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Exhibit 2(b).1.1
  
 National Grid plc
 (incorporated with limited liability in England and Wales on 11 July 2000 under registered number 4031152)
 National Grid Electricity Transmission plc
 (incorporated with limited liability in England and Wales on 1 April 1989 under registered number 2366977))
 Euro 6,000,000,000
 Euro Medium Term Note Programme
     
  Programme Arranger and Dealer
 HSBC
 Dealers
 ABN AMRO
    
    Banc of America Securities LimitedBarclays Capital
    
    CitigroupDeutsche Bank
    
    Dresdner Kleinwort WassersteinMitsubishi Securities International plc
    
    National Australia Bank LimitedRBC Capital Markets
    
    The Royal Bank of Scotland




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IMPORTANT NOTICES
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In connection with the issue of any Tranche (as defined in Overview of the Programme), 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 (provided that, in the case of any Tranche to be admitted to trading on the
Market, the aggregate principal amount of Instruments allotted does not exceed 105 per cent. of the
aggregate principal amount of the relevant Tranche) 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.
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TABLE OF CONTENTS
 PageIMPORTANT NOTICES
    
    
    2DOCUMENTS INCORPORATED BY REFERENCE
    
    
    5SUPPLEMENTAL PROSPECTUS
    
    
    6OVERVIEW OF THE PROGRAMME
    
    
    7RISK FACTORS
    
    
    14TERMS AND CONDITIONS OF THE INSTRUMENTS
    
    
    24SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
    
    
    57USE OF PROCEEDS
    
    
    62DESCRIPTION OF NATIONAL GRID PLC
    
    
    63DESCRIPTION OF NATIONAL GRID ELECTRICITY TRANSMISSION PLC
    
    
    69UNITED KINGDOM TAXATION
    
    
    73PLAN OF DISTRIBUTION
    
    
    76FORM OF FINAL TERMS
    
    
    79GENERAL INFORMATION
    
    
    93
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DOCUMENTS INCORPORATED BY REFERENCE
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SUPPLEMENTAL PROSPECTUS
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OVERVIEW OF THE PROGRAMME
  Issuers
    
    National Grid plcNational Grid Electricity Transmission plcDescription
    
    Euro Medium Term Note ProgrammeSize
    
    Up to Euro 6,000,000,000 (or the equivalent in other
currencies at the date of issue) aggregate nominal amount
of Instruments outstanding at any one time.Arranger
    
    HSBC Bank plcPrincipal Dealers
    
    ABN AMRO Bank N.V.Banc of America Securities LimitedBarclays Bank PLCCitigroup Global Markets LimitedDeutsche Bank AG, London BranchDresdner Bank AG London BranchHSBC Bank plcMitsubishi Securities International plcNational Australia Bank LimitedRoyal Bank of Canada Europe LimitedThe Royal Bank of Scotland plcThe Issuers 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 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
    
    JPMorgan Chase Bank, N.A.Other Paying Agent
    
    Kredietbank S.A. LuxembourgeoiseMethod 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
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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.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 if (a) definitive Instruments
are to be made available to Instrumentholders following
the expiry of 40 days after their issue date or (b) such
Instruments have an initial maturity of more than one year
and are being issued in compliance with the D Rules (as
defined in Selling Restrictions below), otherwise such
Tranche will be represented by a permanent Global
Instrument. 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 relevant 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, 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
relevant Issuer, the Issuing and Paying Agent, the Trustee
and the relevant Dealer.
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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 relevant 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 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 relevant
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 2000
ISDA Definitions published by
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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 relevant 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.Index Linked Instruments
    
    Payments of principal in respect of Index Linked
Redemption Instruments or of interest in respect of Index
Linked Interest Instruments will be calculated by
reference to such index and/or formula as may be specified
in the relevant Final Terms and Supplemental Prospectus.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 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 stock index or 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,
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Dual Currency Instruments, reverse Dual Currency
Instruments, optional Dual Currency Instruments,
partly-paid Instruments and any other type of
Instrument that the relevant 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 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 relevant Issuer (either in whole or in part)
and/or the holders, and if so the terms applicable to
such redemption.Redemption at the Option of the
Instrumentholders following an
National Grid Restructuring
Event,or as the case may be,
an NGET Restructuring Event
(each as defined in
Condition 5.6.2):
    
    Instruments issued by National Grid will be subject to
an optional redemption by Instrumentholders following a
Put Event (as defined in Condition 5.6.1). Instruments
issued by NGET will, if so specified in the relevant
Final Terms, be subject to an optional redemption by
Instrumentholders following a Put Event (as defined in
Condition 5.6.1).If at any time while any relevant Instrument remains
outstanding, a Put Event occurs then (other than in
certain circumstances described in Condition 5.6.1) the
Instrumentholders will, upon the giving of a Put Event
Notice (as defined in Condition 5.6.1), have the option
to require the relevant Issuer to redeem the relevant
Instrument on the Put Date (as defined in Condition
5.6.4) at the principal amount of the Instrument
together with accrued interest to the Put Date.Status of Instruments
    
    The Instruments will constitute unsubordinated and
unsecured obligations of the relevant Issuer, all as
described in Terms and Conditions of the Instruments 
Status.Negative Pledge
    
    Instruments issued by National Grid will have the
benefit of a negative pledge as described in Terms and
Conditions of the Instruments  Status and Negative
Pledge.Instruments issued by NGET will not have the benefit of
a 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.Events of Default
    
    The events of default under the Instruments are as
specified below under Terms and Conditions of the
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Instruments  Events of Default.Early Redemption
    
    Except as provided in Optional Redemption above, Instruments
will be redeemable at the option of the relevant 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 will be made free and clear of withholding taxes of
the United Kingdom subject to customary exceptions (including
the standard EU exceptions), 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 relevant
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, European Economic Area (in the
case of unlisted Instruments) and Japan. See Plan of
Distribution.Category 2 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 (a) the
relevant Final Terms states that Instruments are issued in
compliance with U.S. Treas. Reg. §1.163-5(c)(2)(i)(C) (the C
Rules) or (b) the Instruments are issued other than in
compliance with the D Rules or the C 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 relevant 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 relevant 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 relevant Issuer is not in a position to express a view on the
likelihood of any such contingency occurring.Factors which the relevant 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 relevant Issuer believes that the factors described below represent the principal risks
inherent in investing in Instruments issued under the Programme, but the relevant Issuer may be
unable to pay interest, principal or other amounts on or in connection with any Instruments for
other reasons and such Issuer does not represent that the statements below regarding the risks of
holding any Instrument are exhaustive. Prospective investors should also read the detailed
information set out elsewhere in this Prospectus (including any documents deemed to be incorporated
by reference herein) and reached their own views prior to making any investment decision.Factors that may affect National Grids ability to fulfil its obligations under Instruments issued
under the Programme1
    
    Risks relating to National Grid and its businessChanges in law or regulation in the geographies in which National Grid operates could have an
adverse effect on National Grids results of operationsMany of National Grids businesses are utilities or networks that are subject to regulation by
governments and regulatory authorities. Consequently, changes in law or regulation in the countries
or states in which National Grid operates could adversely affect the Group. Regulatory decisions
concerning, for example, whether licences or approvals to operate are renewed, whether market
developments have been satisfactorily implemented, whether there has been any breach of the terms
of a licence or approval, the level of permitted revenues for National Grids businesses and
proposed business development activities, could have an adverse impact on National Grids results
of operations, cash flows, the financial condition of its businesses and the ability to develop
those businesses in the future.Breaches of environmental or health and safety laws or regulations could expose National Grid to
claims for financial compensation and adverse regulatory consequences and could damage National
Grids reputationAspects of National Grids activities are inherently dangerous, such as the operation and
maintenance of electricity lines and the transmission and distribution of natural gas. Electricity
and gas utilities also typically use and generate in their operations hazardous and potentially
hazardous products and by-products. In addition, there may be other aspects of National Grids
operations that are not currently regarded or proved to have adverse effects but could become so,
for example, the effects of electric and magnetic fields. National Grid is subject to laws and
regulations relating to pollution, the protection of the environment, and how National Grid uses
and disposes of hazardous substances and waste materials. National Grid is also subject to laws and
regulations governing health and safety matters, protecting both the public and its employees. Any
breach of theses obligations, or even incidents relating to the environment or health and safety
that do not amount to a breach, could adversely affect the results of operations and National
Grids reputation.
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Network failure or the inability to carry out critical non-network operations may have
significant adverse impacts on both National Grids financial position and its reputation
  National Grids results of operations depend on a number of factors relating to business
performance including the ability to outperform regulatory targets and to deliver anticipated costs
and efficiency savings
  Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of
operations
  National Grids reputation may be harmed if consumers of energy suffer a disruption to their supply
even if this disruption is outside of National Grids control
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National Grid is subject to the risk that business development activity, such as significant
acquisitions or disposals, will be based on incorrect assumptions or conclusions or that
significant liabilities will be overlooked or there may be other unanticipated adverse impacts
  Fluctuations in the value of the US dollar could have a significant impact on National Grids
results of operations because National Grid has substantial business interests in the US and
because of the proportion of National Grids total debt that is denominated in U.S. dollars
  The nature and extent of National Grids borrowings means that an increase in interest rates could
have an adverse impact on its financial position and business results
  National Grids overall financial position may be adversely affected by a number of factors
including restrictions in borrowing and debt arrangements, changes to credit ratings and effective
tax rates
  New or revised accounting standards, rules and interpretations by the UK, US or international
accounting standard setting boards and other relevant bodies could have an adverse effect on the
Groups reported financial results
 IFRS
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Factors that may affect NGETs ability to fulfil its obligations under Instruments issued
under the Programme
 1
    
