====================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K
(Mark One)
( ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

OR

(x) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from April 1, 1999 to December 31, 1999

                 Registrant, State or other Jurisdiction
Commission       of Incorporation or Organization,          I.R.S. Employer
File Number      Address and Telephone Number            Identification No.

333-47925	Yorkshire Power Group Limited				  84-1393785
	Wetherby Road
	Scarcroft
	Leeds LS14 3HS
	United Kingdom
	011-44-113-289-2123
================================================================

Securities registered pursuant to Section 12(b) of the Act:  8.08% Trust
Securities *

Securities registered pursuant to Section 12(g) of the Act:  None.


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes X No ___

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )

* Issued by Yorkshire Capital Trust I and guaranteed by Yorkshire Power Group
Limited

Aggregate market value of voting and non-voting common equity held by non-
affiliates: None

A description of the registrant's common stock follows:
                                	Description of 		    Shares Outstanding
Registrant                      	Common Stock           	   at January 31, 1999


Yorkshire Power Group        Par Value (POUNDS)1 Per Share         440,000,002
Limited


TABLE OF CONTENTS
							Page
PART I

Item 1   Business
Yorkshire Group and the US Parents			8
Yorkshire's Businesses					11
The Electric Utility Industry in
  Great Britain						23
UK Environmental Legislation				51
UK and EU Competition Law				52
Employees						52
Presentation of Certain Information and
  Exchange Rates					52
Item 2   Properties					52
Item 3   Legal Proceedings				53
Item 4   Submission of Matters to a Vote of
           Security Holders				55

PART II

Item 5   Market for Registrant's Common Equity and
           Related Stockholder Matters			56
Item 6   Selected Financial Data			56
Item 7   Management's Discussion and Analysis of Results
           of Operations and Financial Condition	63
Item 7A  Quantitative and Qualitative Disclosures About
           Market Risk					91
Item 8   Financial Statements and Supplementary Data	92
Item 9   Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure	132

PART III

Item 10  Directors and Executive Officers of
           the Registrant				132
Item 11  Executive Compensation				134
Item 12  Security Ownership of Certain Beneficial Owners
           and Management				135
Item 13  Certain Relationships and Related Transactions	136

PART IV

Item 14  Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K				137


Signatures						138

FORWARD LOOKING STATEMENTS

Certain statements in this Form 10-K under the captions "Management's
Discussion and Analysis of Results of Operations and Financial Condition",
"Other Information" and elsewhere may constitute forward looking
statements.  Such forward looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Yorkshire Group or any
of its subsidiaries or industry results, to differ materially from any
future results, performance or achievements expressed or implied by such
forward looking statements.  Such risks, uncertainties and other important
factors include, among others: general economic and business conditions in
the UK, the Authorized Area and elsewhere; currency fluctuations;
governmental, statutory, regulatory or administrative initiatives affecting
Yorkshire Group, Yorkshire or the UK electric and gas utilities industries;
general industry trends; competition; the cost and availability of
electricity, gas and other alternative energy sources; changes in commodity
prices, interest rates and hedging costs; changes in business strategy,
development plans or vendor relationships; availability, terms and
deployment of capital; availability of qualified personnel; increased rates
of taxes or other changes in tax law; changes in, or the failure or
inability to comply with, governmental regulation, including, without
limitation, environmental regulations; the potential introduction of the
Euro; and other factors referenced in this Form 10-K.  These forward
looking statements speak only as of the date of this Form 10-K.


SELECTED DEFINITIONS

When used in this report, the following terms will have the meanings
indicated.

"1935 Act" means Public Utility Holding Company Act of 1935, as amended

"Acquisition" means acquisition of Yorkshire, indirectly, by Yorkshire
Group, effective April 1, 1997

"AEP" means American Electric Power Company, Inc.

"AEP Resources" means AEP Resources, Inc.

"Authorized Area" means Yorkshire's service area as determined by its PES
license

"British Energy" means British Energy plc

"Calendar Year" means a year ended December 31

"CFDs" means contracts for differences

"Competition Act" means the Competition Act 1998

"Competition Commission" means the body created by the Competition Act to
take over the existing functions of the UK Monopolies and Mergers
Commission

"CSW" means Central and South West Corporation

"DAMS" means Distribution Asset Management System

"Data Management Services" means the metering and data services in support
of the electricity trading arrangements

"Designated Customer" means any residential customer or commercial customer
using less than 12,000 kWh of electricity per year

"DTI" means the UK Department of Trade and Industry

"EC" means European Community, a previous name for the EU

"Economy 7" means electricity tariffs which apply to electricity that
incorporates lower unit charges because it is used during the seven hours
of the night

"EdF" means Electricite de France

"Electricity Act" means the Electricity Act 1989

"EMFs" means electromagnetic fields

"Energy Group" means The Energy Group plc

"EPSL" means Electricity Pension Services Ltd

"ESPS" means Electricity Supply Pension Scheme

"EU" means European Union (See "EC")

"Fiscal Year" means a year ended March 31

"Fossil Fuel Levy" means a levy system instituted to reimburse the
generators and the RECs for the extra costs involved in generating
electricity from non-fossil fuel plants as compared to generating
electricity from fossil fuel plants

"Franchise" means an electricity supply franchise granted to PESs between
1990 and 1998 where second tier suppliers were prevented from supplying
certain customers whose electricity usage was below the Franchise Limit

"Franchise Limit" means (a) during the four year period from March 31,
1990, to March 30, 1994: one megawatt; and (b) during the succeeding four
year period from March 31, 1994, to March 30, 1998: 0.1 megawatt

"Franchise Supply Customers" means electricity customers who within the
most recent twelve month period have an average peak demand ("Peak Demand")
in the three months of highest demand during such period below the
Franchise Limit

"Grid" means the UK's national grid transmission system

"GWh" means gigawatt hours

"Ionica" means Ionica Group plc

"IT" means information technology

"km" means kilometers

"kV" means kilovolts

"kW" means kilowatts

"kWh" means kilowatt hours

"London Electricity" means London Electricity plc

"LV" means low voltage

"March 1998 Green Paper" means the UK Government's Green Paper of March
1998 entitled "A Fair Deal for Consumers: Modernizing the Framework for
Utility Regulation"

"MW" means megawatt

"National Power" means National Power plc

"NCE" means New Century Energies, Inc.

"NETA" means the new electricity trading arrangements

"NFFO" means the Non-fossil fuel obligation - the obligation of the RECs to
obtain a specified amount of generating capacity from non-fossil fuel
sources

"NGC" means the National Grid Company plc, which is wholly-owned by NGG

"NGG" means the National Grid Group plc

"Non-Franchise Supply Customers" means electricity customers who within the
most recent twelve month period have an average peak demand ("Peak Demand")
in the three months of the highest maximum demand during such period above
the Franchise Limit

"NSP" means Northern States Power Company

"OFFER" means the Office of Electricity Regulation, the body appointed by
the Government of the UK to regulate the electricity industry in Great
Britain. This body has now been replaced by Ofgem.

"OFGAS" means the Office of Gas Supply, the body appointed by the
Government of the UK to regulate the gas industry in Great Britain. This
body has now been replaced by Ofgem.

"Ofgem" means the Office of Gas and Electricity Markets, the body appointed
by the UK government effective June 1999 to regulate the gas and
electricity industries in Great Britain.

"Own-generation limits" means the limit imposed by the PES license on the
extent of generation capacity in which a REC may hold an interest

"Peak Demand" means the maximum electricity demand recorded in any half-
hourly period at the customer's site by the appropriate metering

"PES" means public electricity supplier

"Pool" means the wholesale trading market for electricity in England and
Wales

"Pooling and Settlement Agreement" means the agreement which governs the
constitution and operation of the Pool and the calculation of payments to
and from generators and suppliers

"PowerGen" means PowerGen plc

"Predecessor Company" means Yorkshire prior to its acquisition, indirectly,
by Yorkshire Group

"Pro Forma Fiscal Year 1997" means unaudited pro forma information for the
Fiscal Year ended March 31, 1997

"REC" means one of the 12 regional electricity companies in England and
Wales licensed to distribute and supply electricity

"RPG" means Regional Power Generators Limited

"Scottish and Southern" means Scottish and Southern Energy plc

"Scottish Power" means Scottish Power plc

"SEC" means the US Securities and Exchange Commission

"SFAS" means US Statement of Financial Accounting Standards

"Successor Company" means Yorkshire Power Group Limited and its
subsidiaries

"Supply" means the supply of electricity and gas

"SWALEC" means South Wales Electricity plc

"SWEB" means South Western Electricity plc

"Swing Contracts" means gas purchase contracts that contain options which
enable the buyer to vary the volumes of gas taken under the contract from
time to time (typically on a daily basis).  The major obligation of the
buyer is to purchase a specific minimum volume over the contract period.

"Transco"	means BG Transco plc

"Transition Period" means the nine-month period beginning April 1, 1999 and
ending December 31, 1999

"UK" means the United Kingdom

"Unit" means kWh

"US" means the United States of America

"US GAAP" means Generally Accepted Accounting Principles in the US

"US Parents" means AEP and NCE

"YCL" means Yorkshire CoGen Limited

"Yorkshire" means Yorkshire Electricity Group plc and its subsidiaries

"Yorkshire Finance" means Yorkshire Power Finance Limited, a subsidiary of
Yorkshire Power Group Limited

"Yorkshire Finance 2" means Yorkshire Power Finance 2 Limited, a subsidiary
of Yorkshire Power Group Limited

"Yorkshire Group" means Yorkshire Power Group Limited and its subsidiaries

"Yorkshire Holdings" means Yorkshire Holdings plc, a subsidiary of
Yorkshire Power Group Limited

"Yorkshire Trust" means Yorkshire Capital Trust I


PART I

ITEM 1.   BUSINESS


YORKSHIRE GROUP AND THE US PARENTS


YORKSHIRE GROUP

Yorkshire Power Group Ltd was incorporated as a private company with
limited liability under the laws of England and Wales in July 1996.  In
1997, Yorkshire Group was utilized in connection with the joint acquisition
by the US Parents of Yorkshire, one of the twelve RECs in England and
Wales. Each of the US Parents holds an indirect 50% interest in Yorkshire
Group. Yorkshire Group gained effective control of Yorkshire on April 1,
1997.  Yorkshire Group's primary asset is the outstanding shares of
Yorkshire Holdings, a public limited company incorporated under the laws of
England and Wales, which in turn beneficially owns all of the outstanding
shares of Yorkshire.  Yorkshire Holdings was organized as a wholly-owned
subsidiary of Yorkshire Group solely for holding the share capital of
Yorkshire and has no other significant operations.


YORKSHIRE FINANCE AND YORKSHIRE FINANCE 2

Yorkshire Finance and Yorkshire Finance 2 were incorporated under the
laws of the Cayman Islands. Yorkshire Finance was incorporated in August
1997 and Yorkshire Finance 2 in January 2000. Both companies exist solely
for the purpose of operating as financing vehicles for Yorkshire Group and
its affiliates.


YORKSHIRE

Yorkshire is one of twelve RECs in England and Wales licensed to
distribute and supply electricity. Yorkshire's two principal businesses are
the "distribution business" and the "Supply business". Yorkshire's
distribution business consists of the distribution of electricity to
approximately two million residential, commercial, agricultural and
industrial customers in the Authorized Area. The majority of the
distribution business is a regulated monopoly. Yorkshire's Supply business
consists of the purchase and supply of electricity and gas, primarily to
customers within the Authorized Area, in the competitive market.


Yorkshire changed its fiscal year end from March 31 to December 31
beginning with the accounting period April 1, 1999 to December 31, 1999.


YORKSHIRE TRUST

Yorkshire Trust is a statutory business trust created under Delaware
law pursuant to the filing of a certificate of trust with the Delaware
Secretary of State on February 4, 1998.  Yorkshire Trust will terminate in
2043, but may dissolve earlier, as provided in the agreement.  Yorkshire
Trust exists exclusively to act as a financing vehicle for Yorkshire Group,
through its holding certain debt instruments issued by Yorkshire Finance
and the issuance of its Trust Securities.


THE US PARENTS


AEP

AEP is an electric utility holding company registered under the 1935
Act.  AEP owns all of the outstanding common stock of AEP Generating
Company, Appalachian Power Company, Columbus Southern Power Company,
Indiana Michigan Power Company, Kentucky Power Company, Kingsport Power
Company, Ohio Power Company and Wheeling Power Company.  These eight
utility subsidiaries are engaged in the generation, purchase, transmission,
distribution and sale of electricity to over 3 million retail customers in
portions of the states of Indiana, Kentucky, Michigan, Ohio, Tennessee,
Virginia and West Virginia.  Certain other subsidiaries of AEP own and
operate a 1,900 mile natural gas pipeline and related facilities in
Louisiana. AEP also directly owns all the outstanding common stock of AEP
Resources and, indirectly, of AEP Resources International Limited, whose
primary businesses are the development of, and investment in, exempt
wholesale generators, foreign utility companies, qualifying cogeneration
facilities and other power projects.  In the year ended December 31, 1999,
AEP had consolidated operating revenues of $6.9 billion and had
consolidated assets of approximately $21.5 billion.

On December 22, 1997, AEP and CSW, a Dallas, Texas based electric
utility holding company that is registered under the 1935 Act, announced
that their Boards of Directors had approved and signed a definitive merger
agreement.  CSW owns four electric operating subsidiaries serving 1.7
million customers in Texas, Oklahoma, Louisiana and Arkansas.  CSW also
owns SEEBOARD plc, a REC which serves the southeast of England
("SEEBOARD"). The Minister for Consumers and Corporate Affairs of DTI has
announced that, consistent with the advice of the Director General of Fair
Trading and the views of Ofgem, he has decided not to refer the AEP/CSW
merger to the Competition Commission. In this connection, AEP, Yorkshire
and SEEBOARD gave DTI certain assurances as to the future conduct of the
businesses of Yorkshire and SEEBOARD. The AEP/CSW merger is conditional
upon the approvals of various state and federal regulatory agencies.
Assuming the receipt of all required approvals, the AEP/CSW merger is
currently expected to be completed in the first half of 2000.


NCE

NCE is also an electric utility holding company registered under the
1935 Act.  NCE owns all the outstanding common stock of Public Service
Company of Colorado, Cheyenne Light, Fuel and Power Company and
Southwestern Public Service Company, which serve approximately 1.6 million
electric customers in portions of the states of Colorado, Texas, New
Mexico, Wyoming, Oklahoma and Kansas and approximately 1.1 million retail
gas customers in portions of the states of Colorado and Wyoming.  These
three electric and gas utility subsidiaries are principally engaged in the
generation, purchase, transmission, distribution and sale of electricity
and in the purchase, transportation, distribution and sale of natural gas.
In the year ended December 31, 1999, NCE had consolidated operating
revenues of $3.4 billion and had consolidated assets of approximately $8.3
billion.

On March 24, 1999, NCE and NSP entered into a definitive merger
agreement which provides for a strategic business combination of NCE and
NSP. NSP owns three utility companies which provide electricity to about
1.5 million customers in portions of Minnesota, Wisconsin, North Dakota,
Michigan and South Dakota and transport and distribute natural gas to more
than 500,000 customers in Minnesota, Wisconsin, North Dakota, Michigan and
Arizona. Through its wholly-owned subsidiary NRG Energy, Inc., NSP owns
various interests in a number of independent power projects and other
businesses in the US and around the world, including projects in the UK,
Australia, Germany and Latin America. The consummation of the NCE/NSP
merger is subject to certain closing conditions and various regulatory
approvals.  The NCE/NSP merger is expected to be complete by mid-2000.


YORKSHIRE'S BUSINESSES


DISTRIBUTION BUSINESS

Yorkshire's distribution business consists of the ownership, management
and operation of its electricity distribution network within the Authorized
Area.  The primary activity of the distribution business is the receipt of
electricity from the Grid and the distribution of electricity to end users
connected to Yorkshire's power lines.  Because Yorkshire's distribution
business is substantially a regulated monopoly, virtually all electricity
supplied (whether by Yorkshire's electricity supply business or by other
suppliers) to consumers in the Authorized Area is transported through its
distribution network, thus providing Yorkshire with a stable distribution
volume unaffected by customer choice of supplier.  As a holder of a PES
License, Yorkshire is subject to a revenue cap regulatory framework
providing economic incentives to operate in a cost effective manner.  See
"The Electric Utility Industry in Great Britain".


Distribution Business Customers, Units Distributed, Revenues and Operating
Profit

The Authorized Area covers approximately 10,000 square km (3,860 square
miles) from the Pennine uplands in the west, and the cities of Leeds,
Bradford and Sheffield, to the City of Hull, the ports of the Humber
estuary and the eastern coastline.  It encompasses the counties of West
Yorkshire, East Yorkshire and almost all of South Yorkshire, together with
parts of North Yorkshire, Derbyshire, Nottinghamshire, Lincolnshire and
Lancashire.  The regional economy is diverse.  The traditional heavy
industries of iron and steel, coal mining, textiles and engineering
continue to contribute to the regional economy, but their overall
significance has declined, particularly in the last decade.  During this
period, other industries, such as chemicals and food and drink, have
expanded, as have service sector activities such as finance, retailing and
leisure.  The region is well served by road and rail networks, has three
regional airports, and the seaports of the Humber estuary provide access to
European markets.


The following table sets out details of Yorkshire's distribution
customers and the volume of electricity distributed, as well as
distribution operating revenues and operating income at the dates and for
the periods presented:
<TABLE>

                              At December 31,  		At March 31,
				        1999         1999        1998
<CAPTION>
<S>                                <C>          <C>         <C>
Number of customers connected
Residential			   1,922,091    1,955,110   1,930,719

Commercial			     116,432      126,768     126,812

Industrial			      19,319       21,034      21,455


Total				   2,057,842    2,102,912   2,078,986


   				 Transition Period     Fiscal Year
		                		    1999        1998
Electricity distributed (GWh)
Residential				5,254      7,351       7,149

Commercial				4,385      6,135       5,800

Industrial				6,927      9,629      10,484


Total				       16,566     23,115      23,433




				          (In Millions)

Distribution operating revenues   (POUNDS)238 (POUNDS)322  (POUNDS)309
Distribution operating income     (POUNDS)111 (POUNDS)153  (POUNDS)154

</TABLE>
The amounts shown above for operating revenues and operating income
have been taken from the consolidated financial statements.


Competition in the Distribution Business

Yorkshire has not experienced significant competition in its
distribution business and believes that the cost of providing a duplicate
distribution network connected to the Grid would be prohibitive.  To the
extent a customer may invest in its own on-site electric generating plants,
however, such customers would no longer require distribution and related
services from Yorkshire except for standby connection to the Grid.  The
distribution business is subject to marginal loss of income from related
services, such as metering.

Since 1995 work to connect customers to the network has become
contestable as customers are able to provide their own network connections
by employing an approved contractor.  Some work, such as design and
energizing the connection has remained non-contestable and is still carried
out by Yorkshire.  Ofgem is looking for ways to increase competition in the
provision of connections.  Since 1995, in the Authorized Area, only one
connection has been provided other than by Yorkshire.


Data Management Services

With the recent introduction of competition to the electricity supply
market, customers are now able to select their electricity supplier.
Significant additional costs have been incurred by the distribution
business to develop new systems for services to facilitate competition.
The new services, termed "data management services" include meter
operation, data retrieval, processing and aggregation, meter point
administration and distribution use of system billing.

The phase-in of competition in the electricity supply market was
completed for all PESs in May 1999.  The total cost for re-engineering and
information technology work was (POUNDS)67 million.  Of such amount,
approximately (POUNDS)19 million was accounted for in Fiscal Year 1997,
(POUNDS)31 million in Fiscal Year 1998,  (POUNDS)16 million in Fiscal Year
1999, and (POUNDS)1 million in the Transition Period.  Ofgem made proposals
in October 1999 (which were accepted by Yorkshire) to allow Yorkshire
recovery of (POUNDS)25 million over a five year period ending March 31,
2003.  A further (POUNDS)7 million is expected to be recovered through Pool
cost recovery and other national mechanisms and (POUNDS)8 million has been
capitalized as such amount is expected to provide future benefits to the
Supply business, with the balance of (POUNDS)27 million being expensed.  Of
the amount expensed, approximately (POUNDS)19 million was expensed in
Fiscal Year 1997, (POUNDS)2 million was expensed in Fiscal Year 1998 and
(POUNDS)5 million was expensed in Fiscal Year 1999.  The remaining
(POUNDS)1 million was expensed in the Transition Period. The Pool cost
recovery mechanism referred to above pursuant to which (POUNDS)7 million is
expected to be recovered will be terminated with the introduction of NETA.
It is expected that the arrangements under NETA will allow the recovery of
1998 costs as planned.

OFFER also made proposals in October 1997 (which were accepted by
Yorkshire) to provide an annual allowance of (POUNDS)3 million for the
period 1998 through 2000 to cover related operating costs.  This allowance
has been retained for the period to 2004/05 under Ofgem's final
distribution price control formula published in December 1999 and in
addition the set-up cost allowance of (POUNDS)5 million per year has been
extended for a further two years from 2002/03 to 2004/05.  The December
1999 distribution price control final proposal divides the data management
services allowance which covers both the set up and operating costs
described above between the electricity supply and distribution businesses
with two thirds of the allowance remaining in the distribution business.
This reflects the transfer of meter reading and data collection activities
to electricity supply.

For further details of the December 1999 final distribution price
control proposal see Part I, Item 1. "The Electric Utility Industry in
Great Britain - Regulation Under the Electricity Act - Regulatory
Developments - Price Control Reviews".


Strategy for the Distribution Business

Yorkshire's distribution business strategy consists of maintaining a
reliable and safe distribution system which meets customer expectations
while maximizing its operating efficiencies and fulfilling its regulatory
obligations.

To implement its strategy, Yorkshire is taking a number of steps.
Yorkshire intends to maintain a sufficient level of investment in the
distribution system to ensure its continued reliability and safety.  In the
Transition Period Yorkshire invested (POUNDS)120 million in the
distribution system, of which (POUNDS)86 million represented capital
improvements in new substations, cables and overhead lines and (POUNDS)34
million represented expenditures related to the operation, repair and
maintenance of the distribution system.  Yorkshire's investment in DAMS has
centralized information previously stored in over sixty computerized and
paper-based systems into one integrated computerized system.  The
centralization of such information has improved both access to and quality
of information which is vital to the operation and management of an
efficient distribution system.

Yorkshire is also continuing to maintain and improve its responses to
system faults.  In the Transition Period Yorkshire restored services to
93.67% of all customers affected by faults within three hours and on
average a Yorkshire customer was without power for only 41.36 minutes.


Distribution Facilities

Electricity is transported across the Grid at 400 kV or 275 kV to 20
grid supply points within Yorkshire's distribution network, where NGC
transforms the voltage to 132 kV, 66 kV and 33 kV for entry into
Yorkshire's distribution system.

