British utility owns failed power grid

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The Independent US

The New York power grid, which collapsed, plunging millions of Americans into darkness, is owned by the British utility National Grid Transco.

Shares in the company fell sharply in early trading yesterday as fears mounted that the blackout across the Niagara Mohawk transmission system would leave National Grid Transco facing multimillion-dollar compensation claims.

At one point shares were down by by 5 per cent, wiping almost £600m off the value of the company. But the shares recovered some of their losses later in the day after reports that the cause of the blackout may have been the collapse of several major transmission lines in the US Midwest, which are not part of the Niagara Mohawk grid.

A National Grid spokesman said its US arm had insurance cover but he refused to comment on whether it was likely to face claims from businesses, public services and householders who were affected by the blackout. He said: "If customers file claims against us then we will investigate them on a case-by-case basis."

Early estimates from the insurance industry suggest the bill for the blackout is likely to be minimal, as most business insurance policies exclude damage from power failures. Home owners may be able to claim if the contents of their freezers have been ruined, but the excess on their policy is likely to be higher than the amount they could claim for.

In 1977, the New York blackout resulted in a $2m insurance bill. But the looting and civil disobedience that accompanied the blackout caused far more damage, totalling $28m, New York's Insurance Information Institute said.

Some commentators speculated that the blackout could result in Niagara Mohawk having to invest heavily to upgrade its transmission system and make it less vulnerable to catastrophic shutdowns.

National Grid bought Niagara Mohawk for $9bn (£5.6bn) in 2002 in a deal which was made it one of the biggest electricity transmission and distribution companies on the eastern seaboard. Niagara Mohawk has 3.2 million customers in upstate New York and operates a 72,000-mile electricity distribution network and 14,000 miles of high-powered overhead transmission lines.

Last year, profits from National Grid America, which includes two other electricity companies in the north-east region of the US, doubled to £699m, representing nearly a third of the group's overall £2.2bn operating profit.