    Risks relating to NGET and its businessChanges in law or could have an adverse effect on NGETs results of operationsNGET is subject to regulation by governmental and regulatory authorities. Consequently, changes
in law or regulation could adversely affect the company. Regulatory decisions concerning, for
example, whether licences or approvals to operate are renewed, whether market developments have
been satisfactorily implemented, whether there has been any breach of the terms of a licence or
approval, the level of permitted revenues for NGETs business, could have an adverse impact on
NGETs results of operations, cash flows, the financial condition of its businesses and the ability
to develop those businesses in the future.Breaches of environmental or health and safety laws or regulations could expose NGET to
claims for financial compensation and adverse regulatory consequences and could damage NGETs
reputationAspects of NGETs activities are inherently dangerous, such as the operation and maintenance of
electricity lines. Electricity utilities also typically use and generate in their operations
hazardous and potentially hazardous products and by-products. In addition, there may be other
aspects of NGETs operations that are not currently regarded or proved to have adverse effects but
could become so, for example, the effects of electric and magnetic fields. NGET is subject to laws
and regulations relating to pollution, the protection of the environment, and how NGET uses and
disposes of hazardous substances and waste materials. NGET is also subject to laws and regulations
governing health and safety matters, protecting both the public and its employees. Any breach of
these obligations, or even incidents relating to the environment or health and safety that do not
amount to a breach, could adversely affect the results of operations and NGETs reputation.Network failure or the inability to carry out critical non-network operations may have
significant adverse impacts on both NGETs financial position and its reputationNGET may suffer a major network failure or may not be able to carry out critical non-network
operations. Risks to operational performance could arise from a failure to maintain the health of
the network, inadequate forecasting of demand or inadequate record keeping. Any failure could cause
NGET to be in breach of its licence, and even incidents that do not amount to a breach could result
in adverse regulatory action and financial consequences, as well as harming NGETs reputation. In
addition to these risks, NGET is subject to other risks that are largely outside of its control
such as the impact of weather or unlawful acts of third parties. Weather conditions can affect
financial performance and severe weather that causes outages or damages infrastructure will
adversely affect operational, and, potentially, business performance. Terrorist attack, sabotage or
other intentional acts may also physically damage NGETs businesses or otherwise significantly
affect corporate activities and as a consequence affect the results of operations.NGETs results of operations depend on a number of factors relating to business performance
including the ability to outperform regulatory targets and to deliver anticipated costs and
efficiency savingsEarnings maintenance and growth from NGETs business will be affected by its ability to meet or
better regulatory efficiency targets set by Ofgem. From time to time, NGET also publishes cost and
efficiency savings. To meet these targets, NGET must continue to improve management and
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operational performance. Earnings from NGETs business in the UK also depend on meeting standards
set by Ofgem. To meet these standards, NGET must maintain and improve reliability and other
measures. If NGET does not meet these targets and standards, both the its results of operations and
its reputation may be adversely affected.Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of
operationsChanges in commodity prices could potentially impact on NGETs business. Current regulatory
arrangements in the UK provide the ability to pass through virtually all of the increased costs
related to commodity prices to consumers. If regulators in the UK were to restrict this ability, it
could have an adverse effect on NGETs operating results.NGETs reputation may be harmed if consumers of energy suffer a disruption to their supply even if
this disruption is outside of NGETs controlNGET is responsible for transporting available electricity. NGET consults with and provides
information to regulators, governments and industry participants about future demand and the
availability of supply. However, where there is insufficient supply, NGETs role is to manage the
relevant system safely, which, in extreme circumstances, may require NGET to disconnect consumers.The nature and extent of NGETs borrowings means that an increase in interest rates could have an
adverse impact on its financial position and business resultsA significant proportion of NGETs borrowings are subject to variable interest rates that may
fluctuate with changes to prevailing interest rates. Increases in these interest rates could
therefore increase NGETs costs and diminish its profits.NGETs overall financial position may be adversely affected by a number of factors including
restrictions in borrowing and debt arrangements, changes to credit ratings and effective tax ratesNGET is subject to certain covenants and restrictions in relation to its listed debt securities and
its bank lending facilities. NGET is also subject to restrictions on financing that have been
imposed by regulators. These restrictions may hinder NGET in servicing the financial requirements
of its current business or the financing of newly acquired or developing businesses. The debt
issued by NGET is rated by credit rating agencies and changes to these ratings may affect both the
borrowing capacity of NGET and the cost of these borrowings.New or revised accounting standards, rules and interpretations by the UK, US or international
accounting standard setting boards and other relevant bodies could have an adverse effect on NGETs
reported financial resultsWith the adoption of IFRS, for the periods beginning after 31 March 2005, changes in the accounting
treatment of replacement expenditure and pension and post-retirement benefits will significantly
affect the way NGET reports its financial position and results of operations. New standards, rules
or interpretations may be issued that could also have significant effects. In addition, as a body
of practice develops, the application of accounting principles to NGETs particular circumstances
may change.
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Factors which are material for the purpose of assessing the market risks associated with
Instruments issued under the ProgrammeInstruments may not be a suitable investment for all investorsEach potential investor in any Instruments must determine the suitability of that investment in
light of its own circumstances. In particular, each potential investor should:
 (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.
 Some Instruments are complex financial instruments and such instruments may be purchased as a way
to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their
overall portfolios. A potential investor should not invest in Instruments which are complex
financial instruments unless it has the expertise (either alone or with the help of a financial
adviser) to evaluate how the Instruments will perform under changing conditions, the resulting
effects on the value of such Instruments and the impact this investment will have on the potential
investors overall investment portfolio.Risks related to the structure of a particular issue of InstrumentsA wide range of Instruments may be issued under the Programme. A number of these Instruments
may have features which contain particular risks for potential investors. Set out below is a
description of certain such features:Instruments subject to optional redemption by the IssuerAn optional redemption feature is likely to limit the market value of Instruments. During any
period when the Issuer may elect to redeem Instruments, the market value of those Instruments
generally will not rise substantially above the price at which they can be redeemed. This also may
be true prior to any redemption period.The Issuer may be expected to redeem Instruments when its cost of borrowing is lower than the
interest rate on the Instruments. At those times, an investor generally would not be able to
reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the
Instruments being redeemed and may only be able to do so at a significantly lower rate. Potential
investors should consider reinvestment risk in light of other investments available at that time.
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Index Linked Instruments and Dual Currency InstrumentsThe Issuer may issue Instruments with principal or interest determined by reference to an index
or formula, to changes in the prices of securities or commodities, to movements in currency
exchange rates or other factors (each, a Relevant Factor). In addition, the Issuer may issue
Instruments with principal or interest payable in one or more currencies which may be different
from the currency in which the Instruments are denominated. Potential investors should be aware
that:
 (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;(iv)
    
    the amount of principal payable at redemption may be less
than the nominal amount of such Instruments or even
zero;(v)
    
    a Relevant Factor may be subject to significant
fluctuations that may not correlate with changes in interest
rates, currencies or other indices;(vi)
    
    if a Relevant Factor is applied to Instruments in
conjunction with a multiplier greater than one or contains
some other leverage factor, the effect of changes in the
Relevant Factor on principal or interest payable likely will
be magnified; and(vii)
    
    the timing of changes in a Relevant Factor may affect the
actual yield to investors, even if the average level is
consistent with their expectations. In general, the earlier
the change in the Relevant Factor, the greater the effect on
yield.
 Partly-paid InstrumentsThe Issuer may issue Instruments where the issue price is payable in more than one instalment.
Failure to pay any subsequent instalment could result in an investor losing all of its investment.Variable rate Instruments with a multiplier or other leverage factorInstruments with variable interest rates can be volatile investments. If they are structured to
include multipliers or other leverage factors, or caps or floors, or any combination of those
features or other similar related features, their market values may be even more volatile than
those for securities that do not include those features.Fixed/Floating Rate InstrumentsFixed/Floating Rate Instruments may bear interest at a rate that the Issuer may elect to
convert from a fixed rate to a floating rate, or from a floating rate to a fixed rate. The Issuers
ability to convert the interest rate will affect the secondary market and the market value of such
Instruments since the Issuer may be expected to convert the rate when it is likely to produce a
lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate, the
spread on the Fixed/Floating Rate Instruments may be less favourable than the prevailing spreads on
comparable Floating Rate Instruments tied to the same reference rate. In addition, the new floating
rate at any time may be lower than the rates on other Instruments. If the Issuer converts from a
floating rate to a fixed rate, the fixed rate may be lower than the prevailing rates on its
Instruments.Instruments issued at a substantial discount or premiumThe market values of securities issued at a substantial discount or premium to their nominal
amount tend to fluctuate more in relation to general changes in interest rates than do prices for
conventional interest-bearing securities. Generally, the longer the remaining term of the
securities, the greater
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the price volatility as compared to conventional interest-bearing securities with comparable
maturities.Risks related to Instruments generallySet out below is a brief description of certain risks relating to the Instruments generally:Modification, waivers and substitutionThe Terms and Conditions of the Instruments contain provisions for calling meetings of
Instrumentholders to consider matters affecting their interests generally. These provisions permit
defined majorities to bind all Instrumentholders including Instrumentholders who did not attend and
vote at the relevant meeting and Instrumentholders who voted in a manner contrary to the majority.The Terms and Conditions of the Instruments also provide that the Trustee may, without the consent
of Instrumentholders, agree 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, (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 or (c) the
substitution of another company as principal debtor under any Instruments in place of the Issuer,
in the circumstances described in Condition 11 of the Terms and Conditions of the Instruments.European Monetary UnionIf the United Kingdom joins the European Monetary Union prior to the maturity of the
Instruments, there is no assurance that this would not adversely affect investors in the
Instruments. It is possible that prior to the maturity of the Instruments the United Kingdom may
become a participating Member State and that the Euro may become the lawful currency of the United
Kingdom. In that event (i) all amounts payable in respect of any Instruments denominated in
Sterling may become payable in Euro (ii) the law may allow or require such Instruments to be
re-denominated into Euro and additional measures to be taken in respect of such Instruments; and
(iii) there may no longer be available published or displayed rates for deposits in Sterling used
to determine the rates of interest on such Instruments or changes in the way those rates are
calculated, quoted and published or displayed. The introduction of the Euro could also be
accompanied by a volatile interest rate environment, which could adversely affect investors in the
Instruments.EU Savings DirectiveUnder EU Council Directive 2003/48/EC on the taxation of savings income, each Member State is
required, from 1 July 2005, to provide to the tax authorities of another Member State details of
payments of interest or other similar income paid by a person within its jurisdiction to, or
collected by such a person for, an individual resident in that other Member State; however, for a
transitional period, Austria, Belgium and Luxembourg may instead apply a withholding system in
relation to such payments, deducting tax at rates rising over time to 35%. The transitional period
is to terminate at the end of the first full fiscal year following agreement by certain non-EU
countries to the exchange of information relating to such payments. Also with effect from 1 July
2005 a number of non-EU countries and territories including Switzerland have adopted similar
measures (a withholding system in the case of Switzerland) in certain circumstances on a reciprocal
basis.If a payment in respect of an Instrument which is the subject of the Directive were to be made or
collected through a Member State which has opted for a withholding system and an amount of, or in
respect of, tax were to be withheld from that payment, neither the Issuer nor any Paying Agent nor
any other person would be obliged to pay additional amounts with respect to such Instrument as a
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result of the imposition of such withholding tax. However, the Issuer is required, save as
provided in Condition 6.4 of the Instruments, to maintain a Paying Agent in a Member State that
will not be obliged to withhold or deduct tax pursuant to the Directive or any law implementing or
complying with, or introduced in order to conform to, such Directive.Change of lawThe Terms and Conditions of the Instruments are based on English law in effect as at the date of
issue of the relevant Instruments. No assurance can be given as to the impact of any possible
judicial decision or change to English law or administrative practice after the date of issue of
the relevant Instruments.Integral multiples of less than 50,000Although Instruments which are admitted to trading on a regulated market in 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 are required to have a
minimum denomination of 50,000 (or, where the specified currency is not euro, its equivalent in
the specified currency), it is possible that the Instruments may be traded in the clearing systems
in amounts in excess of 50,000 (or its equivalent) that are not integral multiples of
50,000 (or its equivalent). In such a case, should definitive Instruments be required to be
issued, a holder who does not have an integral multiple of 50,000 (or its equivalent) in his
account with the relevant clearing system at the relevant time may not receive all of his
entitlement in the form of definitive Instruments unless and until such time as his holding becomes
an integral multiple of 50,000 (or its equivalent).Risks related to the market generallySet out below is a brief description of certain market risks, including liquidity risk, exchange
rate risk, interest rate risk and credit risk:The secondary market generallyInstruments may have no established trading market when issued, and one may never develop. If a
market does develop, it may not be liquid. Therefore, investors may not be able to sell their
Instruments easily or at prices that will provide them with a yield comparable to similar
investments that have a developed secondary market. This is particularly the case for Instruments
that are especially sensitive to interest rate, currency or market risks, are designed for specific
investment objectives or strategies or have been structured to meet the investment requirements of
limited categories of investors. These types of Instruments generally would have a more limited
secondary market and more price volatility than conventional debt
securities. Illiquidity may have
a severely adverse effect on the market value of Instruments.The Clearing SystemsBecause the Global Instruments may be held by or on behalf of Euroclear Bank S.A./N.V. as operator
of the Euroclear System (Euroclear) and Clearstream
Banking, société anonyme (Clearstream,
Luxembourg) investors will have to rely on their procedures for transfer, payment and
communication with the Issuer.Instruments issued under the Programme may be represented by one or more temporary Global
Instruments or permanent Global Instruments. Such Global Instruments may be deposited with a common
depositary for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the
relevant Global Instrument, investors will not be entitled to receive definitive Instruments.
Euroclear and Clearstream, Luxembourg will maintain records of the interests in the
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Global Instruments. While the Instruments are represented by one or more Global Instruments,
investors will be able to trade their interests only through Euroclear or Clearstream, Luxembourg.While Instruments are represented by one or more Global Instruments, the Issuer will discharge its
payment obligations under such Instruments by making payments to the common depositary for
Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of an
interest in a Global Instrument must rely on the procedures of Euroclear and Clearstream,
Luxembourg to receive payments under the relevant Instruments. The Issuer has no responsibility or
liability for the records relating to, or payments made in respect of, interests in the Global
Instruments.Holders of interests in the Global Instruments will not have a direct right to vote in respect of
the relevant Instruments. Instead, such holders will be permitted to act only to the extent that
they are enabled by Euroclear or Clearstream, Luxembourg.Exchange rate risks and exchange controlsThe Issuer will pay principal and interest on the Instruments in the Specified Currency. This
presents certain risks relating to currency conversions if an investors financial activities are
denominated principally in a currency or currency unit (the Investors Currency) other than the
Specified Currency. These include the risk that exchange rates may significantly change (including
changes due to devaluation of the Specified Currency or revaluation of the Investors Currency) and
the risk that authorities with jurisdiction over the Investors Currency may impose or modify
exchange controls. An appreciation in the value of the Investors Currency relative to the
Specified Currency would decrease (1) the Investors Currency-equivalent yield on the Instruments,
(2) the Investors Currency equivalent value of the principal payable on the Instruments and (3)
the Investors Currency equivalent market value of the Instruments.Government and monetary authorities may impose (as some have done in the past) exchange controls
that could adversely affect an applicable exchange rate. As a result, investors may receive less
interest or principal than expected, or no interest or principal.Interest rate risksInvestment in Fixed Rate Instruments involves the risk that subsequent changes in market
interest rates may adversely affect the value of Fixed Rate Instruments.Credit ratings may not reflect all risksOne or more independent credit rating agencies may assign credit ratings to an issue of
Instruments. The ratings may not reflect the potential impact of all risks related to structure,
market, additional factors discussed above, and other factors that may affect the value of the
Instruments. A credit rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn by the rating agency at any time.Legal investment considerations may restrict certain investmentsThe investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult
its legal advisers to determine whether and to what extent (1) Instruments are legal investments
for it, (2) Instruments can be used as collateral for various types of borrowing and (3) other
restrictions apply to its purchase or pledge of any Instruments. Financial institutions should
consult their legal advisers or the appropriate regulators to determine the appropriate treatment
of Instruments under any applicable risk-based capital or similar rules.
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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 relevant Issuer (as defined below), not to all Instruments that may be
issued under the Programme.National Grid plc (National Grid) and National Grid Electricity Transmission plc (NGET) (each
an Issuer and together, the Issuers) have established a Euro Medium Term Note Programme (the
Programme) for the issuance of up to Euro 6,000,000,000 in aggregate principal amount of debt
instruments (the Instruments). The Instruments are constituted by a Trust Deed (as amended or
supplemented from time to time, the Trust Deed) dated 18 August 2005 between the Issuers 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 Agency Agreement (as amended or
supplemented from time to time, the Agency Agreement) dated 18 August 2005 has been entered into
in relation to the Instruments between the Issuers, the Trustee, JPMorgan Chase Bank, N.A. 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 during usual business hours at the registered office
of the Trustee (as at 18 August 2005 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 Title
 The 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
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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).This Instrument is a Fixed Rate Instrument, a Floating Rate Instrument, a Zero Coupon Instrument, a
Perpetual Instrument, an Index Linked Interest Instrument, an Index Linked Redemption 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.So long as the Instruments are represented by a temporary Global Instrument or permanent Global
Instrument and the relevant clearing system(s) so permit, the Instruments shall be tradeable only
in principal amounts of at least the Specified Denomination (or if more than one Specified
Denomination, the lowest Specified Denomination) provided in the relevant Final Terms and integral
multiples of the Tradeable Amount provided 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 an
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 passu without 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
and, in relation to Instruments issued by National Grid, as provided in Condition 2.2, 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 of National Grid remains outstanding (as defined
in the Trust Deed) National Grid 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
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Relevant Indebtedness, or any guarantee of or indemnity in respect of any Relevant
Indebtedness unless, at the same time or prior thereto, National Grid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.
 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.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 and Index Linked Interest Instruments
 3.2.1
    
