    Business Day Convention:
    
    [Floating Rate Convention/ Following
Business Day Convention/ Modified Following
Business Day Convention/ Preceding Business
Day Convention/ other (give details)](iv)
    
    First Interest Payment Date:
    
    [     ](v)
    
    Business Centre(s) (Condition 3.11):
    
    [     ](vi)
    
    Manner in which the Rate(s) of
Interest is/are to be determined:
    
    [Screen Rate
Determination/ISDA
Determination/other (give details)](vii)
    
    Interest Period Date(s):
    
    (Not Applicable unless different from
Interest Payment Date)(viii)
    
    Party responsible for calculating
the Rate(s) of Interest and Interest
Amount(s) (if not the Calculation Agent):
    
    [     ](ix)
    
    Screen Rate Determination (Condition
3.2.3(b)):   Reference Rate:
    
    [     ]
 76




---



##### 



   Interest Determination Date(s):
    
    [[     ][TARGET] Business Days in
[specify city] for [specify currency] prior
to [the first day in each Interest Accrual
Period/each Interest Payment Date]]   Relevant Screen Page:
    
    [     ]   Reference Banks (if Primary Source is

     Reference Banks):
    
    [Specify five](x)
    
    ISDA Determination (Condition
3.2.3(a)):   Floating Rate Option:
    
    [     ]   Designated Maturity:
    
    [     ]   Reset Date:
    
    [     ]   [ISDA Definitions: (if different from
     those set out in the Conditions)
    
    [2000/2006]](xi)
    
    Margin(s):
    
    [+/-][ ] per cent. per annum(xii)
    
    Minimum Rate of Interest:
    
    [ ] per cent. per annum(xiii)
    
    Maximum Rate of Interest:
    
    [ ] per cent. per annum(xiv)
    
    Day Count Fraction (Condition 3.11):
    
    [     ](xv)
    
    Fall back provisions, rounding
provisions, denominator and any other
terms relating to the method of
calculating interest on Floating Rate
Instruments, if different from those set
out in the Conditions:
    
    [     ]17.
    
    Zero Coupon Instrument Provisions
    
    [Applicable/Not Applicable]

(If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Amortisation Yield (Condition 4.4):
    
    [ ] per cent. per annum(ii)
    
    Day Count Fraction (Condition 3.11):
    
    [     ](iii)
    
    Any other formula/basis of
determining amount payable:
    
    [     ]18.
    
    Dual Currency Instrument Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Rate of Exchange/method of calculating
Rate of Exchange:
    
    [give details](ii)
    
    Calculation Agent, if any,
responsible for calculating the principal
and/or interest due:
    
    [     ](iii)
    
    Provisions applicable where
calculation by reference to Rate of
Exchange impossible or impracticable:
    
    [     ](iv)
    
    Person at whose option Specified
Currency(ies) is/are payable:
    
    [     ](v)
    
    Day Count Fraction (Condition 3.11):
    
    [     ]
 77




---



##### 



PROVISIONS RELATING TO REDEMPTION
 19.
    
    Residual Holding Call Option
    
    [Applicable/Not Applicable](If not applicable, delete the remainingsub-paragraphs of this paragraph)(i)
    
    Residual Holding Percentage:
    
    [  ] per cent.(ii)
    
    Party responsible for calculating the
Residual Holding Redemption Amount (if not
the Calculation Agent):
    
    [     ](iii)
    
    Benchmark Security:
    
    [Specify Government Security/swap benchmark](iv)
    
    Benchmark Spread:
    
    [     ] per cent. per annum(v)
    
    Benchmark Day Count Fraction:
    
    [     ](vi)
    
    [Other relevant provisions:
    
    [     ]]20.
    
    Call Option
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this paragraph)(i)
    
    Optional Redemption Date(s):
    
    [     ](ii)
    
    Optional Redemption Amount(s) of each
Instrument and method, if any, of
calculation of such amount(s):
    
    [     ] per Calculation Amount(iii)
    
    If redeemable in part:(a)
    
    Minimum nominal amount to be redeemed:
    
    [     ] per Calculation Amount(b)
    
    Maximum nominal amount to be redeemed:
    
    [     ] per Calculation Amount(iv)
    
    Option Exercise Date(s):
    
    [     ](v)
    
    Notice period (if other than as set
out in the Conditions)
    
    [     ]21.
    
    Put Option
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this paragraph)(i)
    
    Optional Redemption Date(s):
    
    [     ](ii)
    
    Optional Redemption Amount(s) of each
Instrument and method, if any, of
calculation of such amount(s):
    
    [     ] per Calculation Amount(iii)
    
    Option Exercise Date(s):
    
    [     ](iv)
    
    Notice period (if other than as set
out in the Conditions)
    
    [     ]22.
    
