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EXHIBIT 2(d).1.1
  
 NATIONAL GRID GAS HOLDINGS plc
 (incorporated with limited liability in England and Wales on 27 November 1998 under registered number 3675375)
 NATIONAL GRID GAS plc
 (incorporated with limited liability in England and Wales on 1 April 1986 under registered number 2006000)
 NATIONAL GRID GAS FINANCE (NO 1) plc
 (incorporated with limited liability in England and Wales on 3 August 2006 under registered number 5895068)
 Euro 10,000,000,000
 Euro Medium Term Note Programme
  NATIONAL GRID GAS plc
 Programme Prospectus National Grid Gas Holdings National Grid Gas National Grid Gas Finance (No 1) Issuer Issuers Instruments Guarantor
 UK Listing
Authority FSMA Official List London Stock Exchange Market listed Investment Services Directive
 temporary Global Instrument permanent Global Instrument NGN Common Safekeeper Euroclear Clearstream, Luxembourg Common Depositary
  Prospectus Directive 
  Arranger for the Programme
 HSBC
 The Dealers
 BARCLAYS CAPITAL
    
    HSBCDEUTSCHE BANK
    
    MIZUHO INTERNATIONAL PLCJPMORGAN CAZENOVE
    
    THE ROYAL BANK OF SCOTLAND




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IMPORTANT NOTICES
 National Grid Gas
Holdings Group National Grid Gas Holdings Base Prospectus National Grid Gas Group National Grid Gas Base Prospectus National Grid Gas Finance (No 1) Base
Prospectus Base Prospectuses Base Prospectus
     2




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euro Japanese yen £ Sterling U.S.$ U.S. dollars
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Canadian dollars Australian
dollars New Zealand dollars Swedish krona Danish
krone Hong Kong dollars Swiss francs
 In connection with the issue of any Tranche (as defined in Overview of the Programme), 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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CONTENTS
 PageDOCUMENTS INCORPORATED BY REFERENCE
    
    
    6SUPPLEMENTAL PROSPECTUS
    
    
    7OVERVIEW OF THE PROGRAMME
    
    
    8RISK FACTORS
    
    
    15TERMS AND CONDITIONS OF THE INSTRUMENTS
    
    
    27SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
    
    
    56USE OF PROCEEDS
    
    
    62DESCRIPTION OF NATIONAL GRID GAS HOLDINGS plc
    
    
    63DESCRIPTION OF NATIONAL GRID GAS plc
    
    
    66DESCRIPTION OF NATIONAL GRID GAS FINANCE (NO 1) plc
    
    
    72DESCRIPTION OF THE GUARANTEE
    
    
    74UNITED KINGDOM TAXATION
    
    
    75PLAN OF DISTRIBUTION
    
    
    78FORM OF FINAL TERMS
    
    
    81PART B  OTHER INFORMATION
    
    
    92GENERAL INFORMATION
    
    
    95
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DOCUMENTS INCORPORATED BY REFERENCE
      6




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SUPPLEMENTAL PROSPECTUS
 Supplemental Prospectus
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OVERVIEW OF THE PROGRAMME
  Issuers
    
    National Grid Gas Holdings plc (registered number 3675375).National Grid Gas plc (registered number 2006000).National Grid Gas Finance (No 1) plc (registered number 5895068).Guarantor
    
    National Grid Gas plc (in respect of Instruments to be issued by National Grid
Gas Finance (No 1) plc).Description
    
    Euro Medium Term Note Programme.Size
    
    Up to Euro 10,000,000,000 (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
    
    Barclays Bank PLCDeutsche Bank AG, London BranchHSBC Bank plcJ.P. Morgan Securities Ltd.Mizuho International plcThe Royal Bank of Scotland plcThe Issuers and the Guarantor
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 Agents
    
    Kredietbank S.A. Luxembourgeoise.Method of Issue
    
    The Instruments will be issued on a
syndicated or non-syndicated basis. The
Instruments will be issued in series
(each a Series) having one or more
issue dates and on terms otherwise
identical (or identical other than in
respect of
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the first payment of
interest), the Instruments of each
Series being intended to be
interchangeable with all other
Instruments of that Series. Each Series
may be issued in tranches (each a
Tranche) on the same or different
issue dates. The specific terms of each
Tranche (which will be completed, where
necessary, with supplemental terms and
conditions and, save in respect of the
issue date, issue price, first payment
of interest and nominal amount of the
Tranche, will be identical to the terms
of other Tranches of the same Series)
will be completed in the final terms
document (the Final Terms).Issue Price
    
    Instruments may be issued at their
nominal amount or at a discount or
premium to their nominal amount. Partly
Paid Instruments may be issued, the
issue price of which will be payable in
two or more instalments.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 Guarantor (if applicable), the
Issuing and Paying Agent, the
Trustee and the relevant Dealer.Initial Delivery of Instruments
    
    On or before the issue date for each Tranche, if the relevant Global Instrument
is intended to be recognised as eligible collateral for Eurosystem monetary
policy and intra-day credit operations, the Global Instrument will be delivered
to a Common Safekeeper for Euroclear and Clearstream, Luxembourg. On or before
the issue date for each Tranche, if the relevant Global Instrument is not
intended to be recognised as eligible collateral for Eurosystem monetary policy
and intra-day credit operations, 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
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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 Guarantor (if applicable), the Issuing and Paying Agent, the
Trustee and the relevant Dealer.Currencies
    
    Subject to compliance with all relevant laws, regulations and directives, Instruments may
be issued in U.S. dollars, Australian dollars, Canadian dollars, Danish krone, Euro, Hong Kong
dollars, New Zealand dollars, Sterling, Swedish krona, Swiss francs or Japanese yen 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 the FSMA by
the relevant Issuer.Denominations
    
    Definitive Instruments will be in such
denominations as may be specified in the
relevant Final Terms, save that (a) 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
(b) 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.
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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 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
(if applicable) the relevant 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.
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Unless permitted by then current
laws and regulations, Instruments
which have a maturity of less
than one year must have a minimum
redemption amount of £100,000 (or
its equivalent in other
currencies).Redemption by Instalments
    
    The Final Terms issued in respect
of each issue of Instruments that
are redeemable in two or more
instalments will set out the
dates on which, and the amounts
in which, such Instruments may be
redeemed.Other Instruments
    
    Terms applicable to high interest
Instruments, low interest
Instruments, step-up Instruments,
step-down Instruments, Dual
Currency Instruments, reverse
Dual Currency Instruments,
optional Dual Currency
Instruments, Partly Paid
Instruments and any other type of
Instrument that the relevant
Issuer, the Trustee and any
Dealer or Dealers may agree to
issue under the Programme,
subject to compliance with all
relevant laws, regulations and
directives, will be set out in
the relevant Final Terms and (if
applicable) the relevant
Supplemental Prospectus.Optional Redemption
    
    The Final Terms issued in respect
of each issue of Instruments will
state whether such Instruments
may be redeemed prior to their
stated maturity at the option of
the relevant Issuer (either in
whole or in part) and/or the
holders, and if so the terms
applicable to such redemption.Status of Instruments and the guarantee
    
    The Instruments (and where
applicable, the guarantee in respect
of them) will constitute
unsubordinated and unsecured
obligations of the relevant Issuer
(and where applicable, the
Guarantor, respectively), all as
described in Terms and Conditions
of the Instruments  Status.Negative Pledge
    
    None of the Issuers or the Guarantor
will give any negative pledge in
respect of Instruments to be issued
under the Programme.Cross Default
    
    The events of default in respect of
Instruments in any Series will not
contain any cross default provision
in respect of any other indebtedness
of the relevant Issuer or the
Guarantor, where applicable, whether
with respect to Instruments in any
other Series or otherwise.Events of Default
    
    The events of default under the
Instruments are as specified below
under Terms and Conditions of the
Instruments  Events of Default.Early Redemption
    
    Except as provided in Optional
Redemption above and subject always
to the regulations and any other
laws, regulations and directives
applicable to the relevant currency
in which such Instruments are
denominated, Instruments will
 12




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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 save as compelled by
law. In the event that any deduction
or withholding on account of tax is
required to be made, the Issuer
will, in the circumstances provided
in Terms and Conditions of the
Instruments  Taxation and subject
to the exceptions therein, pay
additional amounts so as to
compensate for the amounts withheld
or deducted.Governing Law
    
    English.Listing
    
    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 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.
 13




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Terms and Conditions
    
    The Terms and Conditions applicable to each Series
will be as agreed between the relevant Issuer, the
Guarantor (where applicable), the Trustee and the
relevant Dealer(s) or other purchaser 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 and the Guarantor believe that the following factors may affect their
ability to fulfil their obligations under Instruments issued under the Programme. All of these
factors are contingencies which may or may not occur and the relevant Issuer and the Guarantor
are not in a position to express a view on the likelihood of any such contingency occurring.
 Factors which the relevant Issuer and the Guarantor believe 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 and the Guarantor believe that the factors described below represent the
principal risks inherent in investing in Instruments issued under the Programme, but the
relevant Issuer or the Guarantor may be unable to pay interest, principal or other amounts on
or in connection with any Instruments for other reasons and such Issuer and the Guarantor do
not represent that the statements below regarding the risks of holding any Instruments 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
reach their own views prior to making any investment decision.
 Risks relating to National Grid Gas Holdings plc and its business
  Changes in law or regulation could have an adverse effect on National Grid Gass results of
operations and may thereby have an adverse effect on National Grid Gas Holdings
  Breaches of or changes in environmental or health and safety laws or regulations could expose
National Grid Gas to claims for financial compensation and adverse regulatory consequences and
could damage National Grid Gas and National Grid Gas Holdings reputation
  15