At December 31, 1999, Yorkshire's distribution system consisted of:

					LV	  11kV	Above 11kV

Number of metered supplies	  2,056,144	 1,672        26
Total length of circuits	   30,250km    20,438km  4,973km
Percentage underground		      91.6%       52.0%	   30.4%

The primary distribution system consists of 20 grid supply points from
the Grid, an additional 66 supply points and 360 primary substations.  At
December 31, 1999, the installed transformer capacity with a secondary
voltage higher than 650 volts at these substations was 20,693,980 kVA.
Remote control facilities enable the real time monitoring and operation of
most of these larger substations from one central control room.

Yorkshire's distribution substations amount to 13,304 indoor
substations, 2,423 outdoor substations and 16,709 pole mounted substations.
At December 31, 1999, the installed transformer capacity with a secondary
voltage less than 650 v was 9,482,501 kVA.


SUPPLY BUSINESS


Electricity Supply

Yorkshire's electricity supply business consists of selling electricity
to customers, purchasing such electricity and arranging for its
distribution to those customers.  Under its PES License, Yorkshire had an
exclusive right to supply electricity to Franchise Supply Customers between
1990 and 1998.  The electricity supply business inside the Authorized Area
is now fully open to competition.


Competition in the Electricity Supply Business

The electricity supply business was divided between Franchise Supply
Customers within the Authorized Area, and Non-Franchise Supply Customers,
inside and outside the Authorized Area.  The Franchise Limit was lowered to
100 kW in April 1994 allowing competition in the supply of electricity for
customers with maximum demands above the Franchise Limit while Franchise
Supply Customers remained subject to price regulation.  On September 14,
1998, phased competition was introduced to the domestic and small business
electricity markets in the UK. This process was completed for all PES
customers in May 1999. OFFER, however, introduced transitional price
regulation for Designated Customers for an initial period of two years from
April 1, 1998. The price controls  required a change from April 1, 1999, of
3% below the level of inflation and an adjustment to allow for changes to
the Fossil Fuel Levy.  These requirements resulted in a reduction of 0.06%
to prices for Designated Customers compared to prices in Fiscal Year 1999.

In December 1999, Ofgem issued final proposals on the supply price
control review. These proposals contained a real price reduction in
Yorkshire's standard domestic tariff of 3.6% from the year beginning April
1, 2000. This incorporated a reduction of 7.3% as a consequence of the
distribution price control review. The proposal also provided for a nominal
price freeze for the year beginning April 1, 2001. There can be no
assurance that Yorkshire will be able to set prices to the maximum allowed
by Ofgem and retain customers, due to competitive pressures. For further
details of the December 1999 electricity supply price control review see
Part I, Item 1. "The Electric Utility Industry in Great Britain -
Regulation Under the Electricity Act - Regulatory Developments - Price
Control Reviews".


Electricity Supply Risk Management

Yorkshire's current electricity supply risk management efforts are
intended to approximately hedge the risks associated with the purchase and
sale of electricity resulting from Pool price volatility. In the existing
wholesale electricity market, virtually all electricity generated in
England and Wales is sold by generators and bought by suppliers through the
Pool.  The most common contracts for electricity supply to business
customers are for twelve-month terms and contain fixed rates. Similarly,
domestic and small business tariffs contain fixed rates.  Yorkshire is
exposed to purchase price risk (the risk associated with fluctuations in
the cost of purchased electricity relative to the price received from the
electricity supply customer) to the extent that it has not hedged such
risk.  Yorkshire substantially hedges purchase price risk by employing a
variety of risk management tools, including management of its electricity
supply contract portfolio, hedging contracts and other means which mitigate
the risk of Pool price volatility.  Yorkshire employs risk management
methods to maximize its return consistent with an acceptable level of risk.
Under its current PES License, Yorkshire has a price cap on the prices
it may charge its Designated Customers in the Authorized Area. From April
2000, the maximum price cap will apply only to domestic customers in the
Authorized Area. Because the maximum price is fixed for these customers,
Yorkshire is at risk from upward movements in purchase costs.  This risk is
mitigated by hedging purchase contracts, mainly through CFDs.
CFDs are contracts predominantly between generators and suppliers which
fix the major elements of the price of electricity for a contracted
quantity of electricity over a specific time period.  Differences between
the actual price set by the Pool and the agreed prices give rise to
difference payments between the parties to the particular CFD. Yorkshire's
electricity supply demand for the Calendar Year 1999 was, and is expected
to be in 2000, substantially hedged through various types of agreements,
including CFDs.
Yorkshire's ability to manage its purchase price risk depends, in part,
on the continuing availability of properly priced risk management
mechanisms such as CFDs.  No assurance can be given that an adequate,
transparent market for such products will in fact be available.
The current system of wholesale purchasing through the Pool is under
review, and NETA is targeted to be in place  by October 31, 2000.  NETA
will replace the Pool. NETA will require participants to submit half hourly
forecasts of electricity supply and demand and endeavor to balance contract
positions and metered volumes.  There will be incentives, in the form of
imbalance payments, for generators and suppliers to balance their
supply/demand position. The precise nature of the incentives is currently
being debated.  Yorkshire is redefining current business operations in
order to manage and exploit the new market by seeking to predict its
customers' demand for electricity on a short-term basis as accurately as
possible and to maximize the trading opportunities, while effectively
managing the risks of imbalances.  See Part I, Item 1. "The Electric
Utility Industry in Great Britain - Regulation Under the Electricity Act -
Regulatory Developments - New Electricity Trading Arrangements".
On January 31, 2000, Ofgem issued final guidelines for its proposed
license condition to prevent abuse of the wholesale electricity market by
generators.  The guidelines have been amended following a period of
consultation with the industry and other interested parties.

The seven generators who will initially be covered by the license
condition were chosen on the basis of their share of total output and their
ability to set prices in the Pool. The generators are National Power,
PowerGen, TXU Europe, Edison Mission Energy, British Energy, Magnox and
AES.

The guidelines set out examples of abusive and non-abusive behavior and
procedures Ofgem will follow when investigating possible market abuse. The
proposed market abuse condition prohibits action that would materially
prejudice the efficient balancing of the transmission system, limiting
generation or capacity in such a way as to increase wholesale prices and
unduly discriminatory pricing policies.

British Energy, National Power and PowerGen have rejected the good
market behavior license clauses proposed by Ofgem and they are now likely
to be referred to the Competition Commission.


Gas: Sourcing and Supply

Recognizing the long-term opportunities in the competitive gas supply
market, in April 1994, Yorkshire acquired a 6.97% equity stake in the
Armada off-shore gas-condensate field (the "Armada Field") for
approximately (POUNDS)27.8 million.  As of  December 31, 1999, the Armada
Field, which has a productive life of approximately 10 years, had initial
proven resources of approximately 1.2 trillion cubic feet (84 billion cubic
feet net to Yorkshire) of gas and 64 million barrels of oil and oil
equivalents (4.4 million barrels net to Yorkshire). Delivery of such gas
from the Armada Field began in October 1997.  The initial development costs
associated with the Armada Field have been lower than originally
anticipated. The reduction of bottle-necks has allowed the field to
increase rates of production substantially.  As of December 31, 1999,
Yorkshire had invested (POUNDS)60 million in the Armada Field including the
initial acquisition costs.  The net book value of the investment at
December 31, 1999 was (POUNDS)45 million.

Yorkshire markets gas to all sectors of the gas market which has been
totally open to competition since May 1998.  By December 31, 1999,
Yorkshire had entered into contracts and supplied gas to more than 315,000
residential customers.  Gas is sourced from Yorkshire's interest in the
Armada Field, a purchase agreement with a major gas supplier designed to
meet the majority of the requirements of Yorkshire's residential gas
market, Swing Contracts and purchases on the spot market which are designed
to give Yorkshire a balanced gas purchase portfolio.  Yorkshire utilizes
risk management methods, in relation to gas purchasing and supply,
including storage and an interruptible customer portfolio, which are
designed to maximize its return consistent with an acceptable level of
risk.  A system to evaluate and enable effective management of risk in gas
trading was installed at the beginning of Calendar Year 1999.  The system
enables greater control of all transactions including daily evaluation of
key parameters such as value at risk and profit and loss positions for each
business unit of Yorkshire.  Sale and purchase confirmations, invoicing and
credit checking are also carried out or facilitated by this system.


Strategy for the Supply Business

Yorkshire's Supply strategy consists of (i) protecting and sustaining
Yorkshire's electricity market position within the Authorized Area, (ii)
cross-selling gas to its existing customer base, (iii) securing market
share for the supply of gas and electricity outside the Authorized Area to
the extent that such contracts are profitable and (iv) seeking marketing
and strategic alliances in the Supply business.

To implement its strategy, Yorkshire is taking a number of steps.
Yorkshire is endeavoring to retain its existing Supply customers in the
Authorized Area by purchasing electricity at competitive rates from power
generators in the UK and providing high quality customer service.  In doing
so, in the Transition Period, Yorkshire maintained a significant portion of
its existing business.  Yorkshire is also applying this strategy to Supply
customers outside the Authorized Area.

Yorkshire continues to take significant steps toward developing its gas
supply capabilities.  By retaining its existing customer base and expanding
into the new markets Yorkshire now offers customers both electricity and
gas.  In offering such flexibility, Yorkshire intends to solidify its
relationship with these customers and provide an established market base
for its developing gas supply business.


Customer Service

Yorkshire remains committed to delivering the highest standards of
customer service and continues to build on its 'Customer Service
Initiative' which was originally launched in 1995.

Yorkshire has carried out research with existing and potential
customers, asking what is the ideal behavior of an energy supplier.  These
brand values have been confirmed for the competitive marketplace and have
been communicated throughout Supply through the 'Mission Possible'
initiative, a communication program which helps to ensure that all staff
who deal with customers are aware of, and contribute fully to, Yorkshire's
mission of delivering customer service excellence.


Results of the Supply Business

The following table sets forth the volume of electricity sold, by
greater than 100kW supply customers and less than 100kW supply customers,
as well as electricity and gas supply operating revenues and operating
income:

				Transition 	Fiscal Year
				  Period
						1999       1998
Volume (GWh):
>100kW supply customers		   8,647       10,732      9,747

<100kW supply customers (Franchise
up to 1998)                        7,981       10,944     10,489

Total                             16,628       21,676     20,236


				   	(In Millions)

Supply operating revenues    (POUNDS)997(POUNDS)1,346(POUNDS)1,222

Supply operating income       (POUNDS)39   (POUNDS)69   (POUNDS)33


The amounts shown above for operating revenues and operating income
have been taken from the consolidated financial statements.  The basis of
segment reporting was changed during the Transition Period and the
financial statements for Fiscal Years 1999 and 1998 have been restated on
this basis.


BUSINESS STREAMLINING

Yorkshire plans to streamline its distribution and Supply workforces
and has announced a reduction of approximately 350 positions during 2000
and a further 75 positions from the distribution business in 2001.
Yorkshire is consulting fully with the trades unions on the extent of the
changes and hopes to achieve the redundancies through a voluntary program.
A provision of approximately (POUNDS)7 million has been recorded in January
2000 to reflect the cost of the 350 reductions in 2000.

Such streamlining is part of the overall program of reducing
controllable costs in response both to Ofgem's final distribution and
electricity supply price control reviews and to increasing competition in
the Supply business.

For further details of both price control reviews and also of the
controllable cost reduction program see Part I, Item 1.  "The Electric
Utility Industry in Great Britain - Regulation Under the Electricity Act -
Regulatory Developments - Price Control Reviews".


BUSINESS SEPARATION

During 1998 and 1999 Yorkshire has implemented a planned business
restructuring intended to enable it to meet increased competition and react
to potential regulatory developments in the energy markets in the UK. The
restructuring has resulted in the distribution and Supply businesses of
Yorkshire becoming more self-sufficient (sharing common services where it
is effective and efficient to do so) and in a significant down-sizing of
the corporate center.

On May 13, 1998, OFFER issued a consultation paper on the separation of
the distribution and electricity supply businesses of PESs. Since that
date, there have been a number of further Ofgem consultations on this issue
to which Yorkshire has responded.

The Utilities Bill, published in January 2000, includes a requirement
for separate licensing of electricity supply and distribution and the
introduction of a ban on electricity supply and distribution licenses being
held by the same legal entity (which effectively means that the electricity
supply and distribution businesses of PESs would have to be held by
separate companies).

In October 1999, Ofgem addressed business separation costs in its
proposals on the distribution price control review. This document included
an allowance for separation costs of (POUNDS)7.5 million for each REC's
distribution business over the next 5 years. Ofgem also proposed that
electricity supply would receive an allowance of (POUNDS)200,000 per year
for the next two years for separation costs. Although this was in addition
to the distribution allowance, commercial pressures in the competitive
electricity supply market may limit the ability to actually recover these
allowed amounts.

In November 1999 Yorkshire submitted a business separation compliance
plan to Ofgem.  The compliance plan includes the actions Yorkshire will
need to undertake in order to implement business separation, including the
appointment of a compliance officer (as required by the new condition 12A
of the PES License), a review of governance and management issues and the
separate branding of the electricity supply and distribution businesses.
It is also proposed to develop internal service level agreements for
remaining common services, including IT systems.

As part of their proposals for business separation, Ofgem have issued a
proposed modification to condition 12 of the PES License: "Restriction on
Use of Certain Information and Independence of the Distribution Business".
Under this proposed condition any information relating to or deriving from
the management or operation of the distribution business shall be treated
as confidential. The condition requires that confidential information is
protected by the full operational separation of electricity supply and
distribution businesses.

It is expected that Ofgem will issue a direction against its separation
requirements on the basis of the compliance plan. There does, however,
remain a risk that Ofgem may extend the scope of the separation
requirements based on a stricter interpretation of condition 12.  This
would lead to increased costs.

On December 20, 1999, Yorkshire accepted the fundamental principles of
the business separation proposals on the basis of the proposed modification
of condition 12 and the acceptance of the compliance plan submitted by
Yorkshire to Ofgem without significant changes. Yorkshire intends to manage
costs within the Ofgem allowance.

On December 22, 1999, Yorkshire agreed to give assurances to Ofgem that
full operational separation would be undertaken in the event of a merger
between Yorkshire and SEEBOARD. The cost allowance for business separation
would not include any costs arising under such assurances.

The compliance plan does not include actions to conform with the
published requirements of the Utilities Bill. The Utilities Bill will
impose additional obligations in terms of the legal separation of REC
electricity distribution and supply businesses. For further details of the
Utilities Bill see Part I, Item 1. "The Electric Utility Industry in Great
Britain - Regulation Under the Electricity Act - Regulatory Developments -
Review of the Regulatory Framework: The Utilities Bill".

In February 2000 Ofgem issued a draft proposed new PES License
condition 12B "Restriction on use of certain information relating to the
Supply Business" and further drafts of condition 12 and condition 12A.  The
implementation date for these proposed modifications is April 1, 2000. The
new condition 12B is intended to provide protection to electricity
suppliers who take meter reading and data services from other supply
businesses until competition in these businesses is sufficiently developed.
Ofgem view the need for the proposed condition 12B as a temporary measure
which would fall away by April 2001 at the latest. Yorkshire is seeking to
confirm with Ofgem that these proposed PES License modifications would not
add additional business separation requirements to those agreed in December
1999.


THE ELECTRIC UTILITY INDUSTRY IN GREAT BRITAIN


SUMMARY

The electric utility industry in England and Wales is divided into
various functions, with different companies participating in the respective
functions. There has, however, been a recent shift towards more vertically
integrated companies which are similar to traditional US utilities which
generally participate in electricity generation, distribution and supply.


INDUSTRY STRUCTURE

Great Britain has two separate but connected electricity markets, each
with a different commercial framework. Both markets are subject to a
licensing regime which exists for the electric industry both in England and
Wales as well as in Scotland.

In England and Wales a significant amount of generating capacity is
owned by three generators: National Power, PowerGen and Nuclear Electric
plc, a subsidiary of British Energy. Competition in generation has
increased over the last decade as RECs and other new entrant generators
have constructed new plants and as imports through the interconnections
with Scotland and France have grown.  In addition, pursuant to undertakings
given to OFFER, National Power and PowerGen have disposed of an aggregate
of 17,129 MW of generating capacity as both companies seek electricity
supply acquisitions. In England and Wales electricity is transmitted
through the Grid by NGC and distributed by the twelve RECs in their
respective authorized areas. The opening of the electricity supply market
to full competition, which was completed in May 1999, now means that
customers are free to choose their electricity supplier.

In Scotland there are two vertically integrated companies, Scottish
Power and Scottish and Southern each generating, transmitting, distributing
and supplying electricity within their respective authorized areas as well
as competing to supply electricity elsewhere.  Scottish Nuclear, another
subsidiary of British Energy, sells all the electricity it generates to
Scottish Power and Scottish and Southern.

The interconnection between the two transmission systems, owned by
Scottish Power and NGC, is capable of transferring electricity between
Scotland and England.  There is also an interconnection with France, owned
by NGC and EdF, through which electricity can be transferred between France
and England and Wales.

Virtually all electricity generated in England and Wales is currently
sold by generators and bought by suppliers through the Pool.  A generator
which is also a licensed supplier must nevertheless sell all the
electricity it generates into the Pool and purchase all the electricity
which it supplies from the Pool.  Because Pool prices fluctuate, generators
and suppliers may enter into bilateral arrangements, such as CFDs, to
provide a degree of protection against such fluctuations.

There is no equivalent to the Pool in Scotland, but Scottish Power and
Scottish and Southern are obligated by their licenses to offer electricity
for sale to second-tier suppliers.  They are also required to provide
access to their transmission and distribution systems on a non-
discriminatory basis to competing suppliers and generators.

The current system of wholesale purchasing of electricity through the
Pool is under review, and a new system of trading arrangements, known as
NETA, is targeted to be in place by October 31, 2000. For further details
of this review of trading arrangements see Part I, Item 1. "The Electric
Utility Industry in Great Britain - Regulation Under the Electricity Act -
Regulatory Developments - New Electricity Trading Arrangements".

Industry combinations involving (i) Southern Electric plc and Scottish
and Southern, (ii) PowerGen and East Midlands Electricity plc (iii)
National Power and the supply business of Midlands Electricity plc, (iv)
EdF and London Electricity, (v) London Electricity and the electricity
supply business of SWEB, and (vi) British Energy and the electricity and
gas supply business of SWALEC, have raised a number of regulatory and
competitive issues in the UK electric utilities industry.  National Power's
acquisition of the supply business of Midlands Electricity plc resulted in
the first separation of a REC's distribution and electricity supply
businesses and the introduction of specific license conditions to provide a
framework for such separation.

On December 14, 1999, TXU Europe, the parent company of Eastern
Electricity, and London Electricity, a subsidiary of EdF, announced their
proposal to establish a joint venture company to maintain and operate the
two companies' distribution networks.  The ownership of the assets will
remain separate and the responsibility of the two parent distribution
companies.  The two companies also propose that licenses continue to be
held separately with their supply businesses continuing to operate
separately as competitors. The parent companies anticipate that the new
joint venture company will seek to obtain contracts for the provision of
network services to other utility network asset owners in the gas,
electricity and water industries.

On November 17, 1999, National Power announced proposals to restructure
into two separate corporate entities: an integrated UK energy business
("npower") and an international power business ("International Power"). The
restructuring is scheduled to take place during its next fiscal year.
National Power has also recently disposed of a substantial amount of
generating capacity.

The consummation of these combinations and the resolution of the
attendant regulatory and competitive issues may change the conduct of
Yorkshire's business in the future.  The nature and magnitude of any such
change cannot be determined at this time.

In response to competitive and regulatory changes, Yorkshire may, from
time to time, consider various strategic initiatives.  These may include
combinations with other entities, internal restructuring and dispositions
of assets or businesses or portions thereof.  No assurance can be given as
to whether any such initiative will be pursued or will occur or as to the
ultimate effect of any such initiatives on the financial condition or
competitive position of Yorkshire.


INDUSTRY BACKGROUND


DISTRIBUTION OF ELECTRICITY


Accessibility Requirements

Each of the RECs is required to offer terms for connection to its
distribution system to any person, for use of its distribution system to
any authorized electricity operator and for the provision of supplemental
and backup supplies to any person.  In providing use of its distribution
system, a REC must not discriminate between its own electricity supply
business and that of any other authorized electricity operator, or between
those of other authorized electricity operators; nor may its charges differ
except where justified by differences in cost.  Similar principles apply to
the provision of supplemental and backup supplies of electricity, and in
the carrying out of connection works.  Disputes over the terms of offers
may be determined by Ofgem.


Distribution Price Regulation: Background

Revenue from the distribution business is controlled by a formula
principally based on P x (1+(RPI-Xd)) where Xd is currently 3% (the
"Distribution Price Control Formula").  P is the previous year's maximum
average price per unit of electricity distributed.  Because the maximum
average price in any year is therefore based in part on the maximum average
price in the preceding year, a price reduction in any given year has an
ongoing effect on the maximum average price for all subsequent years.  The
Retail Price Index ("RPI") is a measure of inflation, and equals the
percentage change in the UK RPI between the six month period July to
December of the two previous years.  Because RPI is based on a weighted
average of the prices of goods and services purchased by a typical
household, which bear little resemblance to the inputs contributing to a
RECs business costs, the RPI calculation may not accurately reflect the
price changes affecting RECs.  The Xd factor is established by Ofgem
following review.  This formula determines the maximum average price per
unit of electricity distributed (in pence per kilowatt hour) which a REC is
entitled to charge.  This price, when multiplied by the expected number of
units to be distributed, determines the expected distribution revenues of
the REC for the relevant year.

The previous distribution price control review was conducted in July
1995.  As a result of this review regulated distribution prices for the
four year period ending on March 31, 2000, required an overall real
reduction in regulated distribution prices for Fiscal Year 1997 of between
10% and 13% (13% for Yorkshire) from the previous year, and resetting the
Xd factor for the remaining three year period ending on March 31, 2000 to
subtract 3% from RPI in each such year.


In setting the distribution charges each year, each REC must project
the permitted maximum average charge per unit to be distributed in that
year.  The projection will have to take account of forecasts of units
distributed, distribution line losses, the actual change in RPI and NGC
exit charges.  Failure to forecast accurately may result in overcharging or
undercharging, which is taken into account in the following year through a
correction factor in the Distribution Price Control Formula.  If a REC has
overcharged in a given year, the maximum average charge per unit
distributed in the following year is reduced by an amount to reflect the
excess income received, to which is added interest.  In the event of
undercharging, the Distribution Price Control Formula allows the licensee
to recover the shortfall in income plus interest.

