|THE NATIONAL GRID
        GROUP PLC and NATIONAL GRID COMPANY PLC
      And
      Steven
        Holliday
      Dated
        6th March 2001
|--------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                            
|                                                                                                                                            



|SERVICE AGREEMENT
|-----------------



1

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INDEX
  TO CLAUSES



|CLAUSE NO | TITLE                                                 | PAGE NO
|--------- | ----------------------------------------------------- | -------
|1.        | Appointment and Term                                  | 3      
|2.        | Duties                                                | 3      
|3.        | Salary                                                | 4      
|4.        | Pension                                               | 5      
|5.        | Insurance Benefits                                    | 5      
|6.        | Professional Fees                                     | 5      
|7.        | Car                                                   | 5      
|8.        | Expenses                                              | 6      
|9.        | Holidays                                              | 6      
|10.       | Sickness and Injury                                   | 6      
|11.       | Code of Corporate
        Governance                  | 7      
|12.       | Interests in other
        Businesses                 | 7      
|13.       | Confidentiality                                       | 8      
|14.       | Protection of Interests
        of Company            | 9      
|15.       | Termination                                           | 10     
|16.       | Waiver of Rights                                      | 12     
|17.       | Discipline and Grievances                             | 12     
|18.       | Inventions                                            | 12     
|19.       | Interpretation                                        | 13     
|20.       | Entire Contract Continuity
        and Conditionality | 14     
|21.       | Notices                                               | 14     
|22.       | Jurisdiction                                          | 15     



2

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THIS SERVICE AGREEMENT
  DATED 6th March 2001 IS BETWEEN:-



THE NATIONAL GRID GROUP
  plc (the Company) and THE NATIONAL GRID COMPANY plc whose registered
  offices are at 15 Marylebone Road, London NW1 5JD and National Grid House, Kirby
  Corner Road, Coventry, CV4 8JY respectively (the Companies)
  and Steven Holliday.



|1. |  | APPOINTMENT
      AND TERM
|-- |  | --------------------------

|1.1 |  | You will
      be employed by the Company as a Director and will perform such duties as
      may be assigned to you from time to time in accordance with Clause 2. Your
      current job title is Group Director, Europe, National Grid Group and you
      will report to the Group Chief Executive.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|1.2 |  | Your appointment
      to this post will be effective from 30th March 2001 and will
      continue, subject to and in accordance with the provisions of this contract,
      until terminated:-
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | by the Companies
      in accordance with Clause 15;
| |  | --- |  | ----------------------------------------------------

| |  | (b) |  | by the Companies
      giving you not less than twelve months notice (24 months for the first
      year, declining on a straight line basis in the second year to 12 months);
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) |  | by you giving
      the Companies not less than twelve months notice.
| |  | --- |  | ----------------------------------------------------------------------

|1.3 |  | In accordance
      with the Companys Articles of Association, your appointment is subject
      to ratification by shareholders in General Meeting.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

|2. |  | DUTIES
|-- |  | ------

|2.1 |  | During the
      continuance of your employment, you will:-
|--- |  | -----------------------------------------------------------

| |  | (a) |  | perform such
      duties as may from time to time be reasonably assigned to you whether those
      duties relate to the business of the Company or to the business of any of
      its Subsidiaries or Associates (including the holding of offices therein);
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | in all respects
      comply with all lawful directions given by or under the authority of the
      Company;
| |  | --- |  | -------------------------------------------------------------------------------------------------------------

| |  | (c) |  | use your
      best endeavours to promote, develop and extend the business and the interests
      of the Company and any of its subsidiaries;
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

| |  | (d) |  | unless prevented
      by sickness or injury and except during holidays, devote the whole of your
      time, attention and ability during your hours of work to the performance
      of your duties under this Contract;
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

