Document:

<PAGE>
                                                                 EXHIBIT 4(b)(i)

           THE NATIONAL GRID GROUP PLC AND NATIONAL GRID COMPANY PLC

                                      AND

                                  EDWARD ASTLE

                               DATED 27 JULY 2001

                               -----------------
                               SERVICE AGREEMENT
                               -----------------
<PAGE>
                                INDEX TO CLAUSES

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

                                       2
<PAGE>
THIS SERVICE AGREEMENT DATED 27 JULY 2001 IS BETWEEN:-

THE NATIONAL GRID GROUP PLC (THE "COMPANY") AND THE NATIONAL GRID COMPANY PLC
whose registered offices are at 15 Marylebone Road, London NW1 5JD and National
Grid House, Kirby Corner Road, Coventry, CV4 8JY respectively (the "Companies")
AND MR. EDWARD ASTLE, Bailey's Farmhouse, Chatham Green, Essex CM3 3LE.

1.   APPOINTMENT AND TERM

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

1.2  Your appointment to this post will be effective from 1st September 2001 and
     will continue, subject to and in accordance with the provisions of this
     contract, until terminated:-

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

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

     (c) by you giving the Companies not less than twelve months' notice.

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

2.   DUTIES

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

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

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

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

     (d) unless prevented by sickness or injury and except during holidays,
         devote the whole of your time, attention and ability during your hours
         of work to

                                       3

<PAGE>
         the performance of your duties under this Contract;

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

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

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

2.3  You will be based at the Group Headquarters at 15 Marylebone Road, London
     NW1 5JD.

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

3.   SALARY

3.1  During the continuance of your employment (subject to Clause 10.2), you
     will be entitled to a salary at the rate of L10,000 per annum (or such
     higher rate as may from time to time be agreed between the parties).

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

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

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

                                       4

<PAGE>
          and your first participation in this bonus will commence 1st September
          2001 and will be pro-rated for the period to 31 March 2002. From 1st
          September 2001 until 31 March 2002 you will also be covered by a
          special bonus. Details of this, together with the fundamental
          considerations underpinning the subsequent special bonus plans, are
          set out in Schedule 1.

4.        PENSION

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

4.2       Subject to the terms and conditions (both statutory and non-statutory)
          in force from time to time in respect of the ESPS Group in which the
          Companies participate or of which it is Principal Employer, you will
          be eligible (but not obliged) to be a Member of the ESPS. You will
          also be entitled to enhanced pension arrangements as set out in
          Schedule 2 to this contract.

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

5.        INSURANCE BENEFITS

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

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

5.3       The Company will provide Permanent Health Insurance to you whilst you
          are employed under this Contract until 1 September 2006, subject to
          underwriting by our insurers. At that time you will be eligible for
          ill health provisions of ESPS.

6.        PROFESSIONAL FEES

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

7.        CAR

7.1       You will be provided with a car allowance OR a car of suitable age,
          make, model and specification during the continuance of your
          employment in accordance with the policy laid down by the Company from
          time to time and the Company shall

                                       5
<PAGE>
          pay all standing and running costs relating to it (including the cost
          of fuel for private mileage) but NOT any taxable benefit arising. You
          shall comply with all rules laid down by the Company in relation to
          Company vehicles, notify the Company immediately of any accident
          involving your car and of any charge brought against you for a
          motoring offence and, unless otherwise agreed, shall return the car to
          your place of work forthwith on termination of your employment.

8.        EXPENSES

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

9.        HOLIDAYS

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

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

10.       SICKNESS AND INJURY

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

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

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

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

                                       6
<PAGE>
     (d)  you will, on request by the Company, allow yourself to be examined by
          the Company doctor who shall report to the Group Chief Executive as
          appropriate.

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

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

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

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

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

11.  CODE OF CORPORATE GOVERNANCE

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

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

12.  INTERESTS IN OTHER BUSINESSES

12.1 You shall disclose promptly in writing to the Company all your interests
     and those of your spouse and dependent children, in any business other than
     the business of the Company and its Subsidiaries and Associates and, save
     with the written consent of the Company (such consent not to be
     unreasonably withheld), you

                                       7
<PAGE>
     will not during the continuance of your employment accept any public office
     nor will you hold any directorship nor will you be engaged or interested
     (except as the holder for passive investment purposes of any shares or
     other securities quoted or dealt in on a recognised stock exchange not
     exceeding, in any case, 3 per cent of the class of securities of the
     company concerned) either directly or indirectly in any business or
     commercial occupation other than the business of the Company and its
     Subsidiaries and Associates.

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

13.  CONFIDENTIALITY

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

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

     (b)  disclose to any person,

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

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

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

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

13.3 During your employment, you will not:-

                                       8
<PAGE>
          (a)  directly or indirectly solicit, receive or obtain any discount,
               rebate, commission or other inducement (whether in cash or in
               kind) which is not authorised by regulations or guidelines from
               time to time governing dealings by executives on behalf of the
               Company, or, if you do, you will account immediately to the
               Company for the amount so received;

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

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

14.       PROTECTION OF INTERESTS OF COMPANY

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

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

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

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

14.5      In this Clause references to acting directly or indirectly include
          (without prejudice

                                        9
<PAGE>
          to the generality of that expression) references to acting alone or
          jointly with or by means of any other person, firm or company.

15.       TERMINATION

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

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

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

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

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

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

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

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

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

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

                                       10

<PAGE>
      (c)   become bankrupt or compound with your creditors; or

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

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

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

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

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

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

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

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

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

                                       11
<PAGE>
16.   WAIVER OF RIGHTS

16.1  If:

      (a)   your employment is terminated:

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

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

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

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

17.   DISCIPLINE AND GRIEVANCES

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

18.   INVENTIONS

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

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

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

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

                                       12
<PAGE>
      (a)   apply, or join with the Company, or any of its Subsidiaries or
            Associates in applying for letters patent or other protection in any
            part of the world for any invention, process, development or design
            to which Clause 18.1 above applies;

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

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

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

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

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

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

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

19.   INTERPRETATION

      In this Contract:-

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

                                       13

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

19.3   "Holiday Year" means each 12 month period commencing 1st February and
       ending 31st January;

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

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

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

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

20.    ENTIRE CONTRACT CONTINUITY AND CONDITIONALITY

20.1   Except as otherwise expressly provided by its terms and for any detailed
       rules (not being inconsistent with the express terms hereof) from time to
       time laid down by the Company, this Contract, together with its two
       Schedules and the covering letter dated 27 July 2001, represents the
       entire understanding, and supercedes any previous agreement between the
       parties in relation to your employment by the Company, its Subsidiaries
       or Associates.