In certain instances, however, overcharging or undercharging by a REC
above specific percentage thresholds may result in adjustments by Ofgem.
If, in any year, the average charge per unit distributed exceeds the
permitted maximum average charge per unit distributed by more than 3%,
then, in the next following year, the REC may not increase distribution
charges unless it has satisfied Ofgem that the average charge per unit in
that next following year is not likely to exceed the permitted maximum
average charge.  If, with respect to any two successive years, the sum of
the amounts by which the average charge per unit distributed has exceeded
the permitted maximum average charge per unit distributed in the second of
those years is more than 4% of that permitted maximum average charge, then,
in the next following year, the REC may be required by Ofgem to adjust its
charges so that they fall within the maximum permitted average charge.  If,
with respect to two successive years, the licensee undercharges by more
than 10% of the maximum average charge, Ofgem may, by directions to the
licensee, limit the amount by which such undercharging may be recovered.

Since April 1995, the Distribution Price Control Formula has been
notionally divided into metering and non-metering components, with the
metering component equal to about 10% of each REC's allowed distribution
revenue.  However, OFFER indicated when making the proposals for this split
in the 1995 price control that there should be no presumption that this sum
would be assigned to a metering business.

Meter provision and meter operation activities relating to network
connections, which will be competitive from April 1, 2000, are nevertheless
subject to the Distribution Price Control Formula. Ofgem initially
indicated that it would review price control provisions if a PES
distribution business lost a significant volume of meter related work to
the competitive market. Ofgem have now included a term in the Distribution
Price Control Formula which would reduce the allowed maximum charge per
unit of electricity distributed in respect of cash cost reductions
(excluding costs of a non-recurring nature) resulting from the provision of
these metering services by third parties. Competitive market pricing
already exists for operations related to the metering of network
connections to half-hourly metered customers.

Connection charges are levied when a customer first connects to a REC's
distribution system or makes a material change in electricity supply
requirements.  These charges are excluded from the Distribution Price
Control Formula.  In the August 1994 distribution review, OFFER introduced
the concept of competition in providing connections to new customers and
limited the extent to which, and the circumstances in which, customers
wishing to be connected would be required to pay for the costs of
reinforcement of the distribution system.


Distribution Price Regulation from April 1, 2000

In early December 1999, Ofgem issued final proposals in its review of
the Distribution Price Control Formula. These proposals were in line  with
those published in October 1999, and are to be effective for the five year
period beginning April 1, 2000. The proposals included a 15% reduction in
allowed revenue for Yorkshire and a further 8% transfer of costs to
Yorkshire's electricity supply business. Ofgem proposed that the X factor
would continue to be 3%. The overall reduction in distribution revenues for
Yorkshire would be 23%. Also included in the proposals was the allowance
for separation costs previously discussed under Part I, Item 1.
"Yorkshire's Businesses - Business Separation".

If accepted, these proposals would apply from April 1, 2000.  On
December 20, 1999, Yorkshire indicated its intention to accept these
proposals.

For further details of the distribution price control review proposals
see Part I, Item 1. "Yorkshire's Businesses - Distribution Business - Data
Management Services" and "The Electric Utility Industry in Great Britain -
Regulation Under the Electricity Act - Regulatory Developments - Price
Control Reviews".


Metering & Data Services

	The December 1999 final proposals for amendments to the distribution
price control, if implemented, will result in a number of changes in
respect of metering and data services. These include the transfer of meter
reading, data aggregation and data processing activities from distribution
to electricity supply from April 1, 2000 onwards. The costs for these
services are included in the 8% transfer of costs from distribution to
electricity supply.


SUPPLY OF ELECTRICITY


Licensed Suppliers

Subject to minor exemptions, all electricity customers in Great Britain
must be supplied by a licensed supplier.  Licensed suppliers purchase
electricity and make open access use of the transmission and distribution
networks to deliver electricity to customers' premises.

There are currently two types of licensed suppliers: public electricity
(or first-tier) suppliers, also known as PESs, and second-tier suppliers.
PESs include the RECs in England and Wales, Scottish Power and Scottish and
Southern.  Second-tier suppliers include National Power, PowerGen, Nuclear
Electric, Scottish Power, Scottish and Southern and other PESs (including
RECs supplying outside their Authorized Areas) and a number of independent
second-tier suppliers.

Second-tier suppliers have license conditions restricting their supply
to certain premises.  This mechanism provided for the enforcement of the
PES Franchise and the phased opening of the electricity supply market to
full competition.


Electricity Supply Price Regulation: Background

Between 1990 and 1998 the supply of electricity to supply customers of
PESs was subject to "pass-through" price control.  The maximum average
charge per unit of electricity supplied (in pence per kilowatt hour) was
controlled by a formula principally based upon (P x (1 + (RPI-Xs)) + Y)
(the "Supply Price Control Formula").  The initial value of Xs was set at 0
for all the RECs on March 31, 1990.  The Supply Price Control Formula was
reviewed by OFFER with effect from April 1, 1994, when the Xs factor was
set at 2% for all the RECs.  This applied until March 31, 1998.  P was the
previous year's maximum average price per unit of electricity supplied (in
pence per kilowatt hour) that related to the REC electricity supply
business's own costs and margin.  RPI was a measure of inflation, equaling
the percentage change in the UK Retail Price Index between the six month
period July to December of the two previous years.  Because RPI is based on
a weighted average of the prices of goods and services purchased by a
typical household, which bear little resemblance to the inputs contributing
to each REC's business costs, the RPI calculation may not accurately
reflect the price changes affecting each REC.  The Y factor was a pass-
through of certain costs which are either largely outside the management
control of the REC or have been regulated elsewhere.  The Y factor thus
covered the REC's electricity purchase costs, including both direct Pool
purchase costs and costs of hedging, transmission charges made by NGC, REC
distribution charges and the Fossil Fuel Levy (described below) or amounts
equivalent thereto in respect of the purchase of non-leviable electricity
which were attributable to Franchise Supply Customers.  The Supply Price
Control Formula was therefore designed to focus downward pressure on costs
and working capital, which are viewed as being within suppliers' direct
control.

As with the Distribution Price Control Formula, there was a correction
factor in the Supply Price Control Formula in the event of overcharging or
undercharging.  If a REC had overcharged in the previous year, the maximum
average charge per unit supplied is reduced by an amount to reflect the
excess income received, to which was added interest.  In the event of
undercharging, the Supply Price Control Formula allowed the licensee to
recover the shortfall in income plus interest.

The current supply price control, which was implemented on April 1,
1998, and is effective until March 31, 2000, takes the form of a series of
price caps on the tariffs applicable to Designated Customers in the
Authorized Area.  These controls also required an additional 3% below
inflation reduction which became effective on April 1, 1999. The automatic
pass-through of costs previously passed through to residential and business
customers below 100kW, consisting primarily of purchased power costs and
the correction factor, which annually adjusted prices for any imbalance
between forecast and actual costs, were both discontinued from April 1,
1998.  From April 1, 2000, electricity priced within the allowed level will
need to be secured and purchase price risk managed accordingly.  If costs
turn out significantly below the level allowed by the new price control,
Ofgem may take steps to ensure that tariffs are reduced.  Price caps for
Fiscal Year 1999 took account of the residual correction factor from Fiscal
Year 1998.


Electricity Supply Price Regulation From April 1, 2000

In early December 1999, Ofgem issued final proposals for a form of
transitional price regulation for electricity supply businesses for an
additional two years. Such proposals would result in a real price reduction
in Yorkshire's standard domestic tariff of 3.6% for the year beginning
April 1, 2000. This incorporated a 7.3% distribution price reduction as a
result of the distribution price control review. The proposal also provided
for a nominal price freeze for the year beginning April 1, 2001.

Yorkshire believes that competitive pressures in the market may require
it to charge supply prices which are lower than the maximum prices
established by Ofgem.  If Yorkshire charges such lower prices, the result
will be a further reduction in supply revenues beyond that mandated by
Ofgem. Yorkshire's supply business is under competitive and regulatory
pressure to lower supply prices for classes of customers other than those
subject to Ofgem's final supply price proposals.

On December 20, 1999, Yorkshire indicated its intention to accept these
proposals.

For further details of the electricity supply price control review
proposals see Part I, Item 1.  "The Electric Utility Industry in Great
Britain - Regulation Under the Electricity Act - Regulatory Developments -
Price Control Reviews".


The Pool

The Pool was established in April 1990 for bulk trading of electricity
in England and Wales between generators and suppliers.  The Pool reflects
two principal characteristics of the physical generation and supply of
electricity from a particular generator to a particular supplier.  First,
it is not possible to trace electricity from a particular generator to a
particular supplier.  Second, it is not practicable to store electricity in
significant quantities, creating the need for a constant matching of
electricity supply and demand.  Subject to certain exceptions, all
electricity generated in England and Wales must be sold and purchased
through the Pool.  All licensed generators and suppliers must become
signatories to the Pooling and Settlement Agreement, which governs the
constitution and operation of the Pool and the calculation of payments due
to and from generators and suppliers.  The Pool also provides centralized
settlement of accounts and clearing.  The Pool does not itself buy or sell
electricity.

Prices for electricity are set by the Pool daily for each half hour of
the following day based on the bids of the generators and a complex set of
calculations matching electricity supply and demand and taking account of
system stability, security and other costs.  Each day, generators inform
NGC of the amount of electricity which each of their generating units will
be able to provide the next day and the price at which they are willing to
operate each such unit.  NGC uses this information to construct a "merit
order" which ranks each generating unit in order of increasing price.  NGC
then schedules the stations to operate according to such merit order,
calling into service the least expensive generating units first and
continuing to call generating units into service until enough are operating
to meet the demand of all suppliers.  Factors which may constrain NGC's
ability to order stations into operation in strict observance of the merit
order include transmission system constraints and the inflexibility of some
generating units.  A computerized system (the settlement system) is used to
calculate prices and to process metered, operational and other data and to
carry out the other procedures necessary to calculate the payments due
under the Pool trading arrangements.  The settlement system is administered
on a day to day basis by NGC Settlements Limited, a subsidiary of NGC, as
settlement system administrator.

	On November 30, 1998, OFFER published a framework document describing
the delivery and implementation of revised electricity trading arrangements
based upon market trading arrangements in commodities markets elsewhere.
The arrangements are designed to better facilitate the development of
competition, to ensure maximum transparency and to give all interested
parties the opportunity to participate in the process.

	NETA encompasses the design and development of the forward and futures
market, the power exchange, the balancing mechanism and the associated
settlement process required to support these markets. These new wholesale
electricity trading arrangements in England and Wales will replace the
Pool.

	It is expected that NETA will be implemented by October 31, 2000. See
Part I, Item 1. "The Electric Utility Industry in Great Britain -
Regulation Under the Electricity Act - Regulatory Developments - New
Electricity Trading Arrangements" for further details relating to NETA.


Fossil Fuel Levy

All the RECs are obliged to obtain a specified amount of generating
capacity from Non Fossil Fuel generators (the "NFFO").  Because electricity
generated from non-fossil fuel plants is generally more expensive than
electricity produced from fossil fuel plants, the Fossil Fuel Levy has been
instituted.  Ofgem sets the rate of the Fossil Fuel Levy annually and
collects and redistributes the revenues from it.  The current Fossil Fuel
Levy is 0.3% of the value of sales of electricity made in England and Wales
and will be 0.8% of the value of sales of electricity made in Scotland as
from April 1, 2000.


Climate Change Levy

In March 1999, the UK government announced the introduction of a levy
on the business use of energy, designed to encourage energy efficiency,
which will be introduced from April 2001.

	In November 1999, the UK government announced amendments to the
proposed climate change levy. Such amendments included:

- lowering the overall size of the levy from (POUNDS)1.75 billion to
(POUNDS)1 billion by reducing the planned levy rates;

- offering an 80% discount to energy-intensive sectors that agree to
deliver energy efficiency schemes in line with UK government targets -
the upper limit for discounts had previously been 50%;

- exempting electricity generated from "new" forms of renewable energy
from the levy, along with "good quality" combined heat and power
plants.

	The UK government no longer claims that the tax will be revenue
neutral, stating instead that it will only be revenue neutral for the
private sector. It also reiterated the commitment that the climate change
levy is not a revenue-raising exercise, as there will be no net financial
gain for the public finances.

	In December 1999 the UK government published draft legislative clauses
relating to collection of the levy.  As currently drafted, the legislation
describes a complex collection process with severe penalties for non-
compliance.

	The issue for Yorkshire is the implementation costs of the levy. At the
present time it is not possible to quantify the potential cost to
Yorkshire.


REGULATION UNDER THE ELECTRICITY ACT

The Regulator

The principal legislation governing the structure and regulation of the
electricity industry in Great Britain is the Electricity Act. This Act
created the institutional framework under which the industry is currently
regulated, including the post of the Director General (the "Regulator"),
who is appointed by the Secretary of State.  The Regulator and his staff
were collectively known as OFFER.  OFFER has now been replaced by Ofgem.

The Regulator's functions under the Electricity Act include granting
licenses to generate, transmit or supply electricity (a function which he
exercises under a general authority from the Secretary of State); proposing
modifications to licenses and, in the case of non-acceptance of such
proposals by licensees, making license modification references to the
Competition Commission; enforcing compliance with license conditions;
advising the Secretary of State in respect of the setting of each NFFO
round; calculating the Fossil Fuel Levy rate and collecting the levy;
determining certain disputes between electricity licensees and customers;
and setting standards of performance for electricity licensees.  The term
"supply" as used in the context of the Electricity Act and the PES License
covers both distribution and electricity supply activities.

The Regulator exercises, concurrently with the Director General of Fair
Trading, certain functions relating to monopoly situations and also to
courses of conduct which have, or are intended or likely to have, the
effect of restricting, distorting or preventing competition in the
generation, transmission or supply of electricity under the Competition Act
(See "UK and EU Competition Law").

The Electricity Act requires the Regulator and the Secretary of State
to exercise their functions in the manner each considers is best calculated
to ensure that all reasonable demands for electricity are satisfied, secure
that license holders are able to finance their licensed activities and
promote competition in the generation and supply of electricity.

Subject to these duties, the Secretary of State and the Regulator are
required to exercise their functions in the manner which each considers is
best calculated: to protect the interests of consumers of electricity
supplied by licensed suppliers in respect of price, continuity of
electricity supply and the quality of electricity supply services; to
promote efficiency and economy on the part of licensed electricity
suppliers and the efficient use of electricity supplied to consumers; to
promote research and development by persons authorized by license to
generate, transmit or supply electricity; to protect the public from the
dangers arising from the generation, transmission or supply of electricity;
and to secure the establishment and maintenance of machinery for promoting
the health and safety of workers in the electricity industry.  The
Secretary of State and the Regulator also have a duty to take into account
the effect on the physical environment of activities connected with the
generation, transmission or supply of electricity.

In performing their duties to protect the interests of consumers in
respect of prices and other terms of electricity supply, the Secretary of
State and the Regulator are required to take into account in particular the
interests of consumers in rural areas.  In performing their duties to
protect the interests of consumers in respect of the quality of electricity
supply services, they are required to take into account in particular the
interests of those who are disabled or of pensionable age.

	On November 1, 1998, Callum McCarthy became Director General of Gas
Supply and on January 1, 1999, he also became the Director General of
Electricity Supply. Mr McCarthy's appointment was subject to legislation to
amalgamate the regulatory regime for gas and electricity. In addition, in
June 1999, the UK government announced that the new name for the combined
Office of Electricity Regulation and Office of Gas Supply would be the
Office of Gas and Electricity Markets ("Ofgem").

	In January 2000 the UK government published a Utilities Bill. This
legislation, if enacted, would amend some of the fundamental
characteristics of the current system of regulation. For further details of
this proposed legislation see Part I, Item 1. "The Electric Utility
Industry in Great Britain - Regulation Under the Electricity Act -
Regulatory Developments - Review of the Regulatory Framework: The Utilities
Bill".


Regulatory Developments

Separation of Distribution and Electricity Supply

For details of the separation of distribution and electricity supply
see Part I, Item 1. "Yorkshire's Businesses - Business Separation" and "The
Electric Utility Industry in Great Britain - Regulatory Developments -
Review of the Regulatory Framework: The Utilities Bill".


Price Control Reviews

Ofgem has undertaken a review of distribution prices in anticipation of
establishing revised distribution price controls to apply from April 1,
2000. On October 8, 1999, Ofgem proposed a 15% reduction in allowed revenue
for Yorkshire and a further 8% transfer of costs to Yorkshire's electricity
supply business. Ofgem proposed that the X factor would continue to be 3%.
The overall reduction in Yorkshire's distribution revenues would be 23%
based on these updated proposals.

Ofgem's October 8, 1999 document also released further details on
business separation, including the allowance for separation costs
previously discussed under Part I, Item 1. "Yorkshire's Businesses -
Business Separation".

On October 8, 1999, Ofgem also issued draft electricity supply price
proposals.  Key features of the proposals were :

-	Retention of a supply price cap on standard domestic and Economy 7
tariffs which would apply for a further two years from April 2000 until
March 2002.  Ofgem proposed that the cap would not apply to small
industrial and commercial customers or domestic customers supplied on
other tariffs where the market was sufficiently competitive.

-	A reduction in the price cap for domestic electricity prices which
would lead to an average fall in Great Britain of 9.9% for customers on
standard domestic tariffs and 6.4% for those on Economy 7 tariffs.

-	An expectation that PESs would reduce prices below the proposed price
caps if generation prices were to fall as expected after the
introduction of NETA.

If adopted, these proposals would have meant that in the year
commencing April 2000 and ending in March 2001 the real price reduction for
Yorkshire's electricity supply business would have been 10.7% (of which
7.3% was due to lower distribution charges arising from the distribution
price control review) on the standard domestic tariff.  The proposed price
reduction for customers on the Economy 7 tariff would not have had a
significant impact on Yorkshire. For the year commencing April 2001 and
ending in March 2002 there was a proposed nominal price freeze. The
proposed reductions to the standard domestic and Economy 7 tariffs would
put pressure on PESs either to pass similar reductions to direct debit and
prompt payment customers or to reduce the discounts given to those
customers. The former would result in a loss of revenue while the latter
may result in a loss of customers.

In December 1999, Ofgem issued its final proposals in both the
distribution and supply price control reviews.  The final distribution
price control proposals with respect to Yorkshire are substantially the
same as Ofgem's October 1999 proposals.  The final supply price control
proposals differ principally from Ofgem's prior proposals in that the real
price reduction in Yorkshire's standard domestic tariff will be 3.6% from
the year beginning April 1, 2000.  This reduction incorporates the 7.3%
reduction arising from the distribution price control review.  There will
be no real price reduction in Yorkshire's Economy 7 tariff and there will
also be a nominal price freeze for the year beginning April 1, 2001.

While these final proposals somewhat mitigate the electricity supply
revenue reductions previously proposed by Ofgem, they still result in a
significant decline in allowed revenues for Yorkshire.

On December 20, 1999, Yorkshire indicated to Ofgem its intention to
accept the final proposals.

Yorkshire believes that competitive pressures in the electricity market
may require it to charge supply prices which are lower than the maximum
prices established by Ofgem.  If Yorkshire charges such lower prices, the
result will be a further reduction in supply revenues beyond that mandated
by Ofgem. Yorkshire's supply business is under competitive and regulatory
pressure to lower supply prices for classes of customers other than those
subject to Ofgem's final supply price proposals.

In response to Ofgem's final proposals and increasing competition,
Yorkshire has adopted an aggressive program of reducing controllable costs.
Significant features of this program include reductions in capital
expenditure, staff reductions, outsourcing of certain functions and
consolidation of facilities.  Yorkshire intends to aggressively pursue this
cost reduction program and is evaluating additional cost reduction measures
to further mitigate the effects of Ofgem's final proposals and increasing
competition in the electricity supply business.  Yorkshire Group expects
that the net result of Ofgem's electricity supply and distribution price
reductions and competitive demands in the Supply business and Yorkshire's
mitigation efforts will be a decline in Yorkshire Group's results of
operations and a reduction in its cash flows which, in each case, may be
significant.  For further details of this cost reduction program see Part
I, Item 1.  "Yorkshire's Businesses - Business Streamlining."


Information & Incentives Program

	The December 1999 distribution price control review proposals set out
Ofgem's intention to commence an ongoing program on information and
incentives.

	The objective for this program is to try to address some of the
weaknesses which Ofgem believes have been associated with the existing
framework of price regulation:

- to reduce the emphasis on periodic negotiation with Ofgem;
- to give clearer incentives in respect of quality of supply; and
- to improve the incentive to achieve efficiency savings in both
operating costs and capital costs.


To achieve the objectives the program has three major workstreams:

1. To review the information provided to Ofgem on an annual basis and to
standardize across all companies.

2. To introduce incentives for quality of supply. These could have a
financial impact on each PES of plus or minus 2% of price control
revenue in each year from April 2002.

3. To develop a broader suite of performance incentives (or yardsticks) for
implementation at the start of the next review period in 2005.

Ofgem has stated in both the December 1999 distribution price control
proposals and in the December 1999 consultation on the information and
incentives program that (i) it is not intended that this program will
result in a change to the PES's risk profile and hence its cost of capital;
and (ii) where particular targets for quality of electricity supply have
been established as part of the distribution price control review, it is
expected that broadly consistent targets will be reflected in the
additional mechanisms for the duration of the next distribution price
control period.


Standard Conditions for Electricity and Gas Licenses

On November 23, 1999, Ofgem issued proposals for changes to electricity
and gas licenses.  Included in the proposals were the separation of
licenses for electricity supply and distribution businesses and the
alignment of the standard conditions of gas and electricity licenses.
These proposals have been made in preparation for the implementation of the
Utilities Bill.  The major points of this consultation include:

- the introduction of a new license for distribution businesses;

- a single type of electricity supply license replacing the existing
public electricity supply and second tier supply licenses; and

- standard conditions for each type of electricity license, mirroring gas
licenses.

- The proposals also request views on:

- the obligations that should be required in the new electricity
distribution and electricity supply licenses;

- which obligations should be standard conditions and which should be
special; and

- the alignment of gas and electricity provisions.

Comments or views are being sought from the industry and other
interested parties before Ofgem advises the government on what might be
appropriate for each type of license.

On February 7, 2000, Ofgem issued a further draft of standard license
conditions for consultation.  Yorkshire's management are currently
assessing the impact of this consultation before providing a response.

The scheduled date for implementation of the standard license
conditions for electricity supply and distribution businesses is April
2001.


Financial Ringfencing

In December 1999, Ofgem issued a consultation paper on financial
ringfencing conditions for the standard license conditions to apply to the
separate electricity supply and distribution licenses, provision for which
is made in the Utilities Bill.

The principal proposed changes to the new electricity distribution
license can be summarized as follows:

- To amend the existing restriction on PES ancillary activities (5% of
aggregate turnover of electricity supply and distribution businesses)
to 2.5% of distribution business turnover.  This is on the basis of a
2.5% threshold having been included in Transco's license.

