Profits were up by 5% to £2.6bn but National Grid said that debt levels had risen by nearly £1bn to £19.6bn
National Grid, the company that operates most of England’s energy pylons and pipelines, has turned in a strong financial performance for 2011 but seen its debt levels reach almost £20bn.
Profits were up by 5% to £2.6bn and earnings per share reached 51.3p, higher than the City has generally anticipated.
National Grid is a key business as the UK tries to modernise its ageing power infrastructure and connect up dozens of smaller wind farms and other low-carbon generation.
There have been fears that National Grid will struggle to deal with the more than £30bn of new investment needed to replace old equipment over the next eight years.
Steve Holliday, the chief executive of National Grid – much of whose business operates under regulatory price restraints – gave an upbeat message to investors on Thursday morning.
“On the back of a solid all round performance in 2011/12, and reflecting the revenue growth that our regulatory arrangements provide, we maintain a positive outlook for 2012/13, and expect to deliver another year of good operating and financial performance,” he said.
But the company also acknowledged that it had lost £116m over the year in Britain and in its smaller US business due to the weather.
Hurricane Irene and the 2011 October snow storm together impacted operating profit by £116m, it revealed.
National Grid said that debt levels had risen by nearly £1bn to £19.6bn but it has still raised the full year dividend by 8% to 39.28p.
Under the government’s recently announced electricity market reform plans, the company is to take on responsibility for administration of both the new “capacity mechanism” and the feed-in tariffs that will replace the existing framework for renewable and low carbon power generation payments.
There have been fears that this will be an unwelcome burden on the National Grid but the company denied this.
It said on Thursday: “This additional responsibility is not expected to have a direct material financial impact on National Grid but recognises our central role in delivering the UK’s energy future.”