National Grid Share Discussion Threads

[pierre oreilly] 28/9/2016 10:22

I'm out of touch with ng's gas business.

Could someone in the know summerise the gas position, whether a sale will go through, the likely implications for shareholders, the likely cash return ... those sorts of things. Thanks in advance.

[m100] 28/9/2016 10:15

Labour conference: Former shadow energy minister backs change to SO role



"“I’m strongly tempted to change how it works at the minute,” he told delegates"

Except he can't because he's in opposition.


OFGEM - Open letter: Sale of gas distribution networks



"Ofgem open letter to potential buyers of the majority stake in National Grid’s four gas distribution networks and part of SSE’s equity stake in SGN .

Ofgem regulates these businesses under our RIIO-GD1 price control (2013-2021) for gas distribution. The regulator is reminding bidders that firm decisions have not yet been made about RIIO-GD2, the price control period after 2021, and if they purchase these businesses at a premium over the Regulatory Asset Values, they will not be compensated for that premium.

Ofgem does not need to provide consent for the sale of shares in either transaction."

[prewar] 22/9/2016 16:56

Being sold as seen to be reduced growth potential. Guess some of the cash will be invested in the US where growth is supposedly higher.

I'm sure there are bidders who believe they can run the assets and operations more efficiently than NG and will bid a premium accordingly. Let's hope so anyway.

[tonio] 22/9/2016 16:43

Hmm,well there are all sorts of views I guess. Mine would be it's better having an asset for which there are several bidders than an asset for which there is only one (eg recently, ARM and RBS W&G branches)

[ringer12] 22/9/2016 15:22

Multiple bids for NG,s gas distribution unit if you can believe the rumors.

If it is so attractive why is it being sold?

[mike24] 20/9/2016 13:17

The employee share scheme has been the great motivator for NG
but there seems to be no such share scheme in place for staff departing with gas business which considering half that business is being retained, they should sort
to avoid a brain drain, by putting in place equal/fair benefits,

[bountyhunter] 19/9/2016 18:00

that was tongue in cheek, but who knows?

[redartbmud] 19/9/2016 14:37

Will she do anything about it if she has?

[bountyhunter] 19/9/2016 13:50

has Theresa May heard about this ;~)

[painter] 19/9/2016 12:40

Alliance News TOP NEWS SUMMARY today:

A Chinese consortium is said to have been put together to bid for a majority stake in the National Grid's GBP11 billion gas business, the Sunday Times reported. The group is believed to include state-owned China Gas and conglomerate Fosun International, the newspaper said. Goldman Sachs is said to be advising the consortium, according to the report. Bids for National Grid's gas business are due later this month.

[utyinv] 16/9/2016 17:04

PO,

Yes the price quoted for the Gas Distn has been valued in Sterling, however one could argue that this value was before the pound was devalued so Foreign Investment Co's i.e., Ontario Teachers Pensions fund along with others will have more to offer in the bidding as their currency will buy more. If the sale was at a fixed price then overseas buyers would make a killing but as it is open to offers they may even offer more to secure the deal (wishful thinking....?).

AS you know I am not from the Gas side, but I do know the business. It will be interesting to see what Strategy National Grid adopts in the future, having said that they believe there is little growth potential in the Gas Distn business and that is why it doesn't really figure in their future Company philosophy.

Don't be surprised if after the sale and after the markets settle from Brexit etc National Grid, in a couple of years, sells the remaining 51% stake. However, if this happens I believe that the proceeds will be reinvested in another US acquisition with greater growth and earnings potential...IMO.

[prewar] 16/9/2016 11:50

The Gas Distribution business will command a price in Sterling as it is a UK business with revenues in £.

I'd be slightly surprised that all of NG's US business would get an uplift in value due to the strengthening of the $, I would have thought at least a good chunk of this investment would be hedged.

[pierre oreilly] 16/9/2016 11:32

Ah right, yeah i now see what you mean, i think! Is it that so much of ng's value is in dollars, so with a 20% drop in £v$ the pound value of ng should have risen 20% in pound terms? So to reflect that you knocked 20% off ngs price to illustrate what it's really worth relative to before the exchange rate change?

I'm out of touch re the gas side of things. Is that being sold for dollars? In which case that is worth 20% more to us too?

[utyinv] 15/9/2016 20:36

PO,

I think you miss my point. Pre referendum National Grid value X. Post referendum National Grid worth X no change intrinsically, but the share price in GBP post referendum has gone up to reflect the drop in the value of the GBP worldwide, ie, 20%.

Sure if you sold Grid at £11.30p and bought something from the UK you would benefit but if you bought something outside the UK you would be no better off than before the referendum. 30%+ of NG income comes from the US with a US$ income that is exchanged back into UK Sterling (in simple terms).

I spoke to Bonfield (CFO) in July when the share price jumped almost overnight to £11.30 and commented that the share price jumping to £11.30 was only a result of the drop in the GBP and euforia shouldn't let us run away with ourselves and he agreed. NG has yet to be valued correctly and a pre referendum share price, based on money spent on increasing our assets by £5billion / yr should have raised the share price to £13/share.

National Grid is one of a very few Companies that are expanding and spending real money improving and building asset base and the share price has not IMO kept pace with build. I dont have to explain the significance of an increasing asset base to you as I know you are aware how National Grid gets its income.