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| |  | (e) |  | act only
      in accordance with the Memorandum and Articles of Association of the Company
      or of the relevant Associate or Subsidiary In the Company; and
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (f) |  | keep the
      board of directors of the Company (and, where applicable of the relevant
      Group company) promptly and fully informed (in writing if so requested)
      of your conduct of the business or affairs of the Company and provide such
      explanations as they may require.
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.2 |  | Your normal
      hours of work total 37 hours per week. However, you will be expected to
      work such other hours as may reasonably be required for the proper performance
      of your duties and you will not be entitled to receive additional remuneration
      for work over and above normal hours. In line with the Working Time Regulations,
      you will not be required to work more than an average of 48 hours per week.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.3 |  | You will
      be based at National Grid House, Kirby Corner Road, Coventry CV4 8JY, but
      you will also be provided with an office in the Group Headquarters at 15
      Marylebone Road, London NW1 5JD.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.4 |  | The Company
      reserves the right (as far as it is reasonable to do so and after giving
      you reasonable notice of the change) to relocate your main place of work
      to (or to require you to perform some of your duties from or to post you
      temporarily to) any of its UK offices.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | SALARY
|-- |  | ------

|3.1 |  | During the
      continuance of your employment (subject to Clause 10.2), you will be entitled
      to a salary at the rate of £270,000 per annum (or such higher rate
      as may from time to time be agreed between the parties).
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Your salary
      will accrue from day to day, be payable by equal monthly instalments on
      or before the last day of each month, and be inclusive of any remuneration
      to which you may be, or become entitled as a holder of any office in the
      Company or any other company for the time being in the Company.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 |  | The salary
      referred to in Clause 3.1 above shall be reviewed annually. The current
      review date is 1 April and your salary will be reviewed for the first time
      in April 2002.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.4 |  | The remuneration
      of senior staff is linked to the Companys and their own performance
      and you will be covered by these arrangements. This includes performance
      management principles and clear and agreed performance targets and objectives
      for each year which will be discussed and agreed with you by the Group Chief
      Executive. Following assessment of performance against these targets an
      annual bonus, currently of up to 60%, may be payable in June following the
      relevant year end. The performance year is 1 April to 31 March and your
      first participation in this bonus will commence 1 April 2001.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

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|4. |  | PENSION
|-- |  | -------

|4.1 |  | In this Clause
      the ESPS means the Electricity Supply Pension Scheme and words
      used in this Clause have the same meaning as they have under the provisions
      of the ESPS.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 |  | Subject to
      the terms and conditions (both statutory and non-statutory) in force from
      time to time in respect of the ESPS Group in which the Companies participate
      or of which it is Principal Employer, you will be eligible (but not obliged)
      to be a Member of the ESPS. You will also be entitled to enhanced pension
      arrangements as set out in Schedule 1 to this contract.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | As a member
      of the ESPS a Contracting-out certificate is in force in respect of your
      employment
|--- |  | -----------------------------------------------------------------------------------------------------------

|5. |  | INSURANCE
      BENEFITS
|-- |  | ------------------------

|5.1 |  | The Company
      will, during your employment, provide you and, if appropriate, your partner
      and dependent children with cover under a private medical expenses insurance
      scheme. This scheme is maintained from time to time by the Company for its
      employees, and cover is subject to and in accordance with the rules of such
      scheme which may be reviewed from time to time.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5.2 |  | The Company
      will, during your employment, provide you with personal accident insurance
      cover, subject to and in accordance with the rules from time to time of
      the relevant scheme, current details of which are available from Group Human
      Resources.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5.3 |  | The Company
      will provide Permanent Health Insurance to you whilst you are employed under
      this Contract until 30th March 2006, subject to underwriting by our insurers.
      At that time you will be eligible for ill health provisions of ESPS.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | PROFESSIONAL
      FEES
|-- |  | -----------------------

|6.1 |  | The Company
      will reimburse you in full for subscriptions for any professional memberships
      which, in its opinion, are relevant to your employment.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. |  | CAR
|-- |  | ---

|7.1 |  | You will
      be provided you with a car of suitable age, make, model and specification
      during the continuance of your employment in accordance with the policy
      laid down by the Company from time to time and the Company shall pay all
      standing and running costs relating to it (including the cost of fuel for
      private mileage) but not any taxable benefit arising. You shall comply
      with all rules laid down by the Company in relation to Company vehicles,
      notify the Company immediately of any accident involving your car and of
      any charge brought against you for a motoring offence and, unless otherwise
      agreed, shall return the car to your place of work forthwith on termination
      of your employment.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

