Annual Report and Accounts for year ended 31 December 2025

Registration number: 02366942 (England and Wales)

Northern Electric plc

Annual Report and Consolidated Financial Statements for the Year Ended 31 December 2025

A P Jones

S J Lockwood

78 Grey Street Newcastle upon Tyne Tyne and Wear

NE1 6AF

110 Quayside House Newcastle upon Tyne United Kingdom NE1 3DX

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The directors present their annual report and audited consolidated financial statements for the year ended 31 December 2025 of Northern Electric plc (the "Company"), which have been drawn up and are presented in accordance with the Companies Act 2006 (the "CA06").

The Company is part of the Northern Powergrid Holdings

Company and its subsidiaries group of companies (the

"Northern Powergrid Group") and acts as a holding company of Northern Powergrid (Northeast) plc ("NPg Northeast"), Integrated Utility Services Limited ("IUS") and Northern Powergrid Metering Limited ("NPg Metering"), alongside other smaller companies, collectively, (the "Group").

NPg Northeast is an authorised distributor under the Electricity Act 1989 and holds a licence granted by the Secretary of State. As a distribution network operator ("DNO"), NPg Northeast is regulated by the Office of Gas and Electricity Markets ("Ofgem"), which in turn, is governed by the Gas and Electricity Markets Authority ("GEMA"). Ofgem requires the DNOs to operate within a regulatory framework known as a price control, the purpose of which is to protect the interests of end consumers by setting an upper limit on the amount the DNOs can charge for the use of their networks. On 31 March 2025, NPg Northeast completed the second year of the RIIO-ED2 price control, which became effective on 1 April 2023, and will conclude on 31 March 2028 (the "ED2 period").

The principal activity of NPg Northeast is the distribution of electricity to approximately 1.6 million customers connected to its electricity distribution network (the "Network") within its distribution services area in the northeast of England, which extends from North Northumberland, south to York and west to the Pennines. The Network includes over 42,000 kilometres ("km") of overhead and underground cables and over 28,000 substations. Electricity is received from National Grid's transmission system and from generators connected directly to the Network, and is then distributed at voltages of up to 132 kilovolts.

Revenue generated by NPg Northeast is primarily controlled by a distribution price control formula which is set out in the electricity distribution licence. The price control formula does not directly constrain profits from year-to-year but is a control on revenue that operates independently of a significant portion of the NPg Northeast's costs. Allowed revenue is recovered from electricity suppliers via the application of Distribution use of System charges. These charges account for approximately 8% of the electricity end users' overall electricity bill. NPg Northeast's opening base allowed revenue (excluding the effects of incentive schemes, volume or legislative driven adjustment mechanisms, any contract liabilities from the prior price control, and real price effects) has been set and provides NPg Northeast with some stability in terms of its income during the ED2 period. Opening base allowed revenues increased in line with inflation (as measured by CPI-H).

IUS provides engineering contracting services and NPg Metering rents meters to energy suppliers.

In common with the Northern Powergrid Group, the Group operates a strategy based on six core principles (the "Core Principles"), which comprise Financial Strength, Customer Service, Operational Excellence, Employee Commitment, Environmental Respect and Regulatory Integrity. The Core Principles (which are applied by the Northern Powergrid Group's parent company, Berkshire Hathaway Energy Company ("Berkshire Hathaway Energy"), set out the basis on which the Company generates shareholder value over the longer-term and defines the standards by which the Northern Powergrid Group holds itself accountable. Each Core Principle is defined by a strategic objective which is linked to the commitments made in the Company's business plan (available via the Northern Powergrid Group website) for the ED2 period (the "Business Plan"). The directors refer to the values established by the Core Principles and the commitments contained within the Business Plan when considering the consequence of decisions they make.

The delivery of the Business Plan is supported by an annual business plan (the "Annual Plan") which is submitted to the Northern Powergrid Group's shareholder each financial year and is designed to phase progress towards the achievement of each commitment over the ED2 period. This ensures that the deliverables in both plans can be measured effectively by using a mix of financial and non-financial Key Performance Indicators ("KPIs").

The Strategic Report focuses on each Core Principle and the performance of the associated KPIs throughout the year in order to provide a summary of the success in achieving each strategic objective, progress made against certain Business Plan commitments and performance in relation to the Annual Plan.

As the largest contributor to the Group in terms of revenue, the Strategic Report primarily concentrates on the performance and progress of NPg Northeast throughout the reporting year.

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cumulative non-equity preference shares are contained in the borrowings Note 20. There were no changes to the Company's share capital during the year.

remitted to Yorkshire Electricity Group plc ("YEG"), a company in the Northern Powergrid Group, and invested

accordingly, generating a market rate of return for the Northern Powergrid Group. Movements in cash flows were as follows:

• Operating activities: Net cash flow from operating activities at £300.3 million was £89.3 mllion lower than the previous year due to fewer cash receipts from customers.
• Investing activities: Cash flow used in investing activities at £468.7 million was £164.8 million higher than the previous year mainly driven by movement in intercompany treasury account and higher capital expenditure, mainly on asset resilience and decarbonisation-enabling investment on the network.
• Financing activities: Cash flow from financing activities at £176.7 million was £263.6 million higher than the previous year, mainly due to higher net proceeds from borrowings.

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To enhance the service provided to customers, NPg Northeast worked closely with new contractors to embed service standards and ensure consistency through stronger accountability. Key initiatives from the customer service improvement plan were implemented, including refining management routines for connections processes and improving the consistency of communications, particularly for those customers impacted by power cuts. In addition, an enhanced Operational Design model was introduced to support the delivery of 2026 improvement priorities.

Improvement activity scheduled for 2026 includes the development of guidance to facilitate managing key scenarios and customer interactions, an increased focus on areas of poor Network performance, and a review of the extra care support provided to the most vulnerable customers.

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The Major Connections programme has been significantly shaped by industry reforms designed to deliver the

Government's decarbonisation ambitions through the Clean Power 2030 Action Plan, which addresses an increasingly over-subscribed connections queue by ensuring that only strategically aligned, deliverable projects progress. NPg Northeast has played an active role by participating in working groups and workshops, and influencing key policy decisions, while trading the impact of reform through a broad programme of customer engagement, including face-to-face sessions, social media posts and webinars.

As part of the reform, new project readiness and strategic alignment requirements were applied to existing accepted customer projects, driving significant investment in customer-facing improvements. This included the development and launch of an online customer evidence submission portal, enhancements to the existing online pipeline tool, and the introduction of a new customer enquiry portal. Together, these provided a more streamlined and efficient route for responding to customers.

support their decarbonisation plans, while continuing to champion inclusive services for those most at risk. As a

consequence, support was scaled up with over 20,000 customers receiving tailored fuel poverty advice, and a further 5,868 customers were provided with guidance on their transition to net zero, generating (with its affiliate) £3.0 million in social benefit, as per Ofgem's output delivery incentive assessment.

Customer resilience initiatives were also strengthened with Priority Services Membership expanded to 76% of eligible households, 95.5% of the most vulnerable customers being contacted within one hour of a power cut, and enhanced winter kits being made available. Alongside, bespoke 'safe-talk' training equipped staff to support customers through difficult situations, while the new Community Energy Team worked with local groups to cut energy bills and boost impact.

Additional support activity included a donation to Community Action Northumberland to sponsor their Warm Hubs programme, the Net Zero Community Energy Fund provided grant funding to nine organisations totalling £50,000, and NPg Northeast established the Community Energy Team to support community energy groups. Alongside, NPg Northeast and all funded partners routinely promoted Priority Services Membership and shared energy efficiency materials and winter preparedness information to customers.

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From a high voltage restoration perspective, NPg Northeast averaged 58.5 minutes (2024: 60.2 minutes), after allowing for severe weather incidents and other exemptions, which was an improvement from the prior year.

NPg Northeast invested £274.5 million during the year through its approved Network investment strategy (2024: £228.5 million), which was designed to improve Network performance and increase resilience. Various major projects were undertaken to reinforce the primary Network, refurbish transformers, rebuild overhead lines, replace oil-filled cables, change deteriorated poles, replace switchgear and install and commission new remote-control points.

Further Network enhancements included the continued roll-out of the automatic power restoration system on the high voltage Network. At low voltage, the implementation of next generation technology devices continued with the addition of sensors and monitoring which detect developing faults so that they can be proactively managed.

Looking ahead to 2026, initiatives will be implemented as part of the Network Performance Improvement Plan. These include the continuation of the risk-based vegetation management programme which, will be refocussed to incorporate the findings from the Network Light Detection and Ranging surveys completed in 2025, additional ground-mounted and pole-mounted automation, the installation of fault management devices on the low voltage Network and further developing the operational incident response model.

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From a vegetation management perspective, a total of £18.0 million was invested by NPg Northeast and Northern Powergrid (Yorkshire) plc on works to clear spans and make the Network more resilient, including by creating corridors between vegetation and the Network to accommodate the falling distance of trees. The targets set at the beginning of ED2 were increased to reflect the actual volumes of work undertaken given a large number of surveys are undertaken which confirm continued compliance, and therefore cutting is not required. In addition, increased growth was observed, driven by wetter winters. The acceleration of the vegetation management programme will be supported by the use of Light Detection and Ratings ("LiDAR") to help more effectively target the work. The first full LiDAR survey of the Network will be completed during the 2025/26 Regulatory Year.

Collaboration with LRFs was positive with NPg Northeast and its affiliate attendance at meetings with 64 quarterly tactical business groups for each of the seven LRFs in the operating areas.

In respect of the management of climate-related risks and opportunities, the Northern Powergrid Group has well-defined and mature governance arrangements in place, which are defined by its risk management policy and processes and are overseen by the Risk Advisory Board ("RAB") with the support of the Internal Audit function (see 'Risk Management' and 'Internal Control' for further details). Each subsidiary is responsible for the assessment and management of its own risks and opportunities, with risks then being reported via the processes set out below including being tracked and monitored at a Northern Powergrid Group level via the RAB.