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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 Gas and National Grid Gas Holdings financial
position and reputation
  National Grid Gas and National Grid Gas Holdings results of operations depend on a number of
factors relating to business performance of National Grid Gas including performance against
regulatory targets and the delivery of anticipated costs and efficiency savings
 Ofgem
 Changes to the regulatory treatment of commodity costs may have an adverse effect on the
results of operations
  16




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National Grid Gas and National Grid Gas Holdings reputations may be harmed if consumers of
energy suffer a disruption to their supply even if this disruption is outside of National Grid
Gass control
  National Grid Gas, and thereby National Grid Gas Holdings, are 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
  The nature and extent of National Grid Gas and National Grid Gas Holdings borrowings means
that an increase in interest rates could have an adverse impact on the companies financial
position and business results
  National Grid Gas and National Grid Gas Holdings 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
  Future funding requirements of National Grids pension schemes could adversely affect National
Grid Gass results of operations and thereby National Grid Gas Holdings
  17




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New or revised accounting standards, rules and interpretations by the UK, or international
accounting standard setting boards and other relevant bodies could have an adverse effect on
National Grid Gas and National Grid Gas Holdings reported financial results
 IFRS
 Risks relating to National Grid Gas plc and its business
 Changes in law or regulation could have an adverse effect on National Grid Gass results
of operations
  Breaches of or changes in environmental or health and safety laws or regulations could expose
National Grid Gas to claims for financial compensation and adverse regulatory consequences and
could damage National Grid Gass reputation
  Network failure or the inability to carry out critical non-network operations may have
significant adverse impacts on both National Grid Gass financial position and its reputation
  18




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National Grid Gass results of operations depend on a number of factors relating to business
performance including performance against regulatory targets and the delivery of 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 Gass reputation may be harmed if consumers of energy suffer a disruption to
their supply even if this disruption is outside of National Grid Gass control
  National Grid Gas 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
  The nature and extent of National Grid Gass borrowings means that an increase in interest
rates could have an adverse impact on its financial position and business results
 19




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National Grid Gas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
  Future funding requirements of National Grids pension schemes could adversely affect National
Grid Gass results of operations
  New or revised accounting standards, rules and interpretations by the UK, or international
accounting standard setting boards and other relevant bodies could have an adverse effect on
National Grid Gass reported financial results
 IFRS
 Risk relating to National Grid Gas Finance (No 1) plc and its business
  20




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Factors which are material for the purpose of assessing the market risks associated with
Instruments issued under the Programme
 Instruments may not be a suitable investment for all investors
  (i)
    
    have sufficient knowledge and experience to make a meaningful evaluation of the
relevant Instruments, the merits and risks of investing in the relevant Instruments and
the information contained or incorporated by reference in this Prospectus or any
applicable supplement;
 (ii)
    
    have access to, and knowledge of, appropriate analytical tools to evaluate, in the
context of its particular financial situation, an investment in the relevant Instruments
and the impact such investment will have on its overall investment portfolio;
 (iii)
    
    have sufficient financial resources and liquidity to bear all of the risks of an
investment in the relevant Instruments, including where principal or interest is payable
in one or more currencies, or where the currency for principal or interest payments is
different from the potential investors currency;
 (iv)
    
    understand thoroughly the terms of the relevant Instruments and be familiar with the
behaviour of any relevant indices and financial markets; and
 (v)
    
    be able to evaluate (either alone or with the help of a financial adviser) possible
scenarios for economic, interest rate and other factors that may affect its investment and
its ability to bear the applicable risks.
  Risks related to the structure of a particular issue of Instruments
  Instruments subject to optional redemption by the Issuer
   21




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Index Linked Instruments and Dual Currency Instruments
 Relevant Factor
 (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 Instruments
  Variable rate Instruments with a multiplier or other leverage factor
  Fixed/Floating Rate Instruments
  22




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Instruments issued at a substantial discount or premium
  Risks related to Instruments generally
  Modification, waivers and substitution
   European Monetary Union
  EU Savings Directive
  23




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Change of law
  Integral multiples of less than Euro 50,000
  Risks related to the market generally
  The secondary market generally
  24




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The Clearing Systems
 Euroclear Clearstream, Luxembourg
    Exchange rate risks and exchange controls
 Investors Currency
  Interest rate risks
  Credit ratings may not reflect all risks
  25




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Legal investment considerations may restrict certain investments
  26




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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  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 Gas Holdings National
Grid Gas National Grid Gas Finance (No 1) Issuer Issuers Guarantor Programme Instruments
 Trust Deed Trustee Agency
Agreement Issuing and Paying Agent Paying Agents Calculation Agent(s)
 Coupons Talons Couponholders Receipts
 27




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1
    
    Form, Denomination and TitleThe Instruments are issued in bearer form in the Specified Denomination(s) specified in
the relevant Final Terms and are serially numbered. Instruments of one Specified Denomination
are not exchangeable for Instruments of another Specified Denomination.In the case of 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 Directive 2003/71/EC (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.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, the Guarantor (if applicable) 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 this Instrument.2
    
    Status [and Guarantee]*
 2.1
    
    StatusThe Instruments and the Receipts and Coupons relating to them constitute direct,
unconditional and unsecured obligations of the Issuer and rank pari passuwithout any
preference or priority among themselves. The payment obligations of the Issuer under the
Instruments, Receipts and Coupons [and of the Guarantor under the Guarantee]* shall, subject to such exceptions as are from time to time applicable under
the laws of England, rank equally with all other present and
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 28




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future unsecured obligations (other than subordinated obligations, if any) of the Issuer
[and the Guarantor respectively]*.2.2
    
    [GuaranteeThe Guarantor has unconditionally and irrevocably guaranteed the due payment of all
sums expressed to be payable by the Issuer under the Trust Deed, the Instruments,
Receipts and Coupons. Its obligations in that respect (the Guarantee) are contained in
the Trust Deed.]*
 3
    
    Interest
 3.1
    
    Interest on Fixed Rate InstrumentsEach Fixed Rate Instrument bears interest on its outstanding nominal amount from
the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to
the Rate of Interest, payable in arrear on each Interest Payment Date. The amount of
interest payable shall be determined in accordance with condition 3.2.4(f).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. The amount of
interest payable shall be determined in accordance with condition 3.2.4(f). Such
Interest Payment Date(s) is/are either specified in the relevant Final Terms as
Specified Interest Payment Dates or, if no Specified Interest Payment Date(s)
is/are specified in the relevant Final Terms, Interest Payment Date shall mean each
date which falls the number of months or other period shown on this Instrument as
the Interest Period after the preceding Interest Payment Date or, in the case of
the first Interest Payment Date, after the Interest Commencement Date.3.2.2
    
    Business Day ConventionIf any date which is specified to be subject to adjustment in accordance with
a Business Day Convention would otherwise fall on a day which is not a Business
Day, then, if the Business Day Convention specified is (A) the Floating Rate
Convention, such date shall be postponed to the next day which is a Business Day
unless it would then fall into the next calendar month, in which event (x) such
date shall be brought forward to the immediately preceding Business Day and (y)
each subsequent such date shall be the last Business Day of the month in which such
date would have fallen had it not been subject to adjustment, (B) the Following
Business Day Convention, such date shall be postponed to the next day which is a
Business Day; (C) the Modified Following Business Day Convention, such date shall
be postponed to the next day which is a Business Day unless it would then fall into
the
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 29




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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 in the
relevant Final Terms.
 (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:
 (x)
    
    the Floating Rate Option is as specified in the relevant Final Terms;(y)
    
    the Designated Maturity is a period specified in the relevant Final
Terms; and(z)
    
    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:
 (x)
    
    if the Primary Source for Floating Rate is a
Page, subject as provided below, the Rate of Interest shall be:
 (a)
    
    the Relevant Rate (where such
Relevant Rate on such Page is a composite quotation or is
customarily supplied by one entity); or(b)
    
    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;
 30




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(y)
    
    if the Primary Source for the Floating Rate is
Reference Banks or if sub-paragraph (x) (a) applies and no Relevant Rate
appears on the Page at the Relevant Time on the Interest Determination
Date or if sub-paragraph (x) (b) 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(z)
    
    if paragraph (y) 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 (I) 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) (II) 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
 31




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Instrument. As from the Maturity Date, the Rate of Interest for any overdue
principal of such an Instrument shall be a rate per annum (expressed as a
percentage) equal to the Amortisation Yield (as defined in Condition
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 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),
 32




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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.
 (f)
    