- To prevent transfers to affiliates of any sum, asset right or benefit
by way of loan, lease, conditional sale or reservation of title or
where consideration of equivalent value is not paid in full on or
before the date of transfer unless the counter-party has and agrees to
maintain an investment grade issuer credit rating or its obligations
are guaranteed by another person having and agreeing to maintain an
investment grade issuer credit rating.

- To amend the requirements regarding parental undertakings to require
the licensee to comply with any direction made by Ofgem to take
enforcement action in respect of the undertakings, and to extend the
prohibition on the payment of dividends and entry into agreements with
affiliates to include circumstances where such a direction has been
made and the relevant enforcement action remains pending.

- To require the licensee to seek and maintain an investment grade issuer
credit rating.

- To include in any compliance certificate required prior to the payment
of dividends confirmation that the licensee has complied in full with
any applicable enforcement order or direction made by Ofgem then in
force.

Ofgem has stated that it does not believe financial ringfencing of
supply licensees is appropriate following the introduction of separate
licenses.  However, Ofgem's December 1999 consultation raised the
possibility of applying financial ringfencing to PES supply businesses to
support the Regulator's duty to ensure that licensees can finance their
functions.  This could include requirements relating to the availability of
resources, undertakings from owners and financing arrangements.

A further consultation on the need for supply business ringfencing is
expected before the end of April 2000.

It is unclear from the current proposals whether Ofgem would require
financing to be conducted at the level of the legally separate distribution
and supply businesses (such legal separation being proposed under the
Utilities Bill) or at the holding company level.


Review of the Regulatory Framework : The Utilities Bill

On October 13, 1999, the UK government published a statement of intent
which set out its legislative proposals to modernize the framework for
utility regulation for the electricity, gas, water and telecommunications
sectors.  The proposals are spread across two documents; one outlining
specific provisions for the gas and electricity industries, and the other
containing regulatory, environmental and equal treatment impact appraisals
emerging from the UK government review of utility regulation as a whole.
The latter document, therefore, includes a number of generic proposals that
are also relevant to the energy sector in addition to the specific
proposals contained in the former.

The publication of the statement of intent marks the last phase of a
process of consultation which began in 1997 and which included the March
1998 Green Paper, the UK government's response thereto and a large number
of other consultations on business separation, energy sources, social
obligations, energy efficiency and environmental issues.

On November 12, 1999, Yorkshire responded to the UK government's
consultation "A Fair Deal for Consumers: Modernising the Framework for
Utility Regulation". Yorkshire expressed concern on a number of issues
including:

- Increased risk for utility companies - the proposals provide both the
UK government and the regulators with new discretionary powers to
impose obligations and penalties on utilities. This can only increase
uncertainty, making regulation less predictable and less consistent
and, therefore, increasing risk and cost of capital for utilities.

- Increased regulatory burden for utility companies - the granting of the
new powers referred to above, together with the powers granted to
regulatory authorities under the Competition Act, results in a far
greater regulatory burden being placed upon utilities, at a time when
markets are increasingly competitive and regulators should adopt "an
increasingly light regulatory touch".

- Development of competition and barriers to entry - the proposals fail
to address pertinent competition issues, such as the market dominance
of Centrica and the growth in the number of vertically integrated
companies.

- Increased costs for utility companies - the proposals not to extend to
Ofgem the ceiling on costs of the gas regulator's office, and to impose
social and environmental obligations will result in higher costs for
companies: however, no specific mechanism is included within the
proposals for price-controlled companies to pass these costs on to
consumers.

- NETA - the proposals for reform of the electricity trading arrangements
are still not supported by a robust business case illustrating how cost
savings will be achieved. There is no mechanism included in the
proposals for price-controlled companies to pass the costs of
implementing NETA on to consumers.

On January 20, 2000, the UK government published the Utilities Bill.
The proposed legislation includes:

- the replacement of individual regulators by a regulatory board - the
Gas and Electricity Markets Authority ("Gema") with the Regulator as
the Chairman;

- increased emphasis on protection of the interests of consumers
including those in energy and telecommunications, reflecting the more
competitive nature of these markets, and a new principal objective for
the regulators to protect the interests of consumers;

- powers for the UK government to issue guidance to Gema on social and
environmental matters;

- a range of reforms to the electricity market, including the
establishment of NETA;

- a requirement for separate licensing of electricity supply and
distribution businesses, and the introduction of a ban on electricity
supply and distribution licenses being held by the same legal person
(which effectively means that the electricity supply and distribution
businesses of current PES's would be put into separate companies);

- powers to enable social issues such as fuel poverty to be tackled;

- tough fines to be imposed on companies guilty of bad practice or poor
performance, such as mis-selling, interruptions to supplies and the
speed of reconnecting customers.  There will be no upper limit on the
fines the regulator can impose;

- `one stop' independent consumer councils to be established for gas and
electricity, telecommunications and water utilities to investigate
complaints and assist customers;

- price-regulated utilities to publish links between directors' pay and
quality of service;

- regulators to give reasons for their key decisions; and

- UK government ministers to be given powers to promote energy efficiency
and electricity from renewable sources.

Assuming the Utilities Bill becomes law in more or less the anticipated
form, there will be a significant number of areas where action will be
required to ensure future compliance.  One particular change which will
impact will, of course, be the "legislative" business separation which will
require separate legal entities for the separately licensed electricity
distribution and supply businesses.

The Bill will be subject to a number of readings before enactment,
which is expected late 2000.  The effective date is yet to be determined.

On March 2, 2000, the UK government announced that all Utilities Bill
clauses relating to the water and telecommunications utility industries
would be removed from the Bill.



New Electricity Trading Arrangements

In 1998, OFFER published a framework document describing the delivery
and implementation of revised electricity trading arrangements based upon
market trading arrangements in commodities markets elsewhere. In October
1999, with the onset of the implementation phase, these new electricity
trading arrangements became known as NETA.  The arrangements are designed
to better facilitate the development of competition, to ensure maximum
transparency and to give all interested parties the opportunity to
participate in the process.

The NETA program encompasses the design and development of the forward
and futures market, the power exchange, the balancing mechanism and the
associated settlement process required to support these markets. These new
wholesale electricity arrangements in England and Wales will replace the
Pool.

As a result of the implementation of NETA, planned for October 31,
2000, it is envisaged that the Pooling and Settlement Agreement will be
replaced by a Balancing and Settlement Code which NGC will be obliged to
maintain and enforce. Both electricity supply and distribution businesses
will incur significant costs to introduce and operate under NETA. Whilst
the UK government propose that such costs will ultimately be borne by
customers, Ofgem has not allowed such costs in the price controls proposed
for effect from April 2000.

As the NETA program develops it is clear that there are a number of
proposals which may have a negative effect on Yorkshire's distribution
business.  Yorkshire is currently evaluating such proposals and is lobbying
to minimize the detrimental impact of NETA on its distribution business and
to ensure that all additional obligations are fully allowed through the
distribution price control review.

On February 29, 2000 the UK government and Ofgem jointly announced
proposals for the license changes required to implement NETA.  Yorkshire is
currently assessing these proposals.

For further details of how the Pool works, see Part I, Item 1. "The
Electric Utility Industry in Great Britain - The Pool".


Social Action Plan

During the Transition Period, OFFER, OFGAS and Ofgem published a number
of consultations and discussion documents in relation to social issues such
as fuel poverty.

 In response to these various consultations Yorkshire pointed out that
it believes social obligations are best delivered through the distribution
business, with costs allowed through the price control; that if obligations
are placed on the electricity supply business, all suppliers should have
the same obligations; and that it is in favor of a social fund which would
subsidize the cost of prepayment metering.

While Yorkshire accepts that initiatives to address the needs of
disadvantaged and vulnerable customers are welcome, it believes that action
should only be taken where necessary and where Ofgem and the industry can
have best effect.

Yorkshire also raised concerns that little detail has been provided of
the costs of carrying out Ofgem's different initiatives, or in the manner
in which these costs will be borne.

On January 10, 2000, Ofgem published proposals for license
modifications aimed at improving the services provided by gas and
electricity companies to poor and disadvantaged customers.

These proposals, which follow concerns raised by consumer groups, align
the social conditions contained in gas and electricity supply licenses and
add new obligations.

On March 1, 2000, Ofgem published a final version of its Social Action
Plan.  The contents of the Plan are as anticipated and its impact on
Yorkshire is not expected to be significant.


Consumers' Committee

Ofgem is required under the Electricity Act to establish a consumers'
committee for the Authorized Area of each PES License holder (or, if the
Secretary of State so determines, for the Authorized Areas of two or more
such suppliers.  The duties of each committee are to make representations
to, and consult with, their allocated PES License holders about matters
affecting the interests of customers or potential customers of such
supplier(s), to review matters affecting the interests of electricity
consumers in such committee's area, and to advise Ofgem on any other matter
which warrants discussion or which is referred to it by Ofgem.

On April 9, 1999, the UK government published a response to a
consultation exercise on consumer committees carried out during October
1998.  The response confirmed the intention to set up an independent energy
consumer council for gas and electricity. The council will have two main
roles. The first will be to act as a customer advocate and to provide
information and advice to the UK government, the media and others and also
to consumers. The second function will be to handle consumer complaints
which have not been satisfactorily dealt with by the gas or electricity
company concerned.

The re-organization of independent consumer councils has been included
in the draft Utilities Bill.


Licenses


Generation Licenses

Unless covered by an exemption, all electricity generators engaging in
the construction, expansion or operation of a power station in Great
Britain are required to have a generation license.  There are currently 51
generation license holders in Great Britain.


PES Licenses

Each of the RECs, Scottish Power and Scottish and Southern has a PES
License for its Authorized Area and is required, under the Electricity Act,
to supply electricity upon request to any premises in that area, except in
specified circumstances.  Each PES is also required not to discriminate
between its own electricity supply business and other users of its
distribution system and the PES License prohibits cross subsidy between the
various regulated businesses.  As described above, PESs are subject to
separate price controls on the amounts they may charge for the use of their
distribution system by all customers in their Authorized Area and for the
supply of electricity to Designated Customers.  The PES Licenses also
require the licensee to procure electricity at the best price reasonably
obtainable having regard to the sources available.

As part of its continued monitoring of the electric utility industry,
OFFER published on August 15, 1996, comparative information relating to the
RECs' economic purchasing performance.  The publication, entitled
"Yardstick of Electricity Purchase Costs", compared in yardstick value
terms, the generation costs which RECs passed through to Franchise Supply
Customers in Fiscal Years 1995 and 1996 under the electricity Supply Price
Control Formula.  OFFER reviewed the electricity supply price controls
applicable to PES License holders and published in October 1997 proposals
for new controls to take effect on April 1, 1998.  He issued a consultation
paper on this matter on September 5, 1996 entitled "The Competitive
Electricity Market from 1998: Price Restraints".  He subsequently issued
four further consultation papers in January, May, July and August, 1997.
The October 1997 proposals were for maximum price restraints in respect of
electricity supply to residential and small business customers for a period
of at least two years beginning April 1, 1998, which would eliminate the
pass-through of costs to such customers, consisting primarily of purchased
power costs.  Yorkshire accepted these proposals.  See Part I, Item 1. "The
Electric Utility Industry in Great Britain - Supply of Electricity -
Electricity Supply Price Regulation: Background".

In England and Wales, each PES License limits the extent of the
generation capacity in which the relevant REC may hold an interest without
the prior consent of Ofgem ("own-generation limits").  These own-generation
limits, expressed in megawatts, currently restrict the participation of a
REC in generation to a level of approximately 15% of the simultaneous
maximum electricity consumption in that REC's Authorized Area at the time
of privatization.  In the case of Yorkshire, the own-generation limit is
fixed at 800 MW.

OFFER stated that it would be reasonable to consider a REC's request to
increase its own-generation limit on the condition that it accepted
explicit restrictions on the contracts it signed with its electricity
supply business, and that at a minimum the REC would be prohibited from
entering into additional own-generation contracts in its authorized area.
OFFER considered that an increase in own-generation limits subject to such
restrictions could allow a REC to contribute more fully to the development
of competition in generation without the allegation that it was exploiting
its captive market and local monopoly position.

OFFER has made modifications to 14 PES Licenses in connection with the
introduction of competition for Franchise Supply Customers which began in
September 1998.  These modifications comprised a number of new obligations
to offer services to all competing suppliers.  These services are generally
known as data management services, including registration, data collection,
aggregation and transfer, meter operation and provision of prepayment meter
infrastructure.  These proposals were accepted by Yorkshire.  OFFER issued
full modifications to the first-tier and second-tier licenses to encompass
the changes.  In response to respective individual requirements, the PESs
are providing collectively a data transfer service.  Preparations were made
to provide these services as part of a program of work and in October 1997
OFFER made final proposals for the recovery of the costs of this program
which were accepted by Yorkshire in November 1997.

The RECs also contributed to a program of work by the Pool to adopt
settlement arrangements for the competitive market in 1998.  It was agreed
that these costs, subject to a cap above which recovery would be partial,
would be recovered from charges to be made to suppliers by the Pool over a
five year period.


Second-Tier Electricity Supply Licenses

Other than a PES in its Authorized Area and subject to certain other
exceptions, a supplier of electricity to premises in Great Britain must
possess a second-tier electricity supply license.  Subject to the
restrictions described in "The Electric Utility Industry in Great Britain -
Supply of Electricity" above, second-tier licensees may compete for the
supply of electricity with one another and with the PES for the relevant
area.  There are currently 40 second-tier electricity supply license
holders for England and Wales, and 27 for Scotland (including Yorkshire in
both cases).


Transmission Licenses

In England and Wales, NGC is the only transmission license holder.  The
transmission license imposes on NGC the obligation to operate the merit
order system for the central dispatch of generating units and gives NGC
responsibility for the economic purchasing of ancillary services from
generators and suppliers.  The transmission license requires NGC to offer
terms on a non-discriminatory basis for the carrying out of works for
connection to, and use of, the transmission system.


Modifications to Licenses

Subject to a power of veto by the Secretary of State, the Regulator may
modify license conditions with the agreement of the license holder.  He
must first publish the proposed modifications and consider representations
or objections made.  If the Regulator fails to agree to modifications with
a license holder, he may refer a matter relating to generation,
transmission or supply of electricity under a license to the Competition
Commission.  If the Competition Commission finds that the matter referred
to it has, or may be expected to have, specified effects adverse to the
public interest which could be remedied or prevented by a license
modification, the Regulator is required to make modifications that appear
to him requisite for the purpose of remedying or preventing the adverse
effects identified by the Competition Commission.  Modifications to license
conditions may also be made by the Secretary of State as a consequence of
monopoly, merger or other competition references under general UK
competition law.

In February 1998, OFFER issued proposals for further modifications to
the licenses of PESs that have been subject to takeovers.  The main
proposals were:

- to allow for a PES generation business to be carried on in an affiliate
which is not a subsidiary and in such cases for the generation business
to be conducted outside the scope of the modifications to the PES
License which have been brought into effect to ensure that OFFER can
regulate a PES effectively after it has been taken over and to help
ensure the financial stability of the PES;

- to restrict further the provisions of existing PES Licenses allowing
PESs to carry out certain otherwise restricted activities provided they
do not exceed 5% of the revenues of the electricity supply, second-tier
electricity supply and distribution businesses, by introducing an
additional test based on cumulative investment;

- to extend to all PESs that have been acquired the condition contained
in the licenses of London Electricity, Northern Electric plc and
Yorkshire to use reasonable endeavors to maintain an investment grade
rating of corporate debt;

- to prohibit PESs from accepting "cross default" provisions in borrowing
agreements; and

- to make the payment of dividends and other distributions by a PES
expressly conditional on compliance with the ringfencing conditions in
the license.

These proposals were accepted by Yorkshire and the Company's PES
License was amended effective September 17, 1999. The September PES License
amendments also included the change in Yorkshire's fiscal year end from
March 31 to December 31.

There are a number of current consultations proposing modifications to
PES licenses, including amendments to take account of the forthcoming
separation of the electricity supply and distribution businesses and
measures to improve services to poor and disadvantaged customers.  For
further details of such proposed license modifications see Part I, Item 1.
"The Electric Utility Industry in Great Britain - Regulation Under the
Electricity Act - Regulatory Developments - Review of the Regulatory
Framework: The Utilities Bill" and "The Electric Utility Industry in Great
Britain - Regulation Under the Electricity Act - Social Action Plan".

Term and Revocation of Licenses

Yorkshire's PES License will continue in effect until at least 2025
unless revoked.  Under ordinary circumstances, the license may not be
revoked except on 25 years' prior notice, which notice may not be given
until 2000.  Otherwise, the Secretary of State may revoke a PES License by
not less than 30 days' notice in writing to the licensee in certain
specified circumstances including any failure to comply with a final order
of Ofgem requiring the license holder to comply with its license conditions
or requirements, or insolvency of the licensee.



UK ENVIRONMENTAL LEGISLATION

Yorkshire's businesses are subject to numerous regulatory requirements
with respect to the protection of the environment.  The principal laws
which have environmental implications for Yorkshire are the Electricity
Act, the Environmental Protection Act 1990, the New Road and Street Works
Act 1991 and the Environment Act 1995.

The Electricity Act requires Yorkshire to consider the preservation of
natural beauty and the conservation of natural and man-made features of
particular interest when it formulates proposals for development in
connection with certain of its activities.  Environmental assessments are
required to be carried out in certain cases including overhead line
constructions at higher voltages and larger substation developments.
Yorkshire has produced a Corporate Environmental Policy Statement and an
Electricity Act Schedule 9 Statement which sets out the manner in which it
intends to comply with its environmental obligations.

Possible adverse effects of EMFs from various sources, including
transmission and distribution lines, have been the subject of a number of
studies and increasing public discussion. Although some current scientific
research is indicating that EMF's do not cause adverse health effects,
there is the possibility that the passage of legislation and changing
regulatory standards would require measures to mitigate EMFs, with
resulting increases in capital and operational costs.  In addition, the
potential exists for public liability with respect to lawsuits brought by
plaintiffs alleging damages caused by EMFs.  The only UK standards for
exposure to power frequency EMFs are those promulgated by the National
Radiological Protection Board and relate to the levels above which
physiological effects have been observed.  Yorkshire fully complies with
these standards.

Yorkshire believes that it has taken, and intends to continue taking,
measures to comply with the applicable law and UK government regulations
for the protection of the environment.  There are no material legal or
administrative proceedings pending against Yorkshire with respect to any
environmental matter.  Yorkshire spent (POUNDS)7.5 million on environmental
compliance in the Transition Period approximately (POUNDS)5.4 million of
which was of a capital nature.



UK AND EU COMPETITION LAW

The Competition Act, which comes into force on March 1, 2000, gives new
concurrent powers to the Director General of Fair Trading and Ofgem to
investigate and act against anti-competitive agreements and conduct. These
new powers include fines of up to 10% of turnover over three years for
companies which breach the prohibitions of the Act. In March 1999 the
Office of Fair Trading issued formal guidelines on the concurrent
application of the Competition Act to the regulated industries: "Concurrent
Application to Regulated Industries".


EMPLOYEES

Yorkshire had 4,275 employees (approximately 4,121 full-time
equivalent) at the end of the Transition Period.  Yorkshire Power Group Ltd
has no employees because it is a holding company with no operations.
Approximately 60% of Yorkshire's employees are represented by labor unions.
All Yorkshire employees who are not party to a personal employment contract
are subject to collective bargaining agreements.  These agreements may be
amended by agreement between Yorkshire and the unions and are terminable
with 12 months notice by either side.  Yorkshire believes that its
relations with its employees are favorable.

For details of business streamlining in Yorkshire see Part I, Item 1.
"Yorkshire's Businesses - Business Streamlining".


PRESENTATION OF CERTAIN INFORMATION AND EXCHANGE RATES

Solely for the convenience of the reader, this document contains
translations of certain pounds sterling amounts into US dollar amounts at
the closing mid-point in London on December 31, 1999 of $1.6117 =
(POUNDS)1.  See note 1 "Summary of Significant Accounting Policies", to
Yorkshire Group's consolidated financial statements for the Transition
Period included elsewhere in this document.


ITEM 2.   PROPERTIES

Yorkshire owns the freehold of its principal offices north of Leeds.
Yorkshire has both network and non-network land and buildings.


Network Land and Buildings

At December 31, 1999, Yorkshire had interests in approximately 16,010
network properties, comprising principally sub-station sites.


Non-Network Land and Buildings

At December 31, 1999, Yorkshire had freehold and leasehold interests in
non-network properties comprising chiefly offices, depots, warehouses,
workshops and a number of former retail outlets.  The net book value of
total non-network land and buildings at December 31, 1999, was
approximately (POUNDS)35 million.



ITEM 3.   LEGAL PROCEEDINGS

Yorkshire Group is routinely a party to legal proceedings arising in
the ordinary course of business which are not material, either individually
or in the aggregate.  Except as described below, Yorkshire Group is
currently not a party to any material legal proceedings nor is it aware of
any threatened material legal proceedings.

On May 18, 1998, Optimum Solutions Limited ("Optimum"), a company that
conducts research and development in the UK electric industry, entered a
claim in the UK High Court of Justice, Chancery Division, against
Yorkshire, Eastern Electricity plc, which is also a REC, NGC and Logica plc
alleging, in the case of Yorkshire, that Yorkshire breached a
confidentiality agreement with Optimum regarding the use of confidential
information in Yorkshire's preparation for the competitive changes to the
electricity supply market in and after 1998.  Optimum sought an injunction
against the continued use of, and the return of, such confidential
information, an unspecified amount of damages relating to breach of
contract and equitable compensation for misuse of such confidential
information.

On October 7, 1998, Yorkshire filed a defense to the claim made against
it by Optimum.  Following discovery, an amended claim was served by Optimum
on Yorkshire and Eastern Electricity plc on July 7, 1999, and the
claimant's claim for injunctive relief was discontinued.  The final outcome
of this matter cannot be determined at present.


Litigation is ongoing with respect to NGC and National Power's use of
actuarial surpluses declared in the ESPS.  The Pension Ombudsman (a UK
arbitrator appointed by statute) issued a "final determination" in favor of
complaints made by members of the ESPS relating to NGC's use of the ESPS
surplus to offset its additional costs of early payment of pensions as a
result of reorganization or redundancy, together with additional
contributions required after a valuation.  Under that determination  the
Pension Ombudsman directed NGC to pay into ESPS the amount of that use of
the surplus plus interest.  The Pension Ombudsman's final determination was
challenged in the courts by NGC and National Power, who were also subject
to a similar complaint.  The High Court subsequently ruled that such use of
surplus was permissible.

On February 10, 1999, the Court of Appeal ruled that the particular
arrangements made by NGC and National Power to dispose of the surplus,
partly by cancelling liabilities relating to pension costs resulting from
early retirement, were invalid as they did not comply fully with the rules
and procedures for dealing with surplus at that time.  However, the Court
of Appeal did uphold the High Court's ruling that NGC and National Power
could benefit from pension scheme surplus provided that the scheme rules
allow and that the interests of the members are taken into account.