    Final Redemption Amount of each Instrument:
    
    [     ] per Calculation Amount(i)
    
    Formula:
    
    [give or annex details]
 
 
    
    This does not include the tax call in
Condition 4.2 or the call option contained in Condition 4.5.1 78




---



##### 



(ii)
    
    Calculation Agent responsible for
calculating the Final Redemption Amount:
    
    [   ](iii)
    
    Provisions for determining Final
Redemption Amount where calculated by
reference to Formula and/or other
variable:
    
    [give or annex details](iv)
    
    Determination Date(s):
    
    [   ](v)
    
    Provisions for determining Final
Redemption Amount where calculation by
reference to Index and/or Formula and/or
other variable is impossible or
impracticable or otherwise disrupted:
    
    [   ](vi)
    
    Payment Date:(vii)
    
    Minimum Final Redemption Amount:
    
    [   ] per Calculation Amount(viii)
    
    Maximum Final Redemption Amount:
    
    [   ] per Calculation Amount23.
    
    Early Redemption Amount(i)
    
    Early Redemption Amount(s) of each
Instrument payable on redemption for
taxation reasons (Condition 4.2) or on
Event of Default (Condition 8) or other
early redemption and/or the method of
calculating the same (if required or if
different from that set out in the
Conditions):
    
    [   ](ii)
    
    Redemption for taxation reasons
permitted on days other than Interest
Payment Dates (Condition 4.2)
    
    [Yes/No](iii)
    
    Unmatured Coupons to become void
upon early redemption (Condition 5.5)
    
    [Yes/No/Not Applicable]GENERAL PROVISIONS APPLICABLE TO THE INSTRUMENTS24.
    
    Form of Instruments:
    
    Bearer Instruments:[temporary Global Instrument exchangeable
for a permanent Global Instrument which is
exchangeable for Definitive Instruments in
the limited circumstances specified in the
permanent Global Instrument][temporary Global Instrument exchangeable
for Definitive Instruments in the limited
circumstances specified in the temporary
Global Instrument][permanent Global Instrument exchangeable
for Definitive Instruments in the limited
circumstances specified in the permanent
Global Instrument]25.
    
    New Global Note
    
    [Yes] [No]
 79




---



##### 



26.
    
    Financial Centre(s) or other special
provisions relating to Payment Dates
(Condition 5.6):
    
    [Not Applicable/give details. Note that
this item relates to the date and place of
payment, and not interest period end dates,
to which item 16(iv) relates]27.
    
    Applicable TEFRA exemption:
    
    [D Rules/Not Applicable]28.
    
    Talons for future Coupons or Receipts to
be attached to Definitive Instruments (and
dates on which such Talons mature):
    
    [Yes/No. If yes, give details]29.
    
    Details relating to Partly Paid
Instruments: amount of each payment
comprising the Issue Price and date on
which each payment is to be made and
consequences (if any) of failure to pay,
including any right of the Issuer to
forfeit the Instruments and interest due
on late payment:
    
    [Not Applicable/give details]30.
    
    Details relating to Instalment Instruments:
    
    [Not Applicable/give details]
    
    Amount of each instalment:
    
    [   ]
    
    Date on which each payment is to be made:
    
    [   ]
    
    Maximum Instalment Amount:
    
    Minimum Instalment Amount:
    
    [   ]31.
    
    Redenomination, renominalisation and
reconventioning provisions:
    
    [Not Applicable/ give details]32.
    
    Consolidation provisions:
    
    [Not Applicable/ give details]33.
    
    Other final terms:
    
    [Not Applicable/give details]
(When adding any other final terms
consideration should be given as to whether
such terms constitute a significant new
factor and consequently trigger the need
for a supplement to the Prospectus under
Article 16 of the Prospectus Directive.)DISTRIBUTION34.
    
    (i)
    
    If syndicated, names of Managers:
    
    [Not Applicable/give names](ii)
    
    Stabilising Manager(s) (if any):
    
    [Not Applicable/give name]35.
    
    If non-syndicated, name of Dealer:
    
    [Not Applicable/give name]36.
    
    Additional selling restrictions:
    
    [Not Applicable/give details]
 [PURPOSE OF FINAL TERMS
  RESPONSIBILITY
 80




---



##### 



  
 Signed on behalf of the Issuer:By:Duly authorised
 81




---



##### 



PART B  OTHER INFORMATION *
 1
    
    Listing(i)
    
    Listing:
    
    [London/other (specify)/None](ii)
    
    Admission to trading:
    
    [Application has been made for the
Instruments to be admitted to trading on
the London Stock Exchange plcs Regulated
Market with effect from [   ].] [Not
Applicable.](iii)
    
    Estimate of total
expenses related to admission
to trading:
    
    [   ]2
    
    Ratings
 Ratings:
    