    CalculationsThe amount of interest payable per Calculation Amount in respect of any
Instrument for any Interest Accrual Period shall be equal to the product of
the Rate of Interest, the Calculation Amount specified thereon, and the Day
Count Fraction for such Interest Accrual Period, unless an Interest Amount
(or a formula for its calculation) is applicable to such Interest Accrual
Period, in which case the amount of interest payable per Calculation Amount
in respect of such Instrument for such Interest Accrual Period shall equal
such Interest Amount (or be calculated in accordance with such formula).
Where any Interest Period comprises two or more Interest Accrual Periods, the
amount of interest payable per Calculation Amount in respect of such Interest
Period shall be the sum of the Interest Amounts payable in respect of each of
those Interest Accrual Periods. In respect of any other period for which
interest is required to be calculated, the provisions above shall apply save
that the Day Count Fraction shall be for the period for which interest is
required to be calculated.(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,[ the Guarantor,]* 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 3.2.2, the Interest Amounts
and the
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 33




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##### 



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 9, 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.(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.(i)
    
    DefinitionsIn these Conditions, unless the context otherwise requires, the following
defined terms shall have the meanings set out below:Benchmark means LIBOR, LIBID, LIMEAN, EURIBOR or such other Benchmark as
may be specified in the relevant Final Terms.Business Day means:
 (i)
    
    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(ii)
    
    in the case of Euro, a day on which the TARGET
System is operating (a TARGET Business Day); and/or(iii)
    
    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.
 Calculation Amount means the amount specified as such in the relevant Final
Terms.
 34




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##### 



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):
 (i)
    
    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);(ii)
    
    if Actual/365 (Fixed) is specified in the
relevant Final Terms, the actual number of days in the Calculation
Period divided by 365;(iii)
    
    if Actual/360 is specified in the relevant
Final Terms, the actual number of days in the Calculation Period divided
by 360;(iv)
    
    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 (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);(v)
    
    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(vi)
    
    if Actual/Actual-ICMA is specified in the
relevant Final Terms,
 (a)
    
    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(b)
    
    if the Calculation Period is longer
than one Determination Period, the sum of:
 35




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(x)
    
    the actual number of
days in such Calculation Period falling in the
Determination Period in which it begins divided by the
product of (1) the actual number of days in such
Determination Period and (2) the number of Determination
Periods in any year; and(y)
    
    the actual number of
days in such Calculation Period falling in the next
Determination Period divided by the product of (1) the
actual number of days in such Determination Period and (2)
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.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:
 (i)
    
    in respect of an Interest Accrual Period, the
amount of interest payable per Calculation Amount for that Interest
Accrual Period and which, in the case of Fixed Rate Instruments, and
unless otherwise specified hereon, shall mean the Fixed Coupon Amount or
Broken Amount specified hereon as being payable on the Interest Payment
Date ending the Interest Period of which such Interest Accrual Period
forms part; and(ii)
    
    in respect of any other period, the amount of
interest payable per Calculation Amount for that period.
 Interest Commencement Date means the Issue Date or such other date as may
be specified in the relevant Final Terms.Interest Determination Date means, with respect to a Rate of Interest and
Interest Accrual Period, the date specified as such in the relevant Final
Terms or, if none is
 36




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so specified, (i) the first day of such Interest Accrual Period if the
Specified Currency is Sterling or (ii) 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 (iii) 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, or calculated in
accordance with the provisions, in the relevant Final Terms.Redemption Amount means, as appropriate, the Final Redemption Amount, the
Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the
Optional Redemption Amount (Put), the Early Termination Amount or such other
amount in the nature of a redemption amount as may be specified in, or
determined in accordance with the provisions of the relevant Final Terms.Reference Banks means 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).
 37




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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 3.2.2.TARGET System means the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System or any successor to it.(j)
    
    Calculation Agent and Reference BanksThe Issuer[, failing whom the Guarantor,]* shall procure that
there shall at all times be four 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
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 38




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##### 



unwilling to continue to act as a Reference Bank, then the Issuer[ or the
Guarantor]* 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[ or the Guarantor]* 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 RPI for the purpose of
calculating the amount payable on repayment of the Reference Gilt. Any reference to the
Index Figure which is specified in the relevant Final Terms as:
 (i)
    
    applicable to a particular month, shall, subject as provided in
Conditions 4.3 and 4.5, be construed as a reference to the Index Figure published in
the seventh month prior to that particular month and relating to the month before
that of publication; or(ii)
    
    applicable to the first calendar day of any month shall, subject as
provided in Conditions 4.3 and 4.5, be construed as a reference to the Index Figure
published in the second month prior to that particular month and relating to the
month before that of publication; or(iii)
    
    applicable to any other day in any month shall, subject as provided in
Conditions 4.3 and 4.5, be calculated by linear interpolation between (x) the Index
Figure applicable to the first calendar day of the month in which the day falls,
calculated as specified in sub-paragraph (ii) above and (y) the Index Figure
applicable to the first calendar day of the month
 39




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##### 



following, calculated as specified in sub-paragraph (ii) above and rounded to the
nearest fifth decimal place.
 If the Index is replaced, the Issuer will describe the replacement Index in a supplement
to the Prospectus;Index Ratio applicable to any month or date, as the case may be, means the Index Figure
applicable to such month or date, as the case may be, divided by the Base Index Figure
and rounded to the nearest fifth decimal place;Limited Index Ratio means (a) in respect of any month or date, as the case may be,
prior to the relevant Issue Date, the Index Ratio for that month or date, as the case may
be, (b) in respect of any Limited Indexation Date after the relevant Issue Date, the
product of the Limited Indexation Factor for that month or date, as the case may be, and
the Limited Index Ratio as previously calculated in respect of the month or date, as the
case may be, twelve months prior thereto; and (c) in respect of any other month, the
Limited Index Ratio as previously calculated in respect of the most recent Limited
Indexation Month;Limited Indexation Date means any date falling during the period specified in the
relevant Final Terms for which a Limited Indexation Factor is to be calculated;Limited Indexation Factor means, in respect of a Limited Indexation Month or Limited
Indexation Date, as the case may be, the ratio of the Index Figure applicable to that
month or date, as the case may be, divided by the Index Figure applicable to the month or
date, as the case may be, twelve months prior thereto, provided that (a) if such ratio is
greater than the Maximum Indexation Factor specified in the relevant Final Terms, it
shall be deemed to be equal to such Maximum Indexation Factor and (b) if such ratio is
less than the Minimum Indexation Factor specified in the relevant Final Terms, it shall
be deemed to be equal to such Minimum Indexation Factor;Limited Indexation Month means any month specified in the relevant Final Terms for
which a Limited Indexation Factor is to be calculated;Limited Index Linked Instruments means Index Linked Instruments to which a Maximum
Indexation Factor and/or a Minimum Indexation Factor (as specified in the relevant Final
Terms) applies; andReference Gilt means the Treasury Stock specified as such in the relevant Final Terms
for so long as such stock is in issue, and thereafter such issue of index-linked Treasury
Stock determined to be appropriate by a gilt-edged market maker or other adviser selected
by the Issuer[ or the Guarantor]* (an Indexation Adviser).4.2
    
    Application of the Index RatioEach payment of interest and principal in respect of the Instruments shall be the
amount provided in, or determined in accordance with, these Conditions, multiplied by the
Index Ratio or Limited Index Ratio in the case of Limited Index Linked Instruments
applicable to the month or date, as
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 40




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##### 



the case may be, on which such payment falls to be made and rounded in accordance with
Condition 3.2.4(e).4.3
    
    Changes in Circumstances Affecting the Index
 (i)
    
    Change in base: If at any time and from time to time the Index is changed by
the substitution of a new base therefor, then with effect from the month from and
including that in which such substitution takes effect or the first date from and
including that on which such substitution takes effect, as the case may be, (1) the
definition of Index and Index Figure in Condition 4.1 shall be deemed to refer
to the new date or month in substitution for January 1987 (or, as the case may be,
to such other date or month as may have been substituted therefor), and (2) the new
Base Index Figure shall be the product of the existing Base Index Figure and the
Index Figure for the date on which such substitution takes effect, divided by the
Index Figure for the date immediately preceding the date on which such substitution
takes effect.(ii)
    
    Delay in publication of Index if sub-paragraph (i) of the definition of
Index Figure is applicable: If the Index Figure which is normally published in the
seventh month and which relates to the eighth month (the relevant month) before
the month in which a payment is due to be made is not published on or before the
fourteenth business day before the date on which such payment is due (the date for
payment), the Index Figure applicable to the month in which the date for payment
falls shall be (1) such substitute index figure (if any) as the Trustee considers
(acting solely on the advice of the Indexation Adviser) to have been published by
the United Kingdom Debt Management Office or the Bank of England, as the case may
be, for the purposes of indexation of payments on the Reference Gilt or, failing
such publication, on any one or more issues of index-linked Treasury Stock selected
by an Indexation Adviser (and approved by the Trustee (acting solely on the advice
of the Indexation Adviser)) or (2) if no such determination is made by such
Indexation Adviser within seven days, the Index Figure last published (or, if later,
the substitute index figure last determined pursuant to Condition 4.3(i)) before the
date for payment.(iii)
    
    Delay in publication of Index if sub-paragraph (ii) and/or (iii) of the
definition of Index Figure is applicable: If the Index Figure relating to any month
(the calculation month) which is required to be taken into account for the
purposes of the determination of the Index Figure for any date is not published on
or before the fourteenth business day before the date on which such payment is due
(the date for payment), the Index Figure applicable for the relevant calculation
month shall be (1) such substitute index figure (if any) as the Trustee considers
(acting solely on the advice of the Indexation Adviser) to have been published by
the United Kingdom Debt Management Office or the Bank of England, as the case may
be, for the purposes of indexation of payments on the Reference Gilt or, failing
such publication, on any one or more issues of index-linked Treasury Stock selected
by an Indexation Adviser (and approved by the Trustee (acting solely on the advice
of the Indexation Adviser)) or (2) if no such determination is made by such
Indexation Adviser within seven days, the Index Figure last published (or, if later,
the substitute index figure last determined pursuant to Condition 4.3(i)) before the
date for payment.
 4.4
    