As is the case for all types of risk across the Northern Powergrid Group, climate related risks and opportunities are identified, assessed and managed at a variety of levels with escalation points incorporated at various stages of the process.

Risks that are identified via NPg Northeast's operational working groups are put forward to the Asset Serviceability Review steering group where appropriate actions and controls are monitored by senior management. Risks can then be further escalated to the Asset Risk Management Executive Review Group for further oversight by a subset of the Executive Leadership team.

When identified at a subsidiary or directorate level, risks are reviewed and monitored by the relevant Senior Management team and are escalated through the quarterly risk identification process run by the Internal Audit team. In all scenarios, where risks are identified as being above the Northern Powergrid Group's risk appetite, they are reported to the RAB.

The Northern Powergrid Group's risk management process (including for climate related risks) takes place on a quarterly basis and includes the Chair of the RAB reporting risks and opportunities to the Audit Committee and the board. In addition, an annual risk submission is made to the Northern Powergrid Group's shareholder, noting that Berkshire Hathaway Energy is routinely made aware of risks via regular dialogue with members of the Executive Leadership team and the board.

Given the significance upon the Northern Powergrid Group and its stakeholders, the board considers climate related risks and opportunities via routine reporting (including scrutinising performance against KPIs) and in-focus updates on at least a quarterly basis. Whilst always being guided by the Core Principles, the board is also cognisant of the impact of risks and opportunities on the Northern Powergrid Group's strategy and business model and, has regard to this when making decisions such as reviewing and approving business plans and monitoring performance.

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In terms of identification, climate related risks and opportunities are typically detected via a number of channels, including at the operational, subsidiary and directorate level (as outlined above), as a result of detailed risk assessments based on climate projections, by investigations into exceptional events, from reviewing the macro environment for trends, or via shared learning from other Berkshire Hathaway Energy subsidiary companies or collaborative work with other DNOs. In relation to the latter, the DNOs typically work with the ENA to establish a sector wide perspective and have used this approach to implement regulatory requirements such as those under the Climate Change Act 2008 and the National Adaptation Plan.

Regardless of the source, all risks are integrated into the Northern Powergrid Group's overall risk management process, are recorded within a central risk register and are categorised by likelihood and impact. Supplementary to this, all climate related risks are also recorded and tracked through the Northern Powergrid Group's climate risk register.

Once identified, all risks (including climate related) are allocated to an owner and are assessed to determine if they are to be tolerated, influenced or mitigated. If the risk is to be mitigated, appropriate actions are developed to reduce or eliminate the impact of the risk over an appropriate timescale. As outlined above, all risks that are above the Northern Powergrid Group's risk appetite are monitored by the RAB and are allocated to a member of the Executive Leadership team to mitigate or manage. Innovation projects and opportunities (including any that are Climate related) are typically reviewed by the Science and Technology Advisory Panel in conjunction with the Executive Leadership team ahead of scoping options to maximise the benefits and progressing to implementation as relevant.

Following the publication by the Department for Environment, Food & Rural Affairs ("Defra") of the supplementary Green Book Guidance on 'Accounting for the Effects of Climate Change' in November 2020, a thorough assessment of the impact of climate change and severe weather upon NPg Northeast and its affiliate was undertaken in collaboration with other gas and electricity network operators through the ENA. The results of the review and associated adaption, recovery and transform plans were published in the NPg Northeast and its affiliates 'Adapting to Climate' strategy in November 2021. An update to the actions laid out in the report was published in December 2024 as part of the fourth round of adaptation reporting (ARP4).

In line with Defra's recommended approach, the assessment was performed at the operational and asset base level and followed the specific guidance for projects, policies and programmes that have a lifespan that goes beyond 2035. This included using two climate scenarios (as utilised by the Climate Change Commission) to:

• Consider options which include all adaptation measures which would mitigate the known impacts of the 2°C scenario; and

• Make decisions based on the Northern Powergrid Group's risk appetite about whether to consider adaptation measures aligned with the 4°C global warming scenario.

  Using outputs from the work that the ENA had commissioned from the Met Office, potential climate related hazards, including high temperatures, heavy rain, droughts, storms, sea level changes, snow, ice, wildfires and lighting - or a combination of these, were identified. The hazards were then reviewed against other variables such as regional climate

  change considerations (known events and topography), asset configuration infrastructure to identify a range of impact scenarios.

  and interdependencies on other national

  The risk assessment was carried out across three timescale horizons, short term: current climate, medium term: 2050's and long term: 2080's, for both the 2°C and 4°C scenario and was applied to each of NPg Northeast and Northern Powergrid (Yorkshire) plc's six operating zones. The three time periods were aligned with the UK Climate Projections 2018 and the most recent guidance from Defra (ARP4). This allowed the Northern Powergrid Group to understand how each impact scenario affected the whole of NPg Northeast and its affiliates geographic operating locations, including those where known vulnerabilities already exist such as in coastal areas, flood plains and exposed areas, and over what period, so as to establish and prioritise the key areas of risk and identify relevant opportunities.

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  Northern Electric plc Strategic Report for the Year Ended 31 December 2025 (continued) Climate Change Adaptation

  From an overall business model and strategy resilience perspective, the risk assessments (and corroborated via the findings from other DNOs through the work of the ENA) identified that there was no significant divergence in the climate projections, the impact scenarios or key risks themselves, were observed between the three timescales until beyond 2050.

  Whilst this provides some comfort during the short term, adapting to climate change requires an understanding of how to better resist the challenges and how to absorb the impact to minimise it as when events do occur and how to utilise the opportunities this creates.

  Accordingly, where the risk assessments identified that risks were more likely to occur (at any point over the three timescales) and/or that the impact was potentially greater, these were categorised as the highest priority risk areas and programmes covering bespoke adaptation, recovery actions and longer-term transformations were developed accordingly. It was identified that the highest priority risk areas included:

• Flooding presented by changes in precipitation rates and sea level rise; and

• Changes in growth rates and patterns of trees due to changes in temperature and precipitation.

As referenced in 'further information' below, the impact of climate related issues upon the Northern Powergrid Group, particularly NPg Northeast, are incorporated into the five-year regulatory Business Plan. This includes an assessment of the impact of investing in mitigation programmes and undertaking innovation projects with climate change acting as a key driver, particularly in Network investment decisions. These plans are fully incorporated into the Northern Powergrid Group's financial planning process (including with consideration of the impact on areas such as the Northern Powergrid Group's supply chain) and the impact of climate related issues will continue to be included in regulatory business plans for the relevant time periods in question. Climate related risk assessment scenarios that feed into financial and strategic planning are included in the NPg Northeast and Northern Powergrid (Yorkshire) plc's third round Adapting to Climate Change report and its supporting annex (available via the Northern Powergrid Group's website). An update to this report is available in the fourth round Adapting to Climate Change update report (which is also available via the website).

1. Physical risk (long term - acute/chronic): Precipitation (extreme prolonged rainfall) - long periods of above average precipitation or intense rainfall events resulting in flooding and erosion.

   Assessment assumptions: data was used concerning the accumulation of rainfall over a month and where it exceeds the 90th and 95th percentile of today's climate, the Soil Moisture Deficit and for heavy daily rainfall events, the percentage changes in the 99th percentile of seasonal daily mean precipitation.

   Findings: There was a large regional variation in how the frequency of climate related hazards were expected to change in future periods. However, in autumn and winter months, instances of prolonged rainfall, heavy daily rainfall events and heavy hourly precipitation were projected to increase across most of the UK. Assets located in coastal areas were more vulnerable to changes in sea level, notably in the Humber Estuary and Seal Sands.

   Impact: Access issues, asset damage and reduced performance, predominantly as a result of Grid and Primary Substations being adversely affected.

   Serious flooding in particular was likely to result in the most severe consequences, including the loss of electricity supply to thousands of people, as well as to other types of infrastructure. This in turn had the potential to lead to additional costs as a result of replacing or repairing damaged equipment, as well as increasing the number of customer interruptions, thereby having a negative effect on service and performance levels.

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   Northern Electric plc Strategic Report for the Year Ended 31 December 2025 (continued)

   As set out in 'Operational Excellence', Network reliability is recorded via Ofgem's Interruptions Incentive Scheme ("IIS") through targets in relation to CML and CI. If IIS targets are exceeded, there is a reward. Conversely, in the event targets are missed, there is a penalty. In addition, if Guaranteed Standards or service levels that are agreed by Ofgem are failed, payments must be made to those customers affected. Therefore, unless there is an exemption applied for an extreme weather event, NPg Northeast is susceptible to an increase in costs if service and performance levels reduce.

   Mitigation: Flood defences programme - designed to comply with national guidance on how to improve the resilience of electricity substations to flooding.

   Mitigation activity:

   • Improve and maintain flood resilience through targeted adaptations in civil defences and install additional substation defences.

   • Improve flood resilience at distribution substations, either by moving them out of the line of flooding risk or by implementing mitigation measures.

2. Physical risk (long term - acute/chronic): Temperature (extreme heat) - high temperatures that may reduce the performance and efficiency of assets.

   Assessment assumptions: Thresholds to understand the frequency of days which constitute 'extreme temperatures' across the UK and how these may change under future climate projections were used. This included the frequency with which the

   daily

   maximum temperature exceeded 28°C, 30°C

   and

   35°C

   and the

   frequency with which

   the

   daily

   maximum

   temperature exceeded 28°C for 3 consecutive days.

   Findings: Trends in observational records confirmed that the UK climate is warming with high temperature thresholds being exceeded each year and expected to increase in line with Representative Concentration Pathway 8.5 (being the worst-case climate change scenario). Met Office climate projections identified that the frequency of hot summer periods is becoming increasingly common.

   The rate of change for extreme heat was expected to be slower for cooler regions of the UK such as the North of England. However, by the 2060s the frequency with which extreme heat occurred in the North of England would be the equivalent to that of the warmest areas of the UK at the time of the assessment.

