National Grid plc (NG) Earnings Call Transcript & Summary

Good morning, and welcome to the 2022 Annual General Meeting of National Grid. I'm Paula Reynolds, I'm the Chairman of the Board, and I must say I'm particularly delighted to be here today because last year, I was on a video and the then Senior Independent Director, Mark Williamson, had to conduct the meeting, and it was all quite awkward but of course, last year was an extraordinary year. I'm pleased to welcome those of you who are in the room who've traveled to be with us today, and I also want to welcome the shareholders who are online. You may recall that last year, on the ballot, we put a vote to have the right to hold a hybrid annual meeting which is to allow those who want to participate online to fully participate to cast their votes if they wish to call in or send in their questions so that you can be here in the room or you can be online and have the same access. And with that change, it gives us the opportunity to change the format a bit. Even though we're still sitting at these desks at the front of the room for those of you who are online who might not see us, the truth of it is we want to use these annual meetings to get to the questions on the minds of our shareholders to learn from our shareholders what are the issues that are on the top of their mind and really be engaged in a conversation. So you're not going to get a speech for me. You're mercifully enough, you'd find as you listen to me. You will get a short presentation from our very capable CEO, John Pettigrew, but it will be a short speech. And really, the purpose is to get right to the questions and to have the conversations that I hope we will have. Justine Campbell, who is our -- among other things, our Corporate Secretary, will take a moment in a bit to try to explain how the voting equipment works to just review that and how you submit a question particularly if you're online. But importantly, once we get past those preliminaries, we really do want to get to the conversation. The one thing I will do is I do want to introduce our directors because we've had quite a bit of change. When I became the Chair there were a number of directors who were at or had already exceeded their 9-year tenure, which, of course, under U.K. government is the limit for them. So we have refreshed the Board governance. Immediately to my right is Therese Esperdy, who became the Senior Independent Director and a great resource for me. To her right, is Earl Shipp, who chairs our Safety and Sustainability Committee. By the way, Therese also chairs our Finance Committee. Then, of course, we have Justine there. Our 2 executive directors are John Pettigrew, as I mentioned earlier, and Andy Agg, who if you have been to this AGM before, you would have met them in the past. We're pleased that they are still with us. And then to the right of Andy is Liz Hewitt, who is the Chair of our Audit Committee and then to her immediate right, Ian Livingston, who is the Chair of the Remuneration Committee. We have the chairs up here at the front of the room so that you can ask questions of them if you have questions that go to the subject matter of their committees. Also joining us online today our directors, Jonathan Silver, who's been a Director for several years. Tony Wood, who is a new director to the company in the last year. Martha Wyrsch, who's also new in the last year and Robinson new in the last year. And Iain Mackay, who will be attending his first Board meeting presuming that you will have elected him at this AGM. We have 2 departing directors. And every time you lose a director, you lose some of the continuity and the wisdom that they have. Jonathan Dawson, who served 9 years plus. And then Amanda Mesler, who's been on the board for years has chosen to stand down at this AGM. And I just want to take a moment because I know they're online to thank them for their service, their commitment, their constant leaning in, if you will, to the business of the company and the advice that they've offered. So with that, the order of the meeting, as I said, is John will kick off with a short report Justine will then go through the resolutions that you have to vote on. Now some of these resolutions are less than riveting. They are technical adjustments that we have to make to the governance -- there's 2 that are of particular note. The first is our climate transition plan, which we have submitted to a nonbinding advisory vote. We want you to know more about what our plans are with respect to the reduction in greenhouse gases and also to our pathway to net 0 by 2050. And so we're asking for your consideration and support of that. And second is our remuneration policy every 3 years, we have to renew the policy in which we compensate our executives. We've tried to simplify that under Ian Livingston's leadership to try to also incorporate some of these new environmental stewardship, sustainability and governance elements to the plan under which our executives are remunerated. We're obviously asking for your support on all the resolutions, but those are the ones that would be particularly of note. So with that, again, I thank you for coming for making the journey to be with us or taking the time to be with us online. And so with that, I will turn the podium over to our CEO, John Pettigrew.