Following a further hearing on May 25 and May 26, 1999 the Court of
Appeal ordered NGC and National Power to pay all sums properly payable by
them to their group trustees.  However, enforcement of the order was stayed
pending the outcome of any appeals to the House of Lords, leave for which
was granted.

NGC and National Power have now initiated appeals in the House of
Lords.  NGC and National Power have also executed amendments which purport
to cancel their accrued contribution obligations arising from the Court of
Appeal's judgment.

	Yorkshire made similar use of actuarial surplus and, if it is decided
by the House of Lords that the sums concerned are all due to the ESPS, the
maximum amount receivable by the ESPS in respect of the use of surplus by
Yorkshire would be approximately (POUNDS)38 million plus interest.

	Yorkshire is considering, with EPSL (the Scheme's central
co-ordinating and policy body) and other member companies, the option
of executing similar retrospective deeds of amendment to those executed
by the two litigants: NGC and National Power.


An agreement has been reached between Yorkshire and its pension
trustees to the effect that no legal action for the recovery of
"outstanding" contributions will be initiated by the trustees against
Yorkshire prior to the House of Lords judgment on the NGC and National
Power appeals. In consideration of this, Yorkshire will waive any defense
in this matter based on the six year statutory limitation period, this
waiver commencing from June 24, 1999, the date when the agreement was first
mooted and agreed in principle.



ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None




PART II


Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
 STOCKHOLDER MATTERS


There is no established public trading market for Yorkshire Power Group
Limited's common stock, all of which is owned indirectly by AEP and NCE.


Item 6.   SELECTED FINANCIAL DATA


The consolidated income statement data and other consolidated data of
the Predecessor Company for the Fiscal Years ended March 31, 1997 and March
31, 1996 and the consolidated balance sheet data and certain business
segment data of the Predecessor Company at the end of each such Fiscal Year
presented below have been derived from the audited consolidated financial
statements of the Predecessor Company.  Such data for the Predecessor
Company has not been restated to show the generation business as a
discontinued operation.  The consolidated income statement data and other
consolidated data of the Successor Company for the Transition Period, the
Fiscal Years 1999 and 1998 and the consolidated balance sheet data of the
Successor Company at the end of each such period presented below have been
derived from the audited consolidated financial statements of the Successor
Company.  The selected consolidated financial data presented below was
derived from the audited consolidated financial statements of the Successor
Company that have been prepared in accordance with US GAAP.  See "Item 7.
Management's Discussion and Analysis of Results of Operations and Financial
Condition" and the consolidated financial statements and notes thereto of
the Successor Company included elsewhere in this document.

The unaudited pro forma consolidated data for the Successor Company for
Fiscal Year 1997 presented below reflects the Acquisition as if it had
occurred as of April 1, 1996.  Such data has been prepared by the Successor
Company based upon assumptions deemed proper in accordance with the
purchase method of accounting for business combinations and has been
adjusted to reflect (i) interest expense of (POUNDS)74 million incurred as
a result of the financing of the Acquisition, (ii) amortization of
(POUNDS)24 million related to goodwill recorded in connection with the
Acquisition, (iii) additional depreciation expense of (POUNDS)6 million as
a result of the revaluation of certain fixed assets in connection with the
Acquisition and (iv) removal of the effect of recording the provision of
(POUNDS)78 million for certain uneconomic gas and electricity contracts,
the loss of (POUNDS)7 million on certain interest rate swap agreements and
the write-down of (POUNDS)6 million relating to non-operational property.
Such data is shown for illustrative purposes only and is not necessarily
indicative of the future results of operations of the Successor Company or
of the results of operations of the Successor Company that would have
actually occurred had the Acquisition occurred at the beginning of the
period presented.  Such data should be read in conjunction with the
unaudited pro forma consolidated statements of income and notes thereto of
the Successor Company included elsewhere in this document.  The unaudited
pro forma consolidated data has not been restated to show the generation
business as a discontinued operation (see note 14 to the Successor Company
Financial Statements).


Predecessor Company

					               Fiscal Year
					             1997        1996
				                (POUNDS)  	(POUNDS)
						    (Amounts in Millions)

Consolidated Income Statement Data:
   Operating revenues				  1,331       1,431

   Operating income (1)				     52         214
   Other income, net (2)			     20         313
   Interest expense, net			    (33)        (20)
   Provision for income taxes (3)		     13         114

Net income		 			     26         393


						        March 31,
						    1997         1996
						 (POUNDS)     (POUNDS)
   					        (Amounts in Millions)

Consolidated Balance Sheet Data:
   Fixed assets					    796         769
   Total assets					  1,375       1,408
   Total shareholders' equity			    359         399
   Long-term debt				    419         424
   Short-term debt and current portion
     of long-term debt			       	     87          90


   					              Fiscal Year
						     1997        1996
						 (POUNDS)     (POUNDS)
				   (Amounts in Millions, Except Ratios)

Other Consolidated Data:
   EBIT (4)					     72         527
   EBITDA (4)					    122         569
   Cash flow from operations			     96         222
   Cash used in investing activities		    (51)         (8)
   Cash used in financing activities		    (76)       (114)
   Ratio of earnings to fixed charges (5)	    1.8        12.0
<TABLE>
Successor Company
<CAPTION>
                                                  Successor      Successor
                                           9 Month               Pro Forma
				       Period Ended                 Fiscal
				       December 31,   Fiscal Year     Year
					  1999       1999     1998    1997
				   (POUNDS)  $(6)   (POUNDS)(POUNDS)(POUNDS)
					      (Amounts in Millions)
<S>                                   <C>     <C>    <C>     <C>     <C>
Consolidated Income Statement Data:
   Operating revenues 		      1,037   1,671  1,366   1,234   1,331

   Operating income (1)		        127     204    195     148     106
   Other income, (loss) net (2)	          6      10    (11)    (39)     20
   Interest expense, net	        (86)   (138)  (122)   (104)   (100)
   Provision (benefit) for income
     taxes				 14      23      3      (4)     17
   Income from continuing operations
     before extraordinary item and
     discontinued operation		 33      53     59       9       9
   Income from discontinued
     operation (8)                        -       -      4       8       -
   Gain on disposal of discontinued
     operation (8)                        8      13     24       -       -
   Income before extraordinary item      41      66     87      17       9
   Extraordinary loss (7)		  -       -      -    (134)      -

Net income (loss)		         41      66     87    (117)      9



				    December 31     March 31   March 31
				          1999          1999       1998
			            (POUNDS)    $(6)  (POUNDS)   (POUNDS)
							       (Amounts in Millions)

Consolidated Balance Sheet Data:
   Fixed assets			     1,036    1,669       985      1,060
   Total assets			     2,395    3,860     2,347      2,462
   Total shareholders' equity	       451      727       410        323
   Long-term debt		       964    1,553     1,103      1,026
   Short-term debt and current
     portion of long-term debt	       140      226       150        324
   Short term debt refinanced June 1998  -        -         -        164
   Short term debt refinanced
     February 2000		       165      266         -          -
   Company obligated mandatorily
     redeemable Trust Securities of
     junior subordinated deferrable
     interest debentures	       166      268       168          -



                                                                  Successor
                                                Successor        Pro forma
  				    9 Month Period                  Fiscal
				 Ended December 31   Fiscal Year      Year
					1999        1999      1998    1997
				(POUNDS)      $(6)(POUNDS)  (POUNDS)(POUNDS)
				   (Amounts in Millions, Except Ratios)


Other Consolidated Data:
  EBIT before extraordinary
    item (4)/(7)		    133      214      184       109     126
  EBITDA before extraordinary
    item (4)/(7)		    201      324      268       180     206
  Cash flow from operations	     70      113       31        62
  Cash used in investing activities (87)    (140)       -    (1,639)
  Cash (used in) provided by
    financing activities	     14       23      (54)    1,391
  Ratio of earnings to fixed
    charges (5)			    1.5      1.5      1.4       1.0     1.2


EBIT, EBITDA and ratio of earnings to fixed charges have been
calculated from income statement data excluding amounts attributable to the
generation business, which was disposed of during Fiscal Year 1999 and has
been treated as a discontinued operation.  EBIT, EBITDA and ratio of
earnings to fixed charges for Fiscal Year 1999, calculated to include the
results of the generation business, would be (POUNDS)191 million,
(POUNDS)280 million and 1.5 respectively.  For Fiscal Year 1998, these
items would be (POUNDS)122 million, (POUNDS)200 million and 1.1
respectively.
</TABLE>

(1)	Notable operating expenses include:

Nine Month Period Ended December 31, 1999 - a charge of (POUNDS)2
million for costs in relation to Year 2000 modifications.

Fiscal Year 1999 - a charge of (POUNDS)9 million for costs in
relation to Year 2000 modifications, (POUNDS)5 million for committed
costs arising from delays in opening up the competitive market and
(POUNDS)5 million restructuring charges.

Fiscal Year 1998 - provision of (POUNDS)5 million for committed costs
arising from delays in opening up the competitive market and (POUNDS)10
million restructuring charges.

Fiscal Year 1997 - (i) a provision of (POUNDS)78 million for
uneconomic gas and electricity contracts (the effect of which is
removed from the Successor Company's unaudited pro forma consolidated
statement of income for Fiscal Year 1997), which resulted in a charge
of (POUNDS)125 million to the supply business offset by an
intrabusiness elimination of (POUNDS)47 million and (ii) a charge of
(POUNDS)50 million for information system development costs to prepare
for the opening of the competitive electricity market in 1998 for
Franchise Supply Customers, of which (POUNDS)37 million was charged to
the supply business and (POUNDS)13 million was charged to the
distribution business.

(2)	Other income (loss) - notable items include:

Fiscal Year 1999 - a loss of (POUNDS)12 million before taxes was
charged following the reduction in fair value of Yorkshire Group's
investment in Ionica by (POUNDS)11 million and a subsequent loss on
sale of the investment of (POUNDS)1 million.

Fiscal Year 1998 - an unrealized loss of (POUNDS)41 million before
taxes was charged following the reduction in fair value of Yorkshire
Group's investment in Ionica.

Fiscal Year 1997 - gain on sale of Yorkshire's investment in Torch
Telecom of (POUNDS)15 million.

Fiscal Year 1996 - income from investment in NGG and gain in respect
of the NGG Transaction.

(3)	Fiscal Year 1996 includes a tax charge of (POUNDS)38 million
relating to the NGG Transaction.

(4)	EBIT represents income before the sum of net interest expense and
income taxes.  EBITDA represents income before the sum of net interest
expense, income taxes, depreciation and amortization.  EBIT and EBITDA
are provided for informational purposes only and such measures should
not be construed as alternatives to operating income (as determined in
accordance with US GAAP) as indicators of operating performance, or as
alternatives to cash flows from operating activities (as determined in
accordance with US GAAP) as measures of liquidity.  EBIT and EBITDA are
widely accepted financial indicators of a company's ability to incur
and service debt.  However, the measures of EBIT and EBITDA presented
herein may not be comparable to similar measures presented by other
companies.

(5)	The ratio of earnings to fixed charges is computed as the sum
of pre-tax income (before extraordinary item) plus fixed charges
divided by fixed charges.  Fixed charges consist of interest
expense and amortization of debt expense.

(6)	Solely for the convenience of the reader, pounds sterling
amounts have been translated into US dollar amounts at the closing
mid-point in London on December 31, 1999 of $1.6117= (POUNDS)1.
See "Note 1. Summary of Significant Accounting Policies" to
the Consolidated Financial Statements of the Successor.

(7)	Represents the windfall tax imposed by the UK government,
which was not deductible for UK corporation tax purposes.

(8) Yorkshire's generation business was disposed of during Fiscal Year
1999.  The gain recognized on disposal resulted in an increase in net
income in Fiscal Year 1999 of (POUNDS)24 million (net of related income
taxes of (POUNDS)31 million).  A favorable adjustment to tax
liabilities of (POUNDS)8 million, in respect of the disposal, has been
recognized in the Transition Period.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION

The following discussion should be read in conjunction with the
consolidated financial statements and the notes thereto of the Successor
Company and "Selected Financial Data" included elsewhere in this document.
The consolidated financial statements of the Successor Company and the
Predecessor Company discussed herein are presented in accordance with US
GAAP.


Introduction

Background

Yorkshire Group is indirectly equally owned by AEP and NCE.  Yorkshire
Power Group Limited was incorporated as a limited company under the laws of
England and Wales in July 1996.  Effective April 1, 1997, Yorkshire Power
Group Limited, through its wholly owned subsidiary Yorkshire Holdings,
gained effective control of Yorkshire.  Yorkshire Power Group Limited's
primary asset is the stock of Yorkshire Holdings.  Yorkshire Holdings,
which beneficially owns all the outstanding stock of Yorkshire, has no
significant operations outside of its investment in Yorkshire.


Significant Factors and Known Trends

Competition and Industry Challenges

On April 1, 1997 and April 1, 1998, Yorkshire's allowed distribution
revenues were decreased by a 3% below inflation reduction, following
reviews by the Regulator, and on April 1, 1999 there was a further 3% below
inflation reduction.

In early December 1999, Ofgem issued final proposals in its review of
the Distribution Price Control Formula. These proposals were in line with
those published in October 1999, and are to be effective for the five year
period beginning April 1, 2000. The proposals included a 15% reduction in
allowed revenue for Yorkshire and a further 8% transfer of costs to
Yorkshire's electricity supply business. Ofgem proposed that the X factor
would continue to be 3%. The overall reduction in distribution revenues for
Yorkshire would be 23%.

If accepted, these proposals would apply from April 1, 2000.  On
December 20, 1999, Yorkshire indicated its intention to accept these
proposals.

Under its PES License, Yorkshire had an exclusive right to supply
electricity to Franchise Supply Customers between 1990 and 1998. The
electricity supply business inside the Authorized Area is now fully open to
competition.

The electricity supply business was divided between Franchise Supply
Customers within the Authorized Area, and Non-Franchise Supply Customers,
inside and outside the Authorized Area.  The Franchise Limit was lowered to
100 kW in April 1994 allowing competition in the supply of electricity for
customers with maximum demands above the Franchise Limit while Franchise
Supply Customers remained subject to price regulation.  On September 14,
1998, phased competition was introduced to the domestic and small business
electricity markets in the UK.  The process was completed for all PES
customers in May 1999.

The current supply price control, which was implemented on April 1,
1998, and is effective until March 31, 2000, takes the form of a series of
price caps on the tariffs applicable to Designated Customers in the
Authorized Area.  These controls also required an additional 3% below
inflation reduction which became effective on April 1, 1999. The automatic
pass-through of costs previously passed through to residential and business
customers below 100kW, consisting primarily of purchase power costs and the
correction factor, which annually adjusted prices for any imbalance between
forecast and actual costs, were both discontinued from April 1, 1998.  From
April 1, 2000, electricity priced within the allowed level will need to be
secured and purchase price risk managed accordingly.  If costs turn out
significantly below the level allowed by the new price control, Ofgem may
take steps to ensure that tariffs are reduced.  Price caps for Fiscal Year
1999 took account of the residual correction factor from Fiscal Year 1998.

In early December 1999, Ofgem issued final proposals for a form of
transitional price regulation for electricity supply businesses for an
additional two years. Such proposals would result in a real price reduction
in Yorkshire's standard domestic tariff of 3.6% for the year beginning
April 1, 2000. This incorporated a 7.3% distribution price reduction as a
result of the distribution price control review. The proposal also provided
for a nominal price freeze for the year beginning April 1, 2001.

Yorkshire believes that competitive pressures in the electricity market
may require it to charge supply prices which are lower than the maximum
prices established by Ofgem.  If Yorkshire charges such lower prices, the
result will be a further reduction in supply revenues beyond that mandated
by Ofgem. Yorkshire's supply business is under competitive and regulatory
pressure to lower supply prices for classes of customers other than those
subject to Ofgem's final supply price proposals.

On December 20, 1999, Yorkshire indicated its intention to accept these
proposals.

In response to Ofgem's final proposals and increasing competition,
Yorkshire has adopted an aggressive program of reducing controllable costs.
Significant features of this program include reductions in capital
expenditure, staff reductions, outsourcing of certain functions and
consolidation of facilities.  Yorkshire intends to aggressively pursue this
cost reduction program and is evaluating additional cost reduction measures
to further mitigate the effects of Ofgem's final proposals and increasing
competition in the electricity supply business.  Yorkshire Group expects
that the net result of Ofgem's electricity supply and distribution price
reductions, and competitive demands in the Supply business and Yorkshire's
mitigation efforts will be a decline in Yorkshire Group's results of
operations and a reduction in its cash flows which, in each case, may be
significant.

With the recent introduction of competition to the electricity supply
market, customers are now able to select their electricity supplier.
Significant additional costs have been incurred by the distribution
business to develop new systems for services to facilitate competition.
The new services, termed "data management services" include meter
operation, data retrieval, processing and aggregation, meter point
administration and distribution use of system billing.

The phase-in of competition in the electricity supply market was
completed for all PESs in May 1999.  The total cost for re-engineering and
information technology work was (POUNDS)67 million.  Of such amount,
approximately (POUNDS)19 million was accounted for in Fiscal Year 1997,
(POUNDS)31 million in Fiscal Year 1998,  (POUNDS)16 million in Fiscal Year
1999, and (POUNDS)1 million in the Transition Period.  Ofgem made proposals
in October 1999 (which were accepted by Yorkshire) to allow Yorkshire
recovery of (POUNDS)25 million over a five year period ending March 31,
2003.  A further (POUNDS)7 million is expected to be recovered through Pool
cost recovery and other national mechanisms and (POUNDS)8 million has been
capitalized as such amount is expected to provide future benefits to the
Supply business, with the balance of (POUNDS)27 million being expensed.  Of
the amount expensed, approximately (POUNDS)19 million was expensed in
Fiscal Year 1997, (POUNDS)2 million was expensed in Fiscal Year 1998 and
(POUNDS)5 million was expensed in Fiscal Year 1999.  The remaining
(POUNDS)1 million was expensed in the Transition Period. The Pool cost
recovery mechanism referred to above pursuant to which (POUNDS)7 million is
expected to be recovered will be terminated with the introduction of NETA.
It is expected that the arrangements under NETA will allow the recovery of
1998 costs as planned.

OFFER also made proposals in October 1997 (which were accepted by
Yorkshire) to provide an annual allowance of (POUNDS)3 million for the
period 1998 through 2000 to cover related operating costs.  This allowance
has been retained for the period to 2004/05 under Ofgem's final
distribution price control formula published in December 1999 and in
addition the set-up cost allowance of (POUNDS)5 million per year has been
extended for a further two years from 2002/03 to 2004/05.  The December
1999 distribution price control final proposal divides the data management
services allowance, which covers both the set up and operating costs
described above, between the electricity supply and distribution businesses
with two thirds of the allowance remaining in the distribution business.
This reflects the transfer of meter reading and data collection activities
to electricity supply.

The Regulator's proposals also provided that RECs should be penalized
as a result of the market opening being delayed beyond April 1998.
Yorkshire has incurred a penalty of (POUNDS)3 million as a consequence of
the delay.  A provision for penalties of (POUNDS)3 million was included in
the results of operations for Fiscal Year 1998.


Separation of Distribution and Electricity Supply

During 1998 and 1999 Yorkshire has implemented a planned business
restructuring intended to enable it to meet increased competition and react
to potential regulatory developments in the energy markets in the UK. The
restructuring has resulted in the distribution and supply businesses of
Yorkshire becoming more self-sufficient (sharing common services where it
is effective and efficient to do so) and in a significant down-sizing of
the corporate center.

On May 13, 1998, OFFER issued a consultation paper on the separation of
the distribution and electricity supply businesses of PESs. Since that
date, there have been a number of further Ofgem consultations on this issue
to which Yorkshire has responded.

The Utilities Bill, published in January 2000, includes a requirement
for separate licensing of electricity supply and distribution and the
introduction of a ban on electricity supply and distribution licenses being
held by the same legal entity (which effectively means that the electricity
supply and distribution businesses of PESs would have to be held by
separate companies).

In October 1999, Ofgem addressed business separation costs in its
proposals on the distribution price control review.  This document included
an allowance for separation costs of (POUNDS)7.5 million for each REC's
distribution business over the next 5 years. Ofgem also proposed that
electricity supply would receive an allowance of (POUNDS)200,000 per year
for the next two years for separation costs.  Although this was in addition
to the distribution allowance, commercial pressures in the competitive
electricity supply market may limit the ability to actually recover these
allowed amounts.

On December 20, 1999, Yorkshire accepted the fundamental principles of
the business separation proposals on the basis of the proposed modification
of condition 12 of the PES license and the acceptance of the compliance
plan submitted by Yorkshire to Ofgem without significant changes. Yorkshire
intends to manage costs within the Ofgem allowance.

On December 22, 1999, Yorkshire agreed to give assurances to Ofgem that
full operational separation would be undertaken in the event of a merger
between Yorkshire and SEEBOARD. The cost allowance for business separation
would not include any costs arising under such assurances.

For further details of business separation see Part I, Item 1
"Yorkshire's Businesses - Business Separation."


Factors Affecting Revenues

Two principal factors determine the amount of revenues produced by the
distribution business: the unit price of electricity distributed (which is
controlled by the Distribution Price Control Formula) and the number of
electricity units distributed (which depends upon customer demands as
influenced in part by economic activity and weather conditions).

Two principal factors determine the amount of revenues produced by the
electricity supply business: the price of the electricity supplied (which,
in the case of Designated Customers within the Yorkshire Authorized Area,
is controlled by the supply price regulation in force) and the number of
electricity units supplied.  The price (except as described in the
preceding sentence) and the number of units supplied, which is largely
determined by the number of customers supplied, are subject to competition.

The revenues produced by the gas supply business are similarly
determined by the price and the volume of gas supplied, which in turn are
determined by the number and characteristics of customers acquired and
lost.


UK Tax Law Changes

On July 2, 1997, the UK government enacted certain changes in tax law,
including a one-time windfall tax on privatized industries and a reduction
in rates of corporation tax on income from 33% to 31%.  The windfall tax on
Yorkshire was (POUNDS)134 million and was not deductible for UK corporation
tax purposes.  The windfall tax has been recorded as an extraordinary
charge in Fiscal Year 1998.  The tax was paid in two equal installments on
December 1, 1997 and 1998.  During Fiscal Year 1998, Yorkshire Group
estimated the impact of the reduction in corporation tax rates, which
resulted in a one-time reduction in deferred income tax liabilities and a
corresponding reduction in income tax expense of approximately (POUNDS)12
million.

On July 31, 1998 a further reduction in the rate of corporation tax on
income, from 31% to 30%, was enacted by the UK government.  This resulted
in a one-time reduction in deferred tax liabilities and a corresponding
reduction in income tax expense of approximately (POUNDS)6 million.