    Application of Changes
 41




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##### 



Where the provisions of Condition 4.3(ii) or Condition 4.3(iii) apply, the
determination of the Indexation Adviser as to the Index Figure applicable to the month in
which the date for payment falls or the date for payment, as the case may be, shall be
conclusive and binding. If, an Index Figure having been applied pursuant to Condition
4.3(ii)(2) or Condition 4.3(iii)(2), the Index Figure relating to the relevant month or
relevant calculation month, as the case may be, is subsequently published while an
Instrument is still outstanding, then:
 (i)
    
    in relation to a payment of principal or interest in respect of such
Instrument other than upon final redemption of such Instrument, the principal or
interest (as the case may be) next payable after the date of such subsequent
publication shall be increased or reduced, as the case may be, by an amount equal to
the shortfall or excess, as the case may be, of the amount of the relevant payment
made on the basis of the Index Figure applicable by virtue of Condition 4.3(ii)(2)
or Condition 4.3(iii)(2) below or above the amount of the relevant payment that
would have been due if the Index Figure subsequently published had been published on
or before the fourteenth business day before the date for payment; and(ii)
    
    in relation to a payment of principal or interest upon final redemption,
no subsequent adjustment to amounts paid will be made.
 4.5
    
    Cessation of or Fundamental Changes to the Index
 (i)
    
    If (1) the Trustee and the Issuer [and the Guarantor]* have
been notified by the Calculation Agent that the Index has ceased to be published or
(2) any change is made to the coverage or the basic calculation of the Index which
constitutes a fundamental change which would, in the opinion of (A) the Issuer be
materially prejudicial to the interests of the Issuer,[ or the Guarantor]* or (B)
the Trustee acting solely on the advice of an Indexation Adviser, be materially
prejudicial to the interests of the Instrumentholders, the Trustee will give written
notice of such occurrence to the Issuer in the case of (B), and the Issuer[, the
Guarantor]* and the Trustee (acting solely on the advice of the Indexation Adviser)
together shall seek to agree for the purpose of the Instruments one or more
adjustments to the Index or a substitute index (with or without adjustments) with
the intention that the same should leave the Issuer[, the Guarantor]* and the
Instrumentholders in no better and no worse position than they would have been had
the Index not ceased to be published or the relevant fundamental change not been
made.(ii)
    
    If the Issuer[, the Guarantor]* and the Trustee (acting solely on the
advice of the Indexation Adviser) fail to reach agreement as mentioned above within
20 business days following the giving of notice as mentioned in paragraph (i), a
bank or other person in London shall be appointed by the Issuer[, the Guarantor]*
and the Trustee or, failing agreement on and the making of such appointment within
20 business days following the expiry of the 20 day period referred to above, by the
Trustee (acting solely on the advice of the Indexation Adviser) (in each case, such
bank or other person so appointed being referred to as the Expert), to determine
for the purpose of the Instruments one or more adjustments to the Index or a
substitute index (with or without adjustments) with the intention that the same
should leave the Issuer[, the Guarantor]* and the Instrumentholders in no better and
no
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 42




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##### 



worse position than they would have been had the Index not ceased to be published
or the relevant fundamental change not been made. Any Expert so appointed shall act
as an expert and not as an arbitrator and all fees, costs and expenses of the
Expert and of any Indexation Adviser and of any of the Issuer[, the Guarantor]* and
the Trustee in connection with such appointment shall be borne by the Issuer[ or
the Guarantor]*.(iii)
    
    The Index shall be adjusted or replaced by a substitute index as agreed
by the Issuer[, the Guarantor]* and the Trustee (acting solely on the advice of the
Indexation Adviser) or as determined by the Expert pursuant to the foregoing
paragraphs, as the case may be, and references in these Conditions to the Index and
to any Index Figure shall be deemed amended in such manner as the Trustee (acting
solely on the advice of the Indexation Adviser)[, the Guarantor]* and the Issuer
agree are appropriate to give effect to such adjustment or replacement. Such
amendments shall be effective from the date of such notification and binding upon
the Issuer,[ the Guarantor and]* the Trustee and the Instrumentholders, and the
Issuer [and the Guarantor]* shall give notice to the Instrumentholders in accordance
with Condition 14 of such amendments as promptly as practicable following such
notification.
 4.6
    
    Redemption for Index ReasonsIf either (i) the Index Figure for three consecutive months is required to be
determined on the basis of an Index Figure previously published as provided in Condition
4.3(ii)(2) and the Trustee has been notified by the Calculation Agent that publication of
the Index has ceased or (ii) notice is published by Her Majestys Treasury, or on its
behalf, following a change in relation to the Index, offering a right of redemption to
the holders of the Reference Gilt, and (in either case) no amendment or substitution of
the Index shall have been advised by the Indexation Adviser to the Issuer [and the
Guarantor]* and such circumstances are continuing, the Issuer may, upon giving
not more than 60 nor less than 30 days notice to the Instrumentholders in accordance
with Condition 14, redeem all, but not some only, of the Instruments at their principal
amount together with interest accrued but unpaid up to and including the date of
redemption (in each case adjusted in accordance with Condition 4.2).
 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.
 
 *
    
    Only applicable where National Grid Gas Finance
(No 1) is the Issuer. 43




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##### 



5.2
    
    Redemption for Taxation ReasonsIf, on the occasion of the next payment in respect of the Instruments the Issuer
[(or, if the Guarantee were called, the Guarantor)]* 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 [(or the Guarantor, as the case may be)]* taking reasonable
measures (such measures not involving any material additional payments by, or expense
for, the Issuer [(or the Guarantor, a the case may be)]*), 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 [(or the Guarantor, as the case may
be)]* 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 [(or the Guarantee, as the case may be)]* 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 [(or the Guarantor, as
the case may be)]* stating that the requirement referred to above cannot be avoided by
the Issuer [(or the Guarantor, as the case may be)]* 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[, the Guarantor]* and any of [its/their] 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
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
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 44




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##### 



(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 above), 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) to be redeemed specified hereon and no greater than the maximum nominal
amount (if any) to be redeemed specified on this Instrument.
 45




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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 and Exercise of
Instrumentholders OptionsIf Put Option is specified in the relevant Final Terms, the Issuer shall, at the
option of the holder of any such Instrument, upon the holder of such Instrument 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) at its Optional Redemption Amount together with interest accrued to the date
fixed for redemption.To exercise such option or any other Instrumentholders option which may be set out on
this Instrument (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 relevant
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.5.7
    
    Partly Paid InstrumentsPartly Paid Instruments will be redeemed, whether at maturity, early redemption or
otherwise, in accordance with the provisions of this Condition and the provisions
specified in the relevant Final Terms.5.8
    
    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.5.9
    
    CancellationAll Instruments redeemed pursuant to any of the foregoing provisions will be
cancelled forthwith (together with all unmatured Receipts and Coupons and unexchanged
Talons attached thereto).
 46




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##### 



All Instruments purchased by or on behalf of the Issuer [, the
Guarantor]* or any of [its/their] subsidiary undertakings 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 [, the Guarantor]* or any
of [its/their] respective subsidiary undertakings shall not entitle the holder to vote at
any meeting of Instrumentholders and shall not be deemed to be outstanding for the
purposes of calculating quorums at meetings of Instrumentholders or for the purposes of
Condition 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 Agents
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 47




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##### 



The Issuing and Paying Agent, the Paying Agents and the Calculation Agent initially
appointed by the Issuer [and the Guarantor]* 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 the Guarantor]* and do not
assume any obligation or relationship of agency or trust for or with any holder. The
Issuer [and the Guarantor]* reserve[s] 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 (i) an Issuing and Paying Agent,
(ii) a Paying Agent having a specified office in a continental European city, (iii) a
Calculation Agent where the Conditions so require one, (iv) 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 (v) 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 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 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 [and the Guarantor]* 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.
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 48




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##### 



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 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).
 49




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##### 



7
    
    TaxationAll payments of principal and interest by or on behalf of the Issuer [or the Guarantor]*
in respect of the Instruments, the Receipts and the Coupons [or under the
Guarantee]* 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 [or, as the case may be, the Guarantor]* 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
thirtieth 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 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 (i) 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, (ii) 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 (iii) principal and/or interest shall
be deemed to include any
 
 *
    
    Only applicable where National Grid Gas Finance (No 1) is the Issuer. 50




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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 [or the Guarantor]* 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 [or the Guarantor]* by the Trustee; or(c)
    
    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 [or the Guarantor]* be wound up or dissolved; or(d)
    
    Enforcement Proceedings: attachment is made of the whole or substantially the whole
of the assets or undertaking of the Issuer [or the Guarantor]* 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 the Guarantor]* or
an administration or similar order is made in relation to the Issuer [or the Guarantor]*
and such taking of possession, appointment or order is not released, discharged or
cancelled within 90 days; or(e)
    