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|8. |  | EXPENSES
|-- |  | --------

|8.1 |  | You will
      be reimbursed with all reasonable travelling, hotel and other expenses properly
      incurred by you in the performance of your duties under this Contract, subject
      to you providing the Company with receipts or other evidence as shall be
      required, of payment of the said expenses. The Company will also, during
      your employment, reimburse line rental and cost of business calls in respect
      of your home telephone.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. |  | HOLIDAYS
|-- |  | --------

|9.1 |  | You will
      be entitled, on a pro-rata monthly basis, to 31 working days holiday
      without loss of pay in each Holiday Year to be taken at such times as may
      be approved in advance by the Group Chief Executive. Holidays may not be
      carried forward from one Holiday Year to the next. No payment will be made
      by the Company during the continuance of this Contract in lieu of holidays
      not taken.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9.2 |  | Upon termination
      of this Contract, if (in the opinion of the Company) its business needs
      have prevented you from taking your holiday entitlement, you shall be entitled
      to payment (at the rate of 1/260th of your annual salary for each day) in
      lieu on a pro rata basis for any holidays not taken which have accrued in
      the Holiday Year up to the Date of Termination. However, if appropriate,
      the Company shall be entitled to deduct from your final salary instalment
      an amount equal to 1/260th of your salary for each days holiday taken
      prior to the Date of Termination in excess of your proportionate entitlement.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. |  | SICKNESS
      AND INJURY
|--- |  | -------------------------

|10.1 |  | If you are
      absent from work as a result of sickness or injury you will:-
|---- |  | ------------------------------------------------------------------------------

| |  | (a) |  | notify the
      Company by telephone on the first day of your absence or in the event of
      being unable to do so, as soon as practicable thereafter;
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | if the period
      of absence is less than 8 consecutive calendar days, submit to the Company
      on your return a certificate of sickness completed by yourself;
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) |  | if it is
      8 consecutive calendar days or more, submit to the Company without delay
      a medical certificate signed by a practising medical practitioner in respect
      of each week of absence after the first;
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (d) |  | you will,
      on request by the Company, allow yourself to be examined by the Company
      doctor who shall report to the Group Chief Executive as appropriate.
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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|10.2 |  | You will,
      subject to compliance with sub-clause 10.1 above and to Clause 15 below,
      be entitled to:-
|---- |  | ---------------------------------------------------------------------------------------------------------------

| |  | (a) |  | payment of
      salary at the full basic rate and maintenance of other contributions and
      benefits contractually provided by the Company (less any social security
      or other benefits payable to you) during any period of absence from work
      as a result of sickness or injury up to a maximum of a continuous period
      of 180 days or for an aggregate of 130 working days in any 12 consecutive
      months;
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | payment of
      salary at half the full basic rate in addition to other contributions and
      benefits (less any social security or other benefits payable to you) during
      any such periods of absence in excess of a continuous period of 180 days
      or for an aggregate of 130 working days in any 12 consecutive months;
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | but you
      will not be entitled to any payment of salary or maintenance of benefits
      during any absence in excess of 12 months.
| | ---------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | The Company
      will pay statutory sick pay, where appropriate, in accordance with the legislation
      in force at the time of absence, and any payment of salary in accordance
      with Clause 10.2 will go towards discharging its liability to pay statutory
      sick pay.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. |  | CODE
      OF CORPORATE GOVERNANCE
|--- |  | ----------------------------------

|11.1 |  | The National
      Grid Group plcs Code of Corporate Governance provides for you, in
      furtherance of your duties as a Director of the Company, to take independent
      professional advice, if necessary, at the Companys expense. The Chairman
      or the Group Company Secretary should be notified if this step is taken,
      which should only be taken in the best interests of the Company.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11.2 |  | As a Director
      of the Company you are, of course, bound by the provisions of the Companies
      Act and the Stock Exchange Listing Requirements, the details of which are
      available from the Group General Counsel and Company Secretary. If at any
      point you are uncertain as to the interpretation of such provisions you
      must seek the advice of the Group Chief Executive.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|12. |  | INTERESTS
      IN OTHER BUSINESSES
|--- |  | -----------------------------------

|12.1 |  | You shall
      disclose promptly in writing to the Company all your interests and those
      of your spouse and dependent children, in any business other than the business
      of the Company and its Subsidiaries and Associates and, save with the written
      consent of the Company (such consent not to be unreasonably withheld), you
      will not during the continuance of your employment accept any public office
      nor will you hold any directorship nor will you be engaged or interested
      (except as the holder for passive investment purposes of any shares or other
      securities quoted or dealt in on a recognised stock exchange not exceeding,
      in any case, 3 per cent of the class of securities of the company concerned)
      either directly or indirectly in any business or commercial occupation other
      than the business of the Company and its Subsidiaries and Associates.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7