21.    NOTICES

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

22.    JURISDICTION

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

                                       14

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

Signed  /s/ [Illegible]
        ------------------

Date    27/7/01
        ------------------

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

Signed  /s/ [Illegible]
        ------------------

Date    27/7/01
        ------------------

                                       15
<PAGE>
SCHEDULE 1

         THE NATIONAL GRID GROUP PLC AND THE NATIONAL GRID COMPANY PLC

                SPECIAL BONUS PLAN ARRANGEMENTS AND OTHER ITEMS

                                  EDWARD ASTLE

This Schedule, should be read in conjunction with the Service Agreement between
the National Grid Group plc and National Grid Company plc ("the Company") and
Edward Astle.

1. SPECIAL BONUS SCHEME:

     You will participate in a special bonus scheme that will cover an initial
     Review period followed by the ongoing Delivery period.

     a) TO 31 MARCH 2002: REVIEW PERIOD:

     In addition to the annual performance bonus that applies to all Executive
     Directors, there will be an enhanced bonus delivering Pound Sterling
     100,000 covering the period ending 31 March 2002. This bonus will be
     contingent on completing the telecommunications strategic review and
     gaining Board approval both for the review and for the business plans that
     result from the review.

     b) POST 31 MARCH 2002: DELIVERY PERIOD:

     When the strategy and business plans have been agreed, the Company will be
     in a much better position to set out a specific structure regarding
     incentives that reflect achievement and the realities of the
     telecommunications market.

     There are certain fundamental considerations that will underpin whatever
     structures are put in place.

     i)   The special scheme will be in addition to the various incentive
          schemes that apply to the other Group Executive Directors.

     ii)  Maximum achievement will deliver 100% of base salary on an annualised
          basis.

     iii) Target achievement will deliver about 66% of base salary on an
          annualised basis.

     iv)  Assessment of achievement against targets will be determined by the
          Remuneration Committee.

     v)   The special scheme will be structured in the way that best supports
          the achievement of whatever business objectives are agreed. The
          special scheme might be structured as an annual or

                                                                               1
<PAGE>
          as a long-term plan (which may be a phantom option plan). If a
          long-term plan is set up, shareholder approval would need to be
          sought.

     If we are unable to draw up a mutually acceptable special scheme then the
     Company would recognise the importance of the telecommunications portfolio
     to enhancing NGG shareholder value by granting an increased multiple of
     share options for an additional two years after the initial grant. This
     multiple would be 3 times annual base salary.

2. IPO/DIVESTMENT

     An additional special bonus, recognising your personal contribution, will
     be paid in the event of an IPO or any divestment - subject to the
     transaction(s) significantly enhancing shareholder value. The Remuneration
     Committee will decide on the exact level of bonus - but an award of up to
     two times base salary would be envisaged for a successful and significant
     transaction. Corporate Finance will develop a method of calculating
     potential awards up to this level.

3. TERMINATION OF SERVICES, BY THE COMPANY, FOR REASONS UNRELATED TO YOUR
   PERFORMANCE AND OUTSIDE YOUR CONTROL

     i)   In the event of termination you would have contractual notice which
          initially is for two years.

     ii)  The special bonus (1(a) above) would still be paid in the event of
          termination on or before 31 March 2002.

     iii) For a termination after 31 March 2002 the Company would recommend to
          the Remuneration Committee that the

          a) Annual Bonus be paid in line with actual achievement against
          objectives for the pro-rated period to actual date of departure PLUS
          an amount equal to 50% of the outstanding notice period assessed at
          target achievement.

          b) Special Bonus (see 1(b) above) be paid in line with actual
          achievement against objectives for the pro-rated period to actual date
          of departure.

     iv)  Notwithstanding 3 (iii)(a) and (b) above, the Remuneration Committee
          will be able, at its discretion, to determine whether any additional
          payment should be made, having regard to the circumstances prevailing
          at the time.

     v)   The Remuneration Committee would have the discretion to grant a period
          of time wherein you could exercise National Grid Group Executive Share
          Options.

     vi)  The above terms regarding termination of services will remain in force
          for the first three years of your employment. Thereafter termination
          terms will revert to those applicable to the other Executive
          Directors.

                                                                               2
<PAGE>
SCHEDULE 2

         THE NATIONAL GRID GROUP plc and THE NATIONAL GRID COMPANY plc

          SUMMARY OF ENHANCED PENSION AND LIFE ASSURANCE ARRANGEMENTS

                                  EDWARD ASTLE

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

1. Your Normal Pension Age is age 60.

2. Your pension will accrue at a rate of 1/30th of your Pensionable Salary for
   each year of Pensionable Service from 1st September 2001 (complete days will
   count) or such higher amount as may be advised by the Actuary to the Scheme,
   subject to pension payable, including any retained benefits, not exceeding
   Inland Revenue limits (but see 12 below). You will be able to exchange part
   of your pension for a tax free lump sum up to the maximum permitted by the
   Inland Revenue. The provisions of paragraph 12 of this Schedule shall apply
   in respect of any pension benefits which cannot be provided under the ESPS
   due to Inland Revenue limits.

3. (a) You may retire WITH the consent of the Companies at any time on or after
       your 55th birthday and receive an immediate pension. Under these
       circumstances, the immediate unreduced pension will be based on your
       Pensionable Service and your Pensionable Salary at the date of
       termination.

   (b) You may retire WITHOUT the consent of the Companies at any time on or
       after your 55th birthday and receive an immediate pension. Under these
       circumstances, the immediate pension will be based on your Pensionable
       Service and your Pensionable Salary at the date of termination, and will
       be reduced for early payment by an amount determined by the Remuneration
       Committee on the advice of the Actuary, having regard to the actuarial
       factors prevailing at that time within the ESPS.