I also expect a boost in share price especially when the City realise and 'clocks' what's on the horizon with the gas distn sale. My forecast, IMO! Distn business worth £11 billion sale of 51% gives a return of £5.6 billion, take pro rata debt off and a possible share buy back ( an option floated at the AGM to try and keep the share value up post sale) would leave £2.9 billion to be returned to shareholders. With 3.7 billion shares in circ this may realise a special divi of 78p.

[pierre oreilly] 15/9/2016 10:27

Steak frites, bleeding useless spull chequered.

[pierre oreilly] 15/9/2016 10:25

Uty, if you think it's rational to knock 20% off your investment values, shouldn't you also knock 20% off the price of a pint, or the cost of the house you want to bug, or your mortgage repayments etc? In which case the value of you investments is exactly the same as before your claimed 20% exchange rate change? Sure if you go to France for a steak drives it'll cost you 20% more if you pay in pounds, but apart from that in the short term nothing changes much. In the long term Imported goods may become more expensive, but that is balanced by our exports being cheaper by the same amount.

[mike24] 09/9/2016 16:12

looking to add a few more when the markets tank
re US elections, whoever wins.

the gloves are off as the
"Basket of Deplorables" could sway the vote
tis a race to the bottom

[utyinv] 01/9/2016 18:42

let's not forget the surge post Brexit vote was just the GBP being devalued by 20%. In reality with the current price being £10.40 and accounting for the fact that the GBP has been devalued by 20% post Brexit, the price is the equiv of £8.32, pretty poor!

National Grid needs to publish some positive PR bringing back on board the major institutions supporting this cash generating share.

Not convinced that the Company UK chief Nicola Shaw is doing enough! Her comments to the press recently has not painted NG in good light whilst trying to further her own career.

[db125] 31/8/2016 17:13

That early July 140p surge to 1120 looks to be unravelling!

[utyinv] 30/8/2016 22:00

over sold again!

[1carus] 26/8/2016 17:17

I started work in a factory in the midlands in the 80's and it was common place to have a klaxon that sounded off when the load taken was becoming excessive. The company would effectively be fined or invoke a higher tariff if it went over its'allowance'. My recent experience in other industries seems to indicate that some of this thriftiness has been lost. So for example, poor implementations of both power factor correction and 3 phase balancing. I've seen a 0.5MW load running at 0.86pf .... I am not saying that this is common place but I do suspect quite a lot of energy is not being used effectively - and it seemed in that particular case the energy supplier was not particularly quick to point out the problem! I am not in the energy industry but I do hope that the basic principles of supply are still being implemented or is the industry being run by people who just don't understand the basics.

[pierre oreilly] 26/8/2016 16:14

Yes the demand curve for any day is quite accurate - but the increasing problem with increasing intermittent generation is the amount of generation you'll get from that intermittent generation at any one time, making planning for remaining generation and balancing more difficult. These days aiui, grid engineers have less and less generation and reserve resources available to match what they know they need, which may become a severe problem around the peak. Would be interesting to hear from a current grid engineer on how they see it.

It looks like with the failure of sufficient bids for the demand side restrictions (where reserve is effectively achieved by lower demand from large users who agree to it) means probably reserve provision becoming even more expensive, imv.

[1carus] 26/8/2016 15:35

PO ... the demand cycles can't be rocket science, there is plenty of historical data including long cold snaps. Working out a cyclic base load then calculating what is needed for the peaks should be a fairly simple process. Depending on how many sigmas you want to look at in the variance, would determine how much cover you would want at anytime. OK maybe its not exactly that simple, and I know they build windfarms in different geographies to increase the likely-hood of some of them producing at anyone time etc. I don't disagree with your statement or sentiment.

One other point-- the cost of sustaining all this windmill stuff. It has to be greater than that of a simple gas / steam turbine, particularly when looking at DC transmission and the endless amount of silicon needed for both rectification and static inverters, --- I drive pass several windfarms on my commute and rarely are they all milling at the same time!

[pierre oreilly] 26/8/2016 15:11

On the last point, my view is the whole industry has been manoeuvred into being 'greener' without the necessary thought (or more likely there was thought, but it was ignored) on the implications of the implemented strategies. One example is the subsidy of intermittent renewables such as wind and solar as a replacement for out traditional generation which is controllable (or dispatchable). Of course, in a power matching grid, intermittent simply isn't a replacement for dispatchable generation. The main problem is the capacity looks similar but is very different. (i.e. THE 100MW capacity of a windfarm looks much the same as a 100MW gas turbine). But obviously the characteristics are wildly different, with the gt generating what we tell it, but the windfarm generating what the hell it wants, sometimes a lot when it's not needed, and sometimes nothing when it is - and both those situations have to be handled. So the system frequency varies more as intermittent penetration rises, and more frequency response services have to be procured to handle that. I doubt those who just shouted about more and more windmills have the faintest notion of those effects, and according to uty above, it looks like the regulator doesn't too.

Basically, I'd say the main driving force of the grid system the last 10/20/30 years has been people who haven't the faintest idea about it, leading to the current mess today, where i bet those at the front end pray that on a cold winter's night, the wind obliges and blows a bit.