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|12.2 |  | You shall
      comply where relevant with every rule of law, every regulation of The Stock
      Exchange and every regulation of the Company from time to time in force
      including compliance with the spirit as well as the letter of the rules
      for the time being applicable to the relevant stock exchanges on which shares
      of the Company are for the time being listed or traded. In relation to overseas
      dealings, you will also comply with all laws of the state and all regulations
      of the stock exchange, market or dealing system in which such dealings take
      place; and you will not (and will procure so far as you are able that your
      spouse and children do not) deal or become or cease to be interested (within
      the meaning of Part 1 of Schedule XIII to the Companies Act 1985) in any
      securities of the Company except in accordance with any rules or guidelines
      from time to time relating to securities transactions by senior executives
      of the Company.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13. |  | CONFIDENTIALITY
|--- |  | ---------------

|13.1 |  | You will
      not during the continuance of your employment or afterwards (unless authorised
      to do so by the Company or by a court of competent jurisdiction) directly
      or indirectly:-
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | use for your
      own benefit or the benefit of any other person; or
| |  | --- |  | ---------------------------------------------------------------------

| |  | (b) |  | disclose
      to any person,
| |  | --- |  | -----------------------------

| | any trade
      secrets or other confidential information relating to the business, affairs,
      finances, products or processes of the Company and/or of any of its Subsidiaries
      or Associates (Confidential Information).
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13.2 |  | The restriction
      in this Clause will not prevent you after the Date of Termination, from
      using for your own or anothers benefit, any Confidential Information
      which:-
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | by virtue
      of your employment, becomes part of your own skill and knowledge; and
| |  | --- |  | -------------------------------------------------------------------------------------

| |  | (b) |  | apart from
      the provisions of this Contract, could lawfully be used by you for that
      purpose, and in this respect you acknowledge without limitation the restrictions
      in Section 57 of the Electricity Act 1989.
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13.3 |  | During your
      employment, you will not:-
|---- |  | --------------------------------------------

| |  | (a) |  | directly
      or indirectly solicit, receive or obtain any discount, rebate, commission
      or other inducement (whether in cash or in kind) which is not authorised
      by regulations or guidelines from time to time governing dealings by executives
      on behalf of the Company, or, if you do, you will account immediately to
      the Company for the amount so received;
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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| |  | (b) |  | except in
      the proper course of your duties under this Agreement remove from Company
      premises or copy or allow others to copy (or transmit by fax, e-mail or
      other means) the contents of any document, computer disk, tape or other
      tangible item which contains any Confidential Information or which belongs
      to the Company; or
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) |  | at any time
      make any untrue or misleading statement relating to the Company, or any
      of its Subsidiaries or Associates.
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------

|14. |  | PROTECTION
      OF INTERESTS OF COMPANY
|--- |  | ----------------------------------------

|14.1 |  | During the
      period of 12 months after the Date of Termination, you will not directly
      or indirectly offer employment to or solicit or entice away or endeavour
      to entice away from the Company, or any of its Subsidiaries or Associates,
      any person who is and was, at any time during the period of two years prior
      to the Date of Termination, employed or engaged by the Company or any of
      its Subsidiaries or Associates in a senior management, senior technical
      or senior sales position and who, by reason of such position, possesses
      any Confidential Information or is likely to be able to solicit the custom
      of any customer of the Company, or its Subsidiaries or Associates.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14.2 |  | After the
      Date of Termination you will not represent yourself or permit yourself to
      be held out as being in any way connected with or interested in the business
      of the Company; and after such date you will not represent yourself or permit
      yourself to be held out as being in any way connected with the business
      of any of the Subsidiaries or Associates of the Company, except if and for
      so long as you remain an employee of that Subsidiary or Associate.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14.3 |  | It is your
      obligation to ensure you take no action and make no statement (or omit to
      take any action or make any statement) which constitutes unlawful discrimination
      whether under the Equal Pay Act 1970, the Sex Discrimination Act 1975, the
      Race Relations Act 1976, the Trade Union and Labour Relations (Consolidation)
      Act 1992, the Disability Discrimination Act 1995 or otherwise.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14.4 |  | You are required
      to comply with the provisions of the legislation on health and safety and
      working conditions. You are further required to do your utmost to ensure
      that the Company, and any of its Subsidiaries or Associates, comply with
      such health and safety legislation, all legislation concerning their areas
      of activity and generally with all legal obligations affecting the Company,
      or any of its Subsidiaries or Associates.
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14.5 |  | In this Clause
      references to acting directly or indirectly include (without prejudice to
      the generality of that expression) references to acting alone or jointly
      with or by means of any other person, firm or company.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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|15. |  | TERMINATION
|--- |  | -----------