                                       1
<PAGE>
4.  Should your employment be terminated as a result of redundancy, and the
    termination is with the consent of the Companies, you will be entitled to
    the greater of:

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

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

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

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

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

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

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

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

                                       2
<PAGE>
11.  In this schedule "Salary" means the annual amount of salary payable by the
     Companies as stipulated in your Agreement as increased from time to time
     but excluding any bonus, allowance or emoluments in kind appertaining to
     your employment, unless otherwise determined by the Companies.

     "Pensionable Salary" means the greater of

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

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

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

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

12.  You should note that the Inland Revenue have placed a restriction (the
     "earnings cap") on the amount of pay on which benefits may be calculated
     in an approved arrangement (L95,400 for the 2001/2002 Tax Year). Your
     pension at Normal Pension Age will be augmented under the National Grid
     Company plc Section of the ESPS, if necessary, up to the maximum allowable
     at that date. If your full pension promise, as set out in paragraph 2 of
     this Schedule, cannot be met from the National Grid Company plc Section of
     the ESPS, you will be provided with additional benefits of equivalent
     value under a separate agreement. For the avoidance of doubt, if your
     Pensionable Service is terminated (for any reason) prior to your Normal
     Pension Age you will be entitled at Normal Pension Age to pension benefits
     which give effect to your full pension promise as set out in paragraph 2
     of this Schedule, but only in respect of your Pensionable Service up to the
     date of termination of your Pensionable Service, and this will apply
     mutatis mutandis to the provisions of paragraphs 3 and 4(b). With the
     exception of the earnings cap restriction, all other limits imposed by the
     Inland Revenue on approved arrangements will apply to the benefits
     referred to in this summary.

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

                                       3<PAGE>
                                                               EXHIBIT 4(b)(iii)

                                                                         12/4/01

                                    FORM OF

                              EMPLOYMENT AGREEMENT

                                WILLIAM E. DAVIS
<PAGE>
                               TABLE OF CONTENTS

                                                            PAGE
                                                            ----

1.0       Employment Period..............................     2

2.0       Position and Duties............................     2

3.0       Compensation...................................     4

4.0       Termination of Employment,.....................     7

5.0       Termination Procedures.........................    12

6.0       Non-Exclusivity of Rights......................    13

7.0       Full Settlement................................    13

8.0       Non-Competition Provision and Confidential
            Information..................................    14

9.0       Certain Additional Payments by the Company.....    16

10.0      Attorneys' Fees................................    21

11.0      Successors.....................................    22

12.0      Ownership of Work Product......................    23

13.0      Miscellaneous..................................    24
<PAGE>
                          PRIVILEGED AND CONFIDENTIAL

                              EMPLOYMENT AGREEMENT

     This Agreement by and between, NATIONAL GRID GROUP PLC, a public limited
company incorporated under the laws of England and Wales with registration
number 4031152 (National Grid), by NATIONAL GRID USA, a Delaware Corporation
("Company") and William E. Davis (the "Executive"), dated as of the _______ day
of ________.

                                WITNESSETH THAT

     WHEREAS, the Executive is currently employed by Niagara Mohawk Holdings,
Inc. (Niagara Mohawk) and is a party to an employment agreement between Niagara
Mohawk and the Executive dated March 17, 1999 (Employment Agreement).

     WHEREAS, Niagara Mohawk and National Grid have entered into an Agreement
and Plan of Merger and Scheme of Arrangement by and among National Grid, Niagara
Mohawk, New National Grid Limited and Grid Delaware, Inc. dated September 4,
2000 (the Merger).

     WHEREAS, a result of the Merger, Niagara Mohawk will become a subsidiary of
the Company.

     WHEREAS, the Company desires to foster the continuous employment of key
management personnel and to provide for orderly succession of management
following the effective date of the Merger (the "Effective Time"); and

     WHEREAS, the Company further wishes to provide for the employment by the
Company of the Executive and the Executive wishes to serve National Grid, the
Company, and its
<PAGE>
                                       2

affiliates in the capacity and according to the terms and conditions set forth
in this Agreement, and

     WHEREAS, this Agreement is the entire agreement amongst the parties
concerning the subject matter hereof and subject to Section 1.2 below,
supersedes all prior agreements concerning the same subject, including the
Employment Agreement.

     NOW THEREFORE in consideration of the premises, mutual rights and
obligations of the parties, the parties hereby agree as follows:

1.0  Employment Period.

     1.1  The Company shall employ the Executive, and the Executive shall serve
the Company according to the terms and conditions set forth in this
Agreement, for a period commencing as of the Effective Time as described in
Section 1.2 of the Merger and ending twenty four (24) months thereafter (the
Employment Period), unless terminated earlier at the Executive's sole
discretion, provided the Executive provides the Company with three (3) months
prior written notice.

     1.2  This Agreement shall not be effective prior to the Effective Time.
For all periods prior to, but not including, the Effective Time, the
Executive's Employment Agreement shall remain in full force and effect.

2.0  Position and Duties.

     2.1  During the Employment Period, the Executive shall serve as Chairman
of National Grid USA. The Executive's responsibilities as Chairman of National
Grid USA shall include all aspects of the Company's and its subsidiaries'
businesses. The Executive shall serve
<PAGE>
                                       3

as an employee of the Company with such duties and responsibilities as are
customarily assigned to such a position, and such other duties and
responsibilities not inconsistent therewith as may from time to time be assigned
to him by the Board of Directors of National Grid Group, PLC (Board). As
Chairman of National Grid USA, the Executive shall report only to the Board.
The Executive shall be a member of the Board on the first day of the Employment
Period, and the Board shall propose the Executive for re-election to the Board
throughout the Employment Period. In addition, and without further compensation,
the Executive shall serve as an Executive Director of National Grid, subject to
ratification of National Grid's shareholders, and shall serve as a director
and/or officer of one or more of the Company's other affiliates if so elected
or appointed from time to time.

     2.2  During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive shall devote
reasonable attention and time during normal business hours to the business and
affairs of National Grid, the Company and its affiliates, as directed by the
Board, and, to the extent necessary to discharge the responsibilities assigned
to the Executive under this Agreement, use the Executive's reasonable best
efforts to carry out such responsibilities faithfully and efficiently. It shall
not be considered a violation of the foregoing for the Executive to serve on
corporate, industry, civic, or charitable boards or committees or to pursue the
Executive's personal, legal and/or financial affairs, so long as such
activities do not materially interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.

