This article analyzes the factors underlying the successful establishment of the National Grid Transco (NGT), which was created in October 2002 by the merger of the Lattice Group and the National Grid Group (NGC). Dr. Hernández and Ms. Gandolfi argue that the joint ownership of gas and electricity transport assets does not directly lead to the kinds of synergies that may create value for shareholders. Instead, the authors argue that the success of the NGT is related to a long-standing regulatory record of enforcing a full separation between transport and supply activities, such as NGC's target acquisition of gas and electricity assets in the US, and the reduction of costs in administration and support activities. Given these factors, the authors conclude that the NGT operation would be difficult to export to other national markets.

This article was published in Gas Actual, No. 89, March-May 2004.