02-21427. Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”)

August 16, 2002.

Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by September 10, 2002, to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After DATE, 2000, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

National Grid Group plc (70-10067)

National Grid Group plc (“National Grid” or “Applicant”), 15 Marylebone Road, London NW1 5JD, United Kingdom, a registered holding company, has filed a declaration under sections 6(a), 7, and 33 of the Act and rules 53 and 54 under the Act.

I. Background

In connection with its intended acquisition of the approximately 3.5 billion outstanding ordinary shares of Lattice Group plc (“Lattice”) a United Kingdom gas utility holding company, (“Merger”), National Grid proposes to issue and sell approximately $9.4 billion of its ordinary shares for the purpose of financing the acquisition of a foreign utility company as defined in section 33 of the Act (“FUCO”). Further, National Grid seeks authority to issue and sell an additional amount of approximately $7.5 billion of debt and equity securities and to enter into guarantees all for the purpose of financing the acquisition of or guaranteeing the securities of FUCOs. National Grid currently has FUCO investments of approximately $3.1 billion.

A. Merger Parties

1. National Grid

National Grid was incorporated in England and Wales on July 11, 2000. Its ordinary shares are listed on the London Stock Exchange and its American Depositary Receipts are listed on the New York Stock Exchange. As of April 19, 2002 there were 1,776,636,707 ordinary shares and one special share outstanding. National Grid employs, in conjunction with its subsidiaries, approximately 14,000 employees. As of April 19, 2002, National Grid had a market capitalization of approximately $12.6 billion.

National Grid holds ownership interests in various utility and nonutility businesses outside the United States through National Grid Holdings One plc (“National Grid Holdings One”).^[1] National Grid Holdings One's principal business in the United Kingdom (“UK”) is the transmission of electricity in England and Wales, which it conducts through its wholly owned indirect subsidiary, The National Grid Company (“NCG”). National Grid through National Grid Holdings One has electric utility businesses located in Argentina and Zambia.^[2] In addition, National Grid is engaged in undersea electric transmission interconnector projects in Australia, Norway, the Netherlands and Ireland that are in various stages of development. National Grid conducts its utility and nonutility businesses ^[3] in the United States through National Grid USA, an indirect, wholly owned registered holding company subsidiary of National Grid.

National Grid USA is engaged, through its subsidiaries, in electric distribution to residential, commercial, and industrial customers in New England and the distribution and sale of electricity and natural gas to residential, commercial, and industrial customers in New York. The company owns all of the outstanding stock of the following public-utility companies: Niagara Mohawk Power Corporation (“Niagara Mohawk”), Massachusetts Electric Company, The Narragansett Electric Company, Granite State Electric Company, and Nantucket Electric Company (collectively, “Distribution companies”). The Distribution Companies deliver electricity to residential, commercial, and industrial customers, operate and maintain distribution power lines and substations, provide metering, billing, and customer services, design and build distribution-related facilities, and provide related products and services including energy efficiency programs for customers. Niagara Mohawk also provides gas utility service to approximately 550,000 customers in New York State. National Grid USA also holds ownership interests in four other public-utility companies: New England Power Company (“NEPCO”), New England Electric Transmission Corporation (“NEET”), New England Hydro-Transmission Corporation (“N.H. Hydro”) and New England Hydro-Transmission Electric Company, Inc. (“Massachusetts Hydro”). NEPCO, a wholly owned subsidiary of National Grid USA, operates electricity transmission facilities in the states of Massachusetts, Rhode Island, New Hampshire, and Vermont, and holds National Grid USA's remaining interests in certain generating units (which the company is actively seeking to divest). NEET, another wholly owned subsidiary of National Grid USA, owns and operates a direct current/alternating current converter terminal facility for the first phase of the Hydro-Quebec and New England interconnection (“Interconnection”) and six miles of high voltage direct current transmission line in New Hampshire. N.H. Hydro, in which National Grid USA holds 53.97% of the common stock, operates 121 miles of high voltage direct current transmission line in New Hampshire for the second phase of the Interconnection, extending to the Massachusetts border. National Grid USA holds directly 53.97% of the common stock of N.H. Hydro, which operates 121 miles of high voltage direct current transmission line in New Hampshire for the second phase of the Interconnection, extending to the Massachusetts border. National Grid USA also holds directly 53.97% of the voting stock of Massachusetts Hydro, which operates a direct current/alternating current terminal and related facilities for the second phase of the Interconnection and twelve miles of high-voltage direct current transmission line in Massachusetts.