Business Restructuring

In December 1997, Yorkshire announced a planned business restructuring
intended to enable it to meet increased competition and react to potential
regulatory developments in the energy markets in the UK.  The restructuring
has resulted in the distribution and Supply businesses of Yorkshire
becoming more self-sufficient (sharing common services where it is
effective and efficient to do so) and in a significant down-sizing of the
corporate center.

As a result of the business restructuring, approximately 291 positions
were eliminated.  A provision of approximately (POUNDS)10 million was
recorded in Fiscal Year 1998 together with (POUNDS)5 million in Fiscal Year
1999 to reflect the cost of these workforce reductions.

As part of pre-existing plans to reduce debt, Yorkshire's generation
business was disposed of during Fiscal Year 1999.

In November 1998, Yorkshire completed the sale of its 75% interest in
RPG to IVO.  IVO is a subsidiary of Imatran Voima Oy, part of Finland's
energy group Forum.  At this time RPG owned Brigg Power Station, a 272-
megawatt combined cycle, gas fired plant located in North Lincolnshire,
England.  The net book value of the assets sold was (POUNDS)14 million.
The cash consideration received from IVO, including payment for the
intercompany balance and net of cash retained by RPG, was (POUNDS)38
million.  In addition, certain contracts between Yorkshire and RPG were
renegotiated enabling Yorkshire to reduce its balance sheet provision for
uneconomic gas and electricity contracts.  The sale resulted in an increase
in net income in Fiscal Year 1999 of (POUNDS)18 million.

A favorable adjustment to tax liabilities of (POUNDS)8 million in
respect of the disposal, has been recognized in the Transition Period.

On December 31, 1998 Yorkshire entered into an unconditional agreement
to sell its subsidiary, YCL, to PowerGen CHP Limited, a subsidiary of
PowerGen.  At this time YCL owned three combined heat and power plants and
seven peaking facilities with a total declared capacity of 70 MW which were
operational, a 50 MW combined cycle gas plant under test operation, a 56 MW
combined heat and power plant under construction and a 56 MW combined heat
and power plant under development.  Yorkshire will purchase portions of the
output of these facilities for up to 20 years.  The net book value of the
assets sold was (POUNDS)3 million.  The consideration for the sale,
including the payment for the intercompany balance of (POUNDS)69 million,
was (POUNDS)95 million.  The total gain on the sale was (POUNDS)15 million,
of which (POUNDS)8 million after tax was included in net income in Fiscal
Year 1999.  The remaining (POUNDS)7 million was deferred and is being
amortized over the life of contracts existing between Yorkshire and YCL.

The remaining generating assets of Yorkshire, windpower plants held
within a joint venture company, Yorkshire Windpower Limited, were sold in
February 1999 for a loss of (POUNDS)2 million.

Substantially all of the cash received from these sales, approximately
(POUNDS)136 million, net of fees and cash retained by RPG, was used to
reduce the debt of Yorkshire Group.

These transactions completed the disposal of Yorkshire's generation
business.



Business Streamlining

Yorkshire plans to streamline its distribution and Supply workforces
and has announced a reduction of approximately 350 positions (260 positions
from the distribution business and 90 positions from the Supply business)
during 2000 and a further 75 positions from the distribution business in
2001.  Yorkshire is consulting fully with the trades unions on the extent
of the changes and hopes to achieve the redundancies through a voluntary
program. A provision of approximately (POUNDS)7 million has been recorded
in January 2000 to reflect the cost of the 350 reductions in 2000.

Such streamlining is part of the overall program of reducing
controllable costs in response both to Ofgem's final distribution and
electricity supply price control reviews and to increasing competition in
the Supply business.


Investment in Ionica

Yorkshire Group's investment in Ionica was initially included in its
consolidated balance sheet at its fair value at acquisition on April 1,
1997 of (POUNDS)54 million plus a subsequent additional investment of
(POUNDS)1 million.  The book value of the investment was written down by
charging losses of (POUNDS)41 million before taxes in Fiscal Year 1998 and
(POUNDS)11 million before taxes in Fiscal Year 1999.

The reduction in fair value of the investment was initially recognized
by management as "other than temporary" following an announcement by Ionica
on May 22, 1998 that it had been unsuccessful in negotiating release of
credit lines from existing providers of bank finance and had been advised
to obtain further equity investment prior to seeking further bank funding.
Ionica announced on October 29, 1998 that it had appointed administrators
for its operating subsidiary due to its inability to obtain further
investment necessary to continue trading and expand its service.

On March 19, 1999 Yorkshire Group sold its investment in Ionica for
(POUNDS)2 million and recognized a further loss on sale of (POUNDS)1
million in Fiscal Year 1999.


Environmental Factors

Yorkshire's businesses are subject to numerous regulatory requirements
with respect to the protection of the environment.  The principal laws
which have environmental implications for Yorkshire are the Electricity
Act, the Environmental Protection Act 1990, the New Road and Street Works
Act 1991 and the Environment Act 1995.  Yorkshire believes that it has
taken, and intends to continue taking, measures to comply with the
applicable law and government regulations for the protection of the
environment.  There are no material legal or administrative proceedings
pending against Yorkshire with respect to any environmental matter.


Inflation

Inflation neither has had a significant impact on Yorkshire in the last
three years, nor is expected to do so in the foreseeable future.
Yorkshire's revenues from regulated activities are adjusted based on
factors which include an index for inflation in costs of operations.



Market Risks


Commodity Price Risk

Yorkshire has certain market risks inherent in its business activities.
The purchase and sale of electricity and gas exposes Yorkshire to market
risk.  Market risk represents the risk of loss that may impact Yorkshire
due to adverse changes in market prices and rates.

Yorkshire's current electricity supply risk management efforts are
intended to approximately hedge the risks associated with the purchase and
sale of electricity resulting from Pool price volatility.  In the existing
wholesale electricity market, virtually all electricity generated in
England and Wales is sold by generators and bought by suppliers through the
Pool.  The most common contracts for electricity supply to business
customers are for twelve-month terms and contain fixed rates.  Similarly,
domestic and small business tariffs contain fixed rates.  Yorkshire is
exposed to purchase price risk (the risk associated with fluctuations in
the cost of purchased electricity relative to the price received from the
electricity supply customer) to the extent that it has not hedged such
risk.  Yorkshire substantially hedges purchase price risk by employing a
variety of risk management tools, including management of its electricity
supply contract portfolio, hedging contracts and other means which mitigate
the risk of Pool price volatility.  Yorkshire employs risk management
methods to maximize its return consistent with an acceptable level of risk.

Under its current PES License, Yorkshire has a price cap on the prices
it may charge its Designated Customers in the Authorized Area.  From April
2000 the maximum price cap will apply only to domestic customers in the
Authorized area.  Because the maximum price is fixed for these customers,
Yorkshire is at risk from upward movements in purchase costs.  This risk is
mitigated by hedging purchase contracts, mainly through CFDs.

CFDs are contracts predominantly between generators and suppliers,
which fix the major elements of the price of electricity for a contracted
quantity of electricity over a specific time period.  Differences between
the actual price set by the Pool and the agreed prices give rise to
difference payments between the parties to the particular CFD.  Yorkshire
expects its electricity supply demand for the Calendar Year 2000 to be
substantially hedged through various types of agreements, including CFDs.

Yorkshire's ability to manage its purchase price risk depends, in part,
on the continuing availability of properly priced risk management
mechanisms such as CFDs.  No assurance can be given that an adequate,
transparent market for such products will in fact be available.

The current system of wholesale purchasing through the Pool is under
review, and NETA is targeted to be in place by October 31, 2000.  NETA will
replace the Pool.  NETA will require participants to submit half hourly
forecasts of electricity supply and demand and endeavor to balance contract
positions and metered volumes.  There will be incentives, in the form of
imbalance payments, for generators and suppliers to balance their
supply/demand position.  The precise nature of the incentives is currently
being debated.  Yorkshire is redefining current business operations in
order to manage and exploit the new market by seeking to predict its
customers' demand for electricity on a short-term basis as accurately as
possible and to maximize the trading opportunities, while effectively
managing the risks of imbalances.  See Part I, Item 1.  "The Electric
Utility Industry in Great Britain - Regulation under the Electricity Act -
Regulatory Developments - New Electricity Trading Arrangements".

Gas is sourced from Yorkshire's interest in the Armada Field, a
purchase agreement with a major gas supplier designed to meet the majority
of the requirements of Yorkshire's residential gas market, Swing Contracts
and purchases on the spot market which are designed to give Yorkshire a
balanced gas purchase portfolio.  Yorkshire utilizes risk management
methods, in relation to gas purchasing and supply, including storage and an
interruptible customer portfolio, which are designed to maximize its return
consistent with an acceptable level of risk.  A system to evaluate and
enable effective management of risk in gas trading was installed at the
beginning of Calendar Year 1999.  The system enables greater control of all
transactions including daily evaluation of key parameters such as value at
risk and profit and loss positions for each business unit of Yorkshire.

Yorkshire Group measures its open exposure to commodity price
variability within the electricity and gas businesses.  A Value at Risk
("VaR") methodology is used to quantify the amount by which a portfolio can
vary in value over a specified time period based on historical volatility
and correlation of price movements of the positions in the portfolio.

At the respective period ends, the calculated VaR was as follows:

					  December 31    March 31
  					      1999         1999
					    (POUNDS)     (POUNDS)
						 (millions)
Electricity		 			6           2
Gas						1           2

Throughout the Transition Period the highest, lowest and average
quarterly VaR for electricity and gas were less than or equal to (POUNDS)7
million and (POUNDS)1 million respectively.

The specified time period for gas VaR calculations is 5 years, with a
confidence level of 95%.

A time period of 2 years is used for electricity VaR.  It is not
possible to state a statistical confidence level for the calculations as a
result of assumptions that have to be made due to the illiquidity which
currently exists in the electricity wholesale market.  (There are a
relatively small number of generators in the Pool market and a very limited
range of derivative instruments which are effectively traded.)


Credit Risk

Credit risk refers to the risk of financial loss that would result from
the failure of counterparties to comply with the terms of their contractual
obligations with Yorkshire Group.

The concentration of credit risk in respect of trade accounts
receivable is limited, due to Yorkshire's large customer base.

Yorkshire is exposed to losses in the event of non-performance by
counterparties to its CFDs.  To manage this credit risk, Yorkshire selects
counterparties based on their credit ratings, limits its exposure to any
one counterparty under defined guidelines, and monitors the market position
of the programs and its relative market position with each counterparty.

Yorkshire Group is also exposed to losses in the event of non-
performance by counterparties to its financial market transactions.  To
manage this credit risk, Yorkshire Group selects counterparties based on
their credit ratings and applies limits to its exposure to each
counterparty.


Foreign Currency Exchange Rate Risk

Yorkshire Group is partly funded by US Dollar-denominated debt. Changes
in the US Dollar/Pound Sterling exchange rate will affect the Pound
Sterling value of cash flows under the US Dollar-denominated debt and the
Pound Sterling fair value of the US Dollar-denominated debt. Yorkshire
Group uses cross-currency swaps to manage the cash flow and translation
risks arising from its exposures to foreign currency exchange rate
movements associated with US Dollar-denominated debt.

In June 1998, Yorkshire Group issued $275 million aggregate principal
amount of 8.08% Trust Securities which mature in 2038. In the absence of
appropriate cover for this maturity, cross-currency swaps maturing in June
2008 are used to manage the foreign currency exchange rate risk arising
from the Trust Securities borrowings. The US Dollar interest cash flows
received under the cross-currency swaps match the US Dollar quarterly
coupon payments under the Trust Securities until 2008. The original nominal
value of the cross-currency swaps was $265 million.  In December 1999
Yorkshire Group repurchased Trust Securities with a nominal value of
approximately $3 million.  In order to preserve the hedge of US Dollar
interest cash flows one of the cross-currency swaps was partially
cancelled.  The aggregate nominal value of the cross-currency swaps at
December 31, 1999 was $262 million. The risks arising from the mismatches
in the maturity dates and principal values of the Trust Securities and the
cross-currency swaps are not considered material.

All US Dollar cash flows under other US denominated debt issued by
Yorkshire Group are matched by cash flows under cross-currency swaps.



Interest Rate Risk

Yorkshire Group is partly funded by short and long-term Pound Sterling-
denominated debt bearing variable and fixed interest rates and long-term US
Dollar-denominated debt bearing fixed interest rates. Changes in Pound
Sterling and US Dollar interest rates will affect the cash flows under debt
bearing variable interest rates and the fair value of debt bearing fixed
interest rates.

Yorkshire Group uses interest rate caps to manage its cash flow
exposures to Pound Sterling-denominated debt that bears interest at
variable rates. Other financial instruments may be used in the future.

At December 31, 1999, fixed interest rates were payable on 79% of debt
and interest rate caps covered a further 3% of debt; the average debt
maturity was 14 years.

<TABLE>
The following tables present by Calendar Year of maturity date, as of
December 31, 1999 and March 31, 1999, the total principal cash repayments
and related weighted average interest rates of Yorkshire Group's debt and
the total principal amounts and weighted average interest rates of
Yorkshire Group's cross currency swaps and interest rate cap.
<CAPTION>

At December 31, 1999


All amounts, 	         Maturity date
Millions	     2000     2001    2002   2003  2004   There                   Fair
	                                		   after       Total      value
<S>                <C>     <C>       <C>       <C>   <C>  <C>         <C>     	 <C>
Debt
Fixed interest rate
  Pound sterling-
  denominated debt
    Amount  	  (POUNDS)9(POUNDS)4(POUNDS)4     -     - (POUNDS)550(POUNDS)567(POUNDS)649
    Average interest
      rate	       6.9%     7.5%     7.5%     -     -        8.3%       8.3%

Variable interest rate
  Pound sterling-
  denominated debt
    Amount     (POUNDS)295       -        -      -      -          - (POUNDS)295(POUNDS)295
    Average interest
      rate 	      6.0%       -        -      -      -          -        6.0%

Fixed interest rate
  US dollar-denominated
  debt
   Amount                -        -        -   $350      -       $572       $922      $806
   Average interest rate -        -        -   6.2%      -       7.2%       6.8%

Cross currency swaps                                                                  ($84)
Receive fixed interest
  rate US dollars
   Amount                -        -         -  $350      -       $562       $912
   Average interest rate -        -         -   6.2%     -       7.4%       6.9%
Vs.
Pay fixed interest
  rate Pounds sterling
   Amount                -        -         -(POUNDS)215 - (POUNDS)345(POUNDS)560
   Average interest rate -        -         -       8.1% -        8.8%       8.5%


Interest rate cap
    Nominal amount       -(POUNDS)40        -         -  -          -   (POUNDS)40(POUNDS)-
    Interest rate	 -      7.5%        -         -  -          -         7.5%

At March 31, 1999


All amounts, 	                         Maturity date (Fiscal Year)
Millions	      2000        2001        2002     2003    2004   There                  Fair
	                                                              after      Total      value

Debt
Fixed interest rate
  Pound sterling-
  denominated debt
    Amount	  (POUNDS)8   (POUNDS)9  (POUNDS)4 (POUNDS)4     - (POUNDS)550(POUNDS)575 (POUNDS)690
    Average interest
      rate	        7.0%        7.0%      7.5%       7.5%    -        8.3%       8.3%

Variable interest rate
  Pound sterling-
  denominated debt
    Amount	 (POUNDS)131           -        -         - (POUNDS)130     - (POUNDS)261(POUNDS)261
    Average interest
      rate		 6.1%          -        -         -    6.4%         -        6.2%

Fixed interest rate
  US dollar-denominated
  debt
   Amount                  -           -        -      $350     -        $575       $925   $913
   Average interest rate   -           -        -      6.2%     -        7.3%       6.8%

Cross currency swaps                                                        		  ($108)
Receive fixed interest
  rate US dollars
   Amount                  -           -        -      $350     -        $565       $915
   Average interest rate   -           -        -      6.2%     -        7.4%       6.9%
Vs.
Pay fixed interest
  rate Pounds sterling
   Amount                  -           -        - (POUNDS)215   - (POUNDS)347(POUNDS)562
   Average interest rate   -           -        -      8.1%     -        8.8%       8.5%


Interest rate cap
    Nominal amount	    -          -  (POUNDS)40     -      -          -  (POUNDS)40  (POUNDS)-
    Interest rate	    -          -        7.5%     -      -          -        7.5%


- The average interest rates shown are weighted average interest
rates.

- The average interest rate of debt is based on the coupon or
interest rates of the debt that is maturing in the period reported.

- The variable interest rate Pound Sterling-denominated debt at
December 31, 1999 comprises: (POUNDS)135 million of borrowings under
Yorkshire Group's revolving credit facility, a (POUNDS)130 million term
loan, (POUNDS)20 million drawn under uncommitted credit facilities and
(POUNDS)10 million of loan notes on which the interest rate is reset semi-
annually, with the next reset being made on March 31, 2000, and which may
be redeemed at various dates from March 31, 2000.

- The weighted average term of the variable interest rate Pound
Sterling-denominated debt at December 31, 1999, was 50 days.
</TABLE>

Year 2000 Issues

Yorkshire Group has successfully completed a program to combat the
threat of systems and equipment failing to interpret correctly dates
falling after December 31, 1999.

The overall expenditure on this project was (POUNDS)16 million at
December 31, 1999 and it is anticipated that further costs to be incurred
will be less than (POUNDS)1 million. Of the (POUNDS)16 million,
approximately (POUNDS)13 million has been expensed and (POUNDS)3 million
has been capitalized. The expected remaining costs will be expensed in
Calendar Year 2000.

The success of the program was measured by the fact that there was no
disruption to customers, no significant adverse publicity, no major legal
liabilities, no financial penalties and no increases in health, safety and
environmental risks to staff or the general public.  Yorkshire Group is not
aware of any disruption to trading resulting from the reaction of customers
to the threat of the Year 2000 problem.

Yorkshire Group is continuing to monitor its systems and liaise with
its suppliers to mitigate continued risks associated with Year 2000 issues.
These risks include a failure of systems to detect that the Year 2000 is a
leap year and the effect this may have on suppliers.

No significant issues have arisen on or after January 1, 2000 but
Yorkshire Group has retained contingency plans to deal with situations
related to the Year 2000 problem, thus reducing the risk of any adverse
impact on operations.


European Monetary Union

On January 1, 1999, 11 European Union countries formed an economic and
monetary union and introduced a single currency, the Euro.  Although the UK
did not join at this time, the UK Government has indicated that it may join
in the future.  Management is currently assessing the effort required to
prepare Yorkshire Group for the potential introduction of the Euro in the
UK.


Review of Policy on Depreciation of Operational Assets

Yorkshire is currently reviewing the useful economic lives of its
operational assets, which may result in changes to the useful economic
lives and method of charging depreciation on those assets.
<TABLE>
RESULTS OF OPERATIONS
<CAPTION>

Transition Period Compared with the Nine Month Period Ended December 31,
1998


				    9 Months ended    Increase / (Decrease)
				       December 31,
					1999 	1998
 						unaudited
				   (POUNDS) (POUNDS)	(POUNDS)          %
                   				(millions)
<S>                                  <C>        <C>         <C>         <C>
Operating revenues		     1,037      972          65          7

Gross margin			       320      340         (20)        (6)

Maintenance			        44       45          (1)        (2)
Depreciation and amortization	        61       56           5          9
Selling, general and
administrative expenses		        88       93          (5)        (5)
Income from operations		       127      146         (19)       (13)
Loss on investment in
Ionica				         -      (11)        (11)      (100)
Other income			         6        4           2         50
Interest expense		       (87)     (99)        (12)       (12)
Interest income			         1        5          (4)       (80)
Income from continuing operations
before income taxes		        47       45           2          4
Provision (benefit) for income taxes    14       (4)         18        450
Income from continuing operations       33       49         (16)       (33)

</TABLE>
Earnings

Income from continuing operations decreased by (POUNDS)16 million (33%)
from (POUNDS)49 million in the nine month period ended December 31, 1998 to
(POUNDS)33 million in the Transition Period.  This decrease was due
primarily to reductions in electricity and gas supply margins and a
favorable tax adjustment in the nine month period ended December 31, 1998.
This was partially offset by a reduction in interest expense, a decrease in
selling, general and administrative expenses and the recording of losses on
the investment in Ionica in the nine month period ended December 31, 1998.

Income (loss) from operations by segments for the Transition Period was
(POUNDS)111 million, (POUNDS)39 million and (POUNDS)(5) million for the
distribution, supply and other segments, respectively, in addition to non-
allocated costs of (POUNDS)18 million. Income (loss) from those segments in
the nine month period ended December 31, 1998 was (POUNDS)113 million,
(POUNDS)55 million and (POUNDS)(3) million respectively, in addition to
non-allocated costs of (POUNDS)19 million.


Revenues

Operating revenues increased by (POUNDS)65 million (7%), from
(POUNDS)972 million in the nine month period ended December 31, 1998 to
(POUNDS)1,037 million in the Transition Period.  This increase is analyzed
as follows:

					     Operating Revenues
					   from External Customers
					     Increase (Decrease)
					   from the Nine Months Ended
					      December 31, 1998
					   to the Transition Period
					         (POUNDS) millions

   Distribution						    19
   Supply						    49
   Other   						    (3)

   Total operating revenues				    65


Overall revenues (including inter-business sales) for the distribution
business have remained stable at (POUNDS)238 million for the Transition
Period, compared with (POUNDS)237 million for the nine month period ended
December 31, 1998.  However, a greater proportion of revenues from the
distribution business are now received from external customers due to the
opening up of competition in the domestic electricity supply market.

Residential and small (<100kW) commercial customers, comprised 48% of
total electricity sales volume for the Transition Period and 50% for Fiscal
Year 1999.  The volume of unit sales of electricity for such customers is
influenced largely by the number of customers in the Authorized Area,
weather conditions and prevailing economic conditions.  (Since Yorkshire's
exclusive right to supply Franchise Supply Customers ended during Fiscal
Year 1999, the number of residential and small commercial electricity
supply customers is subject to competition.)  Unit sales to >100kW Supply
Customers, who are typically large commercial and industrial businesses,
constituted 52% of total sales volume for the Transition Period and 50% for
Fiscal Year 1999.  Sales to these customers are determined primarily by the
success of the Supply business in contracting to supply electricity to
customers who are located both inside and outside the Authorized Area.  The
increase in the proportion of total electricity sales volume attributable
to >100kW Supply customers has arisen as a result of increased volumes
supplied to this market.

During the Transition Period, total revenues (including inter-business
sales) produced by the Supply business increased by (POUNDS)37 million (4%)
to (POUNDS)997 million from (POUNDS)960 million for the nine month period
ended December 31, 1998.  Revenues increased primarily due to the increase
in volumes supplied in the residential and non-residential gas supply
markets and an increase in volumes in the commercial electricity supply
market.

Gross Margin

Gross margin decreased by (POUNDS)20 million (6%) from (POUNDS)340
million in the nine month period ended December 31, 1998 to (POUNDS)320
million in the Transition Period  due to the factors described below.

