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US tax reform to be 'significantly positive' for National Grid customers
National Grid updated the market on the expected impact the US Tax Cuts and Jobs Act would have on the group on Friday, reporting that overall, the US tax reform changes were "significantly positive" for its US customers and economically neutral for National Grid itself.
The FTSE 100 firm said it anticipated that there would be a non-cash tax credit of around $2bn due to the revaluation of certain deferred tax balances, which would be reflected as an exceptional item and was expected to be returned to customers over a period of 20 to 30 years.
"There will be no other material impact on the results for the financial year ending 31 March 2018," the board said in its statement.
It said the full implications of the new legislation on earnings and cash flows were still being reviewed, and would depend on the outcome of discussions with regulators for each of its 14 regulated entities in the US.
"To date, this has been reflected in our joint proposal for Niagara Mohawk Electric and Gas, and our ongoing Massachusetts Gas and Rhode Island rate filings, which together represented 48% of the US rate base at 31 March 2017.
"The total annualised revenue increase for these companies is estimated to reduce by $130m and will come into effect as these changes are adopted in new rates in FY19."
National Grid said the reduction in revenue would be offset by a corresponding reduction in the tax charge.
It said it did not expect a material impact on the year ending 31 March 2019, but it did expect to provide more detailed guidance at the full year results.