|15.1 |  | At any time
      after notice to terminate your employment has been served or received by
      the Company, the Company may:-
|---- |  | -------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | require you
      to return to the Company any documents, computer disks and tapes and other
      tangible items in your possession or under your control which belong to
      the Company or which contain or refer to any Confidential Information; and/or
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | require you
      to delete all Confidential Information from any computer disks, tapes or
      other re-usable material in your possession or under your control and destroy
      all other documents and tangible items in your possession or under your
      control which contain or refer to any Confidential Information; and/or
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) |  | for such
      period as it considers reasonable ending no later than the expiry of such
      notice suspend you from the performance of all or any of your duties under
      this Agreement; and/or
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (d) |  | appoint a
      replacement to hold the same or similar job title as you and/or to carry
      out all or any of your duties instead of you; and/or
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (e) |  | for such
      period as it considers reasonable ending not later than the expiry of such
      notice exclude you from all or any premises of the Company or its Subsidiaries
      or Associates; and/or
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (f) |  | for such
      period as it considers reasonable ending no later than the expiry of such
      notice require you not, without its prior consent, to engage in any contact
      (whether or not at your own instance) with any customer, supplier, employee,
      director, officer or agent of any company in the Company which touches and
      concerns any of the business affairs of the Company.
| |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15.2 |  | Without prejudice
      to the Companys right to summarily dismiss you for gross misconduct,
      the Company will be entitled to terminate your employment without notice
      if you:-
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | commit a
      serious or persistent breach of any term of this Contract;
| |  | --- |  | -------------------------------------------------------------------------

| |  | (b) |  | commit any
      act of dishonesty or engage in any conduct (in either case whether or not
      in the course of your employment) which, in the opinion of the Company,
      causes or is likely to cause your continued employment to be detrimental
      to the interests or reputation of the Company, or any of its Subsidiaries
      or Associates;
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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| |  | (c) |  | become bankrupt
      or compound with your creditors; or
| |  | --- |  | ---------------------------------------------------------

| |  | (d) |  | are convicted
      of any arrestable criminal offence (other than an offence under road traffic
      legislation in the United Kingdom or elsewhere for which a fine or non-custodial
      penalty is imposed).
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15.3 |  | If you are
      incapacitated by sickness (including mental disorder) or injury from carrying
      out your duties under this Contract for a continuous period of 180 days
      or for an aggregate of 130 working days in any 12 consecutive months, the
      Company will be entitled, notwithstanding Clause 10.2 or your entitlement
      at that time to sick pay or benefits under the Companys permanent
      health insurance scheme, to terminate this Contract by not less than 6 months written
      notice given within 6 months after the end of the 180 or (as the case may
      be) 130 working days.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15.4 |  | When requested
      to do so during the currency of any notice to terminate your employment
      given or received by you and, in any event, on the Date of Termination you
      will promptly:-
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) |  | resign (if
      you have not already done so) from all offices held by you in the Company
      and its Subsidiaries and Associates;
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | deliver up
      (if you have not already done so) to the Company all lists of customers,
      correspondence, documents, discs, tapes, data listing, codes, designs, drawings
      and all other materials and property belonging to the Company or any of
      its Subsidiaries or Associates which may be in your possession or under
      your control, including any copies;
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | confirm in
      writing that you no longer have in your possession, custody or power any
      property of or relating to the business of the Company and that you have
      not retained or made any unauthorised copy (whether in documentary or electronic
      form) of any data which contains or refers to any Confidential information;
      and
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | deliver up
      to the Company forthwith any car provided under this Contract; and you hereby
      irrevocably authorise the Company to appoint someone as your attorney to
      act in your name and on your behalf to execute all documents and do all
      things necessary to effect the resignations referred to above, in the event
      of your failure to do so within 7 days of your being so requested or of
      the Termination Date (as the case may be).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15.5 |  | On serving
      or receiving notice to terminate this Contract or at any time thereafter
      during the currency of such notice the Company reserves the right in its
      absolute discretion to pay to you your salary (at the rate then payable
      under Clause 3.1 hereof) in lieu of your entitlement to notice.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|15.6 |  | Any termination
      of your employment will be without prejudice to your continuing obligations
      under this Agreement.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------