Although the number of residential gas supply customers increased,
sales volumes were below expectations partly due to the effect of warmer
weather.  Gross margin percentages for the gas supply business have
decreased as lower than expected sales volumes led to the sale of excess
gas at reduced margins.

Gross margin for the electricity supply business has decreased. Higher
electricity Pool prices and price competition in the non-residential sector
have offset the positive impact of lower CFD costs and increased sales
volumes to both residential and non-residential customers.

Operating Costs

The decrease in selling, general and administrative costs is largely
due to reduced expenditures in relation to the development of new systems
to facilitate competition and reduced costs incurred relating to Year 2000
modifications.

The increase in depreciation and amortization expense is due to
increased capital expenditure in both the Supply and distribution
businesses.

Net Interest Expense

The decrease in interest expense resulted from the application of the
proceeds from the sale of the generation business to reduce the debt of
Yorkshire Group.

Income taxes

The nine month period ended December 31, 1998 was favorably affected by
a (POUNDS)12 million settlement of prior years' tax liabilities and a
(POUNDS)6 million impact of the reduction in the rate of the UK corporation
tax on income from 31% to 30%.  Yorkshire Group has recognized a favorable
tax settlement of (POUNDS)12 million in respect of prior years' tax
liabilities in the Transition Period.  The effective tax rate in both
periods has been increased by the amortization of goodwill, which is not
deductible for UK income tax purposes.


Fiscal Year 1999 Compared with Fiscal Year 1998


Earnings

Income from continuing operations before extraordinary item and
discontinued operations increased by (POUNDS)50 million (556%) from
(POUNDS)9 million for Fiscal Year 1998 to (POUNDS)59 million for Fiscal
Year 1999.  This increase was due primarily to the following: increases in
electricity and gas supply margins, a write down/loss on sale of the
investment in Ionica of (POUNDS)12 million in Fiscal Year 1999 compared
with a write down of (POUNDS)41 million in Fiscal Year 1998 and a
(POUNDS)12 million reduction in estimated tax liabilities.  These items
were partly offset by increased interest expense and an increase in
selling, general and administrative costs.

Income (loss) from operations by segments for Fiscal Year 1999 was
(POUNDS)153 million, (POUNDS)69 million and (POUNDS)(3) million for the
distribution, supply and other segments, respectively, in addition to non-
allocated costs of (POUNDS)24 million.  Income (loss) from those segments
in Fiscal Year 1998 was (POUNDS)154 million, (POUNDS)33 million and
(POUNDS)(11) million, respectively, in addition to non-allocated costs of
(POUNDS)28 million.

In addition to the factors discussed above, which affect net income
(loss), the net loss for Fiscal Year 1998 includes an extraordinary charge
of (POUNDS)134 million for the windfall tax enacted by the UK Government in
July 1997, which was not deductible for income tax purposes.



Revenues

Operating revenues increased by (POUNDS)132 million (11%), from
(POUNDS)1,234 million in Fiscal Year 1998 to (POUNDS)1,366 million in
Fiscal Year 1999.  This increase is analyzed as follows:

				     Operating Revenues
				   from External Customers
				     Increase (Decrease)
				   from  Fiscal Year 1998
				     to Fiscal Year 1999
				         (POUNDS) millions

 Distribution				    10
 Supply					   126
 Other   				    (4)

 Total operating revenues		   132


Overall revenues from the distribution business (including inter-
business sales) increased by (POUNDS)13 million (4%), from (POUNDS)309
million in Fiscal Year 1998 to (POUNDS)322 million in Fiscal Year 1999.
This increase is primarily due to an increase in the volume of electrical
contracting work undertaken.

Residential and small (<100kW) commercial customers, (Designated
Customers in Fiscal Year 1999 and Franchise Supply Customers in Fiscal Year
1998) comprised 50% of total electricity sales volume for Fiscal Year 1999
and 52% for Fiscal Year 1998.  The volume of unit sales of electricity for
such customers is influenced largely by the number of customers in the
Authorized Area, weather conditions and prevailing economic conditions.
(Since Yorkshire's exclusive right to supply Franchise Supply Customers
ended during Fiscal Year 1999, the number of residential and small
commercial electricity supply customers is subject to competition.)  Unit
sales to >100kW Supply Customers, who are typically large commercial and
industrial businesses, constituted 50% of total sales volume for Fiscal
Year 1999 and 48% for Fiscal Year 1998.  Sales to these customers are
determined primarily by the success of the supply business in contracting
to supply electricity to customers who are located both inside and outside
the Authorized Area.

During Fiscal Year 1999, total revenues produced by the Supply business
(including inter-business sales) increased by (POUNDS)124 million (10%) to
(POUNDS)1,346 million from (POUNDS)1,222 million for Fiscal Year 1998.
Revenues increased primarily due to the signing of new electricity
contracts with Non-Franchise Supply Customers in April 1998 and the
commencement of residential gas sales in Fiscal Year 1999.  Of the total
increase of (POUNDS)124 million, (POUNDS)70 million relates to gas supply.


Gross Margin

Gross margin increased by (POUNDS)88 million (24%), from (POUNDS)372
million in Fiscal Year 1998 to (POUNDS)460 million in Fiscal Year 1999 as a
result of both the increase in operating revenues described above and
reduced unit purchase costs for electricity and gas.  The reduced unit
purchase costs for electricity have arisen as a result of lower Pool
prices, lower-cost CFDs with generators and reduced costs levied by NGC for
the management of demand and supply in the Pool.


Operating Costs

Operating expenses increased by (POUNDS)41 million (18%) from
(POUNDS)224 million in Fiscal Year 1998 to (POUNDS)265 million in Fiscal
Year 1999.  This increase was due primarily to a (POUNDS)36 million
increase in selling, general and administrative costs, together with a
(POUNDS)5 million increase in maintenance expense.

The increase in selling, general and administrative costs is largely
due to expenditures in relation to the opening up of the competitive market
in the supply business, including ongoing marketing and customer service
costs, and costs incurred in relation to Year 2000 modifications.

The increase in maintenance expense is due primarily to increased
engineering information system costs in Fiscal Year 1999.


Other Income/Expense - Loss on Investment in Ionica

During Fiscal Year 1999, management wrote down the investment in Ionica
to their estimate of fair value by charging a loss of (POUNDS)11 million
before taxes, in addition to the (POUNDS)41 million before taxes charged in
Fiscal Year 1998.  The reduction in fair value of the investment was
initially recognized by management as "other than temporary" following an
announcement by Ionica on May 22, 1998 that it had been unsuccessful in
negotiating release of credit lines from providers of bank finance and had
been advised to obtain further equity investment prior to seeking further
bank funding.  On October 29, 1998 Ionica appointed administrators, as it
had been unable to obtain further equity investment.

On March 19, 1999 Yorkshire Group sold its investment in Ionica for
(POUNDS)2 million, recognizing a further loss on sale of (POUNDS)1 million.


Net Interest Expense

Net interest expense increased by (POUNDS)18 million (17%), from
(POUNDS)104 million in Fiscal Year 1998 to (POUNDS)122 million in Fiscal
Year 1999.

The increase in interest expense in Fiscal Year 1999 arises from the
debt in connection with Yorkshire Group's acquisition of Yorkshire being
drawn down in installments during the first quarter of Fiscal Year 1998 and
higher interest rates in Fiscal Year 1999.


Income Taxes

Fiscal Year 1999 was favorably affected by a (POUNDS)12 million
adjustment to tax liabilities.

During Fiscal Year 1998, the UK rate of corporation tax on income was
reduced from 33% to 31%, resulting in a reduction of tax of (POUNDS)12
million.  A further reduction in the rate of corporation tax on income,
from 31% to 30%, was enacted by the UK government in Fiscal Year 1999 and
resulted in a reduction in tax liabilities of (POUNDS)6 million for
Yorkshire Group.

Yorkshire Group's effective income tax rate, excluding the windfall tax
in Fiscal Year 1998, increased from (6%) for Fiscal Year 1998 to 7% for
Fiscal Year 1999.  The effective income tax rate in both years has been
increased by the amortization of goodwill, which is not deductible for UK
income tax purposes.



Liquidity and Capital Resources

Yorkshire Power Group Limited's primary asset is the entire share
capital of Yorkshire Holdings, which, in turn, owns the entire share
capital of Yorkshire as its primary asset.  Yorkshire Power Group Limited
is therefore dependent upon dividends from Yorkshire for its cash flow.

Financing

During Fiscal Years 1999 and 1998, Yorkshire Group refinanced the 1997
Credit Facility, which matured on July 30, 1998.  The 1997 Credit Facility
was refinanced through a series of transactions including the February 1998
issuance of (POUNDS)197 million guaranteed Eurobonds, the February 1998
issuance of (POUNDS)400 million of Senior Notes, the June 1998 issuance of
(POUNDS)162 million Trust Securities and the entering into of a (POUNDS)550
million syndicated credit facility in July 1998.

The syndicated credit facility consisted of four tranches: Tranche A, a
(POUNDS)150 million 364 day revolving credit with a one-year extension
option (reduced to (POUNDS)100 million in Fiscal Year 1999 and subsequently
cancelled on April 21, 1999); Tranche B, a (POUNDS)130 million 5 year term
loan cancelled on December 15, 1999; Tranche C, a (POUNDS)50 million 5 year
revolving credit facility and Tranche D, a (POUNDS)220 million 5 year
revolving credit facility.  Tranches A and B were drawn down to repay the
1997 Credit Facility.  During the Transition Period the (POUNDS)130 million
loan under Tranche B was replaced in December 1999 by two (POUNDS)65
million 364 day bridging loans, (the "Bridge Facility"). At December 31,
1999 amounts outstanding under the above syndicated credit facility were as
follows: Tranche D - (POUNDS)135 million.

Yorkshire Power Pass-Through Asset Trust 2000-1 (the "PATS Trust") is a
New York common law trust, the sole assets of which consist of (i) a 100%
beneficial interest in (POUNDS)155 million principal amount of Reset Senior
Notes, issued in February 2000 and due February 15, 2020, (the "Senior
Notes") issued by Yorkshire Finance 2 ("YPF2"), a subsidiary of Yorkshire
Power Group (YPG) and (ii) the rights of the PATS Trust under a currency
swap with UBS AG, London Branch (the "Currency Swap") and an option granted
to UBS AG, London Branch (the "Call Option").

The PATS Trust has issued $250 million principal amount of 8.25% Pass-
Through Asset Trust Securities (PATS) due February 15, 2005 (the
Certificates). All of the US Dollar proceeds from the offering by the PATS
Trust of the Certificates have been swapped by the Trust with UBS AG,
London Branch for (POUNDS) Sterling pursuant to the Currency Swap. The PATS
Trust has used the (POUNDS) Sterling, together with the proceeds received
by the PATS Trust from UBS AG, London Branch under the Call Option, to
purchase the Senior Notes issued by YPF2.  YPF2 has loaned the net proceeds
to YPG and subsidiaries. YPG has issued a guarantee that fully and
unconditionally guarantees the due and punctual payment of principal and
interest on the Senior Notes.


The issue raised net proceeds of (POUNDS)165 million, after deducting
an allowance for issue costs, which was used as working capital and for the
repayment of debt, including repayment of the Bridge Facility.

Available Sources of Credit

At December 31, 1999, in addition to cash flow from Yorkshire's
operations available for distribution indirectly to Yorkshire Group,
Yorkshire Group had (POUNDS)135 million available under the syndicated
credit facility, as its primary source of liquidity.

Yorkshire Group will also be required to fund its ongoing capital
expenditures, fund its debt service and cover its seasonal working capital
needs.  Yorkshire Group expects to fund these ongoing cash requirements
through a combination of available cash flow from Yorkshire's operations,
amounts raised by the issue of the Certificates and amounts available under
the syndicated credit facility.

Use and Source of Funds

The principal sources of funds of Yorkshire Group during the Transition
Period were (POUNDS)70 million from operations, which reflects interest
paid of (POUNDS)74 million and tax paid of (POUNDS)1 million and
(POUNDS)500 million available under the syndicated credit facility (reduced
to (POUNDS)270 million during the period).  During this period, Yorkshire
Group utilized (POUNDS)100 million for capital expenditures.  Proceeds from
asset sales totalled (POUNDS)1 million.

The principal source of funds of Yorkshire Group during Fiscal Year
1999 were (POUNDS)31 million from operations, which reflects interest paid
of (POUNDS)104 million and tax paid of (POUNDS)67 million, in respect of
the second installment of the windfall tax; (POUNDS)162 million from the
issue of Trust Securities; (POUNDS)550 million available under the
syndicated credit facility (reduced to (POUNDS)500 million during the year)
and (POUNDS)136 million from the sale of the generation business.  During
this period Yorkshire Group utilized (POUNDS)149 million for capital
expenditures.  Proceeds from asset sales (excluding the sale of the
generation business) totalled (POUNDS)11 million.

The principal sources of funds of Yorkshire Group during Fiscal Year
1998 were (POUNDS)62 million from operations, which reflects interest paid
of (POUNDS)132 million and tax paid of (POUNDS)77 million, including the
first installment of the windfall tax of (POUNDS)67 million.  Yorkshire
Group raised (POUNDS)1,034 million from the 1997 Credit Facility and
(POUNDS)440 million in equity.  During this period, Yorkshire Group
utilized (POUNDS)1,474 million to acquire Yorkshire, (POUNDS)191 million
for capital expenditures and raised (POUNDS)593 million from the issue of
bonds.  Proceeds from asset sales totalled (POUNDS)20 million.


Capital Expenditures

Yorkshire Group's capital expenditures are primarily related to the
distribution business and include expenditures for load-related, non-load-
related and non-operational capital assets.  Load-related capital
expenditures are largely required by new business growth.  Customer
contributions are normally received where capital expenditures are made to
extend or upgrade service to customers (except to the extent that such
capital expenditures are made to enhance Yorkshire's distribution network
generally).  Non-load-related capital expenditures include asset
replacement which is expected to continue until at least the next decade.
Other non-load-related expenditures include system upgrade work that
provides for load growth and has the additional benefit of improving
network security and reliability.  Non-operational capital expenditures are
for assets such as fixtures and equipment.  For the Transition Period and
Fiscal Year 1999 capital expenditures, net of customer contributions, were
(POUNDS)100 million and (POUNDS)149 million, respectively.  Yorkshire is
required to file five year projections with the Regulator for gross capital
expenditures related to its regulated distribution network and updates of
such projections annually.  The projections are based on Fiscal Year 1996
prices, as required by the Regulator.  The most recent projection was for
the five year period ended March 31, 2000 and was filed in June 1999.  This
filing indicated Yorkshire's current projection of approximately
(POUNDS)540 million in capital expenditures for the five year period.  As
part of the distribution price control review process the five year period
to March 31, 2005 was considered.  In Ofgem's final proposals, published in
December 1999, Yorkshire's distribution allowed revenues were based on
Ofgem's capital projections for load and non-load related expenditure
totaling (POUNDS)454 million (in Fiscal Year 1998 prices).

Management believes that cash flow from operations, together with its
new and existing sources of credit will provide sufficient financial
resources to meet Yorkshire Group's projected capital needs and other
expenditure requirements for the foreseeable future.  Following the
Acquisition, Yorkshire agreed to an amendment to its PES License to the
effect that it will use all reasonable endeavors to ensure that it
maintains an investment grade credit rating on its long-term debt.

Risk Management

Demand for electricity in the UK is seasonal, with demand being higher
in the winter months and lower in the summer months.  Yorkshire bills its
smaller electricity supply customers on a staggered quarterly basis while
it is generally required to pay related expenses (principally the cost of
purchased electricity) on 28-day terms.  However, approximately 52% of the
smaller (<100kW) electricity supply customers settle their accounts using
regular payment plans based on prepayment or spreading of the cost of their
annual bill evenly throughout the year.  A majority of Yorkshire's supply
revenues are based on a fixed price per unit.  The cost of supply to
Yorkshire from the Pool, if not covered by hedging mechanisms, varies
throughout the year, generally being higher in winter months and lower in
summer months.  Yorkshire balances the effect of these influences on its
working capital needs with drawings under its available credit facilities.

Yorkshire is exposed to risk arising from differences between the fixed
price at which it sells electricity and the fluctuating prices at which it
purchases electricity unless it can effectively hedge such exposure.  To
mitigate its exposure, Yorkshire utilizes CFDs with major UK power
generators to fix the price of electricity.  Yorkshire had entered into
CFDs and power purchase contracts for 14,520 GWh of electricity at December
31, 1999 and 33,275 GWh at March 31, 1999.  Yorkshire's electricity sales
volumes were 16,628 GWh, 21,676 GWh and 20,236 GWh for the Transition
Period, Fiscal Years 1999, and 1998 respectively.


New Accounting Standards

SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", was issued in June 1998.  This statement was originally
scheduled to be effective for all fiscal quarters of fiscal years beginning
after June 15, 1999: SFAS No. 137 has delayed the effective date for one
year.  SFAS 133 establishes accounting and reporting standards for
derivative instruments.  It requires that all derivatives be recognized as
either an asset or a liability, measured at fair value, in the financial
statements.  If certain conditions are met a derivative may be designated
as a hedge of possible changes in fair value of a recognized asset or
liability or of an unrecognized firm commitment; variable cash flows of a
recognized asset or liability or of a forecasted transaction; or foreign
currency exposure.  The accounting/reporting for fair value changes in a
derivative used as a hedging instrument depends on the intended use and
resulting designation of the derivative.  Management is currently studying
the provisions of SFAS 133 to determine the impact of its adoption on
results of operations, cash flows and financial condition.  Yorkshire
intends to adopt the standard as required by January 2001.


Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to the "Market Risks" section in Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Yorkshire Power Group Limited and Subsidiaries (Successor Company).


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
						     Page
Yorkshire Power Group Limited and Subsidiaries

	Unaudited Pro Forma Consolidated Statement
  of Income                                            93

Yorkshire Power Group Limited and Subsidiaries

Independent Auditors' Report                           95
Consolidated Statements of Income                      96
Consolidated Balance Sheets                            97
Consolidated Statements of Changes in
  Shareholders' Equity                                 99
Consolidated Statements of Cash Flows                 100
Notes to the Consolidated Financial Statements        102
<TABLE>
YORKSHIRE POWER GROUP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR
THE YEAR ENDED MARCH 31, 1997
<CAPTION>
The following unaudited pro forma consolidated statement of income is
based upon the consolidated statement of income for the year ended March
31, 1997 of the Predecessor Company adjusted to reflect the items described
in notes (1) through (4) below as if the indirect acquisition of the
Predecessor Company by the Successor Company had occurred at April 1, 1996.

				                  (In Millions)

			  Predecessor 		               Pro Forma for
			    Period			       the Year Ended
			  April 1, 1996 to     Adjustments     March 31, 1997
			  March 31, 1997
		         (POUNDS)   (1)     (2)    (3)     (4)(POUNDS)   $(5)
<S>                        <C>      <C>      <C>    <C>    <C> <C>     <C>
Operating revenues	   1,331     -       -      -       -  1,331   2,145
Income from operations	      52     -     (24)    (6)     84    106     171
Other income
   Gain on sale of
     associate		      15     -       -      -       -     15      24
   Other		       5     -       -      -       -      5       8
   Total other income	      20     -       -      -       -     20      32
Interest expense	     (55)  (74)      -      -       7   (122)   (197)
Interest income		      22     -       -      -       -     22      36
Net interest expense	     (33)  (74)      -      -       7   (100)   (161)
Income before income taxes    39   (74)    (24)    (6)     91     26      42
Provision for income taxes   (13)   24       -      2     (30)   (17)    (27)

Net income		      26   (50)    (24)    (4)     61      9      15


(1)	To reflect the interest expense recorded in connection with the
Acquisition financed by (POUNDS)22 million loan notes issued by
Yorkshire Holdings and (POUNDS)1,034 million in short-term debt
incurred by the Successor Company and share capitalization of
(POUNDS)440 million.  The loan notes issued by Yorkshire Holdings are
redeemable at the option of the bond holder until 2002.  An interest
rate of 7% has been assumed for both types of debt.  The impact of a
1/8% change in the assumed interest rate would affect net income by
(POUNDS)1 million.

(2)	Amortization of goodwill recorded in connection with the Acquisition.

(3)	Additional depreciation expense that would have been recorded in
connection with the Acquisition.

(4)	To remove the effect of recording the provision for uneconomic gas and
electricity contracts ((POUNDS)78 million), loss on interest rate swap
agreements ((POUNDS)7 million) and write-down of non-operational
properties ((POUNDS)6 million).  If the Acquisition had occurred on
April 1, 1996, these items would have been accounted for as fair value
adjustments at that date.


YORKSHIRE POWER GROUP AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR
THE YEAR ENDED MARCH 31, 1997

(5)	Solely for convenience of the reader, UK pound sterling amounts have
been translated into US dollars at the closing mid-point in London on
December 31, 1999 of $1.6117 = (POUNDS)1.  See Note 1 ''Summary of
Significant Accounting Policies'' to Yorkshire Group's consolidated
financial statements for the Transition Period included elsewhere in
this document.


During Pro Forma Fiscal Year 1997, the Predecessor Company incurred
expenses of (POUNDS)8.0 million relating to the Acquisition.

No adjustments have been made to the pro forma consolidated statement
of income in respect of discontinued operations.
</TABLE>
<PAGE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
YORKSHIRE POWER GROUP LIMITED


We have audited the accompanying consolidated balance sheets of
Yorkshire Power Group Limited and its subsidiaries (the "Company") as of
December 31, 1999 and March 31, 1999, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for
the nine months ended December 31, 1999 and for the years ended March 31,
1999 and 1998 (all expressed in pounds sterling).  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted within the United States of America.  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Yorkshire Power Group
Limited and its subsidiaries as of December 31, 1999 and March 31, 1999,
and the results of their operations and their cash flows for the nine
months ended December 31, 1999 and for the years ended March 31, 1999 and
1998 in conformity with accounting principles generally accepted in the
United States of America.

Our audit also comprehended the translation of the pounds sterling
amounts into US dollar amounts and, in our opinion, such translation has
been made in conformity with the basis stated in Note 1.  Such US dollar
amounts are presented solely for the convenience of readers in the United
States of America.