So thank you, Paula. So as I speak to you all today, it's with the awareness of a very different macroeconomic and geopolitical environment than a year ago. With the devastating conflict in the Ukraine, a global economic slowdown, rapid rising inflation and, of course, U.K. political uncertainty. The communities that we serve are facing significant cost-of-living challenges and the urgency needed to address climate change is accelerating. So as we navigate through these challenges, National Grid is focused on positioning our business to deliver net 0 while continuing to ensure security of supply at the lowest possible cost for consumers. Our vision to be at the heart of a clean, fair and affordable energy future has never been more crucial than it is today. That vision is supported by new policies and increase clean energy targets on both sides of the Atlantic. For example, we welcomed last week's energy bill as well as the British Energy security strategy with its ambition to produce 95% of the U.K.'s electricity from low carbon sources by 2030. And in the U.S., we were pleased to see the infrastructure investment and Jobs Act signed into law creating the opportunity to accelerate the energy transition. However, the cost of living challenge is clearly the immediate focus. And although National Grid's impact on U.K. consumer bills is relatively small, we want to play our part in keeping consumer bills as low as possible. And that's why we worked with Ofgem on the early return of GBP 200 million to customers from interconnected revenues earned above our regulatory cap. And in the U.S., we're also working hard to provide financial and practical assistance to our customers and communities. For example, our long-term partnership with HeartShare in New York is helping 120,000 families with their heating bills. And in Massachusetts, we've implemented more than $1.3 billion in energy efficiency measures over the last 3 years. So in that broad context, let me now turn to our progress in the last 12 months, starting with the strategic transactions that we announced last year. Last June, we completed our acquisition of WPD and the integration process is well underway. In March, I was pleased to announce our agreement to sell a 60% stake in our gas transmission and metering business to a consortium led by Macquarie, and we expect completion in the second half of this year. And in May this year, we completed the sale of our Rhode Island business. Together, these transactions pivot our portfolio towards electricity and bring even great visibility and certainty of long-term growth. And with such significant portfolio changes during the year, we presented our financial figures on a pro forma basis to reflect the group's underlying performance. Operating profit rose 11% to GBP 4 billion, reflecting good performance in U.K. electricity transmission in its first year of RIIO-T2. The first in contribution from our interconnectors, IFA2 and North Sea Link, higher revenues in Massachusetts following the new rate case and gains on investments in National Grid Partners. Capital investment from our continuing operations was in line with guidance at GBP 6.7 billion, 19% above the prior year, reflecting the critical role we play at the heart of the energy transition. And in accordance with our policy to grow the dividend in line with U.K. CPIH the Board is proposing a final dividend of [ 33.76p ] per share. In addition, we've reaffirmed our commitment to the 5-year framework we set out last year to invest GBP 30 billion to GBP 35 billion in critical infrastructure, 70% of which will be investment in the decarbonization of energy systems. Deliver asset growth of 6% to 8% per annum and drive average underlying earnings per share growth of 5% to 7% per annum, whilst maintaining a strong balance sheet. As one of the U.K.'s largest investors in the delivery of Net Zero, we're investing at unprecedented levels to benefit consumers today and long into the future. So let me now turn to our progress on our operational priorities. Starting with New York, where we achieved a return on equity of 8.8%, 99% of the allowed level. We delivered capital investment of $2.6 billion, around $300 million higher than last year the largest element of which was our gas pipeline replacement program. This resulted in strong rate base growth of 7.6%. We reached settlement on a 3-year rate plan for our KEDNY and KEDLI businesses and in Upstate New York in January, a new 3-year rate settlement for NIMO was approved, including an allowed return on equity of 9% with CapEx of $3.3 billion over the next 3 years. In New England, we've made good regulatory progress with a new 5-year rate plan for our Massachusetts gas business. This includes an allowed return on equity of 9.7% and a formula, which factors inflation into our revenues along the same lines as our electric business. Our achieved return on equity was 8.3% and 85% of the allowed level was higher than last year, it was short of our target to reach at least 95%. However, this performance only reflects 6 months of the new rate case and the initial benefits to our cost efficiency program both of which will have a fuller impact this year, helping to improve returns. Capital investment of $2.1 billion was around $170 million higher than last year with rate base growth of 6.7%. In the U.K., we've had a successful start to RIIO-T2 in our electricity transmission business, returning a return on equity of 7.7% 140 basis points above the allowed level a significant step-up in investment with CapEx increasing by 21% to GBP 1.2 billion. This increase reflects the start of tunnel boring activities in our London Power Tunnels 2 project and the construction of the world's first T-pylons at Hinkley-Seabank. And our investment in the U.K. will continue to grow. Last week, we received approval from Ofgem for 2 subsea interconnectors between Scotland and the North of England. These Green links will form part of a GBP 14 billion investment needed over the next decade to deliver the necessary network reinforcements to support the government's offshore wind targets. In U.K. electricity distribution, WPD continued to perform well under RIIO-ED1, delivering a return on equity of 13.6%. Capital investment of GBP 899 million was driven by asset replacement and reinforcement alongside connecting new renewable generation and electric vehicle charging infrastructure. We're working through the detail of the RIIO-ED2 draft determination that was published last month and we'll work hard with Ofgem in the coming months to ensure we agree a price control that meets the needs of our customers, including resilient and reliable networks as well as enabling the transition to net zero. Moving next to National ventures, where CapEx was similar to the prior year at GBP 452 million. In the U.K., our IFA2 interconnector had its first full year of operation, and we commissioned the North Sea Link to Norway ahead of schedule. In the U.S., our community offshore wind joint venture with RWE successfully won the seabed lease in the New York bit. And in our onshore renewables business, we started commercial operations of our 200-megawatt solar project in Illinois. And finally, gas transmission and metering delivered a strong start to the new regulatory period with a return on equity of 7.8%, 120 basis points ahead of the baseline return. Capital investment was GBP 261 million, GBP 57 million higher than the previous year, driven by spend on asset health, emission reductions and cybersecurity. So overall, you can see that 2021 was a year of strong performance for National Grid, whilst delivering on our strategic pivot. We're now uniquely positioned at the heart of the energy transition, making record levels of investment to deliver a better, more affordable energy future for all. So let me now turn to our priorities and outlook for this fiscal year. Firstly, in the U.K., where the government's target to deliver 50 gigawatts of offshore wind by 2030 will require a significant increase in electricity infrastructure. I know that some here will be particularly concerned about the impact on local communities of the transmission projects needed on the East Coast to deliver decarbonization of the energy system. It's something we care deeply about. And as a consequence, we've carried out extensive studies on route selection even before reaching the current public consultation phase. We appreciate the time and effort that local communities have taken to respond to this consultation. We're reviewing all the feedback, and we'll demonstrate how this is being considered as we further develop our proposals. With these changes needed in the energy system, there are some key questions that need to be considered, including where is it right to use overhead lines and where should cables be buried underground and how should local communities be compensated for hosting electricity infrastructure. The decisions on these issues ultimately sit with government, and they are rightly debating and consulting them at the moment. National Grid is a part of this discussion, and we're also sharing the views that we've heard from local communities directly to government to inform them of their decision making. We want to work with communities, government, regulators and industry to find the best and fairest solutions for local communities and energy bill payers to enable the investment needed to deliver the government's net 0 goal. We're also very conscious at the moment of the heightened awareness around security supply and our focus on delivering world-class reliability across both our transmission and distribution networks, and that's never been greater. We currently have sufficient supply to meet demand in both our gas and electricity networks. Although as you'd expect, we will closely be monitoring this as we move towards the winter. And finally, in U.K. electricity distribution, we'll maintain our focus in the year ahead and agreeing a settlement for ED2 that provides the flexibility to deliver the investment required. Turning now to the U.S. We'll continue to work with our states in developing net 0 pathways. In April, we announced our clean energy vision, setting our plans to decrease reliance on fossil fuels and increase the use of fossil free gas, enabling homes and businesses to meet their heating needs without the use of fossil fuels by 2050. The plan sets out 4 pillars: to continue to increase energy efficiency, to eliminate fossil fuels from our gas network, to give customers tools to maximize the benefits of pairing electric and clean gas and solutions to support harder electrification of heating where it's cost effective to do so. We estimate this hybrid approach could lower home heating costs by 15% to 20%, [ helping ] to keep energy bills more affordable for our customers. In the next 12 months, we'll channel this work into the public proceedings that are ongoing in both Massachusetts and New York to help formulate pragmatic long-term policy. And we've been building several demonstration projects that support the delivery of this vision. On the regulatory side, we expect decisions on 3 filings in Massachusetts as well as an order from the DPU on the future of gas proceedings. In New York, we are preparing for our next KEDNY and KEDLI rate filings and in National Grid ventures, we expect an outcome on the bid to install increased transmission capacity to Long Island to support up to 6 gigawatts of offshore wind generation. So in summary, National Grid has made significant progress over the last year, and we got another busy and exciting 12 months ahead. We're continuing to invest in scale and at pace in the most efficient and affordable way for all our customers to help ensure that no one is left behind. Our vision is supported by new policies and increased clean energy targets on both sides of the Atlantic. These increased targets, coupled with our strategic transactions give us even greater certainty of growth into the medium-term. So thank you very much for your attention. I'll now hand over to Justine, who will explain the formal business of the meeting.

Thank you, John. Good morning, everyone. I can confirm that we have the quorum of shareholders necessary in the room and electronically on the virtual meeting platform, Lumi so we can proceed with the 2022 Annual General Meeting. The resolutions for today's meeting are set out in the 2022 Notice of Meeting, which I propose to be taken as read. Thank you to all those who have registered your votes in advance as is our usual practice, voting on all resolutions will be by way of a poll. For those of you attending in person today, you'll be voting using the handsets that you've been provided with. Your handset will not be activated for voting until the poll is formally opened by Paula as Chair of the meeting at the start of the question-and-answer session. At that time, instructions will appear on the handset or you can refer to the instructions that you received during registration. If you do have any problems, please raise your hand and someone will come and assist you. If you have already cast your vote via a proxy, then you do not need to vote again. If however you do choose to vote again today, your votes cast at this meeting will replace any proxy that you've already lodged. For those of you who are tending electronically, once the vote is declared open, please first click on the voting icon, which will appear on the navigation bar. This will allow you to cast your vote on each resolution. If you require any further guidance on how to cast your vote via the Lumi platform, then please refer to the instructions on the home page. There's also a user guide available on the documents tab. Please note that for all AGM attendees, voting will remain open until the close of the meeting. Final results of the voting will be available on our website and will be announced on the London Stock Exchange as soon as practicable. Turning to the business of the meeting. Resolutions 1 to 23 inclusive are proposed as ordinary resolutions. Resolutions 24 to 27 inclusive are proposed as special resolutions. The Board is unanimously in favor of each resolution proposed and recommends that you vote in favor of all resolutions. I'll now hand over to Paula to formally open the meeting.