11

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|16. |  | WAIVER
      OF RIGHTS
|--- |  | ----------------------

|16.1 |  | If:-
|---- |  | ----

| |  | (a) |  | your employment
      is terminated:-
| |  | --- |  | -------------------------------------

| |  |  |  | i |  | by reason
      of the liquidation of the Company for the purpose of amalgamation or reconstruction;
      or
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------

| |  |  |  | ii |  | as part of
      any arrangement for the amalgamation of the undertaking of the Company not
      involving liquidation or for the transfer of the whole or part of the undertaking
      of the Company to any of its Subsidiaries or Associates, and
| |  |  |  | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | you are offered
      employment of a similar nature with the amalgamated or reconstructed or
      transferee company on terms not generally less favourable to you than the
      terms of this Contract;
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | you will
      have no claim against the Company under this Contract in respect of that
      termination.
| | ----------------------------------------------------------------------------------------------------------

|17. |  | DISCIPLINE
      AND GRIEVANCES
|--- |  | -------------------------------

|17.1 |  | As a Director
      of the Company, you are expected to conduct yourself in a thoroughly professional
      manner at all times. A copy of the Employee Rules of the Company for the
      time being in force, which apply to you by virtue of your employment hereunder
      but which do not form part of your terms and conditions of employment, can
      be obtained from Group Human Resources.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18. |  | INVENTIONS
|--- |  | ----------

|18.1 |  | If at any
      time during the continuance of your employment you, whether alone or with
      any other person, make, discover or produce any invention, process, development
      or design which relates to, or affects, or in the opinion of the Company
      is capable of being used or adapted for use in or in connection with, the
      business or any product, process or intellectual property right of the Company
      or any of its Subsidiaries or Associates:-
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | the invention,
      process, development or design will be the absolute property of the Company
      (except to the extent, if any, provided otherwise by Section 39 of the Patents
      Act 1977); and
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | you will
      immediately disclose it to the Company in writing.
| |  | --- |  | -----------------------------------------------------------------

12

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|18.2 |  | You will,
      if and when required to do so by the Company (whether during the continuance
      of your employment or afterwards), and at its expense:-
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | apply, or
      join with the Company, or any of its Subsidiaries or Associates in applying
      for letters patent or other protection in any part of the world for any
      invention, process, development or design to which Clause 18.1 above applies;
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | execute or
      procure to be executed all instruments, and do or procure to be done all
      things, which are necessary for vesting such letters patent or other protection
      in the Company or any other company, or subsequently for renewing and maintaining
      the same in the name of the Company or its nominee; and
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) |  | assist in
      defending any proceedings relating to, or to any application for, such letters
      patent or other protection.
| |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------

|18.3 |  | In relation
      to each and every copyright work or design which relates either directly
      or indirectly to the business of the Company, or any of its Subsidiaries
      or Associates (a Group Work) which you (jointly or alone) originate,
      conceive, write or make at any time during the period of your employment:-
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (a) |  | you will
      promptly disclose such Group Work to the Company. Group Works made wholly
      outside your normal working hours which are wholly unconnected with your
      employment are not Group Works;
| |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (b) |  | you hereby
      assign to the Company by way of future assignment all copyright, design
      right and other proprietary rights (if any) throughout the world in such
      Group Work;
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (c) |  | you hereby
      irrevocably and unconditionally waive in favour of the Company any and all
      moral rights conferred on you by Part 1 of the Copyright Designs and Patents
      Act 1988 in relation to any such Group Works;
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (d) |  | you acknowledge
      that, for the purposes of the proviso to Section 2(1) of the Registered
      Designs Act 1949 (as amended by the Copyright Designs and Patents Act 1988),
      the covenants on the part of you and the Company will be treated as good
      consideration and, for the purposes of that Act, the Company will be the
      proprietor of any design which forms part of the Group Works.
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19. |  | INTERPRETATION
|--- |  | --------------