     2.3  If at any time during the Employment Period, the Executive believes
in furtherance of his duties as a Director of National Grid, that it is
necessary and in the best
<PAGE>
                                       4

interests of the Company to seek independent financial and/or legal advice
pertaining to a Company matter, the Executive may do so at National Grid's
expense. The Executive shall notify the Chairman or Secretary of National Grid
at the time of taking such action.

     2.4  The Executive's principal place of business shall be located in
Syracuse, New York. If the Company requires the Executive to relocate during
the Employment Period to a location more than fifty (50) miles from Syracuse,
New York, the Executive may terminate his employment with ten (10) days advance
written notice to the Company and receive the benefits set forth in Section
4.3.4 of this Agreement.

3.0  Compensation.

     3.1  The Executive's compensation during the Employment Period, shall be
determined by, and in the sole discretion of National Grid or any successor
thereto, subject to this Article 3.0, Sections 4.3.1 and 4.3.2 and Article 9.0
below.

     3.2  If the Executive has not received a lump sum payment, taxes withheld,
equal to four times his annual base salary in effect immediately before the
Effective Time; the Company shall pay the Executive, said payment within ten
(10) business days following the Effective Time.

     3.3  Base Salary. During the Employment Period, the Executive shall
receive an annual base salary of no less than Eight Hundred Twenty Thousand
Dollars ($820,000), payable in accordance with the Company's regular payroll
practices as in effect, from time to time, for senior officers. During the
Employment Period, the annual base salary shall be reviewed on an annual basis
according to the practices in effect at the time for the Company's senior
officers.
<PAGE>
                                       5

     3.4  Incentive Compensation.

          3.4.1  The Executive shall be deemed a participant in National Grid
     USA Companies' Incentive Compensation Plan Level I for purposes of
     incentive compensation. During the Employment Period, the Executive shall
     participate in annual bonus arrangements which shall be prorated, if
     applicable, the maximum opportunity for which shall comprise: (A) 50% of
     annual base salary, payable in cash (the "Annual Cash Bonus") and (B) 60%
     of the Annual Cash Bonus, payable in phantom or similar shares of National
     Grid stock and subject to a three year vesting requirement and such other
     terms and conditions as such incentive plan may provide, based on Company
     performance goals and standards as determined by National Grid. The
     Executive shall be eligible to participate in the above arrangements at a
     level (in terms of the amount and types of compensation that the Executive
     has the opportunity to receive and the terms thereof) no less favorable in
     the aggregate than those arrangements which are provided to National Grid
     USA's Chief Executive Officer (CEO).

          3.4.2  In addition, at the discretion of the National Grid Group
     Remuneration Committee, the Executive will participate in National Grid's
     Executive Stock Option Plan or any successor plan or scheme thereto at a
     level similar to that provided to the CEO.

     3.5  Retirement Benefits. During the Employment Period, the Executive
shall participate in National Grid USA Companies executive supplemental
retirement plan; provided however, as the Company will be paying the Executive
a lump sum payment as a result of the Merger under Niagara Mohawk's
Supplemental Executive Retirement Plan, Amended and

<PAGE>
                                       6

Restated as of January 1, 1999, any future pension benefits from the Company
will be offset by the annuity value of such lump sum payment, determined in
accordance with the actuarial equivalence factors defined in the Company's
pension plan.

     3.6  Welfare Benefit Plans. During the Employment Period, the Executive,
the Executive's spouse, and their eligible dependants, if any, shall be
eligible for participation in, and be covered by all welfare benefit plans and
programs, provided by the Company in accordance with the terms and conditions
of said programs, including without limitation the medical, hospitalization,
prescription, disability, dental, sick leave, Life Insurance Program for
Executives II (value will be 4x base salary), accidental death and travel
accident insurance plans and programs, to the same extent as other senior
officers of the Company. Notwithstanding the above, if the Executive's
employment is terminated by the Company for any reason other than Cause, as
defined in Section 4.3.3 below, or by the Executive with proper notice as
required under Sections 1.1 or 2.4 of this Agreement; or upon termination of
his employment at the conclusion of the Employment Period, then (i) the
Executive and his eligible dependents shall be entitled to continue
participation (the premiums for which will be paid by the Company) in the
employee benefit plans of the Company providing medical, prescription, dental,
and hospitalization benefits for the remainder of the Executive's or eligible
dependent's life at a level at least equal to those provided by Niagara Mohawk
to executives on March 26, 1997, (ii) the Executive shall be entitled to be
covered by a life insurance policy providing a death benefit equal to 2.5x his
base salary at the rate in effect at the time of termination, payable to a
beneficiary or beneficiaries designated by the Executive (or if none, to his
estate), the premium for which will be paid by the Company for the balance of
the Executive's life, (iii) except for the
<PAGE>
                                       7

continuation of SERP and any qualified pension plan coverage under Section 3.5
above which shall not be required, the Executive shall be entitled to continue
participation (the premiums for which will be paid by the Company) in the other
employee benefit plans of the Company for a four (4) year period from his date
of termination; provided, however, that if the Executive cannot continue to
participate in any of the Company's benefit plans, the Company shall otherwise
provide equivalent benefits to the Executive and his dependents on the same
after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event the Executive becomes employed by
another employer and becomes eligible to participate in an employee benefit plan
of such employer, the benefits described herein shall be secondary to such
benefits during the period of Executive's eligibility, but only to the extent
that the Company reimburses the Executive for any increased cost and provides
any additional benefits necessary to give the Executive the benefits provided
hereunder.

     3.7  Vacation and Fringe Benefits. During the Employment Period, the
Executive shall be entitled to six weeks vacation, plus twelve paid holidays per
calendar year. In addition, the Executive shall be entitled to receive the
financial consulting services of AYCO.

4.0  Termination of Employment.

     4.1  The Company shall continue to employ the Executive and the Executive
shall continue to work for the Company during the Employment Period, unless this
Agreement is terminated in accordance with Sections 1.1, 2.4 or one of the
following provisions of Section 4.3 below.

<PAGE>
                                       8

     4.2  If the Executive continues to work for the Company through the 24
month Employment Period or terminates his employment in accord with Section 1.1
above, upon conclusion of the Employment Period the Company shall pay the
Executive the following Accrued Obligations.

