Ofgem backs Transco.
National Grid agreed last year to sell the networks for pounds 5.8 billion and a company spokesman reiterated it expects to complete the sales during the second quarter. Investors widely expect the deal to gain all necessary regulatory approvals and the transaction also needs clearance by the UK Department of Trade & Industry (DTI) and Health & Safety Executive.
'Lower distribution charges are the prize from this sale which Ofgem, through comparative regulation, will begin to capture for customers from the next price control in 2008,' Ofgem chairman John Mogg said.
Last year, National Grid said it was selling the assets to raise money to return to shareholders and to invest in growing US markets.
However, it added that National Grid had to implement new industry structures before the sale could proceed.
National Grid sold the networks to buyers including Britain's Scottish & Southern Energy and United Utilities, as well as Australia's Macquarie Bank and Cheung Kong Infrastructure Holdings.
Ofgem said it had identified the potential for savings of around pounds 225 million from the transaction. The regulator said the new network owners must have clearly defined roles, however, and also demanded the introduction of a new agency to carry out functions that National Grid currently undertakes centrally.
Transco's shares closed at 505 1 /2p down 1p.