    Interest Payment DatesEach Floating Rate Instrument and Index Linked Interest 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. 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
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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 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: 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 shall be determined by the
Calculation Agent at or about the Relevant Time on the Interest Determination Date in respect of
such Interest Accrual Period in accordance with the following:
 (i)
    
    if the Primary Source for Floating Rate is a Page, subject as provided below, the Rate of
Interest shall be:
 (1)
    
    the Relevant Rate (where such Relevant Rate on such Page is a composite quotation or is
customarily supplied by one entity); or(2)
    
    the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on
that Page,
 in each case appearing on such Page at the Relevant Time on the Interest Determination Date;
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(ii)
    
    if the Primary Source for the Floating Rate is Reference Banks or if sub-paragraph (i)(1)
applies and no Relevant Rate appears on the Page at the Relevant Time on the Interest Determination
Date or if sub-paragraph (i)(2) above applies and fewer than two Relevant Rates appear on the Page
at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of
Interest shall be the arithmetic mean of the Relevant Rates that each of the Reference Banks is
quoting to leading banks in the Relevant Financial Centre at the Relevant Time on the Interest
Determination Date, 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 so quoting Relevant Rates, subject as provided below, the Rate of Interest
shall be the arithmetic mean of the rates per annum (expressed as a percentage) that the
Calculation Agent determines to be the rates (being the nearest equivalent to the Benchmark) in
respect of a Representative Amount of the Specified Currency that at least two out of five leading
banks selected by the Calculation Agent in the principal financial centre of the country of the
Specified Currency or, if the Specified Currency is Euro in those member states of the European
Union which are participating in European economic and monetary union as selected by the
Calculation Agent (the Principal Financial Centre) are quoting at or about the Relevant Time on
the date on which such banks would customarily quote such rates for a period commencing on the
Effective Date for a period equivalent to the Specified Duration (1) to leading banks carrying on
business in Europe, or (if the Calculation Agent determines that fewer than two of such banks are
so quoting to leading banks in Europe) (2) to leading banks carrying on business in the Principal
Financial Centre; except that, if fewer than two of such banks are so quoting to leading banks in
the Principal Financial Centre, the Rate of Interest shall be the Rate of Interest determined on
the previous Interest Determination Date (after readjustment for any difference between any Margin,
Rate Multiplier or Maximum or Minimum Rate of Interest applicable to the preceding Interest Accrual
Period and to the relevant Interest Accrual Period).
 3.2.4
    
    Rate of Interest for Index Linked Interest InstrumentsThe Rate of Interest in respect of Index Linked Interest Instruments for each Interest Accrual
Period shall be determined in the manner specified in the relevant Final Terms and interest will
accrue by reference to an Index or Formula as specified in the relevant Final Terms.
 (a)
    
    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
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annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Condition
5.4.1(b)).(b)
    
    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.(c)
    
    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.(d)
    
    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 7).(e)
    
    Margin, Maximum/Minimum Rates of Interest, Instalment Amounts and Redemption Amounts, Rate
Multipliers and Rounding
 (i)
    
    If any Margin or Rate Multiplier 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 or multiplying by such Rate Multiplier, 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.
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(f)
    
    CalculationsThe amount of interest payable in respect of any Instrument for any period shall be calculated by
multiplying the product of the Rate of Interest and the outstanding nominal amount of such
Instrument by the Day Count Fraction, unless an Interest Amount (or a formula for its calculation)
is specified in the relevant Final Terms in respect of such period, in which case the amount of
interest payable in respect of such Instrument for such 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 in respect of such Interest Period shall
be the sum of the amounts of interest payable in respect of each of those Interest Accrual Periods.(g)
    
    Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption
Amounts, Early Redemption Amounts, Optional Redemption Amounts and
Instalment AmountsAs soon as practicable after the Relevant Time 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, it shall determine such rate and calculate
the Interest Amounts in respect of each Specified Denomination of the Instruments 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 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.
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(h)
    
    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 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.
 3.2.5
    
    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(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, the Calculation Period):
 (a)
    
    if Actual/365 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 (the number of days to be calculated on the
basis of a year of 360 days with 12 30-day months
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(unless (i) the last day of the Calculation Period is the 31st day of a month but the first
day of the Calculation Period is a day other than the 30th or 31st day of a month, in which case
the month that includes that last day shall not be considered to be shortened to a 30-day month, or
(ii) the last day of the Calculation Period is the last day of the month of February, in which case
the month of February shall not be considered to be lengthened to a 30-day month);(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 (the number of days to be calculated on the basis of
a year of 360 days with 12 30-day months, without regard to the date of the first day or last day
of the Calculation Period unless, in the case of a Calculation Period ending on the Maturity Date,
the Maturity Date is the last day of the month of February, in which case the month of February
shall not be considered to be lengthened to a 30-day month); and(f)
    
    if Actual/Actual-ISMA 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:
 (1)
    
    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 actual number of days in such Determination
Period and (b) the number of Determination Periods in any year; and(2)
    
    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.
 Effective Date means, with respect to any Floating Rate to be determined on an Interest
Determination Date, the date specified as such in the relevant Final Terms or, if none is so
specified, the first day of the Interest Accrual Period to which such Interest Determination Date
relates.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.
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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 the amount of interest payable, and in the case of Fixed Rate Instruments,
means the Fixed Coupon Amount or Broken Amount, as the case may be.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.Interest Period Date means each Interest Payment Date unless otherwise specified in the relevant
Final Terms.ISDA Definitions means the 2000 ISDA Definitions as published by the International Swaps and
Derivatives Association, Inc., unless otherwise specified in the relevant Final Terms.Page means such page, section, caption, column or other part of a particular information service
(including, but not limited to, the Reuters Market 3000 (Reuters) and the Telerate Service
(Telerate)) as may be specified for the purpose of providing a Relevant Rate, or such other page,
section, caption, column or other part as may replace it on that information service or on such
other information service, in each case as may be nominated by the person or organisation providing
or sponsoring the information appearing there for the purpose of displaying rates or prices
comparable to that Relevant Rate.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
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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 the institutions specified as such in the relevant Final Terms or, if none,
five leading banks selected by the Calculation Agent in the interbank market (or, if appropriate,
money, swap or over-the-counter index options market) that is most closely connected with the
Benchmark (which, if EURIBOR is the relevant Benchmark, shall be Europe).Relevant Financial Centre means, with respect to any Floating Rate to be determined in accordance
with a Screen Rate Determination on an Interest Determination Date, the financial centre as may be
specified as such in the relevant Final Terms or, if none is so specified, the financial centre
with which the relevant Benchmark is most closely connected (which, in the case of EURIBOR, shall
be Europe) or, if none is so connected, London.Relevant Rate means the Benchmark for a Representative Amount of the Specified Currency for a
period (if applicable or appropriate to the Benchmark) equal to the Specified Duration commencing
on the Effective Date.Relevant Time means, with respect to any Interest Determination Date, the local time in the
Relevant Financial Centre specified in the relevant Final Terms or, if no time is specified, the
local time in the Relevant Financial Centre at which it is customary to determine bid and offered
rates in respect of deposits in the Specified Currency in the interbank market in the Relevant
Financial Centre or, if no such customary local time exists, 11.00 hours in the Relevant Financial
Centre and, for the purpose of this definition local time means, with respect to Europe as a
Relevant Financial Centre, Brussels time.Representative Amount means, with respect to any Floating Rate to be determined in accordance
with a Screen Rate Determination on an Interest Determination Date, the amount specified as such in
the relevant Final Terms or, if none is specified, an amount that is representative for a single
transaction in the relevant market at the time.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.Specified Duration means, with respect to any Floating Rate to be determined in accordance with a
Screen Rate Determination on an Interest Determination Date, the duration specified in the relevant
Final Terms or, if none is specified, a period of time equal to the relevant Interest Accrual
Period, ignoring any adjustment pursuant to Condition 3.2.3(b)(ii).TARGET System means the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System or any successor to it.3.2.6
    
    Calculation Agent and Reference BanksThe Issuer shall procure that there shall at all times be five Reference Banks (or such other
number as may be required) with offices in the Relevant Financial Centre and 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. If any Reference Bank (acting through its relevant office) is unable or
unwilling to continue to act as a Reference
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Bank, then the Issuer shall (with the prior approval of the Trustee) appoint another Reference
Bank with an office in the Relevant Financial Centre to act as such in its place. 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 investment banking firm 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
    
    IndexationThis Condition 4 is applicable only if the relevant Final Terms specifies the Instruments as
Index Linked Instruments.
 4.1
    
    DefinitionsBase Index Figuremeans (subject to Condition 4.3(i)) the base index figure as specified in the
relevant Final Terms;Index or Index Figuremeans, subject as provided in Condition 4.3(i), the UK Retail Price Index
(RPI) (for all items) published by the Office for National Statistics (January 1987 = 100) or any
comparable index which may replace the UK Retail Price Index for the purpose of calculating the
amount payable on repayment of the Reference Gilt. Any reference to the Index Figure applicable to
a particular month shall, subject as provided in Conditions 4.3 and 4.5, be construed as a
reference to the Index Figure published in the seventh month prior to that particular month and
relating to the month before that of publication. If the Index is replaced, the Issuer will
describe the replacement Index in a supplement to the Prospectus;Index Ratioapplicable to any month means the Index Figure applicable to such month divided by
the Base Index Figure;Limited Index Ratiomeans (a) in respect of any month prior to the relevant Issue Date, the Index
Ratio for that month; (b) in respect of any Limited Indexation Month after the relevant Issue Date,
the product of the Limited Indexation Factor for that month and the Limited Index Ratio as
previously calculated in respect of the month twelve months prior thereto; and (c) in respect of
any other month, the Limited Index Ratio as previously calculated in respect of the most recent
Limited Indexation Month;Limited Indexation Factormeans, in respect of a Limited Indexation Month, the ratio of the Index
Figure applicable to that month divided by the Index Figure applicable to the month twelve months
prior thereto, provided that (a) if such ratio is greater than the Maximum Indexation
 35




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Factor
specified in the relevant Final Terms, it shall be deemed to be equal to such Maximum Indexation
Factor and (b) if such ratio is less than the Minimum IndexationFactor specified in the relevant Final Terms, it shall be deemed to be equal to such Minimum
Indexation Factor;Limited Indexation Monthmeans any month specified in the relevant Final Terms for which a
Limited Indexation Factor is to be calculated;Limited Index Linked Instrumentsmeans Index Linked Instruments to which a Maximum Indexation
Factor and/or a Minimum Indexation Factor (as specified in the relevant Final Terms) applies; andReference Giltmeans the Treasury Stock specified as such in the relevant Final Terms for so long
as such stock is in issue, and thereafter such issue of index-linked Treasury Stock determined to
be appropriate by a gilt-edged market maker or other adviser selected by the Issuer (an Indexation
Adviser).4.2
    
