In October OFWAT published, in the document Prospects for Prices, proposals for the five year price control period from 1 April 2000. It was proposed that Southern Water would face an initial price cut of over 17.5%, followed by four years of price increases. Southern Water would be one of only two major Water Companies to have higher prices at the end of the five year price control period.

Since OFWAT's October announcement;
 
The level of investment obligations has increased to £1.5 billion to provide greater environment improvements

OFWAT has decided that Companies will be allowed to retain efficiency savings for a full five years. This is a major benefit for ScottishPower in light of the efficiency savings made since the Southern Water acquisition in 1996.

As a consequence in our business plan, submitted to OFWAT today, we have requested an initial price rise of +3.5% and a K of +3%.  This results in an average regulated rate of return after tax of 6.5%, including our efficiency premium.

Commenting on the announcement Ian Russell, Chairman of Southern Water said:
"Our plan will provide greater environmental improvements and deliver a stable price regime over the entire price control period in line with our customer's preferences."

Further Information:
Sue Clark                  Director of Corporate Affairs               0141 636 4560
Andrew Jamieson      Investor Relations Manager                0141 636 4527