2. Lattice

Lattice is incorporated in England and Wales, and is one of three successors to the former British Gas plc. The company's ordinary shares are listed on the London Stock Exchange. As of April 19, 2002, there were 3,528,149,704 ordinary shares and one special share outstanding. Lattice employs, in conjunction with its subsidiaries, approximately 17,000 employees. As of April 19, 2002, Lattice had a market capitalization of approximately $8.8 billion.

The Lattice system is subdivided into two holding companies: Transco Holdings plc (“Transco Holdings”) and Lattice Group Holdings Ltc. (“Lattice Group Holdings”). Transco plc (“Transco”), the principal subsidiary of Transco Holdings, owns, operates, and develops the majority of Great Britain's gas transportation and distribution system.

Through subsidiaries, Lattice Group Holdings: provides advanced technology and systems solutions for energy and utility companies; provides gas connection services to the gas transportation network under a service provider contract with Transco; ^[4] provides multi-utility infrastructure services to industrial and commercial customers and developers; manages the Lattice system's non-operational real estate portfolio; ^[5] offers leasing and vehicle management services; provides managed payroll services, pensions administration, accounting, business process outsourcing and consulting services; and acquires, builds, leases, and manages sites for mobile telecommunications operators in the United Kingdom.

B. Merger

The terms of the Merger are governed by a Scheme of Arrangement (“Scheme”). Under the Scheme: (1) The issued shares of Lattice would be cancelled, and new shares would be issued to National Grid Holdings One; (2) National Grid would issue 0.375 shares of its stock to Lattice shareholders in exchange for each Lattice share held; (3) National Grid shareholders would retain their shares; and (4) National Grid would be renamed National Grid Transco plc (“Grid Transco”) and would retain its listings on the London and New York stock exchanges. Applicant states that, upon completion of the Merger, National Grid and Lattice shareholders would hold approximately 57.3% and 42.7%, respectively, of the issued shares of Grid Transco.

C. Current Authority

By order dated January 16, 2002 (HCAR No. 27490), the Commission authorized, among other things, National Grid to (1) invest up to $5.406 billion in FUCOs; and (2) issue and sell equity and debt securities the value of which would not exceed an aggregate amount of $6 billion at any one time outstanding (“Aggregate Limit”) through September 30, 2004. More specifically, National Grid was authorized to issue up to $4.5 billion in equity securities and $5 billion in debt securities, subject to the Aggregate Limit.

II. Requested Authority

As of March 31, 2002, National Grid had invested, in the aggregate, approximately $3.104 billion in FUCOs; therefore, National Grid's current unused FUCO investment authority is $2.302 billion. The Merger alone would require the issuance of approximately $9.4 billion in Grid Transco shares, and a corresponding increase in the holding company's authorized level of FUCO investment. Consequently, Grid Transco's aggregate investment would be approximately $12.5 billion. To effect the Merger and maintain flexibility to make other FUCO investments, National Grid requests authority, through September 30, 2004, to: (1) Issue and sell equity and debt securities and to enter into guarantees up to an aggregate limit of $20 billion, subject to the following subcategory limits: up to (a) $18 billion in equity securities; (b) $12 billion in debt securities; and (c) $6 billion in guaranties; and (2) invest up to $20 billion in FUCOs.

For the Commission by the Division of Investment Management, pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  National Grid Holdings One is a FUCO within the meaning of section 33 of the Act.

2.  National Grid is joint owner of Transener SA, the owner and operator of the principal high-voltage electricity system in Argentina. In Zambia, National Grid is joint owner of Copperbelt Energy Corporation, the former Power Division of the Zambia Consolidated Copper Mines.

3.  National Grid USA's nonutility subsidiaries, among other activities, construct and lease of fiber optic telecommunications systems and provide electric utility restructuring and customer choice consulting services to nonaffiliated utilities.

4.  Lattice Group Holdings also seeks to provide indirectly facilities management services in other non-gas markets.

5.  Applicant states that the protfolio consists largely of land and buildings either currently or previously occupied by a Lattice system company.