     A.   In a lump sum cash payment with appropriate taxes withheld, within
thirty (30) days after the date of termination, the sum of the following:

          (i)    any portion of the Executive's annual base salary through the
                 date of termination that has not yet been paid;

          (ii)   in respect to incentives awarded under Section 3.4 of this
                 Agreement, an amount representing the target incentive
                 compensation for the year that would otherwise vest and/or
                 become payable within the year in which the date of termination
                 occurs, computed by assuming that the amount of all such target
                 incentive compensation would be equal to the amount of such
                 target incentive compensation that the Executive would have
                 been eligible to earn for such period, and multiplying that
                 amount by a fraction the numerator of which is the number of
                 days in such period through the date of termination, and the
                 denominator of which is the total number of days in the
                 relevant period;

          (iii)  any compensation previously deferred by the Executive (together
                 with any accrued interest or earnings thereon) that has not yet
                 been paid; and

          (iv)   any accrued but unpaid incentive compensation and/or vacation
                 pay, and,

<PAGE>

                                       9

     (B)  According to the terms of the applicable plan, at the times and in the
          manner set forth in the plan, the following:

          (i)    any amounts owing under any deferred compensation or stock
                 option plan,

          (ii)   any benefits required to be provided under Sections 3.5 and/or
                 3.6 of this Agreement; and

          (iii)  any Excise Tax Payments required under Article 9.0 of this
                 Agreement.

          4.3.1  Termination Due to Death. The Executive's employment shall
     terminate automatically upon the Executive's death during the term of this
     Agreement. If the Executive's employment is terminated by reason of the
     Executive's death during the Employment Period, the Company shall pay to
     the Executive's designated beneficiaries (or, if there is no such
     beneficiary, to the Executive's estate or legal representative) the Accrued
     Obligations set forth in Section 4.2 above.

          4.3.2  Termination Due to Disability. By notice to the Executive, the
     Company may terminate this Agreement upon the "Disability" of the
     Executive. The Executive shall be deemed to incur a Disability when (i) the
     Company's Medical Department or its representative who shall be a licensed
     physician, advises the Company that the Executive's physical or mental
     condition has rendered the Executive unable to perform the essential
     functions of the Executive's position in a reasonable manner, with or
     without reasonable accommodation and will continue to render him unable to
     perform the essential functions of the Executive's position in such
     manner, for a period exceeding twelve (12) consecutive months, or (ii) due
     to a physical or mental condition, the Executive has not performed the
     essential functions of the Executive's position in a

<PAGE>

                                       10

     reasonable manner, with or without reasonable accommodation, for a period
     of twelve (12) consecutive months. Following termination of this Agreement
     pursuant to clause (i) of the preceding sentence of this Section 4.3.2, the
     Executive shall continue to receive his base salary under Section 3.3 of
     this Agreement for a period of twelve (12) months from the date of his
     Disability, reduced by any benefits payable during such period under the
     short-term disability plan and/or long-term disability plan in which the
     Executive is enrolled. Thereafter, or in the event of termination of this
     Agreement pursuant to clause (ii) of the preceding sentence, the Executive
     shall receive benefits under the applicable long-term disability plan in
     lieu of any further base salary under Section 3.3 of this Agreement and
     shall receive the benefits set forth in Section 4.2 B of this Agreement.

          4.3.3  Termination for Cause. The Company may only terminate the
     Executive's employment during the Employment Period for "Cause". For
     purposes of this Agreement "Cause" shall mean (i) the Executive is
     convicted of, or has pled guilty or nolo contendere to, a felony; (ii) the
     willful and continued failure by the Executive to perform substantially his
     duties with the Company (other than any such failure resulting from
     incapacity due to physical or mental illness) after a demand for
     substantial performance is delivered to the Executive by the Company which
     specifically identifies the manner in which the Company believes the
     Executive has not substantially performed his duties; (iii) the Executive
     engages in conduct that constitutes gross neglect or willful misconduct in
     carrying out his duties under this Agreement involving material economic
     harm to National Grid, the Company or any of its affiliates; or (iv) the
     Executive has engaged in a material breach of Article 8.0 of this
     Agreement.

<PAGE>
                                       11

     If the Executive's employment is terminated by the Company for Cause
during the Employment Period, the Company shall only pay the Executive (i) his
annual base salary through the date of termination, (ii) and the amount of any
compensation previously deferred by the Executive and (iii) any accrued
vacation, in each case to the extent not yet paid, and the Company shall have
no further obligations under this Agreement, except as specified in Article 6.0
below.

     4.3.4 Termination Without Cause. If the Executive terminates his
employment during the Employment Period in accord with Section 2.4 above or the
Company terminates his employment without cause during the Employment Period,
as defined in Section 4.3.3 above, the Company shall pay the Executive:

     (a) in a lump sum payment with appropriate taxes withheld, within thirty
(30) days after the date of termination, the sum of:
         (i)   the Accrued Obligations set forth in Section 4.2 above,
         (ii)  that portion of the Executive's salary which he would have
               earned had he continued to be employed throughout the Employment
               Period, based upon his annual salary in effect at the time of his
               termination; and
         (iii) in respect to incentives awarded under Section 3.4.1, an amount
               which covers any incentive compensation payment not yet paid for
               the existing plan year and/or any incentive compensation payment
               for the remainder of the twenty four (24) month Employment

<PAGE>
                                       12

               Period, based upon the target incentive compensation for the Plan
               Year in which the Executive's employment is terminated.

      (b) all reasonable fees and expenses of any executive recruiting or
          placement firm selected by the Executive for the purpose of seeking
          new employment until the Executive obtains outside employment or for
          a period of 24 months whichever comes first;

5.0  Termination Procedures.

     5.1 Notice of Termination. Any purported termination of the Executive's
         employment (other than by reason of death) shall be communicated by
         written Notice of Termination from one party hereto to the other party
         hereto in accordance with Section 13.3 hereof. For purposes of this
         Agreement, a "Notice of Termination" shall mean a notice which shall
         indicate the specific termination provision in this Agreement relied
         upon and shall set forth in reasonable details the facts and
         circumstances claimed to provide a basis for termination of the
         Executive's employment under the provision so indicated.

