January 2012 Capital Investment - National Grid

Exhibit ___ (EIOP-19)Page 153 of 684re-construct equipment to allow public requirements work to proceed. The capitalinvestment plan includes estimates for this type of work based upon historicalexperience. The capital investment Plan will be affected if the agencies substantiallyreduce or expand their public requirements work from historic levels.The Company’s Plan makes assumptions regarding customer activity and usesplanning, forecasting, and disciplined processes to lessen the fluctuations in investmentfrom customer-related changes. However, the Company recognizes that it must adaptto changing circumstances. Thus, the Company approves Programs that consist ofmultiple projects which allow us to manage the overall capital expenditure plans over thebusiness plan period.Governmental and Other ApprovalsNearly every capital project requires some level of approval from one or moregovernment agencies or other third parties. In the Adirondacks, the Department ofEnvironmental Conservation and Adirondack Park Authority are pivotal in approving anyconstruction. Overhead line construction in the public right of way requires permits fromlocal municipalities and/or the Department of Transportation (“DOT”). Obtaining privateland, whether for a substation or off road line work (involved in most transmission andsub-transmission projects) requires the Company to purchase land and/or private rightsof way from landowners. Local town and village planning boards play a pivotal role inthe placement of overhead and underground facilities. Many projects include anynumber of these approvals from agencies and/or other third parties which can createhurdles to the project schedule and cost. To mitigate this risk, the Company hasestablished a permitting and licensing team with focused expertise in this area.To obtain the necessary approvals of government agencies and third parties, the scopeand configuration of projects often must be changed. This can delay investments andincrease costs. To mitigate the risk of these delays and cost increases, the Companyactively works with stakeholders to ensure that the scope of projects is communicated asearly as possible and any contentious issues are raised early in the process.VI-77154