    Insolvency: the Issuer [or the Guarantor]* 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(f)
    
    Bankruptcy: the Issuer [or the Guarantor]* is adjudged bankrupt or insolvent by a
court of competent jurisdiction in its country of incorporation,
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 51




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provided that in the case of [paragraphs (b) to (f)]*, [paragraph
(b)]* the Trustee shall have certified that in its opinion such event
is materially prejudicial to the interests of the Instrumentholders.Any such notice by the Trustee to the Issuer shall specify the serial number(s) of the
Instrument(s) concerned.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.
 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, (i) to amend the dates of maturity or
redemption of the Instruments, any Instalment Date or any date for payment of interest on
the Instruments, (ii) to reduce or cancel the nominal amount of, or any Instalment Amount
of, or any premium payable on redemption of, the Instruments, (iii) 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, (iv) 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, (v) to vary any method of calculating the Final Redemption
Amount, the Early Redemption Amount or the Optional Redemption Amount, (vi) 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 [,or] (vii) to
modify the provisions concerning the quorum required at any meeting of Instrumentholders
or the majority required to pass the Extraordinary Resolution [or (viii) to
 
 *
    
    Only applicable where National Grid Gas
Holdings plc is the Issuer.*
    
    Only applicable where National Grid Gas
plc or National Grid Gas Finance (No 1) is the Issuer. 52




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modify or cancel the Guarantee]* 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 (i) 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 (ii)
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.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
[a Successor in Business (as defined in the Trust Deed) or any subsidiary/any other
company]± in place of the Issuer or of any previous substituted company,
as principal debtor under the Trust Deed and the Instruments [and the substitution of the
Guarantors Successor in Business (as defined in the Trust Deed) or any subsidiary of the
Guarantor in place of the Guarantor]*. 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 [or the Guarantor]* any indemnification or
 
 *
    
    Only applicable where National Grid Gas Finance
(No 1) is the Issuer.±
    
    Delete as applicable. 53




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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[ or the Guarantor]* 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[ or the Guarantor]* on demand the amount payable by the Issuer[ or the
Guarantor]* in respect of such Instruments, Receipts, Coupons or further Coupons) and otherwise
as the Issuer[ or the Guarantor]* 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.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.
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 54




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15
    
    Indemnification of TrusteeThe Trust Deed contains provisions for the indemnification of the Trustee and for its
relief from responsibility, including provisions relieving it from any obligation to take
proceedings to enforce repayment unless indemnified to its satisfaction. The Trustee is
entitled to enter into business transactions with the Issuer[, the Guarantor]* or any of
[its/their] 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
 (a)
    
    The Instruments and all matters arising from or connected with the Instruments are
governed by, and shall be construed in accordance with, English law.(b)
    
    The courts of England have exclusive jurisdiction to settle any dispute (a
Dispute), arising from or connected with the Instruments.(c)
    
    [Each of the]*/[The] Issuer[, and the Guarantor]* 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.(d)
    
    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.
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 55




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SUMMARY OF PROVISIONS
RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
 Initial Issue of Instruments
 Common Depositary
   Common Depositary
  Relationship of Accountholders with Clearing Systems
  56




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Such persons shall have no claim directly against the relevant Issuer in respect of payments.
due on the Instruments for so long as the Instruments are represented by such Global Instrument
and such obligations of such Issuer will be discharged by payment to the bearer of such Global
Instrument in respect of each amount so paid.The Trustee may call for any certificate or other document to be issued by Euroclear,
Clearstream, Luxembourg or any other clearing system as to the principal amount of Instruments
represented by a Global Instrument standing to the account of any person. Any such certificate
or other document shall, in the absence of manifest error, be conclusive and binding for all
purposes. Any such certificate or other document may comprise any form of statement or print
out of electronic records provided by the relevant 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:
 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 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. An Instrumentholder
who holds a principal amount of less than the minimum Specified Denomination will not receive a
definitive Note in respect of such
 57




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holding and would need to purchase a principal amount of Instruments such that it holds an
amount equal to one or more Specified Denominations.
 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 (i) if principal in respect of any
Instruments is not paid when due or (ii) if so provided in, and in accordance with, the
Conditions (which will be set out in the relevant Final Terms) relating to Partly Paid
Instruments.4
    
    Delivery of InstrumentsIf the Global Instrument is a CGN, on or after any due date for exchange the holder of a
Global Instrument may surrender such Global Instrument or, in the case of a partial exchange,
present it for endorsement to or to the order of the Issuing and Paying Agent. In exchange for
any Global Instrument, or the part of that Global Instrument to be exchanged, the relevant
Issuer will (i) 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 (ii) in
the case of a Global Instrument exchangeable for Definitive Instruments, deliver, or procure
the delivery of, an equal aggregate nominal amount of duly executed and authenticated
Definitive Instruments or, if the Global Instrument is an NGN, the relevant Issuer will procure
that details of such exchange be entered pro ratain the records of the relevant clearing
system. In this Prospectus, Definitive Instruments means, in relation to any Global
Instrument, the Definitive Instruments for which such Global Instrument may be exchanged (if
appropriate, having attached to them all Coupons and Receipts in respect of interest or
Instalment Amounts that have not already been paid on the Global Instrument and a Talon).
Definitive Instruments will be security printed in accordance with any applicable legal and
stock exchange requirements in or substantially in the form set out in the Schedules to the
Trust Deed. On exchange in full of each permanent Global Instrument, the 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.
 58




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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:1
    
    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 in CGN form will be
made against presentation for endorsement and, if no further payment falls to be made in
respect of the Instruments, surrender of that Global Instrument to or to the order of the
Issuing and Paying Agent or such other Paying Agent as shall have been notified to the
Instrumentholders for such purpose. If the Global Instrument is a CGN, a record of each payment
so made will be endorsed on each Global Instrument, which endorsement will be prima facie
evidence that such payment has been made in respect of the Instruments. Condition 6.4(v) and
Condition 7(e) will apply to the Definitive Instruments only. If the Global Instrument is an
NGN, the relevant Issuer shall procure that details of each such payment shall be entered pro
ratain the records of the relevant clearing system and in the case of payments of principal,
the nominal amount of the Instruments recorded in the records of the relevant clearing system
and represented by the Global Instrument will be reduced accordingly. Payments under the NGN
will be made to its holder. Each payment so made will discharge the relevant Issuers
obligations in respect thereof. Any failure to make the entries in the records of the relevant
clearing system shall not affect such discharge.2
    
    PrescriptionClaims against the relevant 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).3
    
    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 respect of each integral currency unit of the Specified Currency of the Instruments
for which it may be exchanged in accordance with its terms.
 59




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4
    
    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.5
    
    PurchaseInstruments represented by a permanent Global Instrument may only be purchased by the
relevant Issuer or any of its subsidiary undertakings if they are purchased together with the
rights to receive all future payments of interest and Instalment Amounts (if any) on those
Instruments.6
    
    Issuers OptionAny option of the relevant 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
(to be reflected in the records of Euroclear and Clearstream, Luxembourg either as a pool
factor or as a reduction in nominal amount, at their discretion) or any other clearing system
(as the case may be).7
    
    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, except that
the notice shall not be required to contain the serial numbers of the Instruments in respect of
which the option has been exercised, and stating the nominal amount of Instruments in respect
of which the option is exercised and at the same time, where the permanent Global Instrument is
a CGN, presenting the permanent Global Instrument for notation. Where the Global Instrument is
an NGN, the relevant Issuer shall procure that details of such exercise shall be entered pro
ratain the records of the relevant clearing system and the nominal amount of the Notes
recorded in those records will be reduced accordingly.8
    
    NGN nominal amountWhere the Global Instrument is an NGN, the relevant Issuer shall procure that any
exchange, payment, cancellation, exercise of any option or any right under the Instruments, as
the case may be, in addition to the circumstances set out above shall be entered in the records
of the relevant clearing systems and
 60




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upon any such entry being made, in respect of payments of principal, the nominal amount of the
Instruments represented by such Global Instrument shall be adjusted accordingly.
 9
    
    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.10
    
    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, or a portion of it, to become due and repayable in the circumstances described in
Condition 9 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 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.11
    
    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.12
    
    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.
 61




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USE OF PROCEEDS
  62




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DESCRIPTION OF NATIONAL GRID GAS HOLDINGS plc
 Incorporation and Businesses
    Subsidiaries
  National Grid GasHoldingsShareholding (eitherName
    
    Country of Incorporation
    
    direct or indirect)British Transco Capital Inc.
    
    U.S.A. (Delaware)
    
    100%British Transco Finance (No. 1) Limited
    
    Cayman Islands
    
    100%British Transco Finance (No. 2) Limited
    
    Cayman Islands
    
    100%British Transco Finance (No. 3) Limited
    
    England & Wales
    
    100%British Transco Finance (No. 5) Limited
    
    England & Wales
    
    100%British Transco Finance Inc.
    
    U.S.A. (Delaware)
    
    100%British Transco International Finance B.V.
    