    The Instruments to be issued have been rated:[S & P: [    ]][Moodys: [    ]][[Other]: [    ]](The above disclosure should reflect the rating allocated to
Instruments of the type being issued under the Programme
generally or, where the issue has been specifically rated, that
rating.)
 3
    
    [NotificationThe Financial Services Authority [has been requested to provide/has provided  include first
alternative for an issue which is contemporaneous with the update of the Programme and the
second alternative for subsequent issues] the [include names of competent authorities of host
Member States] with a certificate of approval attesting that the Prospectus has been drawn up
in accordance with the Prospectus Directive.]**4
    
    [Interests of Natural and legal Persons involved in the IssueNeed to include a description of any interest, including conflicting ones, that is material to
the issue/offer, detailing the persons involved and the nature of the interest. May be
satisfied by the inclusion of the following statement:So far as the Issuer is aware, no person involved in the offer of the Instruments has an
interest material to the offer.][(When adding any other description, consideration should be given as to whether such matters
described constitute significant new factors and consequently trigger the need for a
supplement to the Prospectus under Article 16 of the Prospectus Directive.)]
 
 *
    
    If an issue of Instruments is (i) NOT
admitted to trading on a regulated market within the European Economic
Area and (ii) only offered in the European Economic Area in circumstances
where a prospectus is not required to be published under the Prospectus
Directive the Issuer may elect to amend and/or delete certain of the above
paragraphs of Part B.**
    
    Required for derivative securities to which Annex XII to the
Prospectus Directive Regulation applies. 82




---



##### 



5
    
    [Reasons for the Offer, Estimated Net Proceeds and Total Expenses(i)
    
    [Reasons for the offer
    
    [   ](See [Use of Proceeds] wording in
Prospectus  if reasons for offer
different fromgeneral corporate purposes
will need to include those reasons here.)](ii)
    
    [Estimated net proceeds:
    
    [   ](If proceeds are intended for more than
one use will need to split out and present
in order of priority. If proceeds
insufficient to fund all proposed uses
state amount and sources of other
funding.)(iii)
    
    [Estimated total
expenses:
    
    [   ] [Include breakdown of expenses.]([If the Instruments are derivative
securities for which Annex XII of the
Prospectus Directive Regulation applies it
is] only necessary to include disclosure
of net proceeds and total expenses at (ii)
and (iii) above where disclosure is
included at (i) above.)]*6
    
    [Fixed Rate Instruments only  YIELDIndication of yield:
    
    [   ]The yield is calculated at the Issue Date on the
basis of the Issue Price. It is not an indication of
future yield. ]
 7
    
    [Dual Currency Instruments only  PERFORMANCE OF RATE[S] OF EXCHANGENeed to include details of where past and future performance and volatility of the relevant
rate[s] can be obtained.]*[(When completing this paragraph, consideration should be given as to whether such matters
described constitute significant new factors and consequently trigger the need for a
supplement to the Prospectus under Article 16 of the Prospectus Directive.)]
 8
    
    OPERATIONAL INFORMATIONISIN Code:
    
    [   ]Common Code:
    
    [   ]Any clearing
system(s) other
than Euroclear Bank
S.A./N.V. and
Clearstream Banking
société anonyme and
the relevant
identification
number(s):
    
    [Not Applicable/give name(s) and number(s) [and address(es)]]Delivery:
    
    Delivery [against/free of] paymentNames and addresses
of additional
Paying Agent(s) (if
any):
    
    [   ]Intended to be held
in a manner which
would allow
Eurosystem
eligibility:
    
    [Yes][No] [Note that the designation Yes simply means that
the Instruments are intended upon issue to be deposited with
Euroclear or Clearstream, Luxembourg as Common Safekeeper
and does not necessarily mean that the Instruments will be
recognised as eligible collateral for Eurosystem monetary
policy and intra-day credit operations by the Eurosystem
either upon issue or at any or all times during their life.
Such recognition will depend upon satisfaction of the
Eurosystem eligibility criteria.][Include this text if Yes
selected in which case the Instruments must be issued in NGN
form]
 
 *
    
    Required for derivative securities to which
Annex XII to the Prospectus Directive Regulation applies. 83




---



##### 



9
    
    GeneralThe aggregate principal amount of
Instruments issued has been translated into
Euro at the rate of [], producing a sum of
(for Instruments not denominated in Euro):
    
    [Not Applicable/[[Euro]][]]Additional steps that may only be taken
following approval by an Extraordinary
Resolution in accordance with Condition
10.1:
    
    [Not Applicable/give details]
 84




---



##### 



GENERAL INFORMATION
 1.
    