    Application of the Index RatioEach payment of interest and principal in respect of the Instruments shall be the amount provided
in, or determined in accordance with, these Conditions, multiplied by the Index Ratio or Limited
Index Ratio in the case of Limited Index Linked Instruments applicable to the month in which such
payment falls to be made and rounded in accordance with Condition 3.2.4(e).4.3
    
    Changes in Circumstances Affecting the Index
 (i)
    
    Change in base: If at any time and from time to time the Index is changed by the substitution
of a new base therefor, then with effect from the calendar month from and including that in which
such substitution takes effect (1) the definition of
Indexand Index Figurein Condition 4.1 shall be deemed to refer to the new date or month in substitution
for January 1987 (or, as the case may be, to such other date or month as may have been substituted
therefor), and (2) the new Base Index Figure shall be the product of the existing Base Index Figure
and the Index Figure immediately following such substitution, divided by the Index Figure
immediately prior to such substitution.(ii)
    
    Delay in publication of Index: If the Index Figure which is normally published in the seventh
month and which relates to the eighth month (the relevant
month) before the month in which a
payment is due to be made is not published on or before the fourteenth business day before the date
on which such payment is due (the date for payment), the Index Figure applicable to the month in
which the date for payment falls shall be (1) such substitute index figure (if any) as the Trustee
considers to have been published by the Bank of England for the purposes of indexation of payments
on the Reference Gilt or, failing such publication, on any one or more issues of index- linked
Treasury Stock selected by an Indexation Adviser (and approved by the Trustee) or (2) if no such
determination is made by such Indexation Adviser within seven days, the Index Figure last published
(or, if later, the substitute index figure last determined pursuant to Condition 4.3(i)) before the
date for payment.
 4.4
    
    Application of ChangesWhere the provisions of Condition 4.3(ii) apply, the determination of the Indexation Adviser as to
the Index Figure applicable to the month in which the date for payment falls shall be conclusive
and binding. If, an Index Figure having been applied pursuant to Condition
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4.3(ii)(2), the Index Figure relating to the relevant month is subsequently published while an
Instrument is still outstanding, then:
 (i)
    
    in relation to a payment of principal or interest in respect of such Instrument other than upon
final redemption of such Instrument, the principal or interest (as the case may be) next payable
after the date of such subsequent publication shall be increased or reduced by an amount equal to
(respectively) the shortfall or excess of the amount of the relevant payment made on the basis of
the Index Figure applicable by virtue of Condition 4.3(ii)(2) below or above the amount of the
relevant payment that would have been due if the Index Figure subsequently published had been
published on or before the fourteenth business day before the date for payment; and(ii)
    
    in relation to a payment of principal or interest upon final redemption, no subsequent
adjustment to amounts paid will be made.
 4.5
    
    Cessation of or Fundamental Changes to the Index
 (i)
    
    If (1) the Trustee has been notified by the Calculation Agent that the Index has ceased to be
published or (2) any change is made to the coverage or the basic calculation of the Index which
constitutes a fundamental change which would, in the opinion of (A) the Issuer be materially
prejudicial to the interests of the Issuer, or (B) the Trustee acting solely on the advice of an
Indexation Adviser, be materially prejudicial to the interests of the Instrumentholders, the
Trustee will give written notice of such occurrence to the Issuer in the case of (B), and the
Issuer and the Trustee together shall seek to agree for the purpose of the Instruments one or more
adjustments to the Index or a substitute index (with or without adjustments) with
the intention that the same should leave the Issuer and the Instrumentholders in no better and no
worse position than they would have been had the Index not ceased to be published or the relevant
fundamental change not been made.(ii)
    
    If the Issuer and the Trustee fail to reach agreement as mentioned above within 20 business
days following the giving of notice as mentioned in paragraph (i), a bank or other person in London
shall be appointed by the Issuer and the Trustee or, failing agreement on and the making of such
appointment within 20 business days following the expiry of the 20 day period referred to above, by
the Trustee (in each case, such bank or other person so appointed being referred to as the
Expert), to determine for the purpose of the Instruments one or more adjustments to the Index or
a substitute index (with or without adjustments) with the intention that the same should leave the
Issuer and the Instrumentholders in no better and no worse position than they would have been had
the Index not ceased to be published or the relevant fundamental change not been made. Any Expert
so appointed shall act as an expert and not as an arbitrator and all fees, costs and expenses of
the Expert and of any Indexation Adviser and of any of the Issuer and the Trustee in connection
with such appointment shall be borne by the Issuer.(iii)
    
    The Index shall be adjusted or replaced by a substitute index as agreed by the Issuer and the
Trustee or as determined by the Expert pursuant to the foregoing paragraphs, as the case may be,
and references in these Conditions to the Index and to any Index Figure shall be deemed amended in
such manner as the Trustee and the Issuer agree are appropriate to give effect to such adjustment
or replacement. Such amendments shall be effective from the date of such notification and binding
upon the Issuer, the
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Trustee and the Instrumentholders, and the Issuer shall give notice to the Instrumentholders in
accordance with Condition 14 of such amendments as promptly as practicable following such
notification.
 5
    
    Redemption, Purchase and Options
 5.1
    
    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 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 5.5.2
    
    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 7, and such
requirement to pay such additional amounts arises by reason of a change in the laws of the United
Kingdom or any political sub-division of the United Kingdom or taxing authority in the United
Kingdom or any political sub-division of the United Kingdom or in the interpretation or application
of the laws of the United Kingdom or any political sub-division of the United Kingdom 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, on
any Interest Payment Date or, if so specified in the relevant Final Terms, at any time, having
given not less than 30 nor more than 45 days notice to the Instrumentholders in accordance with
Condition 14, 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 5.2, 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.5.3
    
    PurchasesThe Issuer and any of its subsidiary undertakings 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.5.4
    
    Early Redemption
 5.4.1
    
    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 an index
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and/or a formula, upon redemption of such Instrument pursuant to Condition 5.2 or upon it becoming
due and payable as provided in Condition 9 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 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 5.2 or, if applicable, Condition 5.5 or 5.6 or upon it becoming
due and payable as provided in Condition 9, 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 7. 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.
 5.4.2
    
    Other InstrumentsThe Early Redemption Amount payable in respect of any Instrument (other than Instruments
described in Condition 5.4.1), upon redemption of such Instrument pursuant to this Condition 5.4 or
upon it becoming due and payable as provided in Condition 9, shall be the Final Redemption Amount
unless otherwise specified in the relevant Final Terms.
 5.5
    
    Redemption at the Option of the Issuer and Exercise of Issuers OptionsIf 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 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.
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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 an 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.5.6
    
    Redemption at the Option of Instrumentholders following a Restructuring Event
 5.6.1
    
    *[Redemption of Instruments issued by National Grid at the option of
InstrumentholdersIf at any time whilst any of the Instruments issued by National Grid remains outstanding, there
occurs the National Grid Restructuring Event, a Public Announcement shall be made and if, within
the National Grid Restructuring Period, either:
 (a)
    
    (if at the time that the National Grid Restructuring Event occurs there are Rated
Securities) a Rating Downgrade in respect of the National Grid Restructuring Event occurs; or(b)
    
    (if at the time that the National Grid Restructuring Event occurs there are no Rated
Securities) a Negative Rating Event in respect of the National Grid Restructuring Event occurs,
 (the National Grid Restructuring Event and Rating Downgrade or the National Grid Restructuring
Event and Negative Rating Event, as the case may be, occurring within the National Grid
Restructuring Period, together called a Put Event),then the holder of each Instrument issued by National Grid will have the option upon the giving of
a Put Notice (as defined in Condition 5.6.4) to require National Grid to redeem or, at the option
of National Grid, purchase (or procure the purchase of) such Instrument on the Put Date (as defined
in Condition 5.6.4) at its principal amount together with accrued interest to the Put Date.Promptly upon National Grid becoming aware that a Put Event has occurred, National Grid shall, or
at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested in
writing by the holders of at least one-quarter in principal amount of the Instruments then
outstanding or if so directed by an Extraordinary Resolution of the Instrumentholders, the Trustee
shall, give notice (a Put Event Notice) to the Instrumentholders in accordance with Condition 14
specifying the nature of the Put Event and the procedure (as set out in Condition 5.6.4) for
exercising the option contained in this Condition 5.6.1.National Grid shall, forthwith upon becoming aware of the occurrence of the National Grid
Restructuring Event (a) provide the Trustee with the relevant Directors Report and (b) provide or
procure that the Reporting Accountants provide the Trustee with the Accountants Report. The
Directors Report and the Accountants Report shall, in the absence of manifest error, be
conclusive and binding on all concerned,
including the
 
 *
    
    Only applicable where National Grid is the Issuer. 40




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Trustee and the Instrumentholders. The Trustee shall be entitled to act, or not act, and rely
on without being expected to verify the accuracy of the same (and shall have no liability to
Instrumentholders for doing so) any Directors Report and/or any Accountants Report (whether or
not addressed to it).5.6.2
    
    For the purposes of this ConditionAccountants Report means a report of the Reporting Accountants stating whether the amounts
included in the calculation of the Operating Profit and the amount for Consolidated Operating
Profit as included in the Directors Report have been accurately extracted from the accounting
records of National Grid and its Subsidiaries and whether the Disposal Percentage included in the
Directors Report has been correctly calculated which will be prepared pursuant to an engagement
letter to be entered into by the Reporting Accountants, National Grid and the Trustee.National Grid shall use reasonable endeavours to procure that there shall at the relevant time be
Reporting Accountants who have (a) entered into an engagement letter with National Grid and the
Trustee which shall (i) not limit the liability of the Reporting Accountants to the Trustee by
reference to a monetary cap and (ii) be available for inspection by Instrumentholders at the
principal office of the Trustee or (b) agreed to provide Accountants Reports on such other terms
as National Grid and the Trustee shall approve. If National Grid, having used reasonable
endeavours, is unable to procure that there shall at the relevant time be Reporting Accountants who
have entered into an engagement letter complying with (i) above, the Trustee may rely on an
Accountants Report which contains a limit on the liability of the Reporting Accountants by
reference to a monetary cap or otherwise.Investors should be aware that the engagement letter may contain a limit on the liability of the
Reporting Accountants which may impact on the interests of Instrumentholders.National Grid shall give notice to the Trustee of the identity of the Reporting Accountants;Consolidated Operating Profit means the consolidated operating profit on ordinary activities
before tax and interest and before taking account of depreciation and amortisation of goodwill and
regulatory assets (for the avoidance of doubt, exceptional items, as reflected in the Relevant
Accounts shall not be included) of National Grid and its subsidiaries (including any share of
operating profit of associates and joint ventures) determined in accordance with International
Financial Reporting Standards (IFRS) by reference to the Relevant Accounts;Directors Report means a report prepared and signed by two directors of National Grid addressed
to the Trustee setting out the Operating Profit, the Consolidated Operating Profit and the Disposal
Percentage and stating any assumptions which the Directors of National Grid have employed in
determining the Operating Profit;Disposal Percentage means, in relation to a sale, transfer, lease or other disposal or
dispossession of any Disposed Assets, the ratio of (a) the aggregate Operating Profit to (b) the
Consolidated Operating Profit, expressed as a percentage;Disposed Assets means, where National Grid and/or any of its Subsidiaries sells, transfers,
leases or otherwise disposes of or is dispossessed by any means (but
 41