    The Netherlands
    
    100%C4Gas SA
    
    Belgium
    
    47.5%Joint Radio Company Limited
    
    England & Wales
    
    50%National Grid Gas plc
    
    England & Wales
    
    100%National Grid Gas Finance (No 1) plc
    
    England & Wales
    
    100%National Grid Metering Limited
    
    England & Wales
    
    100%Xoserve Limited
    
    England & Wales
    
    51.2%
 Directors
  63




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Principal
    
    Principal Activities outsideName
    
    Occupation
    
    National Grid Gas Holdings GroupStephen Charles Burrard-Lucas
    
    Director
    
    Group Finance Director of
National Grid plc and a director
of National Grid Electricity
Transmission plc, National Grid
Holdings One plc, National Grid
Gas plc, National Grid
International Limited, Lattice
Group plc, National Grid
Commercial Holdings Ltd,
National Grid USA and non
executive director of Compass
Group plcMalcolm Charles Cooper
    
    Director
    
    Group Tax and Treasury Director
of National Grid plc and a
director of British Transco
Capital Inc., British Transco
Finance Inc, National Grid
Commercial Holdings Ltd,
National Grid Holdings One plc,
National Grid International
Limited, Lattice Group plc,
National Grid Insurance Company
(Isle of Man) Ltd and The
Association of Corporate
TreasurersMark Robert Fairbairn
    
    Director
    
    Gas Distribution Director of
National Grid plc, Director of
National Grid Gas plc, National
Grid UK Limited and NGT
Intellectual Property LtdSteven John Holliday
    
    Director
    
    Chief Executive of National Grid
plc, Director of National Grid
Gas plc and a director of
Lattice Group plc, National Grid
Electricity Transmission plc,
National Grid USA, National Grid
UK Ltd, National Grid Gas plc,
National Grid Holdings One plc,
National Grid International
Limited, NGT Intellectual
Property Limited, National Grid
UK Ltd and non executive
director of Marks and Spencer
Group PLCAdam Wiltshire
    
    Director
    
    Director of National Grid Gas plc
   Recent Developments
  64




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65




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DESCRIPTION OF NATIONAL GRID GAS plc
 Incorporation and Businesses
 Gas Act
   Business of National Grid Gas plc
  (i)
    
    owning and operating the high pressure gas national transmission system (NTS) in
Great Britain (i.e. excluding Northern Ireland), comprising approximately 4,300 miles of
high pressure pipe and 25 compressor stations, connecting to eight distribution networks
and to third party independent systems for onward transportation of gas to end consumers
as well as interconnectors;
 (ii)
    
    operating four retained gas distribution networks (RDNs), comprising approximately
82,000 miles of distribution pipeline, conveying gas to domestic and industrial/commercial
users in central, eastern and north west England; and
 (iii)
    
    owning and operating liquefied natural gas (LNG) storage facilities.
 Licences
    66




---



##### 



Subsidiaries
  Country of
    
    National Grid Gass ShareholdingName
    
    Incorporation
    
    (either direct or indirect)British Transco Capital Inc.
    
    U.S.A. (Delaware)
    
    100 %British Transco Finance (No. 1) Limited
    
    Cayman Islands
    
    100 %British Transco Finance (No. 2) Limited
    
    Cayman Islands
    
    100 %British Transco Finance (No. 3) Limited
    
    England & Wales
    
    100 %British Transco Finance (No. 5) Limited
    
    England & Wales
    
    100 %British Transco Finance Inc.
    
    U.S.A. (Delaware)
    
    100 %British Transco International Finance B.V.
    
    The Netherlands
    
    100 %C4Gas SA
    
    Belgium
    
    47.5 %Joint Radio Company Limited
    
    England & Wales
    
    50 %National Grid Gas Finance (No 1) plc
    
    England & Wales
    
    100 %National Grid Metering Limited
    
    England & Wales
    
    100 %Xoserve Limited
    
    England & Wales
    
    51.2%
 67




---



##### 



Directors
  Principal Activities outside NationalName
    
    Principal Occupation
    
    Grid Gas GroupStephen Charles Burrard-Lucas
    
    Executive Director
    
    Group Finance Director of National
Grid plc and a director of National
Grid Electricity Transmission plc,
National Grid Holdings One plc,
National Grid International Limited,
Lattice Group plc, National Grid
Commercial Holdings Ltd, National
Grid USA and non executive director
of Compass Group plcMark Robert Fairbairn
    
    Chief Operating Officer
    
    Gas Distribution Director of
National Grid plc, Director of
National Grid Gas plc, National Grid
UK Limited and NGT Intellectual
Property Ltd.Steven John Holliday
    
    Chief Executive
    
    Chief Executive of National Grid plc
and a director of Lattice Group plc,
National Grid Holdings One plc,
National Grid Electricity
Transmission plc, National Grid USA,
National Grid Gas Holdings plc,
National Grid UK Ltd, National Grid
Gas plc, National Grid International
Limited, NGT Intellectual Property
Limited, National Grid UK Ltd and
non executive director of Marks and
Spencer Group PLCChristopher John Murray
    
    Director, Operations
and Trading
    
    NoneNicholas Paul Winser
    
    Executive Director
    
    Group Director of National Grid plc
and a director of National Grid
Wireless Ltd, National Grid UK Ltd,
National Grid Electricity
Transmission plc and National Grid
USAAdam Wiltshire
    
    Director
    
    Director of National Grid Gas
Holdings plc
   68




---



##### 



Regulatory Framework
 GEMA
   (i)
    
    the NTS; and
 (ii)
    
    the RDNs (taken as a whole),
     (i)
    
    prohibiting National Grid Gas from carrying on activities other than those permitted
by the Licences;
 (ii)
    
    requiring that each business has sufficient managerial and financial resources
available to it to conduct the relevant licensed activities;
 (iii)
    
    requiring National Grid Gas to maintain an investment grade issuer credit rating;
 (iv)
    
    prohibiting National Grid Gas from creating indebtedness (except in limited
circumstances) other than on an arms length basis on normal commercial terms for one of
its permitted purposes;
 69




---



##### 



(v)
    
    prohibiting the creation of cross-default obligations; and
 (vi)
    
    prohibiting either the NTS or the RDN business from giving or receiving any
cross-subsidy from any other group business.
     Recent Developments
  RDNs
    70




---



##### 



71




---



##### 



DESCRIPTION OF NATIONAL GRID GAS FINANCE (NO 1) plc
 Incorporation and Businesses
    Subsidiaries
  Directors
  Principal Activities outside National Grid GasName
    
    Principal Occupation
    
    Finance (No 1)Malcolm Cooper
    
    Director
    
    Director of National Grid Holdings One plc
(NGH1) and certain wholly owned
subsidiaries of NGH1, Group Tax and Treasury
Director of National Grid plc, Chairman of
the Education Committee of the Association of
Corporate Treasurers and Director of ACT
(Administration ) Limited.Richard Pettifer
    
    Director
    
    Director of NGH1 and certain wholly owned
subsidiaries of NGH1.Mark Flawn
    
    Director
    
    Director of NG Luxembourg S.A.Alexandra Lewis
    
    Director
    
    Director of NGH1 and certain wholly owned
subsidiaries of NGH1.Steve Noonan
    
    Director
    
    Director of NGH1 and certain wholly owned
subsidiaries of NGH1.
 72




---



##### 



73




---



##### 



DESCRIPTION OF THE GUARANTEE
 Guarantee
   74




---



##### 



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.
 Payments under the Guarantee
  (A)
    
    UK Withholding Tax on UK Source Interest1.
    
    The 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 of on the Instruments may be
made without withholding or deduction for or on account of United Kingdom income tax.
 75




---



##### 



2.
    
    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.(B)
    
    Provision of Information
 paying agent collecting agent
  (C)
    
    Other Rules Relating to United Kingdom Withholding Tax1.
    
    Instruments may be issued at an issue price of less than 100 per cent. of their
principal amount. Any discount element on any such Instruments should not generally be
subject to any United Kingdom withholding tax pursuant to the provisions mentioned in A
above, but may be subject to reporting requirements as outlined in B above.2.
    
    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.3.
    
    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.4.
    
    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.
 76




---



##### 



5.
    
    The above description of the United Kingdom withholding tax position assumes that
there will be no substitution of an Issuer pursuant to Condition 11.3 of the Instruments
and does not consider the tax consequences of any such substitution.(D)
    
    EU Savings Directive
   77




---



##### 



PLAN OF DISTRIBUTION
 Summary of Agreement
 Dealer Agreement
 Selling Restrictions
 United States
 Securities Act
    European Economic Area
 Relevant Member State
 78




---



##### 



Relevant Implementation Date
 (a)
    
    if the final terms in relation to the Instruments specify that an offer of those
Instruments may be made other than pursuant to Article 3(2) of the Prospectus Directive in
that Relevant Member State (a Non-exempt Offer), in 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, provided that any such prospectus has subsequently been completed by the
final terms contemplating such Non-exempt Offer, in accordance with the Prospectus
Directive and ending on the date specified in such prospectus or final terms, if
applicable;
 (b)
    
    at any time to legal entities which are authorised or regulated to operate in the
financial markets or, if not so authorised or regulated, whose corporate purpose is solely
to invest in securities;
 (c)
    
    at any time to any legal entity which has two or more of (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;
 (d)
    
    at any time to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to obtaining the prior consent
of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or
 (e)
    
    at any time if the denomination per Instrument being offered amounts to at least euro
50,000; or
 (f)
    
    at any time in any other circumstances falling within Article 3(2) of the Prospectus
Directive,
  offer of Instruments to the public 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
 79