Thank you, Justine for that overview. The polls are now open for voting and will remain open until I announce its closure after the conclusion of the Q&A session. So now we'll move into the Q&A session, and Justine will be coordinating it because she's going to try to go between in-person questions and online questions to allow us to answer as many questions as possible. We will appreciate your keeping questions short and concise. And of course, all questions that are asked to be relevant to the business of the meeting. Any questions that you might have about your shareholding itself should be put to our registrar equiniti. So if you would direct any of those personal questions about shareholdings there, we'd appreciate it. If there's a question that cannot be answered today, and every once in a while, there is a question that even baffles the experts will investigate, and we will get back to you with an answer. So I'm thinking that we'll take questions for about an hour, but we want to make sure that we get to all the questions, so we will try to be very efficient in our answers as well. So with that, I'm going to turn the program back to Justine to coordinate.

Thanks, Paula. [Operator Instructions] I think we're going to start with a question in the room today. So the first question is a short statement from Tess Younger from LAPFF -- and I think then Tess you are going to ask a few questions.

Chair, members of the Board, fellow shareholders. My name is [ Tess Younger. ] I speak on behalf of the Local Authority Pension Fund Forum, Northern Trust and Rathbones. We are signatories to Climate Action 100+, an investor initiative with $68 trillion in assets under management. We engaged to support companies in cutting carbon emissions and to accelerate the transition to a 0 carbon economy. In this process, it's vital that government, regulators and companies work constructively together to deliver this energy transition. We welcome the consistent positive 0engagement we have had with you and commend National Grid for the adoption of Real Zero as a goal and actions already taken to address climate change. Our questions to you, Chair and the Board are how can you assure investors that the group Scope 3 targets are in line with remaining within the existing global carbon budget and are fully aligned with remaining with 1.5 degrees. Will you disclose more detail on processes in place to ensure all direct or indirect lobbying is in line with the goals of the Paris Agreement? And finally, will you consider disclosing progress against the Climate Action 100 plus benchmark in your reporting to help investors evaluate action against ambition on the transition as other companies have done.

Thank you, [ Tess, ] very much for the questions today, and thank you for the quality of the engagement in which you have undertaken with National Grid. I want to sort of take a moment to say it's exactly this kind of engagement that we learn from and we get better from and as we are trying to navigate this transition to net zero and real zero. It is this quality dialogue that we have with very serious shareholders who've organized themselves that can be so valuable. So I think we actually have some good answers to your 3 questions. And John will share those -- his thoughts on those and obviously, there'll be more follow-up in the months ahead.

Okay. So well, thank you for your comments. I really do appreciate the engagement you had with National Grid. With regard to the first question, you'll know that we've been working incredibly hard to make sure that we've got detailed robust and real plans to deliver on the emission reductions that we've set out. I'm really pleased actually that the climate transition plan that we've set out and looking for shareholder approval today actually aligns with the 1.5 degrees that you mentioned. What we've been doing is looking at each individual business and setting our plans in detail. So our electricity transmission business, our electricity distribution business in the U.K. and our system operator are already aligned with 1.5 and have accreditation with SBTi what we're going to do now is take the transition plan and look for accreditation for the whole group. So it's absolutely consistent with the 1.5 degrees. In terms of your 2 other questions, you're probably aware, we provide quite extensive and full statement in the annual report on the second point. But we'll look to provide more detail to give you that assurance that you're looking for, and we'll look to do that next year. And in terms of your final question, a similar answer is yes. We want to provide as complete an assessment as we possibly can so we look to align our assessment process with the benchmarks to being set. So thank you for your questions.

We have another question in the room from Mr. John Farmer. Mr. Farmer, welcome. Would you like to...

John Farmer, Chairman, shareholder. There are constructive questions on the annual report and the AGM before a wider question on strategy and performance. May as a long-standing shareholder and the tender of many of your Birmingham AGMs and also the [ sensitive ] AGM now held in London last year during the pandemic, welcome the move to London. It's entirely appropriate. This is the capital arguably the world's financial capital. And this is really where you should be. However, will you please hold future AGMs not at the crack of dawn at 10:00, but it's 11:00. Shareholders should not have to [ toiled ] through the London rush hour when strictly speaking, their freedom passes and bus passes are invalid. And even in Birmingham, in good times, held lunch at 1:00 or 12:01 and the AGM in the afternoon which raises another question, Chairman. Is your 10:00 start [ device ] to avoid giving us lunch. That's really what I have to ask about the AGM treatments. So our opportunity to -- I'm sorry, about the -- so it's your opportunity to answer. And then I would like to make some reports, as I say, comments on the annual report. Would you like to respond on the AGM?

Sure. Well, actually, Mr. Farmer and I met out in the reception area. So his question is not a complete surprise to me. Although I have to say, as an American, I was unfortunately unaware of the Freedom Pass and the logistics of what it would mean by having a 10:00 AGM. And so I confess that because I ultimately approve these arrangements, I am the one ultimately to -- for whom you should blame and I accept that. And I won't even bother to try to defend myself on that decision. I mean, I think bottom line is sometimes we aren't as thoughtful about things as we should be. And in the future, I think that we can create a reasonable accommodation here so that you don't have to be here at, as you say, the crack of dawn. As to the issue of the arrangements of food, I have to say that of the many things for which I am responsible I have to say I would rather decline to be trying to speak to the catering arrangements at the current time. Only to assure you that we will have appropriate catering arrangements based on a different timing of future AGMs.

Well, thank you, Chairman, for gracious and humorous response and...

Could I add something, Mr. Farmer, sorry, just to say there is actually going to be a bit of lunch available for you on the way I didn't, that's a pleasant surprise or not, but it's going to be there.

Well, thank you. Life will be sustained for next year. Constructive point about the annual report, Chairman. From one who reads a lot of them. And with varying difficulty. You also compared with others just about eligible, I think you could slightly darken the print. And I speaker as one with reported the excellent eyesight. So if I'm finding it a mild strain and others presumably are. And can I constructively say, I think you could do away with the color. I've just read the J Sainsbury Plc Annual Report, which is monochrome perfectly adequate, quick to read, whereas some of your graphic designers successes are a bit wearisome. There's some one page the beginning where you print in white on pale green, and that's a bit of a strain. And you've got pastel backgrounds in many places. I think you could get rid of the -- lot of it and just print in black on white, and I constructed this just across the page, not in columns, which I suspect would save paper and if read online scrolling, it's infuriating to have to go up and down, up and down, up and down, if one is really online. Would you catch a respond on that before I go on?

Well, I think I would simply say that we take your feedback. It is in fact -- it's a twofold challenge. One challenge is the challenge of how much government requires that we report -- in other words, what is at the front of the report is what we feel that you would like to know about our company, but then there's hundreds of pages after that, that are required. And we think that there will be a good time for government to take stock of whether or not all the disclosure that you're being provided is truly valuable to you, and we'll be taking part in those discussions as they take place. As for whether our graphic design people have run a [indiscernible], we'll take that into consideration as well. I certainly would agree with you. There are some pages that are rather challenging for interpretation. And one of the things that the Board took on with management in this last year is this idea of simplifying materials the use of graphics can be very good, but they should be clear and that we could probably try to reduce our word count because we don't pay our employees by the word.

Thank you again for another constructive and [ playful lot. ] The report struck me as a little long, but not exceptionally. So if you're being trying to condense then please do. And the small constructive point, can you eliminate abbreviations, which may slip off your [ tongue. ] But although you publish a glossary, if one is reading online, we'll have to scroll through 200 pages to get there, and the customer more to come on, I'm afraid of putting in brackets the explanation of the abbreviation on first occurrence it's not really adequate because when you read a few more pages and it crops up again, you forgot what you were told. And as I came across 1 short sentence where you actually have 3 abbreviations and the very short sentence that 1 dispersed. So the extra space involved in putting things in full is trivial in 278 pages that suggest.

I take your feedback. And I think you would not be the first to say that the acronyms are just a bit overdone. Thank you very much.