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excluding sales, transfers, leases, disposals or dispossessions which, when taken together with any
related lease back or similar arrangements entered into in the ordinary course of business, have
the result that Operating Profit directly attributable to any such undertaking, property or assets
continues to accrue to National Grid or, as the case may be, such Subsidiary), otherwise than to a
wholly-owned Subsidiary of National Grid or to National Grid, of the whole or any part (whether by
a single transaction or by a number of transactions whether related or not) of its undertaking or
(except in the ordinary course of business of National Grid or any such Subsidiary) property or
assets, the undertaking, property or assets sold, transferred, leased or otherwise disposed of or
of which it is so dispossessed;Negative Rating Event shall be deemed to have occurred if either (a) National Grid does not,
either prior to or not later than 21 days after the relevant National Grid Restructuring Event,
seek, and thereupon use all reasonable endeavours to obtain, a rating of the Instruments or any
other unsecured and unsubordinated debt of National Grid having an initial maturity of five years
or more (Rateable Debt) from a Rating Agency or (b) if National Grid does so seek and use such
endeavours, it is unable, as a result of such National Grid Restructuring Event, to obtain such a
rating of at least investment grade (BBB- or Baa3 or their respective equivalents for the time
being), provided that a Negative Rating Event shall not be deemed to have occurred in respect of a
particular National Grid Restructuring Event if the Rating Agency declining to assign a rating of
at least investment grade (as described above) does not announce or publicly confirm that its
declining to assign a rating of at least investment grade was the result, in whole or in part, of
any event or circumstance comprised in or arising as a result of, or in respect of, the applicable
National Grid Restructuring Event (whether or not the National Grid Restructuring Event shall have
occurred at the time such investment grade rating is declined);National Grid Restructuring Event shall be deemed to have occurred at any time (whether or not
approved by the Board of Directors of National Grid) that the sum of Disposal Percentages for
National Grid within any period of 36 months commencing on or after the issue date of the first
Tranche of the Instruments is greater than 50 per cent.;National Grid Restructuring Period means the period ending 90 days after a Public Announcement
(or such longer period in which the Rated Securities or Rateable Debt, as the case may be, is or
are under consideration (announced publicly within the first mentioned period) for rating review
or, as the case may be,
rating by a Rating Agency);Operating Profit, in relation to any Disposed Assets, means the operating profits on ordinary
activities before tax and interest and before taking account of depreciation and amortisation of
goodwill and regulatory assets (for the avoidance of doubt, exceptional items, as reflected in the
Relevant Accounts, shall not be included) of National Grid and its Subsidiaries directly
attributable to such Disposed Assets as determined in accordance with IFRS by reference to the
Relevant Accounts and, if Relevant Accounts do not yet exist, determined in a manner consistent
with the assumptions upon which the Directors Report is to be based. Where the Directors of
National Grid have employed assumptions in determining the Operating Profit, those assumptions
should be clearly stated in the Directors Report;
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Public Announcement means an announcement by National Grid or the Trustee, of the occurrence of
the National Grid Restructuring Event published in a leading national newspaper having general
circulation in the United Kingdom (which is expected to be the
Financial Times);Rated Securities means the Instruments, if and for so long as they shall have an effective rating
from a Rating Agency and otherwise any Rateable Debt which is rated by a Rating Agency; provided
thatif there shall be no such Rateable Debt outstanding prior to the maturity of the Instruments,
the holders of not less than one-quarter in principal amount of outstanding Instruments may require
National Grid to obtain and thereafter update on an annual basis a rating of the Instruments from a
Rating Agency. In addition, National Grid may at any time obtain and thereafter update on an annual
basis a rating of the Instruments from a Rating Agency, provided that,except as provided above,
National Grid shall not have any obligation to obtain such a rating of the Instruments;Rating Agency means Standard & Poors Ratings Services, a division of The McGraw-Hill Companies,
Inc. and its successors or Moodys Investors Service, Inc. and its successors or any rating agency
substituted for either of them (or any permitted substitute of them) by National Grid from time to
time with the prior written approval of the Trustee;Rating Downgrade shall be deemed to have occurred in respect of the National Grid Restructuring
Event if the then current rating whether provided by a Rating Agency at the invitation of National
Grid or by its own volition assigned to the Rated Securities by any Rating Agency is withdrawn or
reduced from an investment grade rating (BBB- or Baa3 or their respective equivalents for the time
being or better) to a non-investment grade rating (BB+ or Ba1 or their respective equivalents for
the time being or worse) or, if a Rating Agency shall already have rated the Rated Securities below
investment grade (as described above), the rating is lowered one full rating category; provided
that a Rating Downgrade otherwise arising by virtue of a particular reduction in rating shall not
be deemed to have occurred in respect of a particular National Grid Restructuring Event if the
Rating Agency making the reduction in rating to which this definition would otherwise apply does
not announce or publicly confirm that the reduction was the result, in whole or part, of any event
or circumstance comprised in or arising as a result of, or in respect of, the applicable National
Grid Restructuring Event (whether or not the applicable National Grid Restructuring Event shall
have occurred at the time of the Rating Downgrade);Relevant Accounts means the most recent annual audited consolidated financial accounts of
National Grid and its Subsidiaries preceding the relevant sale, transfer, lease or other disposal
or dispossession of any Disposed Asset;Reporting Accountants means the auditors of National Grid (but not acting in their capacity as
auditors) or such other firm of accountants as may be nominated by National Grid and approved in
writing by the Trustee for the purpose or, failing which, as may be selected by the Trustee for the
purpose; andSubsidiary means a subsidiary within the meaning of Section 736 of the Companies Act 1985 and
Subsidiaries shall be construed accordingly.
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5.6.3
    
    The Trustee shall not be responsible for ascertaining or monitoring whether or not
the National Grid Restructuring Event, a Negative Rating Event or a Rating Downgrade in relation to
National Grid has occurred and, unless and until it has actual knowledge to the contrary, shall be
entitled to assume that no such event has occurred.5.6.4
    
    To exercise the option of redemption of an Instrument under Condition 5.6.1 the
Instrumentholder must deliver each Instrument to be redeemed accompanied by a duly signed and
completed notice of exercise in the form (for the time being current) obtainable from the specified
office of any Paying Agent (a Put Notice) and, in which the Instrumentholder may specify an
account to which payment is to be made under this Condition 5.6 to the specified office of any
Paying Agent on any business day falling within the period (the Put Period) of 45 days after a
Put Event Notice is given. The Instrument should be delivered together with all Receipts and
Coupons (and Talons) appertaining thereto maturing after the date (the Put Date) falling seven
days after the expiry of the Put Period, failing which (unless Condition 6.5.2 applies) the Paying
Agent will require payment of an amount equal to the face value of any such missing Receipt, Coupon
and/or Talon. Any amount so paid will be reimbursed in the manner provided in Condition 6 against
presentation and surrender of the relevant missing Receipt, Coupon and/or Talon, subject to
Condition 8. The Paying Agent to which such Instrument and Put Notice are delivered will issue to
the Instrumentholder concerned a non-transferable receipt in respect of the Instrument so
delivered. Payment in respect of any Instrument so delivered will be made, if
the Instrumentholder duly specified a bank account in the Put Notice to which payment is to be
made, on the Put Date by transfer to that bank account and, in every other case, on or after the
Put Date in the manner provided in Condition 6 against presentation and surrender (or, in the case
of part payment, endorsement) of such receipt at the specified office of any Paying Agent. A Put
Notice, once given, shall be irrevocable. For the purposes of the Conditions and the Trust Deed,
receipts issued pursuant to this Condition 5.6 shall be treated as if they were Instruments.
National Grid shall redeem the relevant Instruments on the Put Date unless previously redeemed or
purchased.]5.6.1
    
    *[Redemption of Instruments issued by NGET at the option of InstrumentholdersIf NGET Restructuring Put Option is specified in the relevant Final Terms and at any time whilst
any of the Instruments issued by NGET remains outstanding there occurs an NGET Restructuring Event
and in relation to
that NGET Restructuring Event, a Negative Certification is made and, within the NGET Restructuring
Period either:
 (a)
    
    (if at the time that an NGET Restructuring Event occurs there are Rated Securities) a
Rating Downgrade in respect of the relevant NGET Restructuring Event occurs; or(b)
    
    (if at the time that an NGET Restructuring Event occurs there are no Rated Securities) a
Negative Rating Event in respect of the relevant NGET Restructuring Event occurs,
 (the NGET Restructuring Event and Rating Downgrade or the NGET Restructuring Event and Negative
Rating Event, as the case may be, occurring within the NGET
 
 *
    
    Only applicable where NGET is the Issuer. 44




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Restructuring Period, together with a Negative Certification, shall be called a Put Event),then the holder of each Instrument of NGET will have the option upon the giving of a Put Notice (as
defined in Condition 5.6.4) to require NGET to redeem or, at the option of NGET, purchase (or
procure the purchase of) such Instrument on the Put Date (as defined in Condition 5.6.4) at its
principal amount together with accrued interest to the Put Date.Promptly upon NGET becoming aware that a Put Event has occurred, and in any event no later than 14
days after the occurrence of a Put Event, NGET shall, or at any time upon the Trustee becoming
similarly so aware the Trustee may, and if so requested in writing by the holders of at least
one-quarter in principal amount of the Instruments then outstanding or if so directed by an
Extraordinary Resolution of the Instrumentholders, the Trustee shall, give notice (a Put Event
Notice) to the Instrumentholders in accordance with Condition 14 specifying the nature of the Put
Event and the procedure (as set out in Condition 5.6.4) for exercising the option contained in this
Condition 5.6.1.5.6.2
    
    For the purposes of this ConditionElectricity Act means the Electricity Act 1989 as amended or re-enacted from time to time and all
subordinate legislation made pursuant thereto;Electricity Transmission Licence means the transmission licence, as subsequently amended from
time to time, originally granted by the Secretary of State for Energy to NGET under the Electricity
Act;Negative Certification means, on the occurrence of an NGET Restructuring Event, such event or
events being certified in writing by an independent financial adviser appointed by NGET and
approved by the Trustee (or, if NGET shall not have appointed such an adviser within 21 days after
becoming aware of the occurrence of such NGET Restructuring Event, appointed by the Trustee
(following consultation with NGET)) as being in its opinion materially prejudicial to the interests
of the Instrumentholders. Any Negative Certification by an independent financial adviser as to
whether or not, in its opinion, any event defined as an NGET Restructuring Event is materially
prejudicial to the interests of the Instrumentholders shall, in the absence of manifest error, be
conclusive and binding upon NGET, the Trustee, the Instrumentholders and the Couponholders;Negative Rating Event shall be deemed to have occurred if NGET is unable as a result of an NGET
Restructuring Event to obtain a rating of the Instruments or of any other comparable unsecured and
unsubordinated debt of NGET (or of any Subsidiary of NGET and which is guaranteed on an unsecured
and unsubordinated basis by NGET) having an initial maturity of five years or more (Rateable
Debt) from a Rating Agency of at least investment grade (BBB-/Baa3, or their respective
equivalents for the time being), which rating NGET shall use all reasonable endeavours to obtain,
provided that a Negative Rating Event shall not be deemed to have occurred in respect of a
particular NGET Restructuring Event if the Rating Agency making the relevant reduction or declining
to assign a rating of at least investment grade (as described above) does not announce or publicly
confirm or otherwise inform the Trustee that the reduction or its declining to assign a rating of
at least investment grade was the result,
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in whole or in part, of any event or circumstance comprised in or arising as a result of, or in
respect of, the applicable NGET Restructuring Event;NGET Restructuring Event means the occurrence of any one or more of the following events:
 (a)
    
    the Secretary of State for Trade and Industry or any official succeeding to his functions
gives NGET written notice of revocation of the Electricity Transmission Licence in accordance with
the terms as to revocation set out in Schedule 2 of the Electricity Transmission Licence, such
revocation to become effective not later than the Maturity Date of the Instruments or NGET agrees
in writing with the Secretary of State for Trade and Industry or any official succeeding to his
functions to any revocation or surrender of the Electricity Transmission Licence or any legislation
(whether primary or subordinate) is enacted terminating or revoking the Electricity Transmission
Licence; or(b)
    
    any modification is made to the terms and conditions of the Electricity Transmission
Licence other than such a modification which the Trustee, in its opinion, considers to be not
materially prejudicial to the interests of the Instrumentholders and has so confirmed in writing to
NGET; or(c)
    
    any legislation (whether primary or subordinate) is enacted removing, reducing or
qualifying the duties or powers of the Secretary of State for Trade and Industry or any official
succeeding to his functions and/or the Gas and Electricity Markets Authority under Section 3A of
the Electricity Act as compared with those in effect on the issue date of the first Tranche of the
Instruments other than such legislation which the Trustee, in its opinion, considers to be not
materially prejudicial to the interests of the Instrumentholders and has so confirmed in writing to
NGET;
 NGET Restructuring Period means:
 (a)
    
    if at the time at which the NGET Restructuring Event occurs there are Rated Securities,
the period of 90 days starting from and including the day on which an NGET Restructuring Event
occurs or such longer period in which the Rated Securities are under consideration (announced
publicly within such 90 day period) for rating review by a Rating Agency; or(b)
    
    if at the time at which an NGET Restructuring Event occurs there are no Rated Securities,
the period starting from and including the day on which an NGET Restructuring Event occurs and
ending on the day 90 days following the date on which a Negative Certification shall have been
given to NGET in respect of that NGET Restructuring Event;
 Rated Securities means (a) the Instruments or (b) such other comparable unsecured and
unsubordinated debt of NGET (or of any Subsidiary of NGET and which is guaranteed on an unsecured
and unsubordinated basis by NGET) having an initial maturity of five years or more selected by NGET
from time to time for the purpose of this definition with the approval of the Trustee and which
possesses an investment grade rating (BBB-/Baa3, or their respective equivalents for the time
being, or better) by any Rating Agency (whether at the invitation of NGET or by its own volition);
Rating Agency means Standard & Poors Ratings Services, a division of The McGraw-Hill
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Companies, Inc., or any of its Subsidiaries and their successors or Moodys Investors
Service, Inc., or any of its Subsidiaries and their successors or any rating agency substituted for
either of them (or any permitted substitute of them) by NGET from time to time with the prior
written approval of the Trustee;Rating Downgrade shall be deemed to have occurred in respect of an NGET Restructuring Event if
the rating assigned to the Rated Securities by any Rating Agency which is current immediately prior
to the occurrence of an NGET Restructuring Event (whether provided by a Rating Agency at the
invitation of NGET or by its own volition) is withdrawn or reduced from an investment grade rating
(BBB-/Baa3, or their respective equivalents for the time being, or better) to a non-investment
grade rating (BB+/Ba1, or their respective equivalents for the time being, or worse) or, if the
Rating Agency shall have already rated the Rated Securities below investment grade (as described
above), the rating is lowered one full rating category (from BB+/Ba1 to BB/Ba2 or such similar
lowering) provided that a Rating Downgrade shall not be deemed to have occurred in respect of or as
a result of a particular NGET Restructuring Event if the Rating Agency making the relevant
reduction in rating or declining to assign a rating of at least investment grade as provided in
these Conditions does not announce or publicly confirm, or otherwise inform the Trustee, that the
reduction or declining was the result, in whole or part, of any event or circumstance comprised in
or arising as a result of, or in respect of, the applicable NGET Restructuring Event;Subsidiary means a subsidiary within the meaning of Section 736 of the Companies Act 1985 and
Subsidiaries shall be construed accordingly.5.6.3
    