    The admission of the Programme to listing on the Official List of the U.K. Listing
Authority and to trading on the Market is expected to take effect on or about 23 December
2009. The listing of the Instruments on the Official List will be expressed as a
percentage of their nominal amount (exclusive of accrued interest). Any Tranche of
Instruments intended to be admitted to listing on the Official List of the U.K. Listing
Authority and admitted to trading on the Market will be so admitted to listing and trading
upon submission to the U.K. Listing Authority and the Market (in accordance with their
rules and procedures) of the relevant Final Terms and any other information required by
the U.K. Listing Authority and the Market, subject in each case to the issue of the
relevant Instruments. Prior to official listing, dealings will be permitted by the Market
in accordance with its rules. Transactions will normally be effected for delivery on the
third working day in London after the day of the transaction.However, Instruments may be issued pursuant to the Programme which will not be admitted
to listing and/or trading by the U.K. Listing Authority or the Market or any other
listing authority, stock exchange and/or quotation system or which will be admitted to
listing, trading and/or quotation by such listing authority, stock exchange and/or
quotation system as the Issuer and the relevant Dealer(s) may agree.2.
    
    The Issuer has obtained all necessary consents, approvals and authorisations in the
United States of America in connection with the issue and performance of the Instruments.3.
    
    The establishment of the Programme was authorised by a resolution of the Executive
Committee of the Board of Directors of the Issuer passed on 14 November 2007 and the
annual update of the Programme was authorised by a written consent in lieu of a special
meeting of the Board of Directors of the Issuer passed on 20 November 2008.4.
    
    The Instruments have been accepted for clearance through the Euroclear and
Clearstream, Luxembourg. The appropriate common code and the International Securities
Identification Number in relation to the Instruments of each Series will be specified in
the Final Terms relating thereto. The relevant Final Terms shall specify any other
clearing system(s) as shall have accepted the relevant Instruments for clearance together
with any further appropriate information.5.
    
    Neither the Issuer nor any of it subsidiaries is or has been involved in any
governmental, legal or arbitration proceedings (including any such proceedings which are
pending or threatened of which the Issuer is aware) during the 12 months preceding the
date of this Prospectus which may have, or have in such period had, significant effects on
the financial position or profitability of the Issuer or of the Group.6.
    
    There has been no significant change in the financial or trading position of the
Issuer or the Group since 31 March 2009 and no material adverse change in the prospects of
the Issuer since 31 March 2009.7.
    
    PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm of 300
Madison Avenue, New York NY 10017 (members of the American Institute of Certified Public
Accountants), have audited, and rendered unqualified audit reports on, the consolidated
financial statements prepared under U.S. GAAP of the Issuer for the years ended 31 March
2009 and 31 March 2008.8.
    
    Each Instrument having a maturity of more than one year, Receipt, Coupon and Talon
will bear the following legend: Any United States person who holds this obligation will
be subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code.
 85




---



##### 



9.
    
    The Issuers do not intend to provide any post-issuance information in relation to any
issues of Instruments.10.
    
    For so long as the Programme remains in effect or any Instruments are outstanding,
copies of the following documents may be inspected during usual business hours on any
weekday (Saturdays, Sundays and public holidays excepted), at the registered offices of
the Issuer and the specified office in London of the Issuing and Paying Agent:
 (a)
    
    a copy of this Prospectus together with any supplement to this Prospectus
or further Prospectus;(b)
    
    the constitutional documents of the Issuer; and(c)
    
    the audited consolidated accounts of the Issuer for the financial years
ended 31 March 2008 and 31 March 2009, respectively, and any consolidated interim
accounts of the Issuer published subsequently to such accounts.
 In addition, this Prospectus is and, in the case of Instruments to be admitted to the
Official List and admitted to trading on the Market, the relevant Final Terms will be,
available on the website of the Regulatory News Service operated by the London Stock
Exchange at www.londonstockexchange.com/en-gb/pricesnews/marketnews/.
 86




---



##### 



REGISTERED OFFICE OF THE ISSUER
 National Grid USA
  THE ARRANGER
 HSBC Bank plc
 DEALERS
 Commerzbank Aktiengesellschaft
    
    Deutsche Bank AG, London BranchKaiserstraße 16 (Kaiserplatz)
    
    Winchester House60311 Frankfurt am Main
    
    1 Great Winchester StreetFederal Republic of Germany
    
    London EC2N 2DBUnited KingdomHSBC Bank plc
    
    Morgan Stanley & Co. International plc8 Canada Square
    
    25 Cabot SquareLondon E14 5HQ
    
    Canary WharfUnited Kingdom
    
    London E14 4QAUnited Kingdom
 LEGAL ADVISERS
 To the Dealers as to English and United States law
 Clifford Chance LLP
 To the Issuer as to English and United States law
 Linklaters LLP
 THE TRUSTEE
 The Law Debenture Trust Corporation p.l.c.
 ISSUING AND PAYING AGENT
 The Bank of New York Mellon
 PAYING AGENT
 KBL European Private Bankers S.A.
 REGISTERED AUDITORS TO THE ISSUER
 PricewaterhouseCoopers LLP