Can I just widen it with question about strategy and performance. You're doing reasonably well. I mean you've got a possible total shareholder return. What scope do you see for widening your operations such as in the United States to earn a bit more for the company. Can you get access to more franchises, not just New England? Or are there other diversification areas, whether geographic or product that you could exploit. And as a subset of that, how ready are you for when the U.K. government eventually gets around to installing some modern nuclear generation, which is solely needed in your commendable enthusiasm for clean generation, governments procrastinated for decades. If only we had some [ Rolls-Royce ] small modular reactors and [indiscernible] infrastructure. We could build nuclear power stations and not be so dependent on gas, are you ready for that -- and I repeat my wider point, what about diversification product or geographic to enhance your already fairly reasonable shareholder return.

Well, thank you very much for that question. And if you don't mind, I'm going to split it into 2 pieces. I'll handle the first and then turn it to our CEO and then if you don't mind, I'd like to maybe get some other shareholder questions forward and then if we've not answered everything, then we'd certainly be delighted to come back. With respect to your first question, which is what about strategy, what are on your mind? What we did at the beginning of my tenure as Board Chair is we sat as a Board with John and Andy and said, what are the things that we should be talking about. Let us not get ourselves so bogged down in every little detail that we miss the bigger picture. And so we have been doing deep -- what we call deep dives in every Board meeting where we try to focus on what is the strategic matter of the day? And how should we think about it? And among them is the issue of our U.S. strategy, not -- and certainly, it's one of several topics. And so we -- as we have gone down this road of trying to deep dive, we also have heard from our leadership that says, look, we have just done a very major transaction in the acquisition of WPD. We have major transactions ahead of us. Recently, we closed on Rhode Island, the sale of Rhode Island. We have yet to close on the sale of our gas transmission business here in the U.K. We have other things that John outlined. So we have had a lot on our plate this year. But we are continuing to have the discussions about, for example, what's our future in the U.S., what are our opportunities. And I can assure you that it is very much on the Board's mind to look at the U.S., our unregulated businesses where we've had some success because most of them are very tied to regulation. To new technology and what that is going to offer both in terms of what we have invested in is venture, but what is the direction of technology. And it's the most interesting time I've seen in my entire career where there's such a wealth of opportunities and so we're trying to dive deeply into them so that we don't simply get intoxicated by the world of possibilities, but that we're very strategic in what our next steps are. But we do have to get through this year and finishing the transactions in front of us. So with that, JP, I'll turn it to you for nuclear and anything else.

Yes. I think Mr. Farmer is, as you can imagine, we spend an awful lot of time thinking through future energy scenarios and what's the mix of generation going to be. In fact, National Grid publishes every year, our future energy scenarios thinking about what potentially could be the opportunities ahead. And as part of that, we think not just about nuclear, but we think about offshore wind and onshore wind and solar and actually, more recently, things like hydrogen electrification and transport. So all of that we consider and put into the mix. The way that the industry works is that ultimately, if someone comes forward and wants to connect to the transmission system, the National Grid will do the engineering and work out how we do that. You'll know from the history of nuclear in the U.K. that quite often, we've done quite a lot of work on new nuclear stations that haven't progressed. The latest energy bill, as you know, and the energy strategy that the government just announced includes very ambitious targets for nucleus. So we will work with our key stakeholders, with our customers, with government to make sure that if and when that does come forward, that National Grid is ready to be able to connect those new generating stations.

So the next question is also in the room, it's from Ms. Jillian Kale.

I think I'm going to have to put the sunglasses on for this one. Good morning. It's Jillian Kale I'm a shareholder. Next year, I'm running a conference on resilience. I'll try and hone in on only one area, which is solar energy. You may have already thought of this, but I haven't seen it elsewhere. You've got a lot of wind turbines and basically, why don't they have solar panels if they're being built in bed. So that when they're not moving, they're still producing additional energy. Also, I was going to ask, are you across your basis, taking advantage in your infrastructure of solar panels to cut your own use of electricity and when it comes to customers, and you said you wanted to hold down the cost for them and you're a National Grid, many of the new devices are all demanding electricity in the home for heating as well as cooling. The [indiscernible] value, that's the temperature change in many of the walls of the U.K. housing stock is not likely to change until about 2050. And even by then, a lot of the old stock is still going to be there. So what are you doing to generally promote with the householders or sort of hybrid between solar and the use of energy as the population in the U.K. is growing, so will be the demand.

Well, thank you for your question, and thank you for really the thoughtful exposition of what so many of the factors are because, in fact, this very challenge of we're continuing to electrify households and yet are we going to have the resilient generation mix that we need to have to satisfy that's very much on our minds. And so John, do you want to take.

Yes. Thank you for the great set of questions, actually. I'm going to start just a sort of macro level. So One of the things that National Grid is doing as the system operator is really thinking through how do we ensure we have a resilient network when we have all this intermittent generation, whether it's offshore wind, onshore wind or solar, and making sure that we can actually operate the system under all circumstances. And we've actually set out a goal by 2025 to be able to operate the system with 0 carbon generation and that requires us to develop a whole host of tools to operate the network and that work is progressing very well. So we're thinking about it in terms of the country as a whole in terms of how we manage resilience. In terms of your specific questions, there is an awful lot of people thinking about consolidation and bringing together renewable generation. So naturally in the U.K., of course, doesn't develop its own offshore wind farms, we only connect them. But I have seen a number of developers bringing storage and solar and offshore wind together and onshore wind together, in fact, and thinking about how they can provide a firm product into the market. So I suspect that will continue as the economics for these different technologies continues to evolve. In terms of own news, the answer is yes, we do. So we have a number of our facilities where we use solar. Our main office in Boston, for example, is accredited at the highest level for using solar power on its roof. And actually, we've started to provide solar power in some of our operational sites as well and actually link that to allow our staff to charge their EVs, for example. And then in terms of new devices and energy efficiency, I think is the core of your question. So you would have seen perhaps in our response to the U.K. energy strategy document -- but one of the areas we urge governments to continue to think very carefully about is how we promote energy efficiency. We do a huge amount in the U.S. because in the U.S., we are the supplier. So you heard in my remarks this morning that we of invested $1.3 billion over the last 3 years because we're doing that because we're the supplier in the U.S. In the U.K., we believe it's got a massively important role as we think forward to how we manage this energy transition and the demand side is as important as the supply side, and we'll continue to advocate for energy efficiency as well.

I have another question, but I'd like to ask that outside the meeting, perhaps afterwards, if that could be done. There's other people yes as well.

We now have a couple of questions, which have come in on the platform. So they're both from [ Mr. Brandjeski, ] I hope I pronounced your name correctly. Apologies if not. First question is the number of shares in circulation equates to 3.6 billion. A few years ago, it was 3.4 billion ,why are we increasing the number of shares issued when instead we should be reducing the number of shares and increasing the earnings per share and making each share more profitable to hold.

Thank you very much, [ Mr. Brandjeski. ] I hope you're listening for the answer. And it's a very good question about why our share count has grown up -- gone up. I would like to say that, in fact, our share of value has gone up even as our count has gone up, but I'll give back to our CEO to answer specific.