    The Trustee shall not be responsible for ascertaining whether or not an NGET Restructuring
Event, a Negative Rating Event or a Rating Downgrade in relation to NGET has occurred and, unless
and until it has actual knowledge to the contrary, shall be entitled to assume that no such event
has occurred.5.6.4
    
    To exercise the option of redemption of an Instrument under Condition 5.6.1 the
Instrumentholder must deliver each Instrument to be redeemed accompanied by a duly signed and
completed notice of exercise in the form (for the time being current) obtainable from the specified
office of any Paying Agent (a Put Notice) and, in which the Instrumentholder may specify an
account to which payment is to be made under this Condition 5.6 to the specified office of any
Paying Agent on any business day falling within the period (the Put Period) of 45 days after a
Put Event Notice is given. The Instrument should be delivered together with all Receipts and
Coupons (and Talons) appertaining thereto maturing after the date (the Put Date) falling seven
days after the expiry of the Put Period, failing which (unless Condition 6.5.2 applies) the Paying
Agent will require payment of an amount equal to the face value of any such missing Receipt, Coupon
and/or Talon.Any amount so paid will be reimbursed in the manner provided in Condition 6 against presentation
and surrender of the relevant missing Receipt, Coupon and/or Talon, subject to Condition 8. The
Paying Agent to which such Instrument and Put Notice are delivered will issue to the
Instrumentholder concerned a non-transferable receipt in respect of the Instrument so delivered.
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Payment in respect of any Instrument so delivered will be made, if the Instrumentholder duly
specified a bank account in the Put Notice to which payment is to be made, on the Put Date by
transfer to that bank account and, in every other case, on or after the Put Date in the manner
provided in Condition 6 against presentation and surrender (or, in the case of part payment,
endorsement) of such receipt at the specified office of any Paying Agent. A Put Notice, once given,
shall be irrevocable. For the purposes of the Conditions and the Trust Deed, receipts issued
pursuant to this Condition 5.6 shall be treated as if they were Instruments. NGET shall redeem the
relevant Instruments on the Put Date unless previously redeemed or purchased.]
 5.7
    
    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.5.8
    
    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.5.9
    
    Redemption by InstalmentsUnless previously redeemed, purchased and cancelled as provided in this Condition 5, 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.5.10
    
    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 respective Subsidiaries shall not entitle the
holder to vote at any meeting of
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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 11.6

    Payments and Talons
 6.1
    
    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 6.5.6) or Coupons (in
the case of interest, save as specified in Condition 6.5.6), 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.6.2
    
    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.6.3
    
    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 7. No commission or expenses shall
be charged to the Instrumentholders or Couponholders in respect of such payments.6.4
    
    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 a specified office in a continental 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 the 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 6.4, a Paying Agent with a
specified office in
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a European Union member state that will not be obliged to withhold or deduct tax pursuant to
European Council Directive 2003/48/EC or any other European Union Directive implementing the
conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the taxation of savings income
or any law implementing or complying with, or introduced in order to conform to, such Directive. 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.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 6.2.Notice of any such change or any change of any specified office shall promptly be given to the
Instrumentholders in accordance with Condition 14.6.5
    
    Unmatured Coupons and Receipts and unexchanged Talons
 6.5.1
    
    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 8).6.5.2
    
    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.6.5.3
    
    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.6.5.4
    
    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.6.5.5
    
    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.6.5.6
    
    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
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on an Instrument that only bears interest after its Maturity Date shall be payable on
redemption of that Instrument against presentation of that Instrument.
 6.6
    
    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:
 6.6.1
    
    (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 exchange
transactions may be carried on in the relevant currency in the principal financial centre of the
country of such currency; or6.6.2
    
    (in the case of a payment in Euro) which is a TARGET Business Day.
 6.7
    
    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 8).
 7
    
    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 Kingdom or any political sub-division of the United Kingdom or any authority
in or of the United Kingdom 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 Kingdom 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 European Council Directive 2003/48/EC or any other
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Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 on the
taxation of savings income or any law implementing or complying with, or introduced in order to
conform to, such Directive; or(e)
    
    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).
 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 14 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 5 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.8
    
    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.9
    
    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
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(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 £50,000,000, for the period
up to 31 March 2017, and thereafter, £100,000,000.[For the purposes of this Condition 9, Principal Subsidiary means Transco plc, NGET and National
Grid USA, and includes any successor entity thereto or any member of the group of companies
comprising National Grid and each of its subsidiary undertakings (the National Grid 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 National Grid 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.]*; or(d)
    
    Winding-up:a resolution is passed, or a final order of a court in the United Kingdom 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
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 within the meaning of Section 123(1)(e) or Section 123(2) of the Insolvency
Act 1986; or(g)
    
    Bankruptcy:the Issuer is adjudged bankrupt or insolvent by a court of competent
jurisdiction in its country of incorporation,
 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.10
    
    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.
 
 *
    
    Only applicable where National Grid is the Issuer. 53




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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.11
    
    Meetings of Instrumentholders, Modifications and Substitution
 11.1
    
    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 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).11.2
    
    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.
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11.3
    
    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.11.4
    
    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.
 12
    
    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 14 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) and otherwise as the Issuer may require.
Mutilated or defaced Instruments, Receipts, Coupons or Talons must be surrendered before
replacements will be issued.13
    
    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.
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14
    
    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.15
    
    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.16
    
    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 1999.17
    
    Governing Law and Jurisdiction
 17.1
    
    The Instruments and all matters arising from or connected with the Instruments are
governed by, and shall be construed in accordance with, English law.17.2
    
    The courts of England have exclusive jurisdiction to settle any dispute (a Dispute),
arising from or connected with the Instruments.17.3
    
    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 the contrary.17.4
    
    Nothing in this Condition 17 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.
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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.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 an Issuer or the Issuers 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 either of the
Issuers in respect of payments due on the Instruments for so long as the Instruments are
represented by such Global Instrument and such obligations of such Issuer or Issuers 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 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.Exchange1
    
    Temporary Global InstrumentsEach temporary Global Instrument will be exchangeable, free of charge to the holder, on or
after its Exchange Date:
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1.1
    
    if the relevant Final Terms indicates that such Global Instrument is issued in compliance
with the C Rules or 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
    
    otherwise, 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:
 2.1
    
    by the relevant Issuer giving notice to the Issuing and Paying Agent
and the Instrumentholders of its intention to effect such exchange;2.2
    
    if the relevant Final Terms provides that such Global Instrument is exchangeable at the
request of the holder, by the holder giving notice to the Issuing and Paying Agent of its election
for such exchange; and2.3
    
    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.
 In the event that a Global Instrument is exchanged for Definitive Instruments, such Definitive
Instruments shall be issued in Specified Denomination(s) only. Instrumentholders who hold
Instruments in the relevant clearing system in amounts that are not integral multiples of a
Specified Denomination may need to purchase or sell, on or before the relevant Exchange Date, a
principal amount of Instruments such that their holding is an integral multiple of a Specified
Denomination.
 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 InstrumentsOn 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 relevant 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,
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or procure the delivery of, an equal aggregate nominal amount of duly executed and authenticated
Definitive Instruments. 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 relevant 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. A record of each
payment so made will be endorsed on each Global Instrument, which endorsement will be prima facie
evidence that such payment has been made in respect of the Instruments.8
    
    PrescriptionClaims against an 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 7).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 meeting of Instrumentholders and, at any such meeting, as having one vote in
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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 an 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 an Issuer provided for in the Conditions of any Instruments while such
Instruments are represented by a permanent Global Instrument shall be exercised by such 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 such 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, Clearstream, Luxembourg or any other 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 presenting the
permanent Global Instrument for notation.14
    
    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 to such Global Instrument and may consider such interests as if
such accountholders were the holders of the Instruments represented by such Global Instrument.15
    
    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 relevant
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
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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.16
    
    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.17
    
    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 relevant
Issuer may forfeit such Instruments and shall have no further obligation to their holder in respect
of them.18
    
    Tradeable AmountsSo long as the Instruments are represented by a temporary Global Instrument or permanent Global
Instrument and the relevant clearing system(s) so permit, the Instruments shall be tradeable only
in principal amounts of at least the Specified Denomination (or if more than one Specified
Denomination, the lowest Specified Denomination) and integral multiples of the Tradeable Amount in
excess thereof specified in the relevant Final Terms.
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USE OF PROCEEDS
  62




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DESCRIPTION OF NATIONAL GRID PLC
 Overview
    Introduction
  Business overview
 Principal activities and markets
  UK electricity and gas transmission
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electricity transmission
   (NIPSCO) MISO
  UK gas distribution
   US electricity and gas distribution
  64




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US stranded cost recoveries
  Wireless infrastructure
       Other operations
  Regulatory environment
 SEC
 65




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(Ofgem)
   (Ofcom),
 Regulatory developments
 BETTA
    66




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Recent Developments
  Board of Directors
  Principal activities outsideName
    
    Title
    
    the National Grid GroupSir John Parker
    
    Chairman (Non-
Executive)
    
    Non-Executive Deputy Chairman of
Carnival plc, Non-Executive Chairman of
the Peninsular & Oriental Steam
Navigation Company and Senior Non-
Executive Director of the Court of the
Bank of England.Roger Urwin
    
    Group Chief Executive
    
    Non-Executive Director of Utilico
Investment Trust plc.Steve Lucas
    
    Group Finance Director
    
    Non-Executive Director of Compass
Group PLC.Edward Astle
    
    Group Director
    
    No appointments held outside the
National Grid Group.Steven Holliday
    
    Group Director
    
    Non-Executive Director of Marks and
Spencer Group plc.Mike Jesanis
    
    Group Director
    
    No appointments held outside the
National Grid Group.Nick Winser
    
    Group Director
    
    Director of Energy Networks Association
Ltd.John Allan
    
    Non-Executive Director
    
    Chief Executive of Exel plc and Non-
Executive Director of PHS Group plc and
Tibbett & Britten Group Plc.John Grant
    
    Non-Executive Director
    
    Chairman of Hasgo Group Limited. Non-
Executive Director of Cordex Plc,
Torotrak
plc, Corac Group Plc and The Royal
Automobile Club Ltd.
 67




---



##### 



Principal activities outsideName
    
    Title
    
    the National Grid GroupKenneth Harvey
    
    Non-Executive Director
    
    Non-Executive Chairman of Pennon
Group plc.Paul Joskow
    
    Non-Executive Director
    
    Trustee of the Putnam Mutual Funds and
Professor of Economics and Management
at the Massachusetts Institute of
Technology (MIT), Director of MIT Center
for Energy and Environmental Policy
Research and an Independent Director of
TransCanada.Stephen Pettit
    
    Non-Executive Director
    
    Non-Executive Director of National Air
Traffic Services, and Halma plc.
Chairman of ROK Property Solutions plc.Maria Richter
    
    Non-Executive Director
    
    Director of the Western Electricity Co-
ordinating Council.George Rose
    
    Non-Executive Director
    
    Director of BAe Systems plc, Non-Executive Director of SAAB AB and a
member of the Financial Reporting
Review Panel.
   68




---



##### 



DESCRIPTION OF NATIONAL GRID ELECTRICITY TRANSMISSION PLC
 Overview
    Business of National Grid Electricity Transmission
 inter alia,
  Regulation
  69




---



##### 



and demand in the GB electricity market and ensuring the secure,
reliable and efficient delivery of electricity in
real-time.
     Recent Developments
  70