     5.2 Termination for Cause. In order for termination to be effective under
         Section 4.3.3 above, the Executive must be notified in writing of any
         termination of his employment for "Cause," which writing shall set
         forth in reasonable detail the facts and circumstances relied upon
         therefor. Said notice must be delivered to the Executive within ninety
         (90) days after the Board both (1) has or should have knowledge of
         conduct of an event which allegedly constitutes "Cause" and (2) has
         reason to believe such conduct or event could be grounds for "Cause".
         In the event of such a termination notice, the Executive shall have ten
         (10) business days following

<PAGE>
                                       13

receipt of said notice to cure his conduct, to the extent such cure is
possible. If the Executive does not cure within the ten (10) business day
period, his termination of employment shall be deemed to be for "Cause".
Notwithstanding the foregoing, any determination of "Cause" must be made by the
Board at a meeting called for the purpose of determining whether the Executive
has engaged in conduct constituting "Cause", at which meeting the Executive
will have a reasonable opportunity to be represented by counsel. A termination
for "Cause" may be upheld only upon resolution approved by a majority vote of
the members of the Board. If the Board does not make such determination, the
termination shall be treated as a termination by the Company "without cause"
and the Executive shall be entitled to the compensation set forth in Section
4.3.4 above.

6.0       Non-Exclusivity of Rights.    Except as provided in Articles 1.0, 3.0
and 4.0 of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies for which
the Executive may qualify. Vested benefits and other amounts that the Executive
is otherwise entitled to receive under any other plan, policy, practice, or
program of, National Grid, the Company or any of their affiliated companies on
or after the date of termination shall be payable in accordance with the terms
of each such plan, policy, practice, or program, as the case may be, except as
explicitly modified by this Agreement.

7.0       Full Settlement.    Except as set forth in Article 10.0, the
Company's obligation to make the payments provided for in, and otherwise to
perform its obligations under this Agreement shall
<PAGE>
                                       14

not be affected by any set-off, recoupment, defense or other claim, right or
action that the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement, the amount of any payment or benefit
provided for in this Agreement shall not be reduced by any compensation earned
by the Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company, or otherwise.

8.0  Non-Competition Provision and Confidential Information.

     8.1  Non-Competition.    The Executive agrees that without the prior
written consent of the Board, during the Employment Period and for two (2)
years thereafter, the Executive shall not, for himself or on behalf of any
other party, partnership, corporation or company as a shareholder, officer,
director, partner, consultant, or otherwise, engage directly or indirectly, or
acquire any financial or beneficial interest in (except as provided in the next
sentence), or provide consulting services to, be employed by, or own, manage,
operate or control any business which is in competition with a business engaged
in by National Grid, the Company or any of their subsidiaries or affiliates in
any state of the United States in which any of them are engaged in business at
the time of such termination of employment for as long as they carry on a
business therein. Notwithstanding the preceding sentence, the Executive shall
not be prohibited from owning less than five (5%) percent of any publicly
traded corporation, whether or not such corporation is in competition with
National Grid, or the Company or any of their subsidiaries or affiliates.
<PAGE>
                                       15

     The Executive hereby covenants and agrees that, at all times during the
period of his employment and for a period of two (2) years immediately following
the termination thereof, for any reason, the Executive shall not employ or seek
to employ any person employed at that time by National Grid, the Company or any
of their subsidiaries or affiliates, or otherwise encourage or entice such
person or entity to leave such employment.

     8.2  Confidential Information. The Executive agrees to keep secret and
retain in the strictest confidence all confidential matters which relate to
National Grid, the Company and their subsidiaries and affiliates, including,
without limitation, customer lists, client lists, trade secrets, pricing
policies and other business affairs of National Grid, the Company, their
subsidiaries and affiliates and their predecessors and their subsidiaries and
affiliates, learned by him from National Grid, the Company, their subsidiaries
or affiliates, their predecessors and their subsidiaries and affiliates, or
otherwise, before or after the date of this Agreement, and shall not disclose
any such confidential matters to anyone outside National Grid, the Company, or
any of their subsidiaries or affiliates, whether during or after his period
Employment Period, except (i) as such disclosure may be required or appropriate
in connection with his work as an employee of the Company, its parent or their
affiliates or subsidiaries or (ii) when required to do so by a court of law, by
any governmental agency having supervisory authority over the business of
National Grid, the Company or their subsidiaries or affiliates or by any
administrative or legislative body (including a committee thereof) with apparent
jurisdiction to order him to divulge, disclose or make accessible such
information. The Executive agrees to give the Company advance written notice of
any disclosure pursuant to clause (ii) of the preceding sentence and to
cooperate with any efforts by the Company to limit the extent of such
disclosure. Upon request by the

<PAGE>
                                       16

Company, the Executive agrees to deliver promptly to the Company upon
termination of his services for the Company or National Grid, or at any time
thereafter, as the Company may request, all Company, National Grid and their
subsidiaries and affiliates and their predecessors property, memoranda, notes,
records, reports, manuals, drawings, designs, or computer files in any media and
any other documents (and all copies thereof) relating to the business of
National Grid, the Company, their predecessors or any of their subsidiaries or
affiliates which he may then possess or have under his direct control, other
than personal notes, diaries, correspondence or rolodexes.

     8.3  It is the intention of the parties hereto that the restrictions
contained in this Article 8.0 be enforceable to the fullest extent permitted by
applicable law. Therefore, to the extent any court of competent jurisdiction
shall determine that any portion of the foregoing restrictions is excessive,
such provision shall not be entirely void, but rather shall be limited or
revised only to the extent necessary to make it enforceable. Moreover, if any
court of competent jurisdiction should hold that any portion of the foregoing
descriptions is overly broad in time, scope, or area, it is expressly agreed
that such provision shall be reformed to the maximum degree that would not
render it unenforceable.