First of all, [ Vale ] you're listening, I hope you're well. We've known each other for many, many years. So I'd probably take you back though actually to the announcement that we made last year. with our financial framework in which we set out, and as you heard in my remarks this morning that we're looking to invest GBP 30 billion to GBP 35 billion across National Grid over a 5-year period. And that's going to grow the asset base by 6% to 8%, and we're aiming to increase our earnings per share on average each year by 5% to 7%. That is a huge amount of growth, and we recognize the importance of getting the balance right between the dividend that we pay every year but also supporting the investment that's needed. The investment that we do undertake is supported by the profits in National Grid makes and that we retain and plow back into the business. We raised debt on the debt markets, which helps to support that, and we have the regulatory support for that. But also, we issue what's called script every year, which allows us to increase the shareholding where people rather than take a cash dividend, take the shares themselves as a way of recognizing, I guess, the support of the company. And that effectively over time, increases the number of shares. But the key thing is that we've got a significant amount of investment over the next 5 years, and this is the most efficient way, we believe, to finance that investment.

Thank you, John. Second question from [ Mr. Brandjeski ] is after the National Grid shares went ex dividend in June, the shares in circulation lost GBP 7.1 billion worth of value. Isn't this sufficient reason to bring in a quarterly dividend strategy to remove the volatility or after the first of June, there isn't any justification for major institutions to hold National Grid shares until November. In the past, this strategy was rejected due to the increased cost of administration, a quarter dividend would attract but considering the loss and the volatility, doesn't the Board agree that the administration cost is a small price to pay.

I think that is a good -- a very good question, and I'll turn it to our Chief Financial Officer, to take a crack at it.

Yes. Thank you, Chair. And yes, thanks for that question as well. I know it's something we've discussed in the past as well. We have looked at this in the past, and we are satisfied that the biannual dividend is the right strategy for us. There's a number of factors that move the share price within the year, not just the [ ex-div ] status, a number of other factors, both company performance for macro events as well. So we continue to believe that the biannual dividend approach is the right strategy for us. But thank you for the question.

Thanks. So we're back into the room. And I think the next question is from [ Mr. Nigel Stratton Fidel.]

Good morning. I'm a private ordinary shareholder like I guess, most of the people in this room. My question concerns all shareholders present and all those who want to be present at future AGMs. Madam Chair, you actually touched on the subject of my question in your opening remarks when you said that you participated in last year's AGM by video, and you described that as awkward I have different words for that sort of AGM. For those who don't know, this year, [ Marks & Spencer ] Directors banned all shareholders from attending the AGM. They retreated to a TV studio somewhere and actually have someone retained to be a shareholder asking questions to them. My question to you, Madam Chair, is very simple and requires a yes or no answer. Do you have any plans or any intention to fall into that bunker mentality by banning shareholders from AGMs?

I'm going to repeat the question rather than say yes or no to make sure that I have it properly because there's -- when you say yes or no.

Can you confirm that you have.

We have no intention to suspend or otherwise eliminate an in-person AGM. We simply use the resolution to be able to expand access so that people didn't have to but we welcome you here. We're actually, I guess, we are providing lunch afterwards here. But I said quite seriously at the outset, this is a chance for the Board to hear from people. It can be very effective to hear from them in person, we wanted to widen the aperture, if you will, so that we get these questions online, if somebody can't be here in person, but it's absolutely our purpose, our intention, our desire and our delight to be able to engage with shareholders in person. So no, we are not going to eliminate the in-person annual meeting. Yes, we will be here next year, and I will look forward to having a conversation with you next year as well as this.

And next, we have 1 of our regular attendees, Mr. Peter Tore. Welcome.

Good morning, everyone. Madam Chair. Fellow Board of Directors, my fellow shareholders, John Farmers preempted one of my comments. It's not a question. I've got some comments to me favorably, non-favorably. Madam Chair, it's very nice to see you here in person this year, and we appreciate last year, you had to get up very early in the morning come. There again, now you know what we have to go through, but we want to watch the Super Bowl through the night, okay? If I make it to the halftime show, I consider myself very fortunate. I -- trying to find it in sequence, and I must embarrass John Pettigrew he came up to me and said, it's nice to see it. Was it a familiar face or an old familiar face, I think, familiar face, and we have a common bond we're sort of "runners." I mean -- I did your New York Marathon 6 times. It was wonderful, did, not still do. I mean, conflict with John Farmer in so much as -- and I come on to the freedom pass in a minute. It's all coming back. I like going to Birmingham. It's my annual visit to Great Britain's second city and they're putting in a [ Marvin tram system. ] I like to see how it goes, right, big boys train sets type of thing. Less than GBP 10 return from Marvin Station at 6:00 in the morning is my adventure. But I live at [ Mill Hill East ] on the northern line. It's the last stop, end of the line. Sometimes refer to as end of the world. With regard -- yes, so John does it like to come here. I like to go to Birmingham. But it's nice to be here. This is the freedom pass. And with respect, Madam Chair, rank carries privilege it also carries responsibility. Somebody has not informed you about the freedom pass. You come from the states, you don't have these sort of things you have other things as well. Somebody should have told you about this and arrange the meeting for 11:00. I look around my fellow shareholders with the exception of the youngsters here were all of mature years. We can't use the Freedom pass until 9:00 in the morning. I cheated a little bit and got on the train at [ 5:02 ] and I got here in good times. So it's not a big deal, but perhaps you'll consider next year, possibly 11:00 in anticipation of this gourmet lunch we're going to get, I thank you in behalf of my fellow shareholders. I really can't think of much more to say except as I said last year, it's very good that National Grid provide the power that keeps everything going. We forget -- we forgot and I did pass an opinion last year and everybody clap thank everybody who runs National Grid because if it wasn't for you, we wouldn't have all the infrastructure that goes on that we take so much for granted especially nowadays, with what's going on in the Ukraine. We shouldn't complain about anything. Quoting the words from Mr. McMillan in 1957, we've never had it so good. So we thank you for your stewardship of the company and all the people at work. And yes, I will call upon my fellow shareholders through you, Madam Chair, to express our appreciation in a way that seems appropriate. Thank you. Thank you very much I'm a founder shareholder from the beginning Individual one, of course.

Thank you so much for your remarks, and I will look forward to many years of our seeing one another at these AGMs.

The next question is from Ms. Caroline Lam.

Hello, Madam Chairman and the Board and shareholders. My question is about executive pay. Now if executive pay is based on the forecast achievement and if the economic situation changes for the better, does executive pay go up accordingly? If profit suddenly goes up, probably base it on the 5% does it mean executives get 5% more for that year.

I'm going to give just a very brief overview and then ask our Chair of the Remuneration Committee, Ian Livingston to give the response but I would just say that the preponderance of the way we pay our executives is on performance, partly the performance that they deliver in a year and partly on the long-term value of the company because they get much of their pay in stock. So that way, we are all aligned with one another that we are for the increase in value of the stock. And the stock value goes up from many, many factors. So it's -- we're trying to make it a bit simpler to understand. So with that, I'm going to turn it to Ian to maybe go through it a bit.

Thank you, Chair. Ms. Lam, thanks for your question. Certainly, at this point, I'm very much looking forward to the situation you talk about the economy improving. We may be a few years away from that. The answer is it doesn't quite go up like that. I mean obviously, a better economic environment helps. But the -- a lot of the things that affect the financial side of this business are about the efficiency of this huge investment program and delivery of it. But also what we've done in the remuneration policy is we based on a lot more things than just what's the earnings per share and the return that are achieved, recognizing that the company has a wider obligation. So for example, they've been asked today quite a lot. So questions such as our delivery of our climate change ambitions, how we do under that. That's a big part of it. Also, our relationship with our people and our customers are a big part of it. So what we're trying to do is achieve a bit of a balanced scorecard. And as such, it won't mean just automatically if the economy improves, that executive remuneration improves, it will be a helpful background. But for this company, even more so than most others, it's really not the -- it won't be the absolute key determinant and there'll be a much more balanced effect. Hopefully, that helps as an answer.

Thank you. So the next question is one that's on the electronic platform from [ Mr. Anthony Lesley Burton. ] What is the current status of the proposed new transmission line from [indiscernible] Street to Carna in Mid-Wales?