---



##### 



Board of Directors
  Name
    
    Title
    
    Principal activities outside the NGET GroupRoger Urwin
    
    Chairman
    
    Group Chief Executive of National Grid plc and Director of
National Grid (US) Holdings Limited, National Grid (US)
Investments 4, National Grid (US) Partner 1 Limited, National
Grid (US) Partner 2 Limited, National Grid Holdings
Limited,
National Grid Holdings One plc, National Grid International
Limited, National Grid USA and Transco plc and Non-Executive
Director of Utilico Investment Trust PLC.Steven Holliday
    
    Chief
Executive
    
    Group Executive Director of National Grid plc, Director
of Lattice Group plc, Transco Holdings plc, Transco plc,
National Grid International Limited, NGTUK Ltd and Non-
Executive Director of Marks and Spencer Group plc.Andy Chapman
    
    Finance
Director
    
    Director of NG Procurement Holdings Ltd.Steve Lucas
    
    Director
    
    Group Finance Director of National Grid plc and
Director of Lattice Group Holdings Limited, Lattice Group
plc, National Grid Holdings Limited, National Grid
International Limited, National Grid (US) Partner 1 Limited,
National Grid (US) Partner 2 Limited, National Grid (US)
Investments 4, National Grid Holdings One plc, National Grid
plc, National Grid Telecom No. 1 Limited, National Grid USA,
National Grid (US) Holdings Limited, Transco Holdings plc and
Transco plc, President of National Grid Holdings Inc. and
Non-Executive Director of Compass Group plc.Nick Winser
    
    Group Director
    
    Group Executive Director of National Grid plc, Director
of Gridcom (UK) Limited, GridAmerica Holdings Inc.,
National Grid USA, Transco plc, Energy Networks Association
Limited, NGTUK Ltd, President of
 71




---



##### 



Name
    
    Title
    
    Principal activities outside the NGET GroupGridAmerica LLC and Energy Networks Association
Ltd.
   72




---



##### 



UNITED KINGDOM TAXATION
 The following is a summary of the United Kingdom withholding taxation treatment at the date
hereof in relation to payments of principal and interest in respect of the Instruments. The
comments do not deal with other United Kingdom tax aspects of acquiring, holding or disposing
of Instruments. The comments relate only to the position of persons who are absolute
beneficial owners of the Instruments. Prospective Instrumentholders should be aware that the
particular terms of issue of any series of Instruments as specified in the relevant Final
Terms may affect the tax treatment of that and other series of Instruments. The following is a
general guide and should be treated with appropriate caution. Instrumentholders who are in any
doubt as to their tax position should consult their professional advisers. Instrumentholders
who may be liable to taxation in jurisdictions other than the United Kingdom in respect of
their acquisition, holding or disposal of the Instruments are particularly advised to consult
their professional advisers as to whether they are so liable (and if so under the laws of
which jurisdictions), since the following comments relate only to certain United Kingdom
taxation aspects of payments in respect of the Instruments. In particular, Instrumentholders
should be aware that they may be liable to taxation under the laws of other jurisdictions in
relation to payments in respect of the Instruments even if such payments may be made without
withholding or deduction for or on account of taxation under the laws of the United Kingdom.1
    
    UK Withholding Tax on UK Source InterestThe Instruments issued by an Issuer which carry a right to interest will constitute
quoted Eurobonds provided they are and continue to be listed on a recognised stock exchange
within the meaning of section 841 of the Income and Corporation Taxes Act 1988. On the basis
of HM Revenue and Customs published interpretation of the relevant legislation, securities
which are to be listed on a stock exchange in a country which is a member state of the
European Union or which is part of the European Economic Area will satisfy this requirement if
they are listed by a competent authority in that country and are admitted to trading on a
recognised stock exchange in that country; securities which are to be listed on a stock
exchange in any other country will satisfy this requirement if they are admitted to trading on
a recognised stock exchange in that country. The London Stock Exchange is a recognised stock
exchange for these purposes. Whilst the Instruments are and continue to be quoted Eurobonds,
payments of interest on the Instruments may be made without withholding or deduction for or on
account of United Kingdom income tax.In all cases falling outside the exemption described above, interest on the Instruments may
fall to be paid under deduction of United Kingdom income tax at the lower rate (currently 20%)
subject to such relief as may be available under the provisions of any applicable double
taxation treaty or to any other exemption which may apply. However, this withholding will not
apply if the relevant interest is paid on Instruments with a maturity date of less than one
year from the date of issue and which are not issued under arrangements the effect of which is
to render such Instruments part of a borrowing with a total term of a year or more.2
    
    Provision of InformationInstrumentholders should note that where any interest on Instruments is paid to them (or to any
person acting on their behalf) by the relevant Issuer or any person in the United Kingdom
acting on behalf of such Issuer (a paying agent), or is received by any person in the United
Kingdom acting on behalf of the relevant Instrumentholder (other than solely by clearing or
arranging the clearing of
 73




---



##### 



a cheque) (a collecting agent), then the relevant Issuer, the paying agent or the collecting
agent (as the case may be) may, in certain cases, be required to supply to HM Revenue and
Customs details of the payment and certain details relating to the Instrumentholder (including
the Instrumentholders name and address). These provisions will apply whether or not the
interest has been paid subject to withholding or deduction for or on account of United Kingdom
income tax and whether or not the Instrumentholder is resident in the United Kingdom for United
Kingdom taxation purposes. Where the Instrumentholder is not so resident, the details provided
to HM Revenue and Customs may, in certain cases, be passed by HM Revenue and Customs to the tax
authorities of the jurisdiction in which the Instrumentholder is resident for taxation
purposes.With effect from 6 April 2006 the provisions referred to above may also apply, in certain
circumstances, to payments made on redemption of any Instruments where the amount payable on
redemption is greater than the issue price of the Instruments.3
    
    Other Rules Relating to United Kingdom Withholding Tax
 
    
    Instruments may be issued at an issue price of less than 100% of their principal
amount. Any discount element on any such Instruments will not be subject to any United Kingdom
withholding tax pursuant to the provisions mentioned above, but may be subject to
reporting requirements as outlined above.
    
    Where Instruments are to be, or may fall to be, redeemed at a premium, as opposed to
being issued at a discount, then any such element of premium may constitute a payment of
interest. Payments of interest are subject to United Kingdom withholding tax and reporting
requirements as outlined above.
    
    Where interest has been paid under deduction of United Kingdom income tax,
Instrumentholders who are not resident in the United Kingdom may be able to recover all
or part of the tax deducted if there is an appropriate provision in any applicable double
taxation treaty.
    
    The references to interest above mean interest as understood in United Kingdom
tax law. The statements above do not take any account of any different definitions of interest
or principal which may prevail under any other law or which may be created by the terms
and conditions of the Instruments or any related documentation.
    
    The above description of the United Kingdom withholding tax position assumes that
there will be no substitution of an Issuer and does not consider the tax consequences of any such substitution.
 4
    
    EU Savings DirectiveUnder EU Council Directive 2003/48/EC on the taxation of savings income, each Member State
is required, from 1 July 2005, to provide to the tax authorities of another Member State
details of payments of interest or other similar income paid by a person within its
jurisdiction to, or collected by such a person for, an individual resident in that other Member
State; however, for a transitional period, Austria, Belgium and Luxembourg may instead apply a
withholding system in relation to such payments, deducting tax at rates rising over time to
35%. The transitional period is to terminate at the end of the first full fiscal year following
agreement by certain non-EU countries to the exchange of information relating to such payments.Also with effect from 1 July 2005, a number of non-EU countries, and certain dependent or
associated territories of certain Member States, have agreed to adopt similar measures (either
 74




---



##### 



provision of information or transitional withholding) in relation to payments made by a person
within its jurisdiction to, or collected by such a person for, an individual resident in a Member
State. In addition, the Member States have entered into reciprocal provision of information or
transitional withholding arrangements with certain of those dependent or associated territories in
relation to payments made by a person in a Member State to, or collected by such a person for, an
individual resident in one of those territories.
 75




---



##### 



PLAN OF DISTRIBUTION
 Summary of Agreement
  Selling Restrictions
 United States
     European Economic Area
  76




---



##### 




 (a)
    
    in (or in Germany, where the offer starts within) the period beginning on 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, all in accordance with the Prospectus Directive and ending on the date which
is 12 months after the date of such publication;(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 (1) an average of at least 250
employees during the last financial year; (2) a total balance sheet of more than
43,000,000
and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or
consolidated accounts; or(d)
    
    at any time in any other circumstances which do not require the publication by the Issuer of
a prospectus pursuant to Article 3 of the Prospectus Directive.
  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;(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
 77




---



##### 



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
  General
    78




---



##### 



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 PLC/NATIONAL GRID ELECTRICITY TRANSMISSION PLC]*
 PART A  CONTRACTUAL TERMS
  
 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.
     
 [Include whichever of the following apply or specify as Not Applicable (N/A). Instrument
that the numbering should remain as set out below, even if Not Applicable is indicated for
individual paragraphs or sub-paragraphs.]
 
 
    
    Delete as applicable. 79




---



##### 



[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.
    
    (i)
    
    Issuer:
    
    [National Grid plc/National Grid Electricity Transmission plc]12.
    
    (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).]3.
    
    Specified Currency or
Currencies:
    
    [     ]4.
    
    Aggregate Nominal Amount:
    
    [     ][(i)]
    
    Series:
    
    [     ][(ii)
    
    Tranche:
    
    [     ]]5.
    
    Issue Price:
    
    [     ] per cent of the Aggregate Nominal Amount [plus accruedinterest from [insert date] ( if applicable)]6.
    
    Specified Denominations:
    
    [     ]2[     ]7.
    
    [(i)]
    
    Issue Date:
    
    [     ][(ii)]
    
    Interest Commencement
Date
    
    [     ]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][Index Linked Interest][Other (specify)](further particulars specified below)10.
    
    Redemption/Payment Basis:
    
    [Redemption at par][Index Linked Redemption]
 
 1
    
    Delete as applicable2
    
    Instruments which have a maturity of less than one year must have a minimum denomination
of £100,000 (or it equivalent in other
currencies) 80




---



##### 



[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:3
    
    [Investor Put][Issuer Call][(further particulars specified below)]13.
    
    (i)
    
    Status of the Instruments:
    
    Senior(ii)
    
    Date [Board] approval for
issuance of Instruments
obtained:
    
    [     ] [and [     ], respectively]]
(N.B Only relevant where Board (or similar) authorisation is
required for the particular tranche of Instruments)]14.
    
    Method of distribution:
    
    [Syndicated/Non-syndicated]PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE15.
    
    Fixed Rate Instrument
    
    [Applicable/Not Applicable]Provisions
    
    (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 [     ] in Nominal Amount(iv)
    
    Broken Amount(s):
    
    [Insert particulars of any initial or final broken interest amounts
which do not correspond with the Fixed Coupon Amount[(s)]](v)
    
    Day Count Fraction
    
    [30/360 /Actual/Actual ([ISMA]/ISDA)/other](Condition 3.2.5):(vi)
    
    Determination Dates
    
    [     ] in each year (insert regular interest payment dates, ignoring(Condition 3.2.5):
    
    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 ([ISMA]))(vii)
    
    Other terms relating to the
method of calculating interest
for Fixed Rate Instruments:
    
    [Not Applicable/give details]16.
    
    Floating Rate Instrument
    
    [Applicable/Not Applicable]
 
 3
    
    If Instruments are issued by National Grid, only insert any additional
put/call option other than the National Grid Restructuring Put contained in Condition 5.6.
This does not include the National Grid or NGET Restructuing Put in Condition 5.6. 81




---



##### 



Provisions
    
    (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)
    
    Business Centre(s)
    
    [     ](Condition 3.2.5):(v)
    
    Manner in which the
Rate(s) of Interest is/are to be determined:
    
    [Screen Rate
Determination/ISDA Determination/other (give details)](vi)
    
    Interest Period Date(s):
    
    [Not Applicable/specify dates](vii)
    
    Party responsible for
calculating the Rate(s) of Interest and Interest
Amount(s) (if not the Calculation Agent):
    
    [     ](viii)
    
    Screen Rate Determination(Condition 3.2.3(b)):
    
    Relevant Time: :
    
    [     ]
    
    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]]
    
    Primary Source for
Floating Rate:
    
    [Specify relevant screen
pageor Reference Banks]
    
    Reference Banks (if
Primary Source is
Reference Banks):
    
    [Specify five]
    
    Relevant Financial
Centre:
    
    [The financial centre most
closely connected to the Benchmark  specify if not London]
    
    Benchmark:
    
    [LIBOR, LIBID, LIMEAN, EURIBOR or other benchmark]
    
    Representative Amount:
    
    [Specify if screen or Reference Bank quotations are to be given
in respect of a transaction of a specified notional amount]
    
    Effective Date:
    
    [Specify if quotations are not be obtained with effect from
commencement of Interest Accrual Period]
    
    Specified Duration:
    
    [Specify period for quotation if not duration of Interest Accrual
 82




---



##### 



Period](ix)
    
    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)
    
    [     ](x)
    
    Margin(s):
    
    [+/-][     ] per cent per annum(xi)
    
    Minimum Rate of Interest:
    

[     ] per cent per annum(xii)
    
    Maximum Rate of Interest:
    
    [     ] per cent per annum(xiii)
    
    Day Count Fraction
    
    [     ](Condition 3.2.5):(xvi)
    
    Rate Multiplier:
    
    [     ](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
    
    [Applicable/Not Applicable]Provisions
    
    (If not applicable, delete the remaining sub-paragraphs of this
paragraph)(i)
    
    Amortisation Yield
    
    [     ] per cent per annum(Condition 5.4):(ii)
    
    Day Count Fraction
    
    [     ](Condition 3.2.5):(iii)
    
    Any other formula/basis of
determining amount
payable:
    
    [     ]18.
    
