Going multi-National: Utility set to serve NE

(DINA RUDICK/GLOBE STAFF)

Steve Holliday, a 51-year-old Briton, took over as chief executive of National Grid PLC in January and completed the company's $7.3 billion acquisition of Brooklyn-based KeySpan Corp. in August. The utility giant serves 3.3 million electric and 3.4 million natural gas customers in Massachusetts, New Hampshire, New York, and Rhode Island. In the United Kingdom, London-based National Grid has 11 million gas and electricity customers.

Q: You seem sensitive about the fact that National Grid's headquarters is in London.

A: I am sensitive about it, actually. What you need to look at is where the bills come from, and the bills certainly do not come from London, that tiny little office. We are an American and British company. Half the business is here, and half is in the UK. I don't want for one second for people to do what you did, and say this is a company based in London. That's not what we are at all.

Q: Most companies are outsourcing jobs to cheaper locales. Does it make sense for you to do that?

A: We currently have eight call centers in total. We will not have eight in five years' time. We have absolutely no plans at all to move our call centers outside the US. Part of that is a philosophy that I have been espousing here about being local. We need to find that balance in our business about making sure we're bringing the benefits of scale but preserving the fact that we're a local business. Our customers want to relate to someone who quite rightly understands where they are and understands the issues that they're dealing with.

Q: How much in savings will the KeySpan acquisition yield?

A: It will benefit consumers in the US to the tune of $800 million over 10 years. The reality of this business is when you share those benefits across million and millions of consumers you don't see hundreds of dollars flowing back. Many of the cost savings we are putting in place will hold bills back as opposed to bills in reality going up.

Q: So bigger is better for consumers?

A: We have an infrastructure that's getting very, very old, and it needs replacing. That means we need to invest billions of dollars. That tends to be associated with companies with the balance sheets to fund that. But it's less about the balance sheets, and it's more about the technical expertise. You've got to have the real expertise to know what system it is you're designing for the future and the construction expertise to actually build it. There is a natural cycle of bigger companies being formed in this sector. It's not because big is beautiful but because big is necessary to get some of these things actually done.

Q: All this infrastructure improvement sounds expensive?

A: We've been able to milk [the distribution system] for about as long as you can milk an asset. It's time to put some money back into it. We'll put in a system that is smaller than the current system and far more flexible. That will be a great investment for society, for customers, and for the industry. But of course, billions of dollars in investment needs paying for. People will see big numbers in terms of investment required. Billions of dollars. But it's spread over an awful lot of customers.

Q: The Patrick administration is pushing a decoupling proposal, which would financially reward utilities that reduce consumer demand for the power they deliver. Do you support that?

A: We absolutely totally support it. We have now decoupled about 50 percent of our rate plans in the US, and we've decoupled all of our rate plans in the UK. It's wrong implicitly when we earn more when people consume more.

Q: What are you doing to promote conservation now?

A: We will be spending $170 million in this financial year in the US investing in our customers' premises for energy efficiency. We have an awful lot going on, but we believe there's an awful lot more we can do as well.

Q: Doesn't that $170 million come from assessments on customers?

A: With all due respect, nobody invests anything for nothing. That's not what you're in business for. This is an area where we've invested a lot in training our people, in technology. We spent a lot of money on [research and development] in this area.