John, that one's definitely yours.

Thank you, [ Mr. Burton ] for the question. You might be aware actually that last week, there was quite a significant publication brought out in the U.K., which is called the Holistic Network Design. And this is a document that sets out a blueprint of all the infrastructure that may be required to support all the new renewables that will need to be connected for the U.K. government to achieve its targets by 2030 and beyond. And within that, it includes thoughts around infrastructure needs in Wales, including the project that you referenced. The next step in that process is, of course, to do all the detailed assessment of that to make sure that we understand what is that infrastructure that will connect those generators. And as you'd expect, as doing that, we spend a lot of time working with local communities, but also with the Welsh government on that. So A lot more to come on this over the next few years, actually, as we see increasingly more and more renewable generation connect, but we're doing a lot of detailed assessment, including in Wales.

Thank you. So I think we're back in the room now. And next question is from [ Mr. Stephen King, ] I believe.

Good morning, Board and my fellow shareholders. Just a question for Mr. Farmers. Brilliant, can you make the Sprint increased the fonts on paper squinting at 10:00 is good for me, but I like to start. Could you -- you talked a bit about broadening out the scope of some of the things you're looking at? You've got a picture charge -- electric car charging. You have partnerships with rolling out the car charging availability in this country. I guess, in the states as well. And Mr. Pettigrew mentioned hydrogen, I wonder if you could talk a bit about that. It's quite good for running trains and you've got access to excess electricity not to produce it, I guess. I don't know. It's just an open question to get you to talk a little bit more about the future and some of the other things. So, okay.

Sure. No, look, I think it's one of these things. It's very much top of mind. The level of interest in having electric vehicles has gone up in an extraordinary way. And the issue that everybody raises is what's the game plan? And there's quite a bit that National Grid is doing, which John can elaborate on. I would just maybe offer that I'm also on the Board of BP, which has its charging not to put a free add-in for BP necessarily. But it is this issue of there are many players. And it's not just National Grid, it's the service, the core court owners and so on. And it's -- if it's true here, it's even more true in the U.S., many, many players all working to try to increase charging and other technologies as well. So all yours.

So thanks for the question. And to try and just give you some examples because we're doing so much in this area, which won't be a surprise to. So in the U.S., we're spending a lot of time with companies and partners and actually just our domestic customers as well to make sure that we can meet their needs. So we've actually got with our Massachusetts regulator at the moment a proposal to connect 300,000 charging ports which is over $300 million of investment. We've also been looking at the opportunity in the U.S., and I referenced it in my remarks. So there's some funding available from federal government in the U.S. as part of the Infrastructure & Jobs Act. And one of the things we're looking at is whether we can create a fast charging network across the Northeast that will support medium and heavy-duty vehicles. So we've been working very closely on that. In the U.K., I know that WPD is part of National Grid, we've just put our business plan into the regulator as part of our business plan over the next 5 years, we're looking to make sure that the network is capable of supporting 1.5 million additional EVs on that network. So currently, it's in the hundreds of thousands. So that's a massive step up. We don't do the physical charging connections, as you know, but we need to make sure that the network is ready for that. And then finally, on charging. A couple of years ago, National Grid did a very detailed study with the U.K. government and key stakeholders looking at what an ultrafast charging network would look like around the U.K. And effectively, what we proposed was extending the network to service stations on motorways. And if you did that, you could create a network where you're never more than 50 miles away from a charging station. U.K. government set aside about GBP 900 million to start that investment and they're currently looking at how they're going to deliver that, and we're continuing to support that. So a host of things going on, on the electric vehicle side. With regards to hydrogen, again, we've got a lot going on in both the U.K. and in the U.S. A couple of months ago, National Grid launched what's called this fossil-free future. And part of that was to really think about how we continue to repurpose our gas networks in the Northeast U.S. to move off fossil fuels, but to continue to provide benefit and heat to customers. What my vision set up was actually using a mixture of hydrogen and natural renewable gas you can continue to provide heat to a significant number of our customers at a cost which is significantly lower than going for full electrification in fact, it's about $800 to $1,000 lower. So we're spending a lot of time working with people who are producing hydrogen to see whether we can partner with them to provide that hydrogen to our customers to repurpose our networks. And then the final thing I'll say is that we're also doing some work with the states in the U.S. and with the federal government on creating what's called a hydrogen hub which is linking offshore wind when there's surplus electricity to produce hydrogen through electrolysis and then use that either for transport or for industry or indeed for heating. So an awful lot going on across National Grid around these new technologies and a lot more to come.

Great. That's really encouraging. I wish you well.

Yes. It's a journey, but we are very much in the heart of everything going on and trying to make sure that nobody can ever look and say, we didn't do our part and in some cases, trying to lead and try to bring others along. So it's an interesting backdrop right now where all of a sudden, there's a surge in interest around electrification, but it's not that we're unprepared. We've been working on this for years. And in some ways, we're having our moment right now.

So another couple of questions in the room from [ Mr. Alan Mundi. Mr. Mundi, ] if you'd like to go ahead, please.

Good morning, Madam Chair, and good morning, everybody here. First question, can we appoint some trade unionists to the Board to represent the workers on the ground as well as all the accountants. And my second question is to support what my fellow shareholders said and suggest that we do have AGMs in Birmingham from time to time and perhaps other places as well. We are a National Grid, not London Grid.

So with respect to your first question about, should we appoint trade unions for the Board, and I think sort of other expertise -- we've just started through a Board refresh. And in that Board refresh, we've tried to say what are the urgent issues of the time that we need to have the subject matter expertise to address. And we're constantly going through that refresh as to whether or not we need to take on different expertise and so if it appears that we need to specifically have collective bargaining experience and have it represented as a trade unionist. We would certainly consider it. It hasn't seemed to have been the critical issue for us. We have excellent collective bargaining relationships with all of our unions in both countries. And so it doesn't seem to have been the urgent issue. I would say, and I think it's in the annual report. We are doing much more as a Board than we ever did before in terms of employee engagement. Part of it is governments on both sides of the Atlantic have said that boards need to have much more authentic interaction with their people. And so our Board members are out in our field facilities in both countries. They are talking to our colleagues in both countries at the very front line all the way up. We don't get while we trust our top executives, we don't take all of our information from them. We take it directly from employees. We have different ways that we are pulling information from the front line, surveys of them and so on. So we haven't felt the need for a specific trade unionist type of representative on the board, but always, if matters change, we would consider it. As to this issue of being the National Grid and being around the country, I'm very sensitive to this. It's been a funny 2 years. I mean, this issue of how big the room should be, we have an extra room on the other side if we needed it, but we really felt that opening the aperture through the online would be a way to get at more shareholders to have it more available. But certainly, if we could just get past this past pandemic situation and understanding that we were in a much normal -- more normal situation, I think we'd certainly go back to looking at trying to hold the AGM in multiple locations because we would have the online option available with it.

The next question is actually online. I think you've largely covered many of the answers, Paula, but I'll just repeat it again. It refers to your chair letter in the annual report referring to the ethos of our people and engagement with our workforce and businesses. So you've given a comprehensive answer, but is there anything more you wanted to say?