    Index-Linked Interest
    
    [Applicable/Not Applicable]Instrument
    
    (If not applicable, delete the remaining sub-paragraphs of this
paragraph)(i)
    
    Index/Formula:
    
    [give or annex details]
 83




---



##### 



(ii)
    
    Interest Rate:
    
    [     ](iii)
    
    Party responsible for
calculating the Rate(s) of
Interest, Interest Amount and
Redemption Amount(s) (if not the
Calculation Agent):
    
    [     ](iv)
    
    Provisions for determining
Coupon where calculation by
reference to Index and/or Formula
is impossible or
impracticable:
    
    [     ](v)
    
    Interest Payment Dates:
    
    [     ](vi)
    
    First Interest Payment
Date:
    
    [     ](vii)
    
    Interest Period(s):
    
    [     ](viii)
    
    Business Day Convention:
    
    [Following Business Day Convention/Modified Following
Business Day Convention/Preceding Business Day
Convention/other (give details)](ix)
    
    Minimum Indexation
Factor:
    
    [Not Applicable/specify](x)
    
    Business Centre(s)
    
    [     ](Condition 3.2.5):(xi)
    
    Maximum Indexation
    
    [Not Applicable/specify]Factor:(xii)
    
    Limited Indexation
    
    [     ] per cent per annumMonth(s):(xiii)
    
    Base Index Figure:
    
    [     ](xiv)
    
    Day Count Fraction
    
    [     ](Condition 3.2.5):19.
    
    Dual Currency Instrument
    
    [Applicable/Not Applicable]Provisions
    
    (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,
    
    [     ]
 84




---



##### 



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 3.2.5):
    
    [     ]PROVISIONS RELATING TO REDEMPTION20. Call Option4
    
    [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 Instrument of [  ]
specified denomination(iii)
    
    If redeemable in part:(a)
    
    Minimum nominal
amount to be redeemed:
    
    [     ](b)
    
    Maximum nominal
amount to be redeemed:
    
    [     ](iv)
    
    Option Exercise Date(s):
    
    [     ](v)
    
    Notice period (if other than
as set out in the Conditions)
    
    [     ]21. Put Option5
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this
paragraph)
 
 4
    
    This does not include the tax call in Condition 5.25
    
    This does not include the National Grid or NGET Restructuring Put in Condition 5.6. 85




---



##### 



(i)
    
    Optional Redemption
Date(s):
    
    [     ](ii)
    
    Optional Redemption
Amount(s) of each Instrument and
method, if any, of calculation of
such amount(s):
    
    [     ] per Instrument of [     ] specified denomination(iii)
    
    Option Exercise Date(s):
    
    [     ](iii)
    
    Notice period (if other than
as set out in the Conditions)
    
    [     ]22. NGET Restructuring Put Option:
    
    [Applicable/Not Applicable]23. Final Redemption Amount of each Instrument
    
    [[  ] per Instrument of [  ] specified denomination /other/see
Appendix]In cases where the Final Redemption Amount is
Index-Linked:(i)
    
    Index/Formula:
    
    [give or annex details](ii)
    
    Calculation Agent responsible for
calculating the Final Redemption
Amount:
    
    [     ][     ](iii)
    
    Provisions for determining
Final Redemption Amount where
calculated by reference to Index
and/or Formula and/or other variable:
    
    [     ](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:
    
    [     ]
 86




---



##### 



(vii)
    
    Minimum Final Redemption
Amount:(viii)
    
    Maximum Final
Redemption Amount:24. Early Redemption Amount(i)
    
    Early Redemption
Amount(s) of each Instrument
payable on redemption for
taxation reasons (Condition
5.2) or on Event of Default
(Condition 9) 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 5.2)
    
    [Yes/No](iii)
    
    Unmatured Coupons to
become void upon early
redemption (Condition 6.5)
    
    [Yes/No/Not Applicable]
 GENERAL PROVISIONS APPLICABLE TO THE INSTRUMENTS25.
    
    Form of Instruments:
    
    Bearer Instruments:[temporary Global Instrument exchangeable for a permanent Global
Instrument which is exchangeable for Definitive Instruments on 60 days
notice/at any time/in the limited circumstances specified in the
Permanent Global Instrument][temporary Global Instrument exchangeable for Definitive Instruments
on 40 days notice][permanent Global Instrument exchangeable for Definitive Instruments
on 60 days notice/at any time/in the limited circumstances specified in
the permanent Global Instrument]26.
    
    Financial Centre(s) or other
special provisions relating to Payment Dates (Condition
6.6):
    
    [Not Applicable/give details. Note that this item relates to the
date and place of payment, and not interest period end dates, to
which items 16(iv) and 18(vii) relate]27.
    
    Applicable TEFRA exemption:
    
    [C Rules/D Rules/Not Applicable]
 87




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##### 



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]
 88




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##### 



35.
    
    If non-syndicated, name of
Dealer:
    
    [Not Applicable/give name]36.
    
    Additional selling restrictions:
    
    [Not Applicable/give details]
 [LISTING AND ADMISSION TO TRADING APPLICATION
  RESPONSIBILITY
   
 Signed on behalf of the Issuer:By:Duly authorised
 89




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##### 



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 Gilt-Edged and
Fixed Interest Market with effect from
[     .] [Not Applicable.](iii)
    
    Estimate of total expenses
related to admission to
trading:
    
    [     ]2.
    
    RATINGSRatings:
    
    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.][5.
    
    REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES
 
 *
    
    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. 90




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##### 



[(i)] Reasons for the offer
    
    [     ][(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.](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. [Index-Linked Instruments only  PERFORMANCE OF INDEX/FORMULA/OTHER VARIABLE
AND OTHER INFORMATION CONCERNING THE UNDERLYING
 Need to include details of where past and future performance and
volatility of the index/formula/other variable can be obtained. Where the underlying is
an index need to include the name of the index and a description if composed by the
Issuer and if the index is not composed by the Issuer need to include details of where
the information about the index can be obtained. The underlying is not an index need to
include equivalent information.]8.
    
    [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.]*9.
    
    OPERATIONAL INFORMATION
 ISIN 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)]]
 
 *
    
    Required for derivative securities to which Annex XII to the Prospectus Directive
Regulation applies. 91




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##### 



Delivery:
    
    Delivery [against/free of] paymentNames and addresses of
additional Paying Agent(s) (if
any):
    
    [     ]10
    
    GENERALTradeable Amount:
    
    So long as the Instruments are
represented by a Global Instrument and
[specify relevant clearing system(s)] so
permit, the Instruments shall be
tradeable in minimum principal amounts
of [50,000]/[specify equivalent
to 50,000 if Instruments not
denominated in euro] and integral
multiples of [] (the Tradeable Amount)
in addition thereto.The 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 11.1:
    
    [Not Applicable/give details]
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##### 



GENERAL INFORMATION
 1.
    
    The admission of the Programme to listing on the Official List of the UK Listing Authority
and
to trading on the Market is expected to take effect on or about 23 August 2005. 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 UK Listing Authority and admitted to trading on the Market will
be so
admitted to listing and trading upon submission to the UK Listing Authority and the Market
(in
accordance with their rules and procedures) of the relevant Final Terms and any other
information required by the UK 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 UK 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 relevant Issuer and the relevant Dealer(s) may agree.2.
    
    The Issuers have obtained all necessary consents, approvals and authorisations in the
United Kingdom in connection with the issue and performance of the Instruments.3.
    
    The establishment of the Programme was authorised by a resolution of the Finance
Committee of the Board of Directors of National Grid (which was established by a resolution
of the Board of Directors of National Grid passed on 21 October 2002) passed on 23 October
2002 and by a resolution of the Finance Committee of the Board of Directors of NGET (which
was established by a resolution of the Board of Directors of NGET passed on 19 November
2002) passed on 19 October 2002.4.
    
    The update of the Programme was authorised by a resolution of the Finance Committee of
the Board of Directors of National Grid (which was established by a resolution of the Board
of
Directors of National Grid passed on 21 October 2002) passed on 28 October 2004 and by a
resolution of the Finance Committee of the Board of Directors of NGET (which was
established by a resolution of the Board of Directors of NGET passed on 19 November 2002)
passed on 28 October 2004.5.
    
    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.6.
    
    Neither National Grid 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 National Grid 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 National Grid or of the National Grid Group.
 93




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##### 



7.
    
    Neither NGET nor any of its subsidiaries is or has been involved in any governmental,
legal
or arbitration proceedings (including any such proceedings which are pending or threatened
of which NGET 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 NGET or of the NGET Group.8.
    
    Save as disclosed herein, there has been no significant change in the financial or trading
position of National Grid or the National Grid Group since 31 March 2005 and no material
adverse change in the prospects of National Grid since 31 March 2005.9.
    
    There has been no significant change in the financial or trading position of NGET or the
NGET Group since 31 March 2005 and no material adverse change in the prospects of
NGET since 31 March 2005.10.
    
    Pricewaterhouse Coopers LLP (authorised and regulated by the Financial Services Authority
for designated investment business) has audited the accounts of National Grid and NGET, for
the two years ended 31 March 2005 in accordance with United Kingdom generally accepted
auditing standards and reported thereon, respectively, without qualification.11.
    
    Each Instrument, 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.12.
    
    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 relevant
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 Trust Deed (which includes the form of the Global Instruments, the Definitive
Instruments, the Coupons, the Receipts and the Talons);(c)
    
    the Agency Agreement;(d)
    
    the Dealer Agreement;(e)
    
    the Memorandum and Articles of Association of each of the Issuers;(f)
    
    the audited consolidated accounts of National Grid for the financial years ended
31
March 2004 and 31 March 2005, respectively and any consolidated interim accounts of
National Grid published subsequently to such accounts;(g)
    
    the audited consolidated accounts of NGET for the two financial years ended 31
March
2004 and 31 March 2005, respectively; and(h)
    
    any Final Terms relating to Instruments which are admitted to listing, trading
and/or quotation by any listing authority, stock exchange and/or quotation system. (In
the case of any Instruments which are not admitted to listing, trading and/or quotation
by any listing authority, stock exchange and/or quotation system, copies of the
relevant Final Terms will only be available for inspection by the relevant
Instrumentholders.)
 94




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##### 



REGISTERED OFFICE OF EACH OF THE ISSUERS
 
 THE ARRANGER
 HSBC Bank plc
 THE DEALERS
 ABN AMRO Bank N.V.
250 Bishopsgate
London EC2M 4AA
    
    Banc of America Securities Limited
5 Canada Square
London E14 5AQBarclays Bank PLC
5 The North Colonnade
Canary Wharf
London E14 4BB
    
    Citigroup Global Markets Limited
Citigroup Centre
Canada Square
Canary Wharf
London E14 5LBDeutsche Bank AG, London Branch
Winchester House
1 Great Winchester Street
London EC2N 2DB
    
    Dresdner Bank AG London Branch
Riverbank House
2 Swan Lane
London EC4R 3UXHSBC Bank plc
8 Canada Square
London E14 5HQ
    
    National Australia Bank Limited
88 Wood Street
London EC2V 7QQRoyal Bank of Canada Europe Limited
71 Queen Victoria Street
London EC4V 4DE
    
    The Royal Bank of Scotland plc
135 Bishopsgate
London EC2M 3UR
 Mitsubishi Securities International plc
 LEGAL ADVISERS
 To the Dealers and to the Trustee
 Clifford Chance Limited Liability Partnership
 To the Issuers
 Linklaters
 95




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##### 



THE TRUSTEE
 The Law Debenture Trust Corporation p.l.c.
 ISSUING AND PAYING AGENT
 JPMorgan Chase Bank, N.A.
 PAYING AGENT
 Kredietbank S.A. Luxembourgeoise
 REGISTERED AUDITORS TO EACH OF THE ISSUERS
 PricewaterhouseCoopers LLP
 96