   Impact: A reduction in the performance and efficiency of assets. This in turn has the potential to increase fault volumes, leading to additional costs being incurred as a result of repairs and maintenance, reduce service levels and customer satisfaction, and could cause delays to other work planned for delivery.

   Whilst the likelihood of global temperature rise is accepted, the impacts on DNOs has not yet begun to be realised. Because of this, networks do not currently see any drivers to invest ahead of the need to offset risks.

   Mitigation activity:

   • Network and asset performance will continue to be monitored and will be modified once climate change begins to have a direct and longer-term impact.

   • Standards and specifications will be updated to include projected changes in temperatures and ground movements. This includes reviews and changes to asset ratings and construction and design specifications as appropriate.

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   Northern Electric plc Strategic Report for the Year Ended 31 December 2025 (continued)
3. Physical risk (long term - acute/chronic): Precipitation (storms) - Strong winds are a significant hazard, especially when experienced in conjunction with heavy rain.

   Assumptions: As for Precipitation (extreme prolonged rainfall)

   Findings: There was no clear evidence within climate projections that there would be a change in the frequency or power of storms. Accordingly, the risk of strong winds was assessed in line with the climate conditions at that time. It was also recognised that research into the effects of wind had been carried out between 2011 and 2015 under the Resilient Electricity Networks for Great Britain project and learnings had been incorporated into the NPg Northeast's specifications.

   Impact: A number of storms have affected the Network since the initial risk assessment, notably storm Arwen. It is therefore recognised that storms can lead to operational failure of above ground assets, resulting in increased faults and loss of supply to customers, which in turn affects customer service. The potential for damage to telecommunications infrastructure, leading to the inability to communicate with staff in the field or control technology, can also impact repair efforts further.

   Mitigation: Resilience programme - Resilience programme - Maintain operational resilience and embed long-term

   resilience across the asset programmes, working with others to better understand future risks.

   Mitigation activity:

   • Utilise drones for storm damage assessments.

   • Undertake collaborative exercises to test operational response.

   • Major Incident procedures in place.

   • Embed resilience across asset programme designs and specifications to deliver long-term synergistic resilience.

   • Improved resilience of the Network.

   • Vegetation management programme (see below).

4. Physical risk (long term - chronic): Temperature / Precipitation (gradual increase in temperature and rainfall) -warmer and wetter conditions may extend vegetation growing seasons, resulting in increased or accelerated growth of vegetation.

   Assumptions: The length of the growing season was calculated using mean daily temperatures beginning at the start of a period of five successive days where the daily-average temperature was greater than 5°C and ending on the day before a period of five successive days when the daily-average temperature was less than 5°C.

   Findings: The average growing season length had increased by approximately 30 days per year over the course of the last 60 years and was reported as being largely due to an earlier onset of spring. As a result, the combined effect of temperature and precipitation was likely to lead to increased vegetation growth.

   Impact: Interference to overhead lines could cause a variety of power supply issues ranging from transient interruptions, due to vegetation touching the line, through to severe damage from trees, or parts of trees, falling onto the lines. This may result in increased levels of investment being required in order to maintain Network resilience, additional costs associated with maintenance and cutting cycles and performance and customer service related issues.

   Under abnormal weather conditions there is also the potential for large scale power outages with some supply restorations taking many days.

   Mitigation: Vegetation management programme - improving the resilience of the overhead Network under abnormal weather conditions using a risk-based methodology.

   Mitigation activity:

   • Undertake enhanced resilience cuts in line industry standards on the overhead Network to comply with enhanced resilience requirements.

   • Establish and maintain clearance corridors.

   • Assess and tackle the issues anticipated from ash tree dieback through the management of affected spans.

   • Undertake a vegetation clearance programme for substations and tower bases.

   • Utilise Light Detection and Ratings ("LiDAR") technology to ensure efficient targeting for vegetation management.

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   Northern Electric plc Strategic Report for the Year Ended 31 December 2025 (continued)
5. Transition risk: Enabling the Energy Transition - see Principal Risks and Uncertainties
6. Opportunity: Innovation - participating in and leading innovation projects as a way of developing creative solutions to mitigate the risks of climate change and enhance responsiveness in the event an incident does occur.

   A number of projects are planned for the ED2 period including:

   • Optimising the use of LiDAR data in order to carry out more effective and efficient clearance and vegetation

     management by prioritising cutting responses;

   • Reviewing the link between rainfall and underground cable faults to understand and quantify the risk;

   • Research into substation design specifications and innovative materials to mitigate risks associated with

     high-temperatures and assets;

   • Investigations to understand the performance limitations of outdoor control equipment during periods of extreme heat;

   • Estimate the extent of Ash tree dieback and its impacts on the Network; and

   • Review of flood risk at distribution substation sites and the introduction of monitoring.

     Further detail of innovation supporting decarbonisation can be found in the 'Environmental Sustainability' section of the Strategic Report.

7. Opportunity: Decarbonisation -adapting and evolving the Network to facilitate the UK's net zero strategy.

   There are many benefits associated with decarbonisation, not just for the Northern Powergrid Group, but for the areas it serves and the people who live and work there. This includes developing the Network to accommodate additional connections to enable more electric vehicle chargers to be installed, to allow greener heating solutions, to provide a mechanism for local electricity production and to facilitate the growth of renewable energy sources by offering greater flexibility.

   Further detail of the initiatives underway to facilitate decarbonisation can be found in the 'Environmental Sustainability' section of the Strategic Report.

8. Opportunity: Collaboration - working with stakeholders including industry partners and energy networks to find solutions to mitigate the risk of climate change and improve resilience through collaborative work on interdependencies to reduce the risk of cascade failures across systems.

   The Northern Powergrid Group works closely with its stakeholders and partners to share best practice, evolve new protocols, develop industry guidance and adopt measures to prevent or manage the impact of climate change. This includes working with Local Authorities and regional bodies to evolve their climate resilience and decarbonisation plans and collaborating on specific issues to generate practical solutions - such as with the ENA as outline above.

   Initiatives planned in this area include collaboration with:

   • Other regional infrastructure operators to identify and mitigate interdependencies.

   • The Environment Agency and local authorities on the implementation of their regional flood risk management plans and establish support for these where appropriate.

Given the likely impact of climate related opportunities and risks on the Network, the NPg Northeast and its affiliates various mitigation programmes (including KPIs and the methodology for determining these) were fully scoped and costed as part of the Business Plan submission to Ofgem for the ED2 Period, details of which can be found via the Northern Powergrid Group's website.

In addition to the information contained above, the Northern Powergrid Group has published a 'Climate Resilience Strategy' and an 'Adapting to Climate Change Report', the former having been submitted to Ofgem and part of the Business Plan for 2023 to 2028 and the latter having been submitted to Defra in line with the requirements of the Climate Change Act (2008). The Northern Powergrid Group's most recent report was published as part of the fourth round in 2024 and is an update report which should be read in conjunction with the third-round report published in 2021. Copies of both reports can be found on the Northern Powergrid Group's website.

The Northern Powergrid Group is currently working with Ofgem to complete a stress testing exercise which is focussed on the risks from extreme heat, wind and flooding. The outputs from this are anticipated in 2026 and will form the basis of the Business Plan and Climate Resilience Strategy for the ED3 period (2028-2033).

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performance was disappointing with 13 accidents recorded in the year (2024:11). In terms of the Business Plan

commitment, the number of contractor OSHA incidents was higher when compared to the prior year, resulting in further improvement actions being initiated.

In relation to the OSHA incidents, the majority were minor in nature (cuts, slips and trips and slow manoeuvring vehicle accidents), but the increase relative to the prior year reinforced the importance of NPg Northeast's health and safety performance improvement plan which covered colleague safety, contractor safety, health and well-being and public safety. Accordingly, initiatives undertaken and planned for 2026 included the continuation of driver training, enhancing personal protective equipment, the completion of an assurance programme on high -risk activities, safety training for all first line managers, and the renewal of the fleet vehicle telematics contract to equip drivers with the latest technology.

During the year, NPg Northeast successfully completed the ISO 45001 re-accreditation audit of our occupational health and safety management system.

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Employee development continued via the CORE programme, designed to enhance leadership and management skills, leadership apprenticeships, and an approach to identifying and developing individual contributors. Routine training also took place in key areas such as customer service, cyber security and management development, and the rollout of the Core Leadership Expectations 360 programme was completed for senior leaders. A mentoring platform was also introduced to connect colleagues across the Northern Powergrid Group focussing on professional development.

Opportunities for learning and development will be expanded throughout 2026, with the launch of new skills modules.

During the year, 56 new recruits (2024: 89) joined NPg Northeast's and Northern Powergrid (Yorkshire) plc's Workforce Renewal Programme. At 31 December 2025, the Group had 1,802 employees (2024: 1,639).

The Northern Powergrid Group's gender pay gap report is available via the Northern Powergrid Group's website.

The board and senior management team continue to keep employees and trade union representatives informed of and involved as appropriate in developments that may impact them now or in the future. Consultation for collectively bargained employees is agreed with trade union representatives in the form of a constitutional framework. In addition, the Group utilises focus groups and colleague panels to consult on improvements and changes.

In support of this process, the Director of People and Change routinely reports to the board and the Health and Safety Committee to ensure that the views of employees are considered and to facilitate the discussion of and any subsequent decision making in respect of employee related concerns or issues.

During the year, the President and Chief Executive Officer, members of the board and members of the senior management team provided regular updates on financial, organisational, safety and customer service performance. The executive

directors engaged directly with employees during operational and office-based site visits and induction events.

Communication with employees was delivered via various channels including text messages and virtual meetings,

alongside regular briefings, line manager conversations, meetings with trade union representatives and utilising the Northern Powergrid Group's intranet.

The Northern Powergrid Group has adopted the Code of Conduct, which details the commitment to ethics and compliance with the law, provides reporting mechanisms for known or suspected ethical or legal violations, and establishes minimum standards of behaviour expected of all employees. In support of this, a "speaking up" process is in place enabling all employees to raise concerns of unethical acts, malpractice or impropriety (including bribery or corruption), and an anonymous help line operated by an independent company is also available. All colleagues complete an annual online training programme covering the requirements of the Code of Conduct. This also requires all employees to declare any conflicts of interest and unspent criminal convictions.

The Group's policy is to provide all protected groups, including disabled people, with equality at work in respect of employment, training, career development and promotion, having regard to their aptitudes and abilities. Should any member of staff become disabled during their employment, reasonable adjustments will be made, wherever possible.

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Notes:

KWh energy consumed relates to depot energy and fleet fuel usage.

Contractor emissions are based on fuel usage and is the best available information at the time of publishing.

The chosen business carbon footprint intensity ratio is based on the NPg Northeast's licence area which equals 14,394km2

The methodology adopted to calculate energy and business carbon footprint data is aligned with international standards, those required by Defra and BEIS and is audited annually and certified through the Certified Emissions Measurement and Reduction Scheme ("CEMARS") for compliance with ISO 14064-1:2006.

Efficiency, Stewardship, Performance, Evaluation, Communication, and Training) and delivered through the

Environmental Action Plan, which addresses twelve key impact areas including Scope 1, 2, and 3 carbon emissions, SF₆ losses, visual amenity, biodiversity, and waste.

NPg Northeast's overall business carbon footprint Scope 1 and 2 emissions (excluding losses) totalled 4,735 tonnes CO₂e for the year, an improvement on the prior year. Whilst NPg Northeast and its affiliate achieved reductions in Scope 1 and 2 emissions throughout ED1 and into the ED2 period, the current level remains marginally above the science-based target for reaching net zero, indicating that further action is needed to drive additional reductions.

Improvement initiatives include cutting emissions from the operational fleet by replacing diesel vehicles with Ultra-Low and Zero-Emission models, exploring emerging technologies such as hydrogen fuel cells, adopting alternative renewable fuels, and improving energy efficiency through facility upgrades at operational sites.

For Scope 3 emissions, NPg Northeast continued its partnership with the Supply Chain Sustainability School and implemented its carbon calculator to measure supply chain emissions, laying the groundwork for a reduction strategy in 2026. In addition, NPg Northeast collaborates with other DNOs to share expertise, insights, and ensure a consistent approach.

SF₆ losses totalled 14.55 kg, reflecting a year-on-year reduction, though still above target. In response, NPg Northeast continued to implement operational routines, address leaks promptly, and collaborate with other DNOs through the Energy Networks Association ("ENA") to share best practices and trial innovative SF₆-free technologies.

Page 15

During the year, total fluid loss from the Network of 7,229 litres, was within the target of 9,761 litres. However, to further minimise losses, NPg Northeast remains committed to replacing 3,400 km of cable during the ED2 period and continued to advance the use of perfluorocarbon tracer technology for leak detection and self-healing cable solutions.

To meet the requirement of identifying and removing or remediating non-compliant equipment containing PCBs by 31 December 2025, NPg Northeast and its affiliate collaborated with the Environment Agency and the ENA to develop a statistical model for determining non-compliant pole-mounted transformers. The model has been highly effective in reducing the overall burden and cost of the programme. Delivery in 2025 was significant, albeit, NPg Northeast will continue working with the Environment Agency during 2026, until compliance is achieved.

In relation to NPg Northeast's broader environmental impact, plans have been established to achieve zero waste to landfill by 2035 and divert 90% of waste from all operations by 2028. Network operations remain the largest source of waste, with excavations and related activities accounting for over 95% of total waste generated. Measures to improve performance include increased recycling and reuse of materials, with a target to recycle and reuse 85% of all materials by 2028, covering the additional volumes arising from Network investment projects and decarbonisation initiatives. Challenges remain around assessing and classifying materials from unplanned utility excavations as hazardous or non-hazardous prior to transport and disposal, which impacts the NPg Northeast's goal of reducing landfill waste. To address this, the Streetworks UK protocol was introduced during the year, implementing an industry-wide compliance obligation.

From a supply chain perspective, NPg Northeast will continue collaborating with suppliers to reduce Scope 3 emissions. To support this, an embodied carbon model will be developed to guide investment decisions, including material sourcing. At office locations, waste segregation facilities have been expanded by implementing "Simpler Recycling".

The impact of NPg Northeast's operations was mitigated, where possible, through a range of biodiversity, natural capital, and visual amenity initiatives. This includes fulfilling the duty to enhance designated areas such as National Parks and improving biodiversity at 200 sites throughout the ED2 period.

At present, NPg Northeast has no plans to use carbon offsetting to achieve its ED2 targets. The focus remains on reducing physical carbon emissions, as additional investment in the Network to enable decarbonisation delivers greater value for customers. However, at an initiative level, NPg Northeast may pursue ad-hoc offsetting opportunities where appropriate.

From an environmental compliance perspective, NPg Northeast operates under a United Kingdom Accreditation Service (UKAS) scheme for environmental management and is certified to ISO 14001:2015-a standard designed to enhance environmental performance, meet compliance obligations, and achieve environmental objectives, all of which support NPg Northeast's KPIs. NPg Northeast's carbon footprint reporting framework is certified under CEMARS for compliance with

ISO 14064-1:2006. Additionally, NPg Northeast Management System for waste management.

holds 'Energy & Utility Skills'

certification

for its Competence

To date, NPg Northeast's performance against several challenging KPIs aimed at reducing carbon usage and minimising environmental and stakeholder impacts has been largely positive. However, achieving carbon targets, while collaborating with suppliers and partners presents significant challenges and risks. Consequently, NPg Northeast will continue to refine its ambitions and strengthen the implementation of environmental plans throughout ED2, into ED3, and beyond. Details of phased targets for waste to landfill, recycling, noise pollution, and biodiversity, along with descriptions of all key measures, are provided in Annex 1.4 of the Business Plan, available via the Northern Powergrid Group's website (Our Business Plan).

Page 16

The operation of flexibility on the Network has continued to mature in 2025. In the past year, NPg Northeast increased tendering opportunities, improved market access for Flexibility Service Providers and established new forecasting and dispatch processes. By enabling customers to change their energy consumption and generation patterns, NPg Northeast facilitated a more efficient and greener Network by providing an alternative to both Reinforcement and generation curtailment requirements.

From an innovation perspective, NPg Northeast runs a portfolio of projects in the priority areas of customer vulnerability, resilience, and decarbonisation. Notably, the Community DSO project, a £3.2 million trial delivering smart local energy systems, was expanded in 2025 with the mobilization of two further trial sites to explore how consumer energy resources and flexibility can be utilised in communities.

To better understand how to prepare the Network for the future needs of its customers and the potential pathways to net zero, NPg Northeast published its updated Distribution Future Energy Scenarios. NPg Northeast also published its Energising Growth strategy, setting out how larger industrial and commercial customers are being supporting alongside Local Authority stakeholders to drive regional decarbonisation, and in turn enable economic regional growth. This was further supported by the launch of our LAEP+ tool, which provided Local Authorities with key functionality to develop their Local Area Energy Plans, through enhanced conversations, and regional specific insight. Both publications are available via the Northern Powergrid Group's website.

In delivering its Business Plan commitments, NPg Northeast engaged with stakeholders on its DSO Strategy to achieve a number of outcomes and benefits including enabling open energy data sharing, transforming the way decisions and plans are made, supporting the development of new flexible energy markets, increasing customer and Network flexibility and facilitating a whole system energy system. NPg Northeast's Energy Systems directorate centralises responsibility for delivering DSO plans including major connections to the Network.

In conjunction, and with the support of the Independent Stakeholder Group ("ISG"), NPg Northeast operated its DSO Review Panel ("DRP") for the purpose of making its decisions transparent and to allow the independent members to comment on and challenge NPg Northeast's major investment decisions.

Page 17

NPg Northeast submitted its annual Data Assurance Report to Ofgem in March 2025, which included risk assessments of the regulatory returns to be submitted during the Regulatory Year ahead (April 2025 to March 2026), together with a report detailing the assurance work carried out in the Regulatory Year ended 31 March 2025.

On 6 November 2024, Ofgem initiated the process for determining the arrangements for the next electricity distribution price control period, which will begin on 1 April 2028, by issuing a consultation on the framework for ED3. Ofgem envisages that ED3 will have a critical role in the path to achieving net zero by 2050, which could involve a significant change in the level of Network investment. In that respect, Ofgem has stated that it will aim to keep the costs of the infrastructure needed for net zero as low as possible through maintaining a low cost of capital and driving further efficiency. NPg Northeast submitted its response to the consultation on the framework on 15 January 2025 and began the process of preparing its draft ED3 Business Plan, which, it is currently expected, will be submitted to Ofgem in July 2026 and will be followed, in December 2026, by submission of the final version.

Ofgem published the methodology consultation to further develop arrangements for ED3 on 08 October 2025, which was clear on the need to attract equity capital to secure the step-up in investment. NPg Northeast submitted its response to the methodology consultation on 03 December 2025. The process will culminate with Ofgem expected to issue its Draft Determinations in June 2027 and its Final Determinations in December 2027

Page 18

The Northern Powergrid Group operates a structured and disciplined approach to the management of risk as part of its overall risk management policy and in support of its financial reporting practices. A system is in place to facilitate the identification of new and emerging opportunities and risks, including those associated with the achievement of the Northern Powergrid Group's strategic objectives and Core Principles. This includes regular reviews of the macro environment as well as risks that arise from within functional business areas.

Once identified, key risks and their respective controls and mitigation plans are continually assessed and formally reviewed on a quarterly basis by the Risk Advisory Board ("RAB") in order that they are managed to an acceptable level in accordance with the Northern Powergrid Group's risk appetite, which is determined by a process based on risks, issues and consequences. The level of tolerance varies in accordance with the pursuit of objectives and with caution or acceptance adopted depending on whether risks can be influenced or mitigated fully, partly or not at all. The RAB routinely reports its findings to the board to ensure the directors are sufficiently appraised of the risk exposure associated with the pursuit of the Group's long-term strategy.

The risk management programme includes regular reviews of the crisis management, disaster recovery and major incident plans. To determine the level of disaster preparedness and responsiveness against threats to business continuity, risk management plans and processes are periodically tested. This self-evaluation approach is reinforced by Berkshire Hathaway Energy, which benchmarks risk management activities across its business units and shares significant lessons learned. The business continuity and disaster recovery plans are tested regularly to ensure that as required, operational performance can remain resilient and employees are able to perform their duties safely.

Page 19

During the year, no notable changes have taken place. The Northern Powergrid Group's principal risks are not ranked or prioritised in any particular order. Given their sensitivity and ever-changing nature, the board has elected not to disclose the risk appetite associated with each risk.

Unauthorised access or compromise of the Information Technology or Operational Technology networks, resulting in loss of Network control and availability. Unauthorised access or loss of large volumes of data or sensitive data.

Mitigations:

• Robust cyber security risk mitigation programme is in place.

• Accreditation under the ISO 27001 Information Security standard for operational, customer, employee and financial information.

• Compliant to the Network Information Security Directive and the Basic Cyber Assessment Frameworks.

• Compliance with the Centre for Internet Security Critical Security Controls.

  Regulatory and policy positioning

  Decisions taken resulting in negative impacts to our business model.

  Mitigations:

• Continued dialogue and engagement with Ofgem.

• Active involvement in consultations on price controls.

• Robust budgetary and financial position.

• Optimising price control reopener mechanisms.

  Network resilience

  Loss of the Network due to significant weather events, targeted physical attack or catastrophic asset failure resulting in sustained or widespread loss of essential supply.

  Mitigations:

• Major incident and crisis management policies, plans and governance arrangements in place.

• An industry mutual aid agreement exists.

• Grid resilience programme and audits.

• Vulnerable site protocols.

  Safety

  Fatality or serious harm caused to an employee or a third party.

  Mitigations:

• Overseen by the Health and Safety Committee.

• Safety Health and Improvement Plan and associated policies and procedures.

• Health and safety training, enhanced audit programme and inspection regimes are in place.

• ISO45001 safety management system in place.

  Page 20

  
  
  Northern Electric plc Strategic Report for the Year Ended 31 December 2025 (continued) Environment and climate protection

  Failure to prevent network assets from having a significant negative impact on the environment.

  Mitigations:

• Programme to reduce fluid loss, business carbon footprint and remove assets containing PCBs.

• Environment improvement plan, Environment Action Plan and science-based targets.

• Path to carbon neutrality by 2040.

• Incident response, waste management and habitat protection programmes.

• ISO14001 environmental management system in place.

  Resource availability

  Access to and availability of skilled resource resulting in an inability to deliver work programmes.

  Mitigations:

• Mix of direct labour and contracted resource is used.

• Workforce renewal programmes in place to recruit and retain employees.

• Ongoing training and development builds internal capability.

• Employee engagement, health and well-being initiatives and a diversity, equality and inclusion plan in place.

• Good relationships with trade unions representatives.

  Enabling the energy transition

  The Network either becomes, or is perceived to have become, an obstacle to decarbonisation and energy transition.

  Mitigations:

• Overseen by a steering group.

• Change programme in place to improve customer connection lead times and customer communication.

• Part of an industry work programme through the ENA.

• Policy team engages and with Government and Ofgem.

• Stakeholder engagement programme scrutinised by the ISG and DRP.

  Customer Service

  Loss of reputation, financial penalties.

  Mitigations:

• Customer service improvement plan.

• Engagement with ISG and DRP.

• Relationship with customer support partners and organisations.

• Employee training and development.

  Efficiency and output performance

  Failure to maintain cost and output performance competitiveness in the industry.

  Mitigations:

• Robust business planning process.

• Robust financial controls in place.

• Monthly executive business performance review.

• Comprehensive "Efficient Output Delivery" programme.

  Page 21

  
  
  Northern Electric plc Strategic Report for the Year Ended 31 December 2025 (continued) Financial risks

  The exposure to interest rate, tax, liquidity and treasury risks.

  Mitigations:

• Financed by long-term borrowings at fixed rates and has access to short-term borrowing facilities at floating rates of interest.

• As at 31 December 2025, 99% of the Group's long-term borrowings were at fixed rates and the average maturity for the long-term borrowings was 20 years.

• Financial covenant monitoring is in place.

• Regulatory adjustments control the effect of taxation changes.

The Group's internal control exists to support the financial reporting process, including regular reporting, a series of operational and financial policies, investigations undertaken by internal audit and a stringent process for ensuring the implementation of internal audit recommendations. In addition, the Group utilises comprehensive business planning

procedures, regularly reviews KPIs to assess progress towards its goals, and the internal audit function provides

independent scrutiny. Financial controls include centralised treasury operations and established procedures for the planning, approving and monitoring of major capital expenditure.

The RAB monitors the effectiveness of internal controls and reports on its findings to the Audit Committee and Berkshire Hathaway Energy.

Controls which are applicable to financial decisions are governed via a schedule of delegations of authority which are approved by the board (and applies to the Northern Powergrid Group) for the purpose of enabling the senior management team to make decisions up to certain financial limits, above which point the decision making reverts to the directors. These limits reflect the board's level of risk appetite and are reviewed regularly.

In accordance with Berkshire Hathaway Energy's requirements to comply with the Sarbanes-Oxley Act, the Group undertakes a quarterly risk control assessment confirming that the effectiveness of the system of internal controls have been reviewed during the year. A self-certification process is in place, in support of this review, requiring certain senior managers to confirm that the system of internal control in their area of the business is operating effectively. Consequently, the directors believe that a robust system of risk assessment and management is in place.

The Northern Powergrid Group does not have a specific human rights policy. However, in accordance with the Core Principles, it remains fully committed to operating ethically and responsibly and with fairness and integrity. This is implemented through its policies and procedures, which are applicable to all stakeholder groups and encompasses employees' health, safety and welfare, dealings with customers (particularly those who are vulnerable), the impact of the Northern Powergrid Group on the environment and the contribution to sustainability.

To ensure that the Northern Powergrid Group maintains the highest level of ethical standards Berkshire Hathaway Energy's Code of Conduct has been adopted (See 'Employees'). The Northern Powergrid Group has robust procedures in place to meet the requirements of the Bribery Act 2010 for which every employee undertakes annual training.

All matters which under the Company and Group's governance arrangements are reserved for decision by the directors are presented at board meetings. Directors are briefed on any potential impacts and risks for customers, and other stakeholders and how they are to be managed. The directors take these factors into account before making decisions, which together they believe are in the best interests of the Company and Group and its member.

Page 22

As referenced throughout the Strategic Report, NPg Northeast's business model is to make sufficient profit in order to invest in the Network thereby, ensuring the integrity of the electricity supply for its customers. To achieve this objective, NPg Northeast delivers its service to fulfil the needs of the stakeholders with whom it interacts and in doing so, ensures all business relationships are conducted in an open and transparent manner. Consequently, fostering business relationships is a prerequisite of the activity performed by the Group in the pursuit of its goals and the long-term sustainability of the Group is at the forefront of decision-making.

The Group's policy in respect of engaging with stakeholders is governed by the Core Principles and the Code of Conduct. The Core Principle of 'Regulatory Integrity' defines the Northern Powergrid Group's commitment to comply with all laws wherever it does business and the expectation that all employees (including directors) manage their activities in a manner that is compliant with all standards, regulations and corporate policies. In addition, the Code of Conduct requires adherence to the highest level of ethical conduct and fair dealings with all customers, suppliers and competitors.

As detailed in 'Employee Commitment', the Group works hard to ensure the health and safety of employees and to provide them with opportunities for advancement alongside fair terms whilst remunerating appropriately. Activities undertaken by the board in the year included reviewing health and safety performance, monitoring key appointment changes and reviewing the Northern Powergrid Group's gender pay gap report.

Customers, whether they are domestic or commercial, are the primary stakeholder group served by the Group and therefore the services offered are all tailored to provide a benefit or enhance an experience. During the year, the board regularly reviewed performance levels, closely monitored the response in respect of major storms and associated Network resilience and engaged with the Chair of the ISG. Further detail of NPg Northeast's relationship with customers and the support programmes provided is discussed in 'Customer Service'.

The Group works closely with its supply chain and has measures in place to ensure the treatment of all suppliers is fair and equitable. Relations with suppliers is managed using a supplier registration system which supports a robust and transparent

procurement process and ensures strict compliance with the prevention of slavery and human trafficking. As a

consequence, the system allows the Group to make informed decisions which align with its values when awarding contracts. When considering suppliers, the board advocates prompt payment practices, which are reviewed regularly by the internal audit function, and the implementation of procedures to reduce the risk of modern slavery in supply chains - as set out in the Northern Powergrid Group's annual modern slavery statement.

Financial information is routinely made available to financial stakeholders, including relationship banks and bondholders. Directors engage with stakeholders when entering into new financial arrangements. During the year, the board approved an interim dividend, the annual accounts and the tax strategy and met representatives from the Northern Powergrid Group's external auditor.

Each director is required to take all reasonable steps to minimise any detrimental impact the Group's operations may have on the environment (see 'Environmental Respect'). NPg Northeast provides a range of charitable and community activities to support customers with fuel poverty and safety around electricity ('Corporate Responsibility'). During the year, the directors routinely reviewed environmental performance and made decisions pursuant to Environmental Respect.

NPg Northeast is in regular dialogue with Ofgem concerning new policy development and emerging risks or opportunities within the sector. As outlined in 'Regulatory Integrity', to meet its licence conditions, NPg Northeast and the directors

provide regular reporting to Ofgem (including annual regulatory certificates), contribute to various regulatory

consultations and monitor regulatory compliance. Given the implications on the NPg Northeast's long-term strategy, the relationship with Ofgem and the evolving ED3 framework were regular items on the board agenda throughout the year.