Yes. Maybe I'll just make one more quick comment, which is to my earlier comment, we find lots of ways to engage at the front line. And the thing for me that has been so powerful in coming into National Grid. I come with fresh eyes and the fact that people who work for National Grid truly want to work for National Grid, they really believe in what we do, the service that we provide to customers in both countries. And that's what I mean by [ Ethos ] is it's a service-oriented trying to get it right for the customer, for the community, for the country. I think it's being tested right now where we are trying to site transmission across the U.K. that's very large scale to bring in power from the East Coast and the West Coast. And that really raises the bar on us in terms of community engagement. As John mentioned in his opening remarks, we've spent well over a year already on conferring with communities around the East Coast. We'll start a conferring on the West Coast. In New York, we have a North-South transmission line that we've built in a partnership that has required conferring with the public. And that is part of our challenge going forward in a world in which so many people don't come to a local meeting anymore. The issue of how do we make sure that we get the local authentic voice of the community and the commitment that we have to build a resilient network that will work for society for decades to come. So there's plenty for us to do but I think we have the right sense in our organization of the people that we have that we can do it, but the bar is being raised all the time on the quality of engagement. JP, if you want to add to that, I've kind of gotten a little on my high horse here on this one, I'm afraid.

Just to reinforce, I think, Paula, more than anything, which is I said in my remarks, we truly do appreciate it when local communities come out and tell us what they're feeling about the proposals that we have. And we genuinely take those into account as we move through the process. We have quite rigid rules. They are set with the U.K. government about how we approach these things. But we're very sensitive to make sure that we do listen to people in whatever part of the country we're working to make sure that their views are reflected and ultimately, we get a balanced solution to meet the needs of the country, but also hopefully meet the needs of local communities as well.

Okay. Thank you. We've got another question in the room, I believe, from [ Dr. Karmarkar. ]

Good morning, all shareholders. My name is [ Dr. Mohan Karmarkar ]. My 2 questions. First, you talked about EV chargers. You are looking at ensuring there is enough capacity and you mentioned there are several different players in this field of providing EV chargers. I'll just remind everyone in terms of mobile and the charging and the number of different connectors that were involved. I don't want to find that you have a electric car, and you have to carry 5 different connectors to charge. There should be somebody looking at standardization such that people can easily charge without having to resort to where is the connector because there will be trouble for people. So will -- is there a responsibility on National Grid about it? Or would you be taking part in the standardization process.

So first of all, I wholeheartedly agree. I think we're in -- I think it's fair to say that electric vehicles is at the early stage of industry development. And as you'd expect, at the early stage, different people have proposed different ways. I mean if you go back far enough, you remember BETAMAX and VHS videos, I'm sure video recorders and examples like that. We certainly are advocating for standardization. And I think that, that is a momentum that's building. I'm not sure of the details of the moment, but I'm pretty sure that there's a lot of car manufacturers also coming together and promoting standardization. So we don't have a specific role because we don't actually do the charging. As I said, but certainly as a sensible proposal going forward, we certainly are advocates for it.

My second question concerns gas supply security, particularly with war going on in Ukraine now the Russian supply is in danger. If [ Nicola Sturgeon ] goes ahead and gets independent in the future, if it happens how are you going to ensure the network can supply, electricity, gas, whatever generation may be? That's the second question.

You want to go ahead?

Yes. So great question again. I mean, it's something that, as you can imagine, foremost in all our minds. So probably just a little bit of context and obviously, with the terrible things going on in Ukraine with Russia, the U.K. gets around 4% of its gas from Russia. So it's not hugely dependent on it. We're not in the same position as countries like Germany and Italy were close to 40% and we are fortunate that we do have diversity of supply. So we have the gas from the North Sea. We have gas from Norway as well as interconnection to Europe, and we have quite significant LNG Liquefied Natural Gas facilities both in West [ Wales ] and our own [ green ] facility in Kent. So National Grid spends a lot of time looking at security supply in that context and particularly looking at the coming winter. As you can imagine, we spend a lot of our time working with the U.K. government and whether it's stakeholders. As I said in my remarks, today, there is sufficient gas to meet demand. Having said that, gas is a worldwide price, and we are all experiencing huge increases in the gas price in the U.K. as a result of that worldwide market. At the end of this month, you'll see a report coming out from National Grid's electricity system operator and our gas system operator, which is an early view as to how we see the winter. And then that will be formalized at the end of September. As you can imagine, we're spending a lot of time thinking about what if scenarios. And you may have seen in the press recently, for example, that our electricity system operator has just recently contracted with some coal-generating stations which is a partial insurance policy against potentially some of the gas generating stations not been available in the winter. So at the moment, we have very good security supply. But as you'd expect, we will continue to monitor the situation, both in terms of Ukraine, Russia but also the diversity of supply we have in the U.K.

My understanding is that there has always been a shortage of storage capacity for gas. Is that still true?

The U.K. relative to other European countries has less long-term storage. One of the things that has come to the fore, I think, as part of the sort of discussion of the Ukraine, Russian crisis is whether we have sufficient long-term storage in the U.K. Again, you may have seen in the press that there was a facility that was opened a few years ago that closed called [ Rough ] which is owned by [ Centrica, ] and there have been discussions going on around whether that is going to come back as a form of long-term storage for the U.K. So it's a good observation. It's a strategic question that U.K. government is thinking about, and I'm sure they'll come to a sensible conclusion over time.

My last question is about electricity generation. You are involved in distribution and you're looking at wind power, solar power, et cetera. Are you also looking at electrolyzers for hydrogen production, et cetera, and it's innovation in it.

Yes. So as I said, we're spending quite a lot of time at the moment thinking around the future of hydrogen and how potentially that could play an important role in the energy transition. In the U.S. in particular, as I said, we've been -- we've set out a vision for a fossil free gas network, which is a mix of hydrogen, renewable natural gas. We do think there is an opportunity to increase the supply of hydrogen through regulated utilities in the U.S. like National Grid actually using hydrogen to support customer needs for heat. So as we do that, as demand increases, we would expect supply to increase and prices for electrolysis to come down and the U.S. government has set a target of $1 per kilogram per hydrogen. It's significantly higher than that, they set themselves a target to try and do that over the next few years.

Next question is from [ Michael Chu, ] who's also in the room, I believe.

Lady Chairman, members of the Board and fellow shareholders. I am happy today, and I cannot help sharing it with you all. I'm happy about the composition of the Board, 50% of members of the Board are ladies. I think that is wonderful. The icing on the cake is the ladies come across us is lovely. And this is why I think this meeting has been so pleasant so far. Not every AGM I attend is conducted as peaceful as this one. I'm also happy that not equally happy to see an ethnic minority both [ Mamba ]. Perhaps this does not truly represent your customer base, I would therefore make a request. Perhaps you could look into this with a view for improving it perhaps more than one minority member is warranted on the Board. I plan to ask a few more things but the problem is, I have forgotten them. So on that note, thank you very much for your time. All the best.

Well, thank you very much. And if the thought comes to mind, I'll be glad to see you out in the reception area, and we can chat further. Pretty clearly, it has been a goal of both the Board and the leadership to increase the diversity of our organization. And we have continued to make progress in this area. We appreciate you acknowledging it. And we will continue to make more progress. And then we are really in a situation where we're trying to do a refreshment of the Board. And we've started to go -- we've gone quite quickly and it becomes quite challenging after a certain amount where every board member is in an orientation in a different place in terms of the knowledge base. And so we have tried to take just a little bit of a breather for the next few months, at least before we introduce additional Board members. But absolutely committed there. And equally, if you looked at the composition of the executive leadership, you would see significant progress being made and more progress in the future. And what I think John and I have agreed is at the beginning of these processes where you start to try to create this change it's not easy to make change. And I'm a little countercultural to National Grid in some ways. But the fact is we now have a wonderful working relationship here and a board that's really trying to be the proper kind of adviser. And we're seeing that interaction start to take place with the leadership. And similarly, John has made many changes in his leadership team over the last couple of years. And it takes a while to make it go, but it's what gives you the ambition the willingness to change, the opportunity to innovate. So I can assure you that we see the benefit of becoming more diverse as an organization and that, that will continue to increase over time. It's -- there is always this, it's good for business sort of statement about it, but we see the genuine impact of how it changes our thinking, makes us more holistic, allows us to challenge one another rather than be in a group thing. So we totally embrace what you've asked us to embrace.