| | In this
      Contract:-
| | ------------------------

|19.1 |  | Associate
      means a body corporate which for the time being has not less than 20 per
      cent of its equity share capital beneficially owned by the Company;
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

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|19.2 |  | Date
      of Termination means the date upon which your employment under this
      Agreement terminates or, where so notified by the Company, the date with
      effect from which the Company exercises its right to suspend you under Clause
      15.1(c);
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19.3 |  | Holiday
      Year means each 12 month period commencing 1st February and ending
      31st January;
|---- |  | ------------------------------------------------------------------------------------------------------

|19.4 |  | Subsidiary
      has the meaning attributed to it by Section 736 of the Companies Act 1985
      and equity share capital has the meaning attributed to it by
      Section 744 of the Companies Act 1985;
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19.5 |  | unless otherwise
      stated and except in Clause 20 below, a reference to your employment
      is to your employment by the Companies under this Contract;
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|19.6 |  | unless the
      context otherwise requires, words in the singular include the plural and
      vice versa, and a reference to a person includes a reference to a body corporate
      and to an unincorporated body of persons;
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|19.7 |  | a reference
      to a statute or statutory provisions includes a reference to that statute
      or provision as from time to time modified or re-enacted.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|20. |  | ENTIRE
      CONTRACT CONTINUITY AND CONDITIONALITY
|--- |  | ---------------------------------------------------

|20.1 |  | Except as
      otherwise expressly provided by its terms and for any detailed rules (not
      being inconsistent with the express terms hereof) from time to time laid
      down by the Company, this Contract represents the entire understanding,
      and supersedes any previous agreement, between the parties in relation to
      your employment by the Company, its Subsidiaries or Associates.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21. |  | NOTICES
|--- |  | -------

|21.1 |  | Any notice
      to be given under this Contract will be in writing and will be deemed to
      be sufficiently served by one party on the other if it is either delivered
      personally or is sent by prepaid first class post and addressed to the party
      to whom it is to be given, in the case of yourself, at your last known residence
      and in the case of the Company, at its registered office, and any such notice
      if so posted will be deemed to have been served on the day (excluding Sundays
      and public holidays) following that on which it was posted.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|22. |  | JURISDICTION
|--- |  | ------------

|22.1 |  | This Contract
      shall be governed by and interpreted in accordance with the laws of England
      and Wales and each of the parties submits to the jurisdiction of the English
      and Welsh courts as regards any claim or matter arising under this Contract
      or as a direct result of your employment by the Company.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Signed for and on behalf
  of
  The National Grid Group plc and The National Grid Company plc

|Signed | 
|------ | 
|       | 

|Date | 
|---- | 
|     | 





I accept employment with
  the National Grid Group plc and The National Grid Company plc on the terms and
  conditions contained in this Service Agreement.



|Signed | 
|------ | 
|       | 

|Date | 
|---- | 
|     | 



15

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#### SCHEDULE 1

#### THE NATIONAL GRID
  GROUP plc and THE NATIONAL GRID COMPANY plc

#### SUMMARY OF ENHANCED
  PENSION AND LIFE ASSURANCE
ARRANGEMENTS

#### Steven Holliday

This summary, which should
  be read in conjunction with the National Grid Company plc (the Company)
  section of the ESPS booklet, notifies you of your entitlement to additional
  benefits to those provided by the ESPS. The additions are as follows:

|1. | Your
      Normal Pension Age is age 60.
|-- | ----------------------------------------