---



##### 



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 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
 Securities and Exchange Law resident of
Japan
 General
    80




---



##### 



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 GAS HOLDINGS PLC/NATIONAL GRID GAS PLC/NATIONAL GRID GAS
FINANCE (NO 1) PLC] +
 *
 PART A  CONTRACTUAL TERMS
 Prospectus Directive www.londonstockexchange.com/en-gb/pricesnews/marketnews.
 The following alternative language applies if the first Tranche of an issue which is being
increased was issued under a Prospectus with an earlier date.
 Conditions Prospectus Directive
 
 +
    
    Delete as applicable.*
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 81




---



##### 



  www.londonstockexchange.com/en-gb/pricesnews/marketnews.
 [Include whichever of the following apply or specify as Not Applicable (N/A). Note that the
numbering should remain as set out below, even if Not Applicable is indicated for individual
paragraphs or sub-paragraphs.]
 [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 Gas Holdings plc/National
Grid Gas plc/National Grid Gas Finance (No
1)]+[(ii) Guarantor:
    
    National Grid Gas plc]*2
    
    (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 accrued interest from
[insert date] (if applicable)]6
    
    Specified Denominations:
    
    []1[Note  where multiple denominations
above 50,000 (or equivalent) are
being used the following sample wording
should be followed:[50,000] and integral multiples of
[1,000] in excess thereof [up to
and including [99,000]. No
instruments in definitive form will be
issued with a
 
 +
    
    Delete as applicable.*
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer.1
    
    Instruments which have a maturity of less than
one year must have a minimum denomination of £100,000 (or it equivalent in
other currencies). 82




---



##### 



denomination above [99,000]].]Calculation Amount[If only one Specified Denomination, insert the
Specified Denomination. If more than one Specified
Denomination, insert the highest common factor]
[Note: There must be a common factor in the case of two
or more Specified Denominations]7
    
    [(i)]
    
    Issue Date:
    
    [][(ii)]
    
    Interest Commencement
Date:
    
    []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][Dual Currency][Partly Paid][Instalment][Other (specify)][N.B. If the Final Redemption Amount
is less than 100% of the nominal
value, the Instruments will
constitute derivative securities for
the purposes of the Prospectus
Directive and the requirements of
Annex XII to the Prospectus
Directive Regulation No.809/2004
will apply and the Issuer will
prepare and publish a supplement to
the Prospectus.]11
    
    Change of Interest or
Redemption/Payment Basis:
    
    [Specify details of any provision
for convertibility of Instruments
into another interest or redemption/
payment basis]12
    
    Put/Call Options:
    
    [Investor Put][Issuer Call][(further particulars specified below)]13
    
    (i)
    
    Status of the Instruments:
    
    Senior
 83




---



##### 



[(ii)
    
    Status of the Guarantee:
    
    Senior]*[(iii)]
    
    Date [Board] approval for
issuance of Instruments [and the Guarantee]* obtained:
    
    []
(N.B Only relevant where Board (or similar)
authorisation is required for the particular
tranche of Instruments[or related Guarantee])]14
    
    Method of distribution:
    
    [Syndicated/Non-syndicated]PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE15
    
    Fixed Rate Instrument Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Rate[(s)] of Interest:
    
    [] per cent. per annum [payable
[annually/semi-annually/quarterly/monthly] in
arrear](ii)
    
    Interest Payment Date(s):
    
    [] in each year(iii)
    
    Fixed Coupon Amount[(s)]:
    
    [] per Calculation Amount(iv)
    
    Broken Amount(s):
    
    [] per Calculation Amount, payable on the
Interest Payment Date falling [in/on] [](v)
    
    Day Count Fraction
(Condition 3.2.4(i)):
    
    [30/360 / Actual/Actual (ICMA/ISDA)/Other](vi)
    
    Determination Dates
(Condition 3.2.4(i)):
    
    [] in each year (insert regular interest payment
dates, ignoring issue date or maturity date in the
case of a long or short first or last coupon. N.B.
only relevant where Day Count Fraction is
Actual/Actual (ICMA))(vii)
    
    Other terms relating to
the method of calculating
interest for Fixed Rate
Instruments:
    
    [Not Applicable/give details]16
    
    Floating Rate Instrument Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Interest Period(s):
    
    [](ii)
    
    Specified Interest Payment
Dates:
    
    [](iii)
    
    Business Day Convention:
    
    [Floating Rate Convention/ Following Business Day
Convention/ Modified Following Business Day
Convention/ Preceding Business Day Convention/other
(give details)](iv)
    
    Business Centre(s) (Condition
3.2.4(i)):
    
    []
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 84




---



##### 



(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 page or 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 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
 85




---



##### 



(xiii)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    [](xiv)
    
    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 Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Amortisation Yield (Condition 5.4):
    
    [] per cent. per annum(ii)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    [](iii)
    
    Any other formula/basis of
determining amount payable:
    
    []18
    
    Index-Linked Interest Instrument
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Index/Formula:
    
    [give or annex details](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)
    
    Specified 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
3.2.4(i)):
    
    []
 86




---



##### 



(xi)
    
    Maximum Indexation Factor:
    
    [Not Applicable/specify](xii)
    
    Limited Indexation Month(s) or
Period for calculation of Limited
Indexation Factor:
    
    [] per cent per annum(xiii)
    
    Base Index Figure (Condition
4.1):
    
    [](xiv)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    [](xv)
    
    Index or Index Figure
(Condition 4.1):
    
    Sub-paragraph [(i)/(ii)
(iii)] of the definition
of Index or Index
Figure as set out in
Condition 4.1 shall apply(xvi)
    
    Reference Gilt:
    
    []19
    
    Dual Currency Instrument Provisions
    
    [Applicable/Not Applicable]
(If not applicable, delete
the remaining
sub-paragraphs of this
paragraph)(i)
    
    Rate of Exchange/method of
calculating Rate of Exchange:
    
    [give details](ii)
    
    Calculation Agent, if any,
responsible for calculating the
principal and/or interest due:
    
    [](iii)
    
    Provisions applicable where
calculation by reference to Rate of
Exchange impossible or impracticable:
    
    [](iv)
    
    Person at whose option Specified
Currency(ies) is/are payable:
    
    [](v)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    []PROVISIONS RELATING TO REDEMPTION20
    
    Call Option*
    
    [Applicable/Not Applicable]
(If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Optional Redemption Date(s):
    
    [](ii)
    
    Optional Redemption Amount(s) of
each Instrument and method, if any,
of calculation of such amount(s):
    
    [] per Instrument of [] specified denomination(iii)
    
    If redeemable in part:
 
 * [This does not include the tax call in
Condition 5.2]. 87




---



##### 



(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 Option
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Optional Redemption Date(s):
    
    [](ii)
    
    Optional Redemption Amount(s) of
each Instrument and method, if any,
of calculation of such amount(s):
    
    [] per Instrument of [] specified denomination(iii)
    
    Option Exercise Date(s):
    
    [](iv)
    
    Notice period (if other than as
set out in the Conditions)
    
    [](v)
    
    Option Period
    
    []22
    
    Final Redemption Amount of each
Instrument
    
    [[] per Instrument of [] specified
denomination /other/see Appendix][NB. If the Issuer issues Instruments under the
Programme where the principal being returned to
investors is determined by the performance of
an underlying index, entity or security, the
Instruments will constitute derivative
securities for the purposes of the Prospectus
Directive and the requirements of Annex XII to
the Prospectus Directive Regulation No.
809/2004 will apply and the Issuer will prepare
and publish a supplement to the Prospectus.]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:
    
    []
 88




---



##### 



(iv)
    
    Determination Date(s):
    
    [](v)
    
    Provisions for determining Final
Redemption Amount where calculation
by reference to Index and/or Formula
and/or other variable is impossible
or impracticable or otherwise
disrupted:
    
    [](vi)
    
    Payment Date:
    
    [](vii)
    
    Minimum Final Redemption Amount:
    
    [](viii)
    
    Maximum Final Redemption
Amount:
    
    []23
    
    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 INSTRUMENTS24
    
    Form of Instruments:
    
    Bearer Instruments:[Temporary Global Instrument
exchangeable for a permanent
Global Instrument which is
exchangeable for Definitive
Instruments in the limited
circumstances specified in the
Permanent Global Instrument][Temporary Global Instrument
exchangeable for Definitive
Instruments on 40 days notice][Permanent Global Instrument
exchangeable for Definitive
Instruments in the limited
circumstances specified in the
permanent Global Instrument]
 89




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##### 



New Global Note intended
to be held in a manner
which would allow
Eurosystem eligibility:
    
    [Not Applicable1/Yes]

Note that the designation Yes
simply means that the
Instruments are intended upon
issue to be deposited with
Euroclear or Clearstream,
Luxembourg as common safekeeper
and does not necessarily mean
that the Instruments will be
recognised as eligible
collateral for Eurosystem
monetary policy and intra-day
credit operations by the
Eurosystem either upon issue or
at any or all times during
their life. Such recognition
will depend upon satisfaction
of the Eurosystem eligibility
criteria. [Include this text if
Yes selected in which case
the Instruments must be issued
in NGN form]25
    
    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(x) relate]26
    
    Applicable TEFRA exemption:
    