So I'm not aware that we -- we do have another question in the room. Good. Thank you. I was going to check.

Good morning, everybody. [ Peter Arvan, ] private shareholder. The 2 questions I wanted to ask have been already asked by fellow shareholders, including John Farmer so I don't think I'm going to mention the F word anymore freedom pass although I've got one, and if the Board would like to have a look at one and see what they actually look like. So we -- I'm very happy to show you mine.

I've actually already seen one.

Oh, yes, of course, we have. I do beg your apology. [indiscernible] I couldn't see you. You've seen mine aren't you? Good So my question is this. Are the Board -- by the way, sorry, let's go back. I believe we received on those 2 questions that I was going to ask that the other shareholders have asked, we've received a positive response from the Board. That's my view. Now my next question is, are the Board considering reinstating the shareholder visits to transmission stations.

I wasn't aware that we had shareholder visits to transmission stations. So I'm going to turn that to the CEO. Does this happen on your watch.

Yes. Historically, we've -- we actually run the ballot where people could put a card into a bin and then we would select a small number of people who could go and visit a site. Can we take that away in consideration and I would think about whether that's something we can do going forward.

Yes, please do.

Thank you we have [ Mr. Tore, ] would you like to.

Sorry to come back with a supplementary. Just to comment, I've been on one of these visits, and they're very, very informative and also it was an overnight stay somewhere in [indiscernible]. But it was so interesting to go and see the sharp [ end ] where the transmission actually takes place in the control room with the armed guards. Also, they took us up the Gasometer at near Heathrow, that was quite an experience. I wasn't expecting that marvelous few of the planes landing at Heathrow. It was very good. I would strongly recommend that you do bring it back and put the ballot in. And for those who've never been on it, please, it's very, very informative. It's very technical, of course, but as part of it. So thank you. It was good. And by the way, Madam Chair as I'm here, the freedom pass not only lets us travel on the buses and the tube, but it takes us out to Zone 6, which is like East Croydon Heathrow Airport, [ high Barnet, ] [indiscernible] world, et cetera. And the bonuses you're probably not aware of this. We're allowed to travel on any bus local buses within the United Kingdom. I can go to Birmingham and I can use the bus there with my freedom pass that's what people don't realize. The youngsters who are working to their 70 before they get this probably, they're not aware of this. I just thought I'd give you the final definition of the Freedom pass. It's not only for London, the greater area, but all the local buses within the United Kingdom. It's all part of our National Health Service that we contributed to something you haven't got in America.

Thank you for that advertisement on behalf of the Freedom Pass, and I'm sure that if this were broadcast we could definitely increase the take-up.

Chairman could I say I too have been on one of these visits and would thoroughly endorse the previous comments, very good. One engaging feature of it was, I think, on that occasion, you actually had dinner with members of the Board and you circulate it between courses. So we actually got the opportunity to talk to several individuals -- very good. And I was interested to see as an aside that the supposedly secret location of your electricity control room, which I won't now mention was actually mentioned in the press recently so perhaps be careful.

Yes. We agree. I would say I have traveled extensively through both countries to see our facilities over my first year as Board chair and actually in the months that preceded that. And I think that it is a great reminder of the extraordinary investment over a long period of time in technology that has created this absolutely reliable system and people would benefit. I think it's easy to criticize if you haven't seen it, but once you see it up close, very much it's the case that it does improve understanding. And that's really -- at the end of the day, that's what it's all about is our having a mutual understanding and an agreement on the way forward. So we really will take the suggestions that you've offered and try to see if we can incorporate them appropriately. Let me also say you do have a number of Board members here on either side of me who will be in the reception afterwards and really encourage all of you to interact with our Board members because again, we've learned from you this morning and continue to benefit from the [ colloquial ] that we established with you.

So I think we have one final question in the gentleman here.

Good morning to you all and to my fellow shareholders. [ John Quickly ] been with you since the conception. We've heard a lot about electricity electric cars, there's hydrogen trains being developed here and in Germany and also for [ Lori. ] Now we're pro the curved ball. There is a synthetic fuel being developed. So conventional cars can use synthetic fuel which produces no nothing to the atmosphere. At the moment, the limitation is due to price. There's only possibility that we could be involved in that at all. Thank you.

Do you want to take that one, John.

Yes. So thanks for the question. I'm very conscious. There's a lot of work going on actually around synthetic fuels, particularly for aviation and National Grid has been in a number of industry forums thinking through the potential opportunity and how it might interact with our networks. So for us, it's more about having an awareness of how those [ fuels ] are going to develop and how they could interact with our networks. It's not something we would invest directly in given that we're a networks business predominantly, but it's certainly something that we need to be aware of and to follow the trends as they move forward.

I think that might be is there one more question? Or is that the last one? We have one more. Okay.

Good morning, board and very kind of you to invite us to this AGM. I have been to many AGMs. And as my friends, both on my right and one on my left, requested you to hold the meeting in London and Birmingham. I have been to both. And there used to be -- I'm going to support what my friend said that he visited the [indiscernible] gas tank. I call it tank, storage tank. Now there is a little history about that if he has remembered or not, but in 1948 or so, '42, there was an airplane which came to London. And because of the light, the red light on the tank, the pilot thought that was Heathrow Airport. I don't know if many people remember that. And there is too much talk about. My final question or suggestion is there's too much talk about the Freedom Pass. And since we have so many shareholders here who take advantage of it or are benefiting out of it. May I please suggest to you chairperson, could you please write to Mayor to reinstate the Freedom Pass as it was before the pandemic, which is 24 hours. So we would have solved a problem of not coming here earlier or many shareholders have missed out. So my suggestion on behalf of all shareholders, millions would be considered by Mayor and can be reinstated. Recently, I went to the London Mayor's debate. I wanted to ask the question, but unfortunately, there are very limited questions to be allowed to be asked. So I have put a question to the Mayor, but he has not replied to me. Maybe Paula Reynolds, your existence and weight would carry a long way, which would help us all, especially my friend, who I went to the invitation of National Grid at reading hotels, and we were given and provided accommodation and took us by the coach to the National Grid operational unit and also to the storage tank at [indiscernible]. It was fantastic. And I think that used to be called shareholders Club. Right. Shareholders Club. If you can reinstate that President, and secretary and the Board, that will be fantastic. Not many members or shareholders know about this. It should be included in your letters. To invite people to join this club. Pleasant afternoon, and look forward to your lunch.

Very quick comment about the plane at Heathrow it was a 707 apparently, the pilots first attempts are coming into London and he mistook going into Heathrow and landed at [ North REF North. ] complained it was a very, very short runway when landed and he just managed to get it on the ground -- he was then informed. It was not Heathrow. It was North [indiscernible]. They got the plane off the ground eventually after they stripped it out and of everything. So they had a big arrow put on that gasometer. That's the word sorry, gasometer. So our future pilots will know on where to go and not land at North [indiscernible]. That's basically the story. Thank you so.

Great. Thank you. Okay. I think with that, there are no more questions that no more have come in online. I think we have -- now that we will be available, as I said, during the reception, so that I think that we can close the voting and bring this meeting to a close. So I therefore declare the 2022 AGM close. Again, the final results of the voting will be available on our website announced at the LSE in due course. Please remember to leave your handset when you leave the room, and thank you so much for joining us for engaging with us, and we look forward to seeing you next year, either online or in person at a time to be announced.