21-01-05 The UK's gas and power regulator, Ofgem, has conditionally approved National Grid Transco's planned £ 6 bn sale of four gas distribution networks as it would help customers save money.
National Grid Transco agreed last year to sell the networks. The company expects to complete the sales between April and June this year, and the City widely expects the deal to gain all necessary regulatory approvals.

The transaction also needs clearance by the UK Department of Trade & Industry (DTI) and Health & Safety Executive.
"Lower distribution charges are the prize from this sale which Ofgem, through comparative regulation, will begin to capture for customers from the next price control in 2008," Ofgem Chairman John Mogg said.

NGT said Ofgem's analysis identified potential net benefits to gas customers of around £ 225 mm between 2005 and 2023, but the saving could be as little as £ 80 mm or as much as £ 500 mm. The costs of gas distribution make up around 23 % of the average domestic customer's bill.
The benefits are expected to come from Ofgem being more able to compare the performance of the networks. he regulator added that NGT had to implement new industry structures before the sale could proceed.

Last year, National Grid said it was selling the assets to raise money to return to shareholders and to invest in growing US markets. National Grid is selling the networks to buyers including the UK's Scottish & Southern Energy and United Utilities.
The regulator said the new network owners must have clearly defined roles and responsibilities, however, and also demanded the introduction of a new agency to carry out functions that NGT currently undertakes centrally, including administering the processes needed to support gas competition.