National Grid pulls out the stops after Superstorm Sandy

Utilities group National Grid said restoration expenses following Hurricane Sandy, excluding those related to the Long Island Power Authority (LIPA), are not expected to exceed 100m pounds.

"I am pleased with the progress we made in the first half of the year: operating our networks safely and reliably and delivering a record level of investment. More recently, our teams in the US responded in a timely, safe and effective way to restore service to our customers and limit disruption caused by 'Superstorm' Sandy," said Steve Holliday, National Grid's Chief Executive.

Having amended its storm restoration procedures in 2011 after two major storms, the group was able meet or exceed its restoration objectives for its upstate New York, Rhode Island and Massachusetts service areas, where the group's teams restored power to around 400,000 customers - virtually all of those affected by the storm - within three days.

On Long Island, storm damage caused loss of power to more than 1.1m customers served by National Grid on behalf of LIPA with many also affected by severe flooding. Most are now reconnected and much of the work being done has moved on from restoration to reinforcement and rebuilding of the LIPA network.

The group announced underlying pre-tax profit of £1,154m for the six months to the end of September, up 21% from £953m the year before. Statutory profit before tax of £1,285m was up 37% higher than the £941m achieved at the halfway stage last year.

Operating profit on a constant currency basis and excluding major storms and timing issues rose 7% to £1,673m from £1,559m the year before.

Underlying earnings per share (EPS) rose 20% to 23.0p from 19.2p the year before while statutory EPS jumped 32% to 28.8p from 21.9p.

Holliday said the first half performance reflects increased net regulated revenues driven by National Grid's growing asset base and tight control over operating cost growth.

Increased investment in both the UK and US operations is in line with previous guidance, with the group ploughing £1,825m into the business in the reporting period, £346m more than it did in the corresponding period of 2011.

"In the UK, as we work through the final stages of Ofgem's RIIO [price control review] process, our focus is on successfully implementing a number of RIIO readiness initiatives, led by the ongoing development of our new UK operating model. In the US, our priority remains to improve overall returns through improved customer service and efficiency, combined with securing appropriate rate case outcomes in key jurisdictions," Holliday said.

The interim dividend has been increased to 14.49p, in line with the group's policy of targeting 4% dividend growth in the current financial year. The group is set to announce a new dividend policy for the period from April 2013 by May of next year, once the outcomes of key regulatory developments are a bit clearer.

JH