National Grid share price declines as utility enters multibillion US pipeline project

on Feb 18, 2015
Updated: Oct 21, 2019

National Grid Plc (LON:NG) will join the Access Northeast project in the US as a co-developer. The FTSE 100-listed utility will acquire a 20 percent stake in the $3 billion (£1.9 billion) expansion pipeline plan meant to increase the supply of natural gas to power plants in New England.

News report emerged in the media overnight that the two original companies in the project – Eversource Energy and Houston-based pipeline company Spectra Energy Corp., which first proposed the Access Northeast pipeline project back in September, have provided more details on the project and said National Grid had taken a 20 percent stake in the operation. The new structure of the venture will leave each of the other two sides with a 40 percent share in ownership.

The Wall Street Journal cited John Flynn, senior vice president at National Grid for business development in the US as saying: “Our customers are literally paying the price for the pipeline constraints we have here in New England […] We are joining Access Northeast to lower energy costs for our customers and to help improve and support the region’s economic vitality. This project will play a key role in helping New England achieve a sustainable energy future.”

The lack of adequate pipeline infrastructure for natural gas in New England has been driving electricity prices up in recent years, capping economic competitiveness and growth, while at the same time straining systems to the point where significant reliability issues have become a threat to public safety and security. According to Lee Olivier, executive vice president of enterprise energy strategy & business development at Eversource:
“Once Access Northeast is operational, it is projected to save electric customers an average of $1 billion a year during normal weather conditions and even more during severe cold weather […] ICF International has estimated savings during the extreme 2013-2014 winter could have been $2.5 billion with Access Northeast in service.”
As of 14:15 GMT, National Grid’s share price was trading 0.93 percent lower at 874.20p. The utility’s stock value has slid some 3.89 percent since the start of the year.
According to the Financial Times, as of 06 February, 2015, the consensus forecast amongst 33 polled investment analysts covering National Grid plc has it that investors should hold their position in the company. The median target of the 15 analysts offering 12 month price targets is 888.00p with a low estimate of 775.00p and a high estimate of 1,010.00p.
As of 14:56 GMT, Wednesday, 18 February, National Grid plc share price is 873.90p.

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