/S/Deloitte & Touche LLP

Deloitte & Touche LLP
Columbus, Ohio
March 16, 2000
<PAGE>
<TABLE>

YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 (In Millions)
<CAPTION>
					     9 Month Period Ended   Year Ended
                                          	December 31          March 31,
              					    1999       	    1999    1998
					      (POUNDS)     $     (POUNDS) (POUNDS)
						      (See Note 1)
<S>                                             <C>       <C>      <C>     <C>
OPERATING REVENUES				1,037     1,671    1,366   1,234

COST OF SALES					  717     1,156      906     862

GROSS MARGIN					  320       515      460     372

OPERATING EXPENSES
  Maintenance					   44        71       69      64
  Depreciation and amortization			   61        98       76      71
  Selling, general and administrative		   88       142      115      79
  Restructuring charges			   	    -         -        5      10

INCOME FROM OPERATIONS				  127       204      195     148

OTHER INCOME EXPENSE
  Loss on investment in Ionica		    	    -         -      (12)    (41)
  Other income, net				    6        10        1       2
    Total other income (expense), net	    	    6        10      (11)    (39)

NET INTEREST EXPENSE
  Interest expense				  (87)     (140)    (126)   (117)
  Interest income				    1         2        4      13
    Net interest expense			  (86)     (138)    (122)   (104)

INCOME FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES				   47        76       62       5

PROVISION (BENEFIT) FOR INCOME TAXES	  	   14        23        3      (4)

INCOME FROM CONTINUING OPERATIONS
  BEFORE EXTRAORDINARY ITEM AND
    DISCONTINUED OPERATION			   33        53       59       9

INCOME FROM DISCONTINUED OPERATION
  NET OF INCOME TAXES OF (POUNDS)- ($-)
    (POUNDS)2 AND (POUNDS)3			    -         -        4       8

GAIN ON DISPOSAL OF DISCONTINUED
  OPERATION NET OF INCOME TAXES
    CHARGE (BENEFIT) OF
      (POUNDS)(8) ($(13)) (POUNDS)31 AND (POUNDS)-  8        13       24       -

INCOME BEFORE EXTRAORDINARY ITEM		   41        66       87      17

EXTRAORDINARY LOSS - UK WINDFALL TAX	            -         -        -    (134)

NET INCOME (LOSS)			           41        66       87    (117)

The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
<CAPTION>
				            December 31,              March 31,
				                   1999                   1999
				              (POUNDS)            $   (POUNDS)
ASSETS					               (See Note 1)
<S>                                            <C>        <C>             <C>
FIXED ASSETS
   Property, plant and equipment, net
     of accumulated depreciation
       of (POUNDS)139 ($224) and (POUNDS)96    1,005      1,619           970
   Construction work in progress	          31         50            15

Total fixed assets			       1,036      1,669           985


CURRENT ASSETS
   Cash and cash equivalents		           9         15            12
   Investments				          16         26            26
   Accounts receivable, less
     provision for uncollectibles
       of (POUNDS)9 ($15) and (POUNDS)9	         108        174           100
   Unbilled revenue			         100        161            84
   Prepaids and other			          44         71            44

Total current assets			         277        447           266


OTHER ASSETS
   Goodwill, net of accumulated
     amortization of (POUNDS)68 ($110)
     and (POUNDS)50      			 902      1,454		  925
   Investments, long-term		          45         73            51
   Prepaid pension asset		         115        185            98
   Other non-current assets		          20         32            22

Total other assets			       1,082      1,744         1,096


Total assets				       2,395      3,860         2,347



The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 (In Millions, Except Shares)

			                      December 31,   March 31,
      						     1999       1999
					  (POUNDS)     $     (POUNDS)
					    (See Note 1)
SHAREHOLDERS' EQUITY AND LIABILITIES

SHAREHOLDERS' EQUITY
   Share capital, (POUNDS)1 par value common shares,
      440,000,100 , authorized,
      440,000,002 issued and outstanding      440    709     	440
   Retained profit (deficit)		       11     18        (30)

Total shareholders' equity	              451    727        410

Long-term debt				      964  1,553      1,103

Short-term debt refinanced February 2000      165    266          -

Company-Obligated Mandatorily Redeemable
   Trust Securities of Subsidiary Holding
   Solely Junior Subordinated Deferrable
   Interest Debentures			      166    268        168

OTHER NON-CURRENT LIABILITIES
   Deferred income taxes   	              195    314        214
   Provision for uneconomic
     electricity and gas contracts	       29     47         30
   Other				       13     21         13

Total other non-current liabilities	      237    382        257

CURRENT LIABILITIES
   Current portion of long-term debt            9     15          8
   Short-term debt			      131    211        142
   Accounts payable			       79    127         77
   Accrued liabilities and
     deferred income		               91    147         85
   Income taxes payable			       58     93         37
   Other current liabilities		       44     71         60

Total current liabilities                     412    664        409

Total liabilities	   	            1,944  3,133      1,937

COMMITMENTS AND CONTINGENCIES (NOTE 5)

Total shareholders' equity and
  liabilities			            2,395  3,860      2,347


The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In Millions, Except Shares)


For the year ended March 31, 1998

				     Share Capital      Retained
				   Shares    Amount     Deficit     Total
				           (POUNDS)      (POUNDS) (POUNDS)

Balance, April 1, 1997	 	          2      -            -         -
Issuance of ordinary shares	440,000,000    440            -       440
Net loss				  -      -         (117)     (117)

Balance, March 31, 1998		440,000,002    440         (117)      323



For the year ended March 31, 1999

				     Share Capital      Retained
				   Shares    Amount     Deficit     Total
				           (POUNDS)     (POUNDS)  (POUNDS)

Balance, April 1, 1998	 	440,000,002    440         (117)      323
Net income				  -      -           87        87

Balance, March 31, 1999		440,000,002    440          (30)      410



For the nine month period ended December 31, 1999

				    Share Capital        Retained
				   Shares    Amount      Deficit     Total
				           (POUNDS)     (POUNDS)  (POUNDS)

Balance, April 1, 1999	 	440,000,002    440          (30)      410
Net income				  -      -           41        41

Balance, December 31, 1999	440,000,002    440           11       451

<PAGE>
<TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<CAPTION>

YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
						   9 Month Period     Year Ended
						 Ended December 31,    March 31,
					        1999    	    1999    1998
						(POUNDS)     $    (POUNDS)(POUNDS)
<S>                                             <C>         <C>     <C>     <C>
Cash flows from operating activities:
Net income (loss)				     41      66       87    (117)
Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Gain on sale of discontinued operation	      -       -      (24)      -
   Depreciation of fixed asset investment
     included in cost of sales			      7      11        8       -
   Depreciation					     43      69       56      53
   Amortization					     18      29       25      25
   Gain on sale of fixed assets			      -       -       (3)     (3)
   Gain on sale of long-term investment	   	     (3)     (5)       -       -
   Loss on investment in Ionica		     	      -       -       12      41
   Deferred income taxes			    (19)    (30)      15       4
Changes in assets and liabilities:
   Receivables and unbilled revenue		    (24)    (38)     (44)     34
   Prepaid pension asset			    (17)    (27)     (23)    (14)
   Provisions for uneconomic electricity
     and gas contracts				     (1)     (2)     (11)      6
   Accounts payable				      2       3       (5)      3
   Windfall tax payable				      -       -      (67)     67
   Other current assets				      -       -       (4)    (10)
   Other					     23      37        9     (27)
Net cash provided by operating activities	     70     113       31      62

Cash flows from investing activities:
   Proceeds from sale of discontinued
     operation					      -       -      136       -
   Capital expenditures				   (100)   (161)    (149)   (191)
   Proceeds from sale of property,
     plant and equipment			      1       2       11      20
   Proceeds from sale of
     long-term investment			      3       5        2       -
   Purchase of
     Yorkshire Electricity Group plc		      -       -        -  (1,474)
   Reduction in short-term investments	     	     10      16        1       -
   Other					     (1)     (2)      (1)      6
Net cash used in investing activities	    	    (87)   (140)       -  (1,639)


YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)

						   9 Month Period     Year Ended
						 Ended December 31,    March 31,
							     1999     1999    1998
					      (POUNDS)       $    (POUNDS) (POUNDS)

Cash flows from financing activities:
   Proceeds from issuance of
     Trust Securities				      -       -      162       -
   Proceeds from issuance of long-term debt	      -       -      130     593
   Proceeds from issuance of common stock	      -       -        -     440
   Payments to terminate interest rate
     swap agreements				      -       -        -     (14)
   Repayments of long-term debt			   (140)   (225)      (5)     (5)
   Net change in short-term debt		    154     248     (341)    377
Net cash provided by (used in)
  financing activities				     14      23      (54)  1,391

Decrease in cash and cash equivalents	     	     (3)     (4)     (23)   (186)

Beginning of year cash and cash
  equivalents					     12      19       35     221

End of year cash and cash equivalents	     	      9      15       12      35



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


					 9 Month Period           Year Ended
					Ended December 31,         March 31,
					         1999            1999     1998
				        (POUNDS)          $   (POUNDS)  (POUNDS)

Cash paid for interest			     74         119       104      132

Cash paid for income taxes		      1           2        67       77


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Yorkshire Group issued (POUNDS)22 million of loan notes during Fiscal
Year 1998 to former shareholders of Yorkshire Electricity Group plc (see
note 12).

The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Yorkshire Power Group Limited ("YPG" or the "Company") is a joint
venture formed by subsidiaries of American Electric Power Company,
Inc. and New Century Energies, Inc. for the purpose of acquiring the
entire issued share capital of Yorkshire Electricity Group plc
("YEG").  The acquisition of YEG was made effective as of April 1,
1997 by Yorkshire Holdings plc, a wholly-owned subsidiary of YPG.

YEG is one of the twelve regional electricity companies ("RECs")
in England and Wales licensed to supply, distribute, and to a limited
extent, generate electricity.  The RECs were created as a result of
the privatization of the UK electricity industry in 1990 after the
state owned low voltage distribution networks were allocated to the
then existing twelve regional boards.  YEG's main business, the
distribution and supply of electricity to customers in its licensed
area (the "Authorized Area"), is regulated under the terms of YEG's
Public Electricity Supply License ("PES License") by Ofgem.

YEG operates primarily in its Authorized Area in Northern
England.  YEG's Authorized Area covers approximately 10,000 square
kilometers, encompassing parts of the counties of West Yorkshire,
East Yorkshire, South Yorkshire, Derbyshire, Nottinghamshire,
Lincolnshire and Lancashire.  The Authorized Area has a resident
population of approximately 4.4 million.

YEG purchases power primarily from the wholesale trading market
for electricity in England and Wales (the "Pool").  The Pool monitors
supply and demand between generators and suppliers, sets prices for
generation and provides for centralized settlement of accounts due
between generators and suppliers.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of presentation

On February 24, 1997, the joint venture partners of the Company
announced the terms of a cash tender offer for Yorkshire Electricity
Group plc to be made by Yorkshire Holdings plc, a subsidiary of the
Company.  The offer was declared wholly unconditional on April 1,
1997.  On April 16, 1997 notices were issued by Yorkshire Holdings
plc in accordance with section 429 of the Companies Act 1985 to
acquire all YEG shares outstanding at the end of the requisite notice
period.

The acquisition was accounted for using the purchase method of
accounting in accordance with Accounting Principles Board Opinion No.
16, "Accounting for Business Combinations" ("APB 16").  The purchase
price of YEG has been allocated to the underlying assets and
liabilities based on estimated fair values at the acquisition date
(April 1, 1997).

Yorkshire is not subject to cost-based rate regulation but
rather, is subject to price cap regulation and, therefore, the
provisions of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" ("SFAS
71") do not apply.

The consolidated financial statements of Yorkshire Group are
presented in pounds sterling ((POUNDS)) and in conformity with
accounting principles generally accepted in the United States of
America.

The consolidated balance sheet, income statement, statement of
cash flows and certain information in the notes to the consolidated
financial statements are presented in pounds sterling ((POUNDS)) and
in US dollars ($) solely for the convenience of the reader, at the
exchange rate of (POUNDS)1 = $1.6117, the closing mid-point in London
on December 31, 1999.  This presentation has not been translated in
accordance with Statement of Financial Accounting Standards No. 52,
"Foreign Currency Translation".  No representation is made that the
pounds sterling amounts have been, could have been, or could be
converted into US dollars at that or any other rate of exchange.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Principles of consolidation

The consolidated balance sheet includes the accounts of the
Company and its wholly-owned and majority-owned subsidiaries and has
been prepared from records maintained by the Company in the UK.
Significant intercompany items are eliminated in consolidation.

Use of estimates

The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements.  As a result of the
transition to a more competitive utility environment, estimates are
required for revenues and the costs to produce revenues, including
bad debt expense (see Revenue Recognition below).

Electricity generated in England and Wales is sold by generators
and bought by suppliers through the Pool.  Charges are raised on a
half hourly basis.  Prior to opening the domestic market to
competition on September 14, 1998, all charges were allocated between
suppliers based on actual meter readings.  Charges in respect of
residential customers, whose meters are not read at half hourly
intervals, were allocated to the host PES.  Since September 14, 1998,
it is necessary to allocate charges in respect of residential
customers between suppliers based on estimates.

Actual results could differ from the Company's estimates.

Revenue Recognition

Yorkshire Group records revenue net of value added tax ("VAT")
and accrues revenues for service provided but unbilled at the end of
each reporting period.  Residential customers are normally billed at
quarterly intervals, and such bills may be based on estimated meter
readings.  As a result, unbilled revenues are subject to a degree of
estimation that can be significant.

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments

YEG enters into contracts for differences ("CFDs") primarily to
hedge its supply business against the price risk of electricity
purchases from the Pool.  Use of these CFDs is carried out within the
framework of YEG's purchasing strategy and hedging guidelines.  CFDs
are accounted for as hedges and consequently, gains and losses are
deferred and recognized over the same period as the item hedged.  YEG
recognizes gains (losses) on CFDs when settlement is made, which is
generally monthly.  Gains (losses) on CFDs are recognized as a
decrease (increase) to cost of sales based upon the difference
between fixed prices in the CFD compared to variable prices paid to
the Pool for the period.  Gains (losses) based upon the difference
between fixed prices in the CFD compared to variable prices paid to
the Pool for future electricity purchases are not recognized until
the period of such settlements.

Yorkshire Group enters into interest rate and cross currency
swaps as a part of its overall risk management strategy and does not
hold or issue material amounts of derivative financial instruments
for trading purposes.  If the interest rate and cross currency swaps
were to be sold or terminated, any gain or loss would be deferred and
amortized over the remaining life of the debt instrument being hedged
by the swaps.  If the debt instrument being hedged by the swaps were
to be extinguished, any gain or loss attributable to the swap would
be recognized in the period of the transaction.

Yorkshire Group considers the carrying amounts of financial
instruments classified as current assets and liabilities to be a
reasonable estimate of their fair value because of the short maturity
of these instruments.

Cash and cash equivalents

Yorkshire Group considers all short-term investments with an
original maturity of three months or less to be cash equivalents.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, plant and equipment

Property, plant and equipment is recorded at fair market value as
adjusted at the acquisition date in accordance with APB 16.  Items
capitalized subsequent to the acquisition are recorded at cost, which
includes materials, labor and appropriate overhead costs.  Customer
contributions towards construction of distribution-related assets
reduce the cost of such assets.

Yorkshire Group's policy is to record depreciation on a straight-
line basis, except for distribution network assets which are charged
at 3% for 20 years and 2% for the remaining 20 years.  Assets are
depreciated using the following estimated useful lives:

							   Years

Distribution network					      40
Generation						      20
Buildings						Up to 60
Fixtures and equipment					Up to 15
Vehicles and mobile plant				Up to 10


Goodwill

Yorkshire Group's policy is to amortize acquisition costs in
excess of fair value of net assets of the business acquired using the
straight-line method over a period of 40 years.  Recoverability
(evaluated on the basis of undiscounted operating cash flow analysis)
is reviewed when events or changes in circumstances indicate that the
carrying amount may exceed fair value.  Goodwill shown in the
accompanying consolidated balance sheet relates to the acquisition of
YEG.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments

Yorkshire Group accounts for investments in marketable debt and
equity securities in accordance with Statement of Financial
Accounting Standards No. 115, "Investments in Certain Debt and Equity
Securities" ("SFAS 115").  Yorkshire Group's investments are
classified as available-for-sale under SFAS 115.  Securities whose
fair market values are readily determinable are reported at fair
value.  Securities whose fair market values are not readily
determinable are recorded at the lower of cost or net realizable
value.

Income taxes

Yorkshire Group accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes".  This standard requires that deferred income taxes be
recorded for temporary differences between the financial statement
basis and the tax basis of assets and liabilities and loss carry-
forwards and that deferred tax balances be based on enacted tax laws
at rates that are expected to be in effect when the temporary
differences reverse.


2.	EXTRAORDINARY LOSS

In July 1997, the British Government announced a "windfall tax"
to be applied at that date to companies privatized by floatation and
regulated by relevant privatization statutes.  Yorkshire Group
recorded an extraordinary loss of (POUNDS)134 million in Fiscal Year
1998 for this tax.  The windfall tax is not deductible for UK
corporation tax purposes.  Half of the tax was paid on December 1,
1997 with the final installment paid on December 1, 1998.


3.	RETIREMENT BENEFITS

Pension plans

Yorkshire operates two plans, one based on defined contributions
and a second based on defined benefits.


3.	RETIREMENT BENEFITS (continued)

Defined contribution

The defined contribution plan was established on December 1,
1991.  From April 1, 1995 new employees are only eligible to join
this plan.  The assets of the defined contribution plan are held and
administered by an independent trustee.  The cost recognized for this
plan for the Transition Period and Fiscal Year 1999 was less than
(POUNDS)1 million in each accounting period.

Defined benefit
Yorkshire participates in the ESPS, which provides pension and
other related defined benefits, based on final pensionable pay, to
substantially all employees throughout the electricity supply
industry in the UK.
Yorkshire uses the projected unit credit actuarial method for
accounting purposes.  Amounts funded to the pension are primarily
invested in equity and fixed income securities.
			           December 31, 1999    March 31, 1999
			  	    (POUNDS)      $       (POUNDS)
					(amounts in millions)

Reconciliation of Projected Benefit Obligation

Projected benefit obligation
  at April 1                             812      1,309         740
Service cost                               8         13           9
Interest cost                             27         43          43
Plan participants' contributions           2          3           2
Actuarial (gain) loss                     (2)        (3)         44
Prior service cost incurred                -          -          14
Benefits paid                            (29)       (47)        (40)
Projected benefit obligation
  at December 31 (March 31)              818      1,318         812


Reconciliation of Fair Value of Plan Assets

Fair value of plan assets
  at April 1                             908      1,463         855
Actual return on plan assets             104        168          84
Employer contributions                     2          3           7
Plan participants' contributions           2          3           2
Benefits paid                            (29)       (47)        (40)
Fair value of plan assets
  at December 31 (March 31)              987      1,590         908



3.	RETIREMENT BENEFITS (continued)


Funded Status
				    December 31, 1999  March 31, 1999
				     (POUNDS)        $	    (POUNDS)

Funded status                            170        274          96
Unrecognized net actuarial gain          (67)      (108)        (11)
Unrecognized prior service cost           12         19          13

Prepaid pension cost                     115        185          98


The weighted average rates assumed in the actuarial calculations
as of the following dates were:

   			        December 31, 1999     March 31,
						      1999    1998
		   	                    %        %         %

Discount rate			          4.75     4.50      6.00
Annual salary rate increase		  4.25     4.00      5.25
Expected long-term rate of return
  on plan assets			  7.50     8.25      9.00



The components of the plan's net periodic pension cost during the
period are shown below (in millions):

			9 Month Period Ended   Year Ended    Year Ended
			     December 31,       March 31,     March 31,
			         1999             1999 		1998
  		                  (POUNDS)    $  (POUNDS)     (POUNDS)

Service cost                         8       13        9           9
Interest                            27       43       43          50
Expected return on plan assets	   (51)     (82)     (70)        (66)
Net amortization and deferral	     1        2        1           -

Net periodic pension credit	   (15)     (24)     (17)         (7)




4.	REGULATORY MATTERS

The distribution business of Yorkshire is regulated under its PES
license, pursuant to which revenue of the distribution business is
controlled by the Distribution Price Control Formula ("DPCF").  The
DPCF determines the maximum average price per unit of electricity
(expressed in pence per kilowatt hour) that YEG can charge.  The DPCF
is usually set for a five-year period, subject to more frequent
adjustments as determined necessary by the Regulator.  At each
review, the Regulator can adjust the value of certain elements in the
DPCF.  On April 1, 1997, 1998 and 1999 YEG's allowed distribution
revenues were decreased by 3% below the applicable rate of inflation
in the formula, following a review by the Regulator.

In early December 1999, Ofgem issued final proposals in its
review of the Distribution Price Control Formula. These proposals
were in line with those published in October 1999, and are to be
effective for the five year period beginning April 1, 2000. The
proposals included a 15% reduction in allowed revenue for Yorkshire
and a further 8% transfer of costs to Yorkshire's electricity supply
business. Ofgem proposed that the X factor would continue to be 3%.
The overall reduction in distribution revenues for Yorkshire would be
23%.

If accepted these proposals would apply from April 1, 2000.  On
December 20, 1999, Yorkshire indicated its intention to accept these
proposals.

Yorkshire's electricity supply business is also regulated by
Ofgem.  Until March 31, 1998 prices were established based upon the
Supply Price Control Formula.  The current supply price control,
which was implemented on April 1, 1998 and is effective until March
31, 2000, takes the form of a series of price caps on the tariffs
applicable to Designated Customers in the Authorized Area.  These
controls also required an additional 3% below inflation reduction
which became effective on April 1, 1999. The automatic pass-through
of costs previously passed through to residential and business
customers below 100kW, consisting primarily of purchased power costs
and the correction factor, which annually adjusted prices for any
imbalance between forecast and actual costs, were both discontinued
from April 1, 1998.  From April 1, 2000, electricity priced within
the allowed


4.	REGULATORY MATTERS (continued)

level will need to be secured and purchase price risk managed
accordingly.  If costs turn out significantly below the level allowed
by the new price control, Ofgem may take steps to ensure that tariffs
are reduced.  Price caps for Fiscal Year 1999 took account of the
residual correction factor from Fiscal Year 1998.

In early December 1999, Ofgem issued final proposals for a form
of transitional price regulation for electricity supply businesses
for an additional two years. Such proposals would result in a real
price reduction in Yorkshire's standard domestic tariff of 3.6% for
the year beginning April 1, 2000. This incorporated a 7.3%
distribution price reduction as a result of the distribution price
control review. The proposal also provided for a nominal price freeze
for the year beginning April 1, 2001.

Yorkshire believes that competitive  pressures in the market may
require it to charge supply prices which are lower than the maximum
prices established by Ofgem.  If Yorkshire charges such lower prices,
the result will be a further reduction in supply revenues beyond that
mandated by Ofgem. Yorkshire's Supply business is under competitive
and regulatory pressure to lower supply prices for classes of
customers other than those subject to Ofgem's final supply price
proposals.

On December 20, 1999, Yorkshire indicated its intention to accept
these proposals.

In response to Ofgem's final proposals and increasing
competition, Yorkshire has adopted an aggressive program of reducing
controllable costs.  Significant features of this program include
reductions in capital expenditure, staff reductions, outsourcing of
certain functions and consