PENSIONS

ELECTRICITY giant National Grid Company will today ask the High Court to overturn a ruling by the pensions watchdog that could cost it #46m.

If the appeal fails, the ruling could cost the privatised electricity industry #1000m and benefit 200,000 former workers.

The company was ordered by the Pensions Ombudsman, Julian Farrand, in January to repay the money into its pension scheme after he investigated complaints made by Grid pensioners David Laws, 59, and Reginald Mayes, 73.

Dr Farrand ruled the company was wrong to divert #46m of surplus arising from the fund in 1992 to pay for redundancies and early retirement.

The company, which owns the electricity transmission system in England and Wales, said it believed that valuation of the surplus was properly made under the rules of the Electricity Supply Pension Scheme and was lawful.

''The company considers that it also represented a reasonable distribution of benefit to the members and to the company bearing in mind the pensions contributions which had been made by employees and employers,'' it said.

''The basis of the company's appeal is that the rules of the scheme enable a wide variety of decisions to be taken by it to deal with surpluses which arise following actuarial valuations.''

The cost of the pensioners' legal battle are being met by the National Grid and the company said that, even if its appeal was successful, it would not try to recover any of the costs from Mr Laws and Mr Mayes.

The issue will have profound implications for the 21 electricity companies which were formed out of privatisation.

The pensions fund of the former Central Electricity Generating Board and the regional boards were divided up as part of the 1989 sell-off.

When the companies found an ''actuarial surplus'' - an excess of assets over expected pension liabilities - they divided them between the company and pension fund managers.

National Power redistributed surpluses from the National Power Pension Fund and would have to repay about #300m.

A spokesman said the company was seeking a court ruling that the action it took with regard to its pensions surpluses was in accordance with the rules of the fund.