British Power Giant National Grid Shares Dive On New York Exchange

More than UKpound 500 million was wiped off the value of British power giant National Grid Transco today, as investors fretted it could become the target for litigation over the massive power blackout in New York and the north eastern US.

NGT is the owner of Niagara Mohawk, the US electricity transmission and distribution company on whose patch the massive blackout is believed to have been sparked.

With analysts warning that NGT may face huge legal bills if it is found to have been responsible for the biggest power cut in US history, traders sold down the shares 1734 pence to 37914 pence.

More than 30 million shares had changed hands by midday, nearly 10 times the normal volume, as the price fell close to a five-year low.

In New York, Mayor Michael Bloomberg promised: "There will be a real post-mortem on why this did happen."

The Grid's US boss, however, refused to admit responsibility. In a hastily arranged Press conference, Bill Edwards said: "We, like other utilities and officials across the country, do not know the cause of the outage. Many potential causes have been speculated on -- including a potential on Niagara Mohawk's system -- but such speculation is uninformed and premature.

"It is going to take a significant period of time for experts to analyse the data so that a root cause can be determined."

Fraser McLaren, utilities analyst at ING, indicated NGT could be in trouble if it were to be found "grossly negligent". He said: "We have spoken with the company twice this morning which currently maintains there there is no reason to believe Niagara Mohawk was at fault.

"Until the cause is established, however, investors are likely to be nervous and the shares may come under pressure."

Niagara Mohawk, which supplies much of the US north east, was bought by National Grid for UKpound 2 billion in 2000, as a key part of its expansion strategy in North America, having seen its investments in South America go awry.

Despite the crippling of Manhattan, which was not expected to see the lights back on by the start of the working day, the New York Stock Exchange said it would open as usual at 2:30 p.m. London time. It, like many Wall Street banks, will again be relying on emergency back-up generators which kicked into action almost immediately after the power cut around 4 p.m. New York time Thursday.