Business Context and Reporting Period
Company: National Grid plc
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: December 4, 2025
Subject: Publication of Ofgem's RIIO-T3 Final Determination for the National Grid Electricity Transmission business.
Regulatory Period Covered: April 2026 to March 2031.
Key Financial Metrics
This filing is a regulatory announcement and does not contain audited financial statements, revenue, profit, cash flow, or debt figures for the reporting period.
- Allowed Cost of Equity: 6.12% (real) at 60% gearing.
- Investment Context: The framework supports significant investment to nearly double power transfer capacity while maintaining reliability.
Material Changes and Regulatory Developments
The primary material event is the finalization of the RIIO-T3 price control framework by the UK regulator, Ofgem. Key details include:
- Final Determination Published: Ofgem has released the final terms for the 2026-2031 period.
- Management Stance: National Grid welcomes the recognition of the need for significant investment but is currently reviewing the full package to assess if it is "investable and workable."
- Focus Areas: Management is evaluating the incentive framework for high-performing networks and "totex" mechanisms to ensure efficient cost recovery.
Outlook, Guidance, and Risks
Next Steps and Timeline:
- License Modifications: Expected to be published for consultation soon.
- Regulatory Decision: Ofgem's decision on the license is anticipated in February 2026.
- Company Response: National Grid expects to announce its response to the license modifications in early March 2026.
Risks and Contingencies:
The filing includes a comprehensive cautionary statement regarding forward-looking statements. Key risks cited include:
- Changes in laws, regulations, and decisions by governmental bodies (specifically UK price controls and US rate cases).
- Timing of construction and delivery by third parties for new generation projects.
- Environmental, climate change, and health and safety regulations.
- Network failure due to adverse weather or climate change impacts.
- IT system reliability and cybersecurity threats.
- Fluctuations in exchange rates, interest rates, and commodity prices.
- Pension scheme funding requirements.
Investor Verification Checklist
- Verify the specific details of the proposed license modifications once published by Ofgem.
- Monitor National Grid's formal response in early March 2026 to determine if they accept the framework or seek further negotiation.
- Assess the impact of the 6.12% allowed cost of equity on the company's weighted average cost of capital (WACC) and future investment returns.
- Review the "totex" mechanisms to ensure they align with the company's capital expenditure plans for doubling power transfer capacity.
- Check for any updates on the timing of third-party generation projects that may affect the transmission network's utilization.