The Company has one class of ordinary shares which are all held by Northern Powergrid Limited, a company owned by Northern Powergrid UK Holdings. The Company also has one class of preference shares, further details of which can be found in Note 17. As outlined in 'Strategy', the Northern Powergrid Group is owned by Berkshire Hathaway Energy. Further details of the shareholder relationship is set out in the 'Corporate Governance Statement'.

Page 23

The non-financial reporting information pursuant to Section 414CA of the CA06 has been reported throughout the Strategic Report and principal risks and uncertainties. The climate-related financial disclosures pursuant to Section 414CB (2A) can be found in the 'Adapting to Climate Change' and 'Environmental Respect' sections of the Strategic Report.

The Company has complied with all of the requirements of LR 14.3.27R by including climate related financial disclosures consistent with the TCFD recommendations and recommended disclosures, with the exception of the scope 3 greenhouse emissions disclosures relating Metrics and Targets (b). The Company has reported scope 3 emissions in relation to certain categories (being those required by Ofgem's reporting framework). However, it is accepted that further work is required to develop the disclosures.

The steps the Company plans to take in order to be able to make the relevant disclosures in the future, and the timeframe within which it expects to be able to make those disclosures, is set out in Ofgem's 'Environmental Reporting Guidance', sections 3.8 to 3.13, a copy of which can be found via Ofgem's website. This includes a recommendation for the energy industry to work collaboratively to develop an appropriate methodology for reporting scope 3 emissions during the remainder of the ED2 period. In addition, the Northern Powergrid Group is working in conjunction with Berkshire Hathaway Energy to enhance its carbon emission reporting as a result of the California Air Resources Board obligations.

Approved by the Board on 19 May 2026 and signed on its behalf by:

A P Jones Director

Page 24

The directors present their annual report and the audited consolidated financial statements for the year ended 31 December 2025.

During the year, an interim dividend of £35.2 million was paid (2024: £277.4 million). The directors recommend that no final dividend be paid in respect of the year (2024: £nil).

An interim dividend of £160.0 million was received (2024: £300.0 million) from NPg Northeast to the Company.

During October 2025, the Company declared and paid an interim dividend to Northern Powergrid Limited which was an unlawful distribution due to failure to comply with the procedural requirements of Part 23 of the Companies Act 2006. As a result, the Company has categorised the amount paid in excess of distributable reserves as a debt due from Northern Powergrid Limited to the Company (see Note 30). The Company is in the process of implementing steps to remedy the potential consequences of the unlawful distribution.

The Group's dividend policy is that dividends will be paid only after having due regard to available distributable reserves, available liquid funds and the financial resources and facilities needed to enable the Company and Group to carry on its business for at least the next year, with the Company and Group's long-term prospects and viability in mind. In addition, the level of dividends is set to maintain sufficient equity in the Northern Powergrid Group so as not to jeopardise any investment grade credit ratings. These strict parameters align with the conditions set out in NPg Northeast's distribution licence and are considered carefully by the board so as to ensure that the payment of any dividend does not cause NPg Northeast to breach any licence obligations in the future.

The directors who held office during the year under review and to the date of signing this report were:

A P Jones

S J Lockwood J N Reynolds J C Riley

During the year, none of the directors had an interest in any contract which was material to the business of the Company or Group. During the year and up to the date of approval of the Directors' Report, an indemnity contained in the Company's (and each company within the Northern Powergrid Group's) Articles of Association was in force for the benefit of the directors of the Company and as directors of associated companies, which was a qualifying indemnity provision for the purposes of the CA06.

The financial position of the Group, as at 31 December 2025, is shown in the consolidated statement of financial position. There have been no significant events since the year end and the directors intend that:

• NPg Northeast will continue to develop its business by efficiently investing in the Network and improving the quality of supply and service provided to customers. NPg Northeast intends to continue to embrace the role of DSO by expanding its energy systems operations in order to allow its Network to form a key part of a whole energy system, which fosters flexibility and facilitates decarbonisation.

• IUS will concentrate on its core skills of engineering contracting thereby delivering a high standard of service to its existing clients and pursuing opportunities to increase its portfolio.

• NPg Metering will retain its focus on pursuing opportunities in the market for meter asset provision.

There are no plans to change the existing business model of the Company, or any of the companies within the Group.

Page 25

The Group supports a programme of research that is expected to contribute to higher standards of performance and a more cost-effective operation of its business. During the year, the Group invested £1.3 million (2024: £5.6 million) in its research and development activities.

Financial risk management

Details of financial risks are included in the Principal Risks and Uncertainties, found in the Strategic Report and in Note 29 to the financial statements.

Financial derivatives

As at 31 December 2025 the Group held two derivative financial instruments (2024: two) to mitigate the interest rate risk on a floating interest rate loan. More details on derivative financial instruments are available in Note 30 to the financial statements.

Page 26

In accordance with Paragraphs 10, 11 and 20 of Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, details concerning the employment of disabled persons, the relationship and engagement with employees and those with whom the Company and Group does business, in addition to information concerning greenhouse gas emissions can be found in the Section 172 Statement and the Strategic Report (Environmental Respect and Employee Commitment).

There have been no disclosures to the Company under Disclosure and Transparency Rule 5 (Vote Holder and Issuer Notification Rules).

Mr Jones joined the Northern Powergrid Group in January 2015 and became Finance Director in March 2022. He is a

Chartered Accountant having completed his training with KPMG, spending seven years in their Restructuring practice. Prior to becoming Finance Director, Mr Jones was the Director of Performance and Planning, leading on the development of the Northern Powergrid Group's Business Plan. He has also spent time leading the Northern Powergrid Group's engineering and major projects operations teams.

Appointed in April 2022, Mr Lockwood joined the Northern Powergrid Group in 1983 and became Group Financial Controller in 2016 before taking on the role of Head of Technical Accounting and Quality in 2023. Prior to this he held a number of finance roles in the Northern Powergrid Group. Mr Lockwood is a qualified Chartered Management Accountant and Chartered Tax Advisor.

Mr. Reynolds was appointed in January 2011 as a director of Northern Powergrid Holdings Company and in October 2017 as Chairman of the audit committee and a director of the Company. Mr Reynolds is the Chief Executive Officer of Castle Water. He is a Fellow of the Institution of Engineering & Technology, a Fellow of the Energy Institute and is a former commission member of the Water Industry Commission for Scotland. Mr Reynolds chaired the Church of England Ethical Investment Advisory Group, and is a former council member of the Central Finance Board of the Methodist Church. He is the author of a number of books and articles on business ethics. Mr. Reynolds previously held senior management roles at HSBC and Houlihan Lokey.

Mrs Riley was appointed in October 2024 as a director of Northern Electric plc. Mrs Riley joined the Northern Powergrid Group in 2016 as the Company Secretary. Prior to this, she had held a number of roles at Farnell UK (formerly Premier Farnell plc). Mrs Riley is a Chartered Governance Professional and Company Secretary.

Of the four board directors of the Company, one is female (25%). Mrs Riley does not hold any of the positions outlined in Listing Rule 16.3.29 (ii). No members of the board are from a minority ethnic background.

All appointments are based on merit with due regard for diversity, inclusion and equal opportunity. The Northern Powergrid Group does not set diversity targets.

Page 27

The Company has sought to apply the UK Corporate Governance Code 2024 (the "Code") and report on the application of the Principles and supporting Provisions. Given the nature of the securities in issue, the Company (nor any Company within the Northern Powergrid Group) is not required to adopt the Code, and it has not been voluntarily applied. However, the board has elected to operate within the spirit of the Code and explain below how the Company's and Northern Powergrid Group's governance framework aligns with the Principles and Provisions.

The directors confirm that the governance framework in place is appropriate to the circumstances of the Company and the Northern Powergrid Group. The framework is agreed with the Northern Powergrid Group's shareholder, Berkshire Hathaway Energy. The Company and the Northern Powergrid Group has not complied with Provisions 4, 9, 12, 17, 18, 19, 20, 23, 26, 32, 33, 35, 38, 40 and 41 as they are deemed not to be relevant to the Company's or the Northern Powergrid Group's circumstances (given it is privately owned) or for the reasons explained in the pages that follow. Consequently,

the Company and Northern Powergrid Group do not intend to put actions in place in order to comply with the aforementioned provisions at this time. A copy of the Code can be found at https://frc.org.uk/.

The board (of the Company and the Northern Powergrid Group throughout) is collectively responsible for generating value for the Northern Powergrid Group's shareholder and wider society which is achieved through the delivery of a strategy which corresponds to Berkshire Hathaway Energy's six Core Principles. The strategy is set out in two forms of business plan (the Business Plan and Annual Plan), both of which are approved and monitored by the board and are designed to promote the long-term sustainable success of the Company and the Northern Powergrid Group whilst achieving the commitments developed to address stakeholder requirements.

For the purpose of scrutinising performance in respect of both business plans, the board review a range of financial and non-financial KPIs which correspond to the Core Principles and have been established to operate within a framework of internal controls.

The deliverables set out in the business plans shape the allocation of both financial and operational resource for which the board delegates the responsibility to a single senior management team who have specific functional responsibilities in respect of operations, safety, health and environment, asset management, customer service, business development, energy systems, regulation, economic analysis, human resources, information systems, legal and finance.

Page 28

The Company and Northern Powergrid Group have an established relationship with its shareholder, reflected by the leadership structure, whereby the President and Chief Executive Officer of the Northern Powergrid Group reports directly to the President and Chief Executive Officer of Berkshire Hathaway Energy. Frequent interaction and dialogue with Berkshire Hathaway Energy (which is maintained through regular governance reporting and meetings with the Northern Powergrid Group's President and Chief Executive Officer and senior management team) ensures that strategic views and board decisions are understood and aligned, and that appropriate values, standards and a desired culture of integrity, openness and transparency are set. Demonstrated by the adoption of Berkshire Hathaway Energy's 'Core Leadership Expectations', required behaviour and standards include the delivery of quality and improvement (for which all employees are responsible) to developing individuals and teams, building stakeholder relationships and establishing strategic direction (predominantly responsibilities of the senior management team and the board).