9.0  Certain Additional Payments by the Company.

     9.1  Excise Tax Payment by the Company. Notwithstanding anything in this
Agreement to the contrary, in the event it shall be determined that any payment,
award, benefit or distribution (or any acceleration of any payment, award,
benefit or distribution) by the Company or any of its affiliates to or for the
benefit of the Executive, whether pursuant to the terms of this

<PAGE>
                                       17

Agreement or otherwise, but determined without regard to any additional
payments required under this Section 9.1 (the "Payments") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Company shall pay to the Executive (or to the Internal
Revenue Service on behalf of the Executive) an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any Excise Tax) imposed upon the Gross-Up Payment, the Executive
retains (or has had paid to the Internal Revenue Service on his behalf) an
amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed
upon the Payments and (y) the product of any deductions disallowed because of
the inclusion of the Gross-Up Payment in the Executive's adjusted gross income
and the highest applicable marginal rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to (i) pay federal income taxes at the highest marginal rates of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made,
(ii) pay applicable state and local income taxes at the highest marginal rate
of taxation for the calendar year in which the Gross-Up Payment is to be made,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes and (iii) have otherwise allowable
deductions for federal income tax purposes at least equal to the Gross-Up
Payment.

          9.1.1 All determinations required to be made under Section 9.1 above,
including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up

<PAGE>
                                       18

     Payment and the assumptions to be utilized in arriving at such
     determinations, shall be made by a PricewaterhouseCoopers (PWC) (the
     "Accounting Firm") which shall provide detailed supporting calculations
     both to the Company and the Executive within fifteen (15) business days of
     the receipt of notice from the Company that there has been a Payment, or
     such earlier time as is requested by the Company (collectively, the
     "Determination"). All fees and expenses of the Accounting Firm shall be
     borne solely by the Company and the Company shall enter into any agreement
     requested by the Accounting Firm in connection with the performance of the
     services hereunder. The Gross-Up Payment under Section 9.1 above with
     respect to any Payments shall be made no later than thirty (30) days
     following such Payment. If the Accounting Firm determines that no Excise
     Tax is payable by the Executive, it shall furnish the Executive with a
     written opinion to such effect, and to the effect that failure to report
     the Excise Tax, if any, on the Executive's applicable federal income tax
     return will not result in the imposition of a negligence or similar
     penalty. The Determination by the Accounting Firm shall be binding upon the
     Company and the Executive.

          As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment") or Gross-Up Payments are made by the Company which should not
have been made ("Overpayment"), consistent with the calculations required to be
made hereunder. In the event that the Executive thereafter is required to make
payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment

<PAGE>
                                       19

(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code) shall be promptly paid by the Company to or for the benefit of the
Executive. In the event the amount of Gross-Up Payment exceeds the amount
necessary to reimburse the Executive for his Excise Tax, the Accounting Firm
shall determine the amount of the Overpayment that has been made and any such
Overpayment (together with interest at the rate provided in Section 1274(b)(2)
of the Code) shall be promptly paid by the Executive (to the extent he has
received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company. The Executive shall
cooperate, to the extent the Company reimburses his expenses, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.

          9.1.2 The Executive shall notify the Company in writing of any claim
     by the Internal Revenue Service that, if successful, would require the
     payment by the Company of the Underpayment. Such notification shall be
     given as soon as practicable but no later than fifteen (15) business days
     after the Executive knows of such claim, and shall apprise the Company of
     the nature of such claim and the date on which such claim is requested to
     be paid. The Executive shall not pay such claim prior to the expiration of
     the period ending on the date that any payment of taxes with respect to
     such claim is due or the thirty (30) day period following the date on which
     the Executive gives such notice to the Company, whichever occurs first. If
     the Company notifies the Executive in writing prior to the expiration of
     such period that it desires to contest such claim, the Executive shall (i)
     give the Company any information reasonably requested by the Company
     relating to
<PAGE>
                                       20

     such claim, (ii) take such action in connection with contesting such claim
     as the Company shall reasonably request in writing from time to time,
     including, without limitation, accepting legal representation with respect
     to such claim by an attorney reasonably selected by the Company, (iii)
     cooperate with the Company in good faith in order to effectively contest
     such claim, and (iv) permit the Company to participate in any proceedings
     relating to such claim; provided, however, that (a) the Company shall bear
     and pay directly all costs and expenses (including attorneys fees and any
     additional interest and penalties) incurred in connection with such contest
     and shall indemnify and hold the Executive harmless, on an after-tax basis,
     upon demand for any reasonable and verifiable incidental costs and expenses
     incurred by the Executive in connection with such contest, and for any
     Excise Tax or income tax, including interest and penalties with respect
     thereto, imposed as a result of such representation and payment of costs
     and expenses, (b) the Executive shall not be required to continue such
     contest if the Company fails to timely pay amounts due under (a) above of,
     if the Executive is advised in writing by counsel, and provides the Company
     with a copy of such advice, that any position or action taken by the
     Company in connection with the contest may result in civil or criminal
     liability to the Executive other than for the amount of Underpayment,
     expenses, civil penalties, and/or interest, reimbursed by the Company under
     (a) above; and (c) any information provided to the Company or its counsel
     hereunder shall be treated as confidential and shall not be used for any
     purpose than pursuit of the contest hereunder. Subject to the foregoing
     provisions of this Section 9.1.2, the Company shall control all
     proceedings taken in connection with such contest and, at its sole option,
     may pursue or
<PAGE>
                                       21

     forego any and all administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect to such claim and may, at
     its sole option, either direct the Executive to pay the tax claimed and sue
     for a refund or contest the claim in any permissible manner, and the
     Executive agrees to prosecute such contest to a determination before any
     administrative tribunal, in a court of initial jurisdiction and in one or
     more appellate courts, as the Company shall determine; provided, however,
     that if the Company directs the Executive to pay such claim and sue for a
     refund, the Company shall advance the amount of such payment to the
     Executive, on an interest-free basis and shall indemnify and hold the
     Executive harmless, on an after-tax basis, from any Excise Tax and income
     tax, including interest and/or penalties with respect thereto, imposed with
     respect to such advance or with respect to any imputed income with respect
     to such advance; and further provided that any extension of the statute of
     limitations relating to payment of taxes for the taxable year of the
     Executive with respect to which such contested amount is claimed to be due
     is limited solely to such contested amount. Furthermore, the Company's
     control of the contest shall be limited to issues with respect to which a
     Gross-Up Payment would be payable hereunder and the Executive shall be
     entitled to settle or contest, as the case may be, any other issue raised
     by the Internal Revenue Service or any other authority.