    [C Rules/D Rules/Not Applicable]27
    
    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]28
    
    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[
or the Guarantor] to
forfeit the Instruments
and interest due on late
payment:
    
    [Not Applicable/give details]29
    
    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:
    
    []30
    
    Redenomination, renominalisation
and reconventioning provisions:
    
    [Not Applicable/give details]31
    
    Consolidation provisions:
    
    [Not Applicable/give details]
 
 1
    
    Specify Not Applicable if the Notes being
issued are Classic Global Notes/CGNs. 90




---



##### 



32
    
    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.)]DISTRIBUTION33
    
    (i)
    
    If syndicated, names of
Managers:
    
    [Not Applicable/give names](ii)
    
    Stabilising Manager(s) (if
any):
    
    [Not Applicable/give name(s)]34
    
    If non-syndicated, name of Dealer:
    
    [Not Applicable/give name]35
    
    Additional selling restrictions:
    
    [Not Applicable/give details]
 [LISTING AND ADMISSION TO TRADING APPLICATION
  RESPONSIBILITY
 *
 Signed on behalf of the Issuer:By:Duly authorised[Signed on behalf of the Guarantor:By:Duly authorised]*
 
 *
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 91




---



##### 



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 [] 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
    
    NOTIFICATION[The 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.][Not Applicable.]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:
  
 *
    
    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. 92




---



##### 



5
    
    [REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES[(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 UNDERLYINGNeed 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. Where 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 INFORMATIONISIN Code:
    
    []Common Code:
    
    []Any clearing system(s) other than
Euroclear Bank S.A./N.V. and
Clearstream Banking société anonyme
and the relevant address(es) and
identification number(s):
    
    [Not Applicable/give name(s) and
number(s) [and address(es)]]
 93




---



##### 



Delivery:
    
    Delivery [against/free of] paymentNames and addresses of additional Paying Agent(s) (if any):
    
    []10
    
    GENERALThe aggregate principal amount of Instruments
issued has been translated into Euro at the
rate of [], producing a sum of (for Instruments
not denominated in Euro):
    
    [Not Applicable/[[Euro]][]]Additional steps that may only be taken
following approval by an Extraordinary
Resolution in accordance with Condition
11.1:
    
    [Not Applicable/give details]
 94




---



##### 



GENERAL INFORMATION
 (1)
    
    The admission of the Programme to listing on the Official List and to trading on the
Market is expected to take effect on or about 28 February 2007. 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 and admitted to trading on the Market will be so admitted to
listing and trading upon submission to the UK Listing Authority and the London Stock
Exchange (in accordance with their rules and procedures) of the relevant Final Terms and
any other information required by the UK Listing Authority and the London Stock Exchange,
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, trading and/or quotation 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)
    
    National Grid Gas Holdings has obtained all necessary consents, approvals and authorisations in
the United Kingdom in connection with the issue and performance of the Instruments.(3)
    
    National Grid Gas has obtained all necessary consents, approvals and authorisations
in the United Kingdom in connection with the issue and performance of the Instruments.(4)
    
    National Grid Gas Finance (No 1) has obtained all necessary consents, approvals and
authorisations in the United Kingdom in connection with the issue and performance of the
Instruments.(5)
    
    The establishment of the Programme was authorised by a resolution of the Finance
Committee of the Board of Directors of National Grid Gas Holdings passed on 17 July 2003.
The update of the Programme was authorised by a resolution of the Finance Committee of the
Board of Directors of National Grid Gas Holdings passed on 25 April 2005.(6)
    
    The establishment of the Programme was authorised by a resolution of the Finance
Committee of the Board of Directors of National Grid Gas passed on 17 July 2003. The
update of the Programme was authorised by a resolution of the Finance Committee of the
Board of Directors of National Grid Gas passed on 25 April 2005. The guarantee of the
Instruments issued by National Grid Gas Finance (No 1) was authorised by a resolution of
the Finance Committee of the Board of Directors of National Grid Gas passed on 31 July
2006.(7)
    
    The update of the Programme was authorised by a resolution of the Board of Directors of
National Grid Gas Finance (No 1) passed on 18 August 2006.(8)
    
    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 relevant Final Terms
 95




---



##### 



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. The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210
Brussels, Belgium and the address of Clearstream, Luxembourg is 42 Avenue JF Kennedy,
L-1855 Luxembourg.
 (9)
    
    There are no, nor have there been any, governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which National Grid Gas
Holdings is aware) during the 12 months preceding the date of this Prospectus which may
have, or have had in the recent past a significant effect on the financial position or
profitability of National Grid Gas Holdings or of the National Grid Gas Holdings Group.(10)
    
    Save as disclosed in the section entitled Description of National Grid Gas plc  Recent
Developments on page 70, there are no, nor have there been any, governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which National Grid
Gas is aware) during the 12 months preceding the date of this Prospectus which may have,
or have had in the recent past a significant effect on the financial position or
profitability of National Grid Gas or of the National Grid Gas Group.(11)
    
    There are no, nor have there been any, governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which National Grid Gas
Finance (No 1) is aware) during the 12 months preceding the date of this Prospectus which
may have, or have had in the recent past a significant effect on the financial position or
profitability of National Grid Gas Finance (No 1).(12)
    
    Save as disclosed in the section entitled Description of National Grid Gas Holdings plc -
Recent Developments on page 64, there has been no significant change in the financial or
trading position of the National Grid Gas Holdings Group since 31 March 2006.(13)
    
    There has been no material adverse change in the prospects of National Grid Gas
Holdings or the National Grid Gas Holdings Group since 31 March 2006.(14)
    
    Save as disclosed in the section entitled Description of National Grid Gas plc -
Recent Developments on page 70, there has been no significant change in the financial or
trading position of the National Grid Gas Group since 31 March 2006.(15)
    
    There has been no material adverse change in the prospects of National Grid Gas or
the National Grid Gas Group since 31 March 2006.(16)
    
    There has been no significant change in the financial or trading position and no material
adverse change in the prospects of National Grid Gas Finance (No 1) since its
incorporation on 3 August 2006.(17)
    
    PricewaterhouseCoopers LLP (chartered accountants and registered auditors authorised and
regulated by the Financial Services Authority) has audited the accounts of the National
Grid Gas Holdings Group for the years ended 31 March 2005 and 31 March 2006, in accordance
with United Kingdom generally accepted auditing standards and reported thereon,
respectively, without qualification.(18)
    
    PricewaterhouseCoopers LLP (chartered accountants and registered auditors authorised
and regulated by the Financial Services Authority) has audited the accounts of the
National Grid Gas
 96




---



##### 



Group for the years ended 31 March 2005 and 31 March 2006, in accordance with United
Kingdom generally accepted auditing standards and reported thereon, respectively, without
qualification.
 (19)
    
    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.(20)
    
    For a period of 12 months following the date of this Prospectus, copies of the following
documents may be inspected during usual business hours on any weekday (Saturdays, Sundays
and public holidays excepted), for inspection at the offices of JPMorgan Chase Bank at
Trinity Tower, 9 Thomas More Street, London E1W 1YT:
 (i)
    
    a copy of this Prospectus with any supplement to this Prospectus or further Prospectus;(ii)
    
    the Memorandum and Articles of Association of National Grid Gas Holdings;(iii)
    
    the Memorandum and Articles of Association of National Grid Gas;(iv)
    
    the Memorandum and Articles of Association of National Grid Gas Finance (No 1);(v)
    
    the audited consolidated accounts of National Grid Gas Holdings for the
years ended 31 March 2005 and 31 March 2006, together with the audit report thereon;(vi)
    
    the audited consolidated accounts of National Grid Gas for the years
ended 31 March 2005 and 31 March 2006, together with the audit report thereon; and(vii)
    
    the amended and restated Trust Deed dated 23 February 2007 which
incorporates the Guarantee.
 In addition, this Prospectus is and, in the case of Instruments to be admitted to the
Official List and admitted to trading on the Market, the relevant Final Terms will be,
available on the website of the Regulatory News Service operated by the London Stock
Exchange at www.londonstockexchange.com/en-gb/pricesnews/marketnews.
 97




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##### 



REGISTERED OFFICE OF THE ISSUERS AND THE GUARANTOR
 
 THE TRUSTEE
 The Law Debenture Trust Corporation p.l.c.
 THE ARRANGER
 HSBC Bank plc
 THE DEALERS
 Barclays Bank PLC
5 The North Colonnade 
Canary Wharf 
London E14 4BB
    
    Deutsche Bank AG, London Branch
Winchester House
1 Great Winchester Street
London EC2N 2DBHSBC Bank plc
8 Canada Square 
London E14 5HQ
    
    J.P. Morgan Securities Ltd.
125 London Wall
London EC2Y 5AJMizuho International plc
Bracken House 
One Friday Street 
London EC4M 9JA
    
    The Royal Bank of Scotland plc
135 Bishopsgate
London EC2M 3UR
 LEGAL ADVISERS
 To the Issuers
 Linklaters
 98




---



##### 



To the Dealers and to the Trustee
 Clifford Chance LLP
 ISSUING AND PAYING AGENT
 JPMorgan Chase Bank, N.A.
 PAYING AGENTS
 Kredietbank S. A. Luxembourgeoise
 REGISTERED AUDITORS TO EACH OF THE ISSUERS
 PricewaterhouseCoopers LLP
 99