Employee engagement (and the investment therein) is implemented through consistent messaging and regular training which commences with the induction programme, during which colleagues are introduced to the Northern Powergrid Group, its business model, strategy and the Core Leadership Expectations. Throughout the year, every employee has regular meetings with line management and communications from the President and Chief Executive Officer in addition to having access to the board and senior leadership team during events (whether virtual or physical), via engagement visits and as a result of rotational working locations. Whilst there is direct exposure, given the Northern Powergrid Group's large and disparate workforce, the board elect to engage with employees via the senior management team and the reporting hierarchy which is deemed to be very effective. However, to supplement the existing arrangement, the board engages directly with members of each of the trade unions which represent the workforce.

A number of policies such as the Code of Conduct and Code of Practice and Business Ethics support the employee engagement programme and underpin the onward dissemination of the values, desired culture and expected standards of behaviour to the wider employee population. The board is able to reassure itself that corporate messaging concerning behaviour and culture is provided on an annual basis in the form of training on the aforementioned policies. In addition, the Northern Powergrid Group's non-executive directors and independent member routinely challenge the executive team on topics that are more difficult to track, including cultural change and diversity to establish how embedded the culture is. In the event employees have concerns regarding behaviour, ethics or compliance related matters, they are able to raise these confidentially via either internal or externally facilitated independent channels.

Throughout the year, the board routinely monitored the effectiveness of engagement with the Northern Powergrid Group's various stakeholders via updates and bespoke briefings. In addition, the directors participate in direct engagement with the Northern Powergrid Group's shareholder, Chair of the ISG, the external auditor, employees (as detailed above) as well as various political and regulatory representatives. Further detail concerning the way in which the Company and Northern Powergrid Group participate in engagement with stakeholders can be found in the Strategic Report.

The President and Chief Executive Officer combines the executive responsibility of running the Company and Northern Powergrid Group's business with the responsibility for the leadership of Northern Powergrid Group's various boards of directors, which includes directing the Company and the Northern Powergrid Group, ensuring its effectiveness and facilitating a constructive and open board culture. The Northern Powergrid Group's shareholder supports the role undertaken by the President and Chief Executive Officer and, through the shareholder's regular interaction with the President and Chief Executive Officer and input into and oversight of the principles governing to whom the board of the Company (and the wider Northern Powergrid Group) delegates its authority, ensures no one person has unfettered powers of decision. Chairpersons and senior independent non-executive directors are not routinely appointed to the Northern Powergrid Group's boards.

Page 29

The board of the Company comprises three executive directors and one non-executive director. There are two additional non-executive directors appointed within the Northern Powergrid Group. Each of the Northern Powergrid Group's non-executive directors and Mr Knowles (a member of the Northern Powergrid Group's audit committee) are considered to be independent. Although the board of the Company (nor that of any other Northern Powergrid Group company) does not include a balanced number of executive and non-executive directors, the board believes that the combination is appropriate, and it possesses the requisite skills and experience necessary to provide effective leadership, stewardship and control of the Company and the Northern Powergrid Group. The non-executive directors of the Company and the Northern Powergrid Group constructively challenge the executive board and senior management team on the delivery of the Company's and the Northern Powergrid Group's strategic objectives. In accordance with their individual areas of specialism, the non-executive directors chair a number of the Northern Powergrid Group's board sub-groups, which combined with the guidance and challenge they provide during routine board meetings, gives them additional opportunity to hold the executive directors and senior management team to account.

To facilitate the delivery of their duties, the directors continually update their knowledge of and familiarity with the operations of the Company and the Northern Powergrid Group. This is supported by robust reporting arrangements, access to the Northern Powergrid Group's operations and interaction with its staff. Under the direction of the President and Chief Executive Officer, information is provided to the board in a timely manner to enable directors to commit sufficient time to the preparation for and attendance at board meetings. In addition, updates and briefings are circulated during the course of the regular board meeting cycle. The directors are able to utilise the advice and services of the Company Secretary and her team. Upon request, the directors have access to independent professional advice. A register of situational conflicts is held centrally to ensure independent judgment is maintained and time commitment is not jeopardised. Conflicts of interests are declared as a matter of routine pursuant to individual director's duties.

The board of NPg Northeast meet on a quarterly basis to review business performance, strategic initiatives and operational and risk-related issues. Additional board meetings are held as required. Meetings of the board are chaired by the President and Chief Executive. The board of the Company meet on a regular basis, with meetings predominantly aligned with reporting financial cycles.

During the year, there were a number of committees and board sub-groups in operation, acting under delegated terms of reference which oversee the Company and Northern Powergrid Group and report regularly on their activities. Attendance at meetings by the Company and Northern Powergrid Group's appointed representatives during the year was as follows:

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The senior leadership team attend meetings of the RAB and relevant members also attend meetings of the Health and Safety Committee and STAP. A number of independent members are also appointed to the STAP.

Role: Meets bi-annually to manage the health and safety policy and performance of the Company and Northern Powergrid Group.

Duties:

• Oversee the implementation and review the effectiveness of health and safety policy;

• Develop the strategy for managing health and safety issues;

• Monitor health and safety performance consider policy changes; and

• Report to the board.

  STAP

  Role: Meets quarterly to provide independent and expert challenge and assurance to the Group's plans, as the sector transitions to the low-carbon energy future embodied in the national targets for decarbonisation.

  Duties:

• Provide strategic oversight and challenge of the Group's science, data and technology programmes, initiatives or projects, and promote a culture of change, creativity and innovative thinking;

• Keep under review progress against ED2 (including decarbonisation) commitments;

• Monitor the level of risk and opportunity associated with the programme; and

• Report to the board.

  Further detail concerning the Audit Committee and RAB can be found in 'Audit, risk and internal control' below.

  Appointments

  Given the nature of the relationship between the Northern Powergrid Group and its shareholder, a nominations committee has not been established for the purpose of identifying board appointments, or indeed considering the removal of directors. Instead, this function is undertaken by the appropriate representative of Berkshire Hathaway Energy and the President and Chief Executive Officer of the Northern Powergrid Group. All board appointments are subject to a formal and rigorous process and are considered with due regard to the board's overall composition including the balance of skills, experience and the promotion of diversity, inclusion and equal opportunity, ahead of recommendations being put to the board. Succession plans are in place for all board and senior management positions and are reviewed and agreed by the President and Chief Executive Officer of Berkshire Hathaway Energy. Prior to appointment, the commitments already held by directors are considered so as to ensure each individual has sufficient time to discharge their duties.

  Evaluation

  The board of the Company (and that of each Northern Powergrid Group subsidiary) is subject to thorough evaluation as a consequence of its performance being continually monitored and assessed by Berkshire Hathaway Energy through the delivery of the Annual Plan. In addition, each year, the President and Chief Executive Officer of the Northern Powergrid Group considers the composition of the board as a whole and its effectiveness in achieving strategic objectives during the annual performance evaluation process. Off cycle reviews of the Northern Powergrid Group's governance arrangements (including the composition or board and sub-board groups) is also undertaken periodically to ensure its structure remains fit for purpose and evolves to reflect changes to strategic priorities. The Northern Powergrid Group does not and is not required to undertake external evaluation of its boards.

  As a matter of routine, the committees and sub-groups that have been constituted on behalf of the Northern Powergrid Group have historically been evaluated through the activity delivered in accordance with their terms of reference. In addition, board committees and sub-groups are also subject to the aforementioned off-cycle governance reviews, whereby the scope, purpose, duties and membership are revisited so as to ensure they remain effective, are refreshed as appropriate and have the requisite level of skill and expertise.

  The Company's Articles of Association requires the periodic retirement and re-election of directors. Appointments and reappointments are therefore put to the shareholders at the Company's Annual General Meetings. The notice period for all board members is less than one year.

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  Northern Electric plc Directors' Report for the Year Ended 31 December 2025 (continued) Diversity policy

  The Company and Northern Powergrid Group has adopted a number of policies (including the policy on diversity at work and the Code of Conduct) that collectively comprise the policy on diversity. Diversity is actively supported through recruitment, educational programmes, employee opportunities and the Global Days of Service charitable support programme. All appointments (which includes board, board committee, and senior management appointments) are based on merit with due regard for diversity, inclusion and equal opportunity. The Northern Powergrid Group does not set diversity targets. Further information concerning how the Northern Powergrid Group is supporting gender diversity in the energy industry can be found in the Northern Powergrid Group's gender pay gap report via the Northern Powergrid Group's website.

  AUDIT, RISK AND INTERNAL CONTROL

  Each of the Company's and Northern Powergrid Group's directors is responsible for the management of risk and the internal control environment which is designed to address Berkshire Hathaway Energy's United States Sarbanes-Oxley Act requirement. As part of this responsibility, the board has established and maintains robust procedures and processes which ensure the effectiveness of both the internal and external audit functions.

  Audit committee

  The audit committee meets at least twice a year to consider the application of corporate reporting, risk management and internal control principles. Membership comprises, an independent non-executive director (chair), an independent member and the Finance Director. All members are considered to have relevant financial experience. Its duties include:

• Carrying out the functions required by DTR 7.1.3R;

• Overseeing the RAB;

• Monitoring the internal audit plan;

• Sub-delegating activities to another person or body as seen fit; and

• Reporting to the board.

  As referenced above, the performance of the audit committee is evaluated each year via a review process whereby its remit, terms of reference and the attributes of its members is assessed by the board and through the process whereby Berkshire Hathaway Energy's Finance team retains a degree of oversight of a number of duties including the financial audit process.