|2. | Your
      pension will accrue at a rate of 1/30th of your Pensionable Salary for each
      year of Pensionable Service from 30th March 2001(complete days will count)
      or such higher amount as may be advised by the Actuary to the Scheme, subject
      to pension payable, including any retained benefits, not exceeding Inland
      Revenue limits (but see 12 below). You will be able to exchange part of
      your pension for a tax free lump sum up to the maximum permitted by the
      Inland Revenue.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | You
      may retire early and opt for payment of an immediate pension, subject to
      the consent of the Companies, at any time after age 55 in which case you
      will be entitled to an immediate pension calculated on your Pensionable
      Service and your Pensionable Salary at the date of termination.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Should
      your employment be terminated as a result of redundancy, and the termination
      is with the consent of the Companies, you will be entitled to the greater
      of:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | the
      severance terms of The National Grid Group, as amended from time to time,
      which currently include payment of a pension under standard ESPS terms only,
      (ie not a pension based on the enhanced accrual rate set out in this summary)
      at age 50, or immediately if aged over 50, or;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (b) | a
      deferred pension (and lump sum) payable at your request from age 50, or
      such later date as you may choose but no later than 60. The pension (and
      lump sum) will be calculated on your Pensionable Service and your Pensionable
      Salary at the date of termination. Should such a termination occur after
      your 50th birthday you will be entitled to an immediate pension (and lump
      sum) calculated on your Pensionable Service and your Pensionable Salary
      at the date of termination.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | In
      the event that it is agreed with the Companies that you should continue
      in service beyond age 60, there will be an appropriate adjustment to your
      benefits. The exact terms of the adjustment will be determined by the Companies
      and notified to you, upon advice received from the Actuary, when you reach
      age 60.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | On
      death in service before the Normal Pension Age a lump sum is available for
      your beneficiaries equal to four times your annual rate of basic salary
      at death, plus the total amount of contributions with interest paid by you
      into the National Grid Company plc Section of the ESPS.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | The
      pension payable to a spouse on death in service before Normal Pension Age
      is calculated as 2/3 of the pension you would have received at Normal Pension
      Age based on your Pensionable Salary at death.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|8. | The
      pension payable to a spouse on death after retirement is calculated as 2/3
      of your pension. The calculation will assume you chose to exchange no pension
      for cash at retirement and will be increased at the same rate as your pension
      has increased between retirement and death.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|9. | In
      the event of a transfer in of accrued pension benefits from another pension
      provider, any Back Service Credit will be calculated on standard ESPS benefits.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10. | Your
      contributions will be normally be 6% of your Salary. However, this may be
      reduced from time to time based on actuarial advice. In this respect, you
      will benefit from a reduction in your contribution to 3% of your salary
      until March 2002 or such later time as notified.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. | In
      this schedule Salary means the annual amount of salary payable
      by the Companies as stipulated in your Agreement as increased from time
      to time but excluding any bonus, allowance or emoluments in kind appertaining
      to your employment, unless otherwise determined by the Companies.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Pensionable
      Salary means the greater of
| | -----------------------------------------------

| | (a) | the
      Salary paid or payable in the highest paid year in the last five years of
      Pensionable Service, or if Pensionable Service is for a shorter period than
      five years in respect of such shorter period, or;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2

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| | (b) | the
      average annual Salary paid in the three highest paid consecutive years in
      the last ten of Pensionable Service, or if your Pensionable Service is for
      a shorter period, in respect of such shorter period.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Where
      a year other than the last one is used, such Salary to be increased in line
      with RPI.
| | -------------------------------------------------------------------------------------------------------

| | Pensionable
      Service means service whilst a contributing member of the ESPS. It
      is calculated in complete years but with each day completed in excess of
      a complete year calculated as 1/365 of a year and may include a Back Service
      Credit or Added year.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|11. | You
      should note that the Inland Revenue have placed a restriction (the earnings
      cap) on the amount of pay on which benefits may be calculated in an
      approved arrangement (£91,800 for the 2000/2001 Tax Year). Your pension
      at Normal Pension Age will be augmented under the National Grid Company
      plc Section of the ESPS, if necessary, up to the maximum allowable. If your
      full pension promise cannot be met from the National Grid Company plc Section
      of the ESPS, you will be provided with additional benefits of appropriate
      value under a separate agreement. With the exception of the earnings cap
      restriction, all other limits imposed by the Inland Revenue on approved
      arrangements will apply to the benefits referred to in this summary.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13. | In
      all other respects the provisions of ESPS will apply to you.
|--- | ---------------------------------------------------------------------

3

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