10.0 Attorneys' Fees. The Company shall pay to the Executive, within thirty
(30) days following submission of a written statement of the expenditure, and
to the fullest extent permitted by law, (i) all legal fees, court costs and
litigation expenses reasonably incurred by the

<PAGE>
                                       22

Executive as a result of any contest by the Company, the Executive, or others
regarding the validity or enforceability of or liability under, or otherwise
involving, any provision of this Agreement or (ii) any counsel fees incurred by
the Executive seeking counsel for the purpose set forth in Section 9.1.2 (b)
above (except to the extent it is determined by a final and non-appealable
order of court of competent jurisdiction, mediator or arbitrator, as the case
may be, that the Executive's claim is, or claims are, frivolous or without
merit, in which case the Executive shall bear all such fees and expenses),
together with interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code. If the court, mediator, or
arbitrator determines that the Executive' claim(s) is frivolous or advanced in
bad faith, the Executive shall reimburse the Company for all such fees and
expenses previously paid by the Company within fifteen (15) days of the court,
mediator, or arbitrator's decision. Provided further, if the Executive fails to
reimburse the Company as set forth herein, the Company may offset said amount
against any payment due the Executive.

11.0 Successors.

     11.1 This Agreement is personal to the Executive and, without the prior
written consent of the Chief Executive Officer of National Grid, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives. If the Executive shall die while any
amount would still be payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of

<PAGE>
                                       23

this Agreement to the executors, personal representatives or administrators of
the Executive's estate.

     11.2 This Agreement shall inure to the benefit of and be binding upon
National Grid, the Company and their successors and assigns.

     11.3 National Grid and/or the Company shall require any successor
(whether  direct or indirect by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company or
National Grid, as applicable, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that National Grid and/or
the Company would have been required to perform it if no such succession had
taken place.

12.0 Ownership of Work Product.

     12.1 Any and all improvements, inventions, discoveries, formulae,
processes, methods, know-how, confidential data, trade secrets and other
proprietary information (collectively, "Work Product") within the scope of any
business of the Company, National Grid or any of their affiliates or
subsidiaries which the Executive may conceive or make or have conceived or made
during the Executive's employment with the Company or a Niagara Mohawk company,
shall be and are the sole and exclusive property of the Company, and that the
Executive, whenever requested to do so by the Company, at the Company's
expense, shall execute and sign any and all applications, assignments or other
instruments and do all other things which the Company may deem necessary or
appropriate (i) to apply for, obtain, maintain, enforce, or defend in the
United States or any foreign country, or (ii) to assign, transfer, convey or
otherwise make available to the Company the sole and exclusive right, title and
interest in and to any Work Product.

<PAGE>
                                       24

13.0 Miscellaneous.

     13.1 Waiver and Election of Remedies. Waiver by a party of any term,
condition or provision of this Agreement shall not be considered a waiver of
that term, condition or provision in the future or of any other term, condition,
or provision, and any provision hereof may be waived only by an instrument in
writing signed by the party against whom or which enforcement of such waiver is
sought. The failure of a party, at anytime, to require the performance by the
another party of any provision hereof, shall in no way affect the full right to
require such performance at anytime thereafter.

     13.2 Severability. In the event that any portion or part of this Agreement
is deemed invalid, against public policy, void or otherwise unenforceable by a
court of law, the parties shall negotiate an equitable adjustment in the
affected provision of this Agreement; however, the validity and enforceability
of the remaining portions hereof shall otherwise be fully enforceable.

     13.3 Notice. All notices and other communications required or desired
under this Agreement shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return receipt requested,
postage prepaid, or by overnight delivery addressed as follows:

If to the Executive:     William E. Davis

                         ______________________

                         ______________________

If to the Company:       National Grid USA
<PAGE>
                                       25

                         25 Research Drive
                         Westborough, MA 01582
                         Attention: General Counsel

With copy to:

                         The National Grid Group PLC
                         National Grid House
                         Kirby Corner Road
                         Coventry CV4 8JY
                         United Kingdom
                         Attention: General Counsel

If to National Grid:     _____________________ The National Grid Group PLC
                         National Grid House
                         Kirby Corner Road
                         Coventry CV4 8JY
                         United Kingdom
                         Attention: General Counsel

With copy to:            General Counsel

or to such other address as either party furnishes to the other in writing in
accordance with this Section 13.3. Notices and communications shall be effective
when actually received by the addressee.

     13.4  Captions and Paragraph Headings.  The captions and paragraph
headings used in this Agreement are for convenience only and are not to be
construed as a part of this Agreement.

     13.5  Applicable Law.  This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts. The Executive
agrees to submit to the personal jurisdiction of the Massachusetts courts in
respect to any matter or dispute arising out of this Agreement.

<PAGE>
                                       26

     13.6  Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

     13.7  Performance Covenant.  The Executive represents and warrants to the
Company that the Executive is not party to any agreement which would prohibit
the Executive from entering into this Agreement or performing fully the
Executive's obligations hereunder.

     13.8  Survival of Covenants.  The obligations of the Executive set forth
in Article 8.0 herein, are independent covenants by which the Executive is and
will remain bound notwithstanding any breach by the Company, and shall survive
the termination of this Agreement.

     13.9  Taxes.  Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations. All cash amounts required to be paid hereunder shall be
paid in United States dollars.

     13.10 Entire Agreement.  This Agreement constitutes the entire Agreement
between the Company and the Executive and all previous representations or
agreements, whether written or oral; including the Employment Agreement, are
hereby annulled and superseded. No change, modification or alteration of any of
the provisions of this Agreement shall be binding except by a written agreement
executed by the parties hereto or their respective successors and legal
representatives. Any action by the Company to amend or modify this Agreement
must be approved by the Company's Board of Directors.

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of their respective Boards of Directors, the
Company and National

<PAGE>
                                       27

Grid have caused this Agreement to be executed in their name on their behalf,
all as of the day and year set forth below.

                                       William E. Davis

                                       /s/ William E. Davis
                                       ---------------------------

                                       Date: 5 December 2001

                                       National Grid USA
                                       By: /s/ [ILLEGIBLE]
                                          ------------------------
                                          Its

                                       Date:

                                       THE NATIONAL GRID GROUP PLC

                                       By: /s/ [ILLEGIBLE]
                                          ------------------------
                                          Its

                                       Date: 7.12.01

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}]]