  Internal Audit

  The internal audit team operates in an independent and objective manner without interference from the Company or the Northern Powergrid Group. This provides the flexibility to refocus the scope of the annual internal audit plan to align with changing priorities if required. Internal audit findings including the resilience of internal controls are reported to the board on a quarterly basis in order to keep the directors sufficiently apprised of areas of risk. An external assessment of the activity of the internal audit team confirmed it operates at the highest level in accordance with the Institute of Internal Audit standards.

  External Audit

  An appropriate relationship is maintained with the Northern Powergrid Group's external auditor to ensure independence and rigour is preserved. The Audit Engagement Lead has regular interaction with the Finance Director and routinely attends two Audit Committee meetings per year to present the audit plan for the forthcoming year and subsequently disseminate the findings. It is at such meeting where the Audit Committee consider the effectiveness of the external audit process, in terms of quality, timeliness, preparation and insight into technical matters and discuss any comments and issues raised. Matters raised by KPMG and considered by the Audit Committee during the year included capitalisation of plant, property and equipment, revenue recognition, deferred revenue and the valuation of the defined benefit obligation. Any control findings raised by the external auditor are allocated to an owner and are tracked by the Finance Director or managed via the internal audit team, both of whom report their findings to the board.

  KPMG staff have full access to the Northern Powergrid Group's systems and premises for the purpose of conducting their audit work in a robust and efficient manner.

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  Northern Electric plc Directors' Report for the Year Ended 31 December 2025 (continued) RAB

  The RAB is chaired by one of the Northern Powergrid Group's independent non-executive directors and meets quarterly to ensure effective risk management and internal control processes are in place. Its duties include:

• contributing to the setting of the Northern Powergrid Group's risk tolerance and appetite;

• keeping under review current business risks and the effectiveness of internal controls;

• overseeing the processes for the identification of emerging risks; and

• reporting to the board, Berkshire Hathaway Energy and the Audit Committee.

  Further detail concerning the procedures to manage risk, oversee the internal financial reporting control framework, set the board's risk appetite and the Company's principal risks can be found in the Strategic Report.

  REMUNERATION

  As outlined above, the board has not elected to establish a remuneration committee for the purpose of determining executive directors' and senior managers' compensation. However, this does not reflect a lack of policy or rigour given the process is instead managed by the Northern Powergrid Group's shareholder. As a consequence, remuneration is strictly aligned to both the Company's and the Northern Powergrid Group's long-term strategy, the delivery of sustainable growth and Berkshire Hathaway Energy's values as defined by the Core Principles. No individual is involved in determining their own remuneration.

  The Company's and the Northern Powergrid Group's executive directors' and senior managers' remuneration is considered on an annual basis and is explicitly linked to the employee performance evaluation process. Each individual's effectiveness is measured against both personal and Berkshire Hathaway Energy goals with all resulting awards based on merit and linked to the delivery of stretching accountabilities. Only basic salary is pensionable.

  Non-executive director remuneration is also reviewed on an annual basis and is reflective of time commitment and level of responsibility. Any increases are made in line with the wider Northern Powergrid Group's employee population and is subject to continued satisfactory performance.

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  Northern Electric plc Directors' Report for the Year Ended 31 December 2025 (continued) Going Concern

  A review of the Company's business activities during the year, together with details regarding its future development, performance and position, its objectives, policies and processes for managing its capital, its financial risk management objectives and details of its exposures to trading risk, credit risk and liquidity risk are set out in the Strategic Report, the Directors' Report and the appropriate notes to the financial statements.

  The Company's financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.

  The directors have responsibility over performing a going concern assessment and when considering continuing to adopt the going concern basis in preparing the annual reports and financial statements, they have considered a number of factors, including:

• The Company is profitable with strong underlying cash flows;

• The Company benefits from strong investment-grade credit ratings;

• The Company meets its day to day working capital requirements from intercompany loans (via the current account mechanism) with the Northern Powergrid Group;

• Northern Powergrid Holdings Company, being the ultimate UK parent company, has indicated its intention to make available such funds as are needed by the Company through the intercompany current account mechanism. . As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so;

• The Northern Powergrid Group as a whole is financed both in its operating companies and in other entities within the Northern Powergrid Group through the use of the current account mechanism. For that reason, financial health is also considered with reference to the Northern Powergrid Group, the directors therefore take into consideration a number of factors affecting the wider group:

  • The Northern Powergrid Group's main subsidiaries, Northern Powergrid (Northeast) plc and Northern Powergrid (Yorkshire) plc, are stable electricity distribution businesses operating an essential public service and are regulated by the Gas and Electricity Markets Authority ("GEMA"). In carrying out its functions, GEMA has a statutory duty under the Electricity Act 1989 to have regard to the need to secure that licence holders are able to finance the activities, which are the subject of obligations under Part 1 of the Electricity Act 1989 (including the obligations imposed by the electricity distribution licence) or by the Utilities Act 2000;

  • The Northern Powergrid Group is financed by long-term borrowings with an average maturity of 19 years and has access to short-term committed borrowing facilities of £242 million provided by Barclays Bank plc, Lloyds Bank plc, HSBC UK Bank plc and Royal Bank of Canada;

  • The Northern Powergrid Group benefits from strong investment-grade credit ratings which allow access to a range of financing options including the capital markets. Based on the directors evaluation of current market conditions, they understand successful bond issuances by the Northern Powergrid Group during 2025, demonstrates that the Northern Powergrid Group's bonds remain attractive to investors and there is an active market with strong appetite to invest. The Northern Powergrid Group plans to issue debt in the form of bonds in going concern period to support the continued funding of its planned capital expenditure programme;

  • The Northern Powergrid Group has prepared forecasts which consider reasonable possible downside

    sensitivities. This indicates that the Northern Powergrid Group has sufficient covenant headroom and adequate resources to settle its liabilities as they fall due for at least the 12 months from the date of these accounts; and

  • Consideration was also given to the obligations contained in Northern Powergrid (Northeast) plc and Northern Powergrid (Yorkshire) plc licences to provide Ofgem with annual certificates, confirming that the directors have a reasonable expectation that the Northern Powergrid Group will have sufficient financial and operational resources available for the continuation of business for a period of at least 12 months.

Consequently, after making their assessment, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence and meet its liabilities as they fall due for at least 12 months from the date of approval of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

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Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the CA06.

A resolution to re-appoint KPMG LLP as the Company's auditor and authorise the directors to determine their

remuneration will be proposed at the annual general meeting.

In accordance with Section 414CA(7) of the CA06, the directors have set out the information required by Section 414CB

(1) to (6) in Strategic Report.

The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law and are required to prepare the parent Company financial statements on the same basis.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial statements, the directors are required to:

• Select suitable accounting policies and then apply them consistently;

• Make judgements and estimates that are reasonable, relevant and reliable;

• State whether they have been prepared in accordance with UK-adopted international accounting standards;

• Assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

  The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the CA06. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

  Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report, Directors' Report, and Corporate Governance Statement that complies with that law and those regulations.

  The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

  In accordance with Disclosure Guidance and Transparency Rule ("DTR") 4.1.16R, the financial statements will form part of the annual financial report prepared under DTR 4.1.17R and 4.1.18R. The auditor's report on these financial statements provides no assurance over whether the annual financial report has been prepared in accordance with those requirements.

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  Northern Electric plc Directors' Report for the Year Ended 31 December 2025 (continued)

  Approved by the Board on 19 May 2026 and signed on its behalf by:

  
  
  

  A P Jones Director

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  Northern Electric plc Independent Auditor's Report to the Members of Northern Electric plc 1 Our opinion is unmodified

  We have audited the financial statements of Northern Electric plc ("the Company") for the year ended 31 December 2025

  which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the

  Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated

  Statement of Cash Flows, the parent Company Statement of Financial Position, the parent Company Statement of Changes in Equity and the related notes, including the accounting policies in Note 2.

  In our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2025 and of the Group's profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

• the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

  Basis for opinion

  We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.

  We were first appointed as auditor by the shareholders on 26th June 2024. The period of total uninterrupted engagement is for the two financial years ended 31 December 2025. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided.

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  Northern Electric plc Independent Auditor's Report to the Members of Northern Electric plc (continued) 2 Key audit matters: our assessment of risks of material misstatement

  Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters (unchanged from 2024), in decreasing order of audit significance, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

  Retirement Benefit Obligations

  Gross Defined Benefit Obligations: £878.5m (2024: £850.9m).

  Refer to page 57 (critical accounting estimates and judgements), page 63 (accounting policies) and pages 104-112 (financial disclosures)

  The risk - Subjective valuation

  The Company is the principal employer of a defined benefit pension scheme, Northern Powergrid Group of the ESPS, that is material in the context of the overall balance sheet and the results of the Group and Company.

  Significant assumptions, including the discount rate, the inflation rate and the mortality rate, are made in valuing the Group's and Company's defined benefit pension obligations (before deducting the scheme assets). Small changes in the assumptions and estimates with respect to the obligation would have a significant effect on the financial position of the

  Group

  and Company. The

  Group

  and Company engages external actuarial specialists to

  assist them in

  selecting

  appropriate assumptions and calculate the obligations.

  The effect of these matters is that, as part of our risk assessment, we determined that the valuation of the defined benefit obligations has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount.

  Our response

  We performed the tests below rather than seeking to rely on any of the Group's or Company's controls because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described.

  Our procedures included:

• Benchmarking financial assumptions: involved our actuarial specialists to develop an independent expectation over the key financial assumptions, including the discount rate and inflation rate, to compare the key financial assumptions against the market data.
• Benchmarking demographic assumptions: involved our actuarial specialists to assess management's process for development of key demographic assumptions, including the mortality, and the resulting assumptions, to compare the key demographic assumptions against market data.
• Actuary's credentials: assessed the competence, capabilities and objectivity of the Group's and Company's actuarial expert.
• Sensitivity analysis: assessed the sensitivity of the defined benefit obligation to changes in key assumptions.
• Assessing transparency: considered adequacy of the Group's and Company's disclosures in respect of the sensitivity of the gross obligation to changes in key assumptions.

We found the valuation of the gross defined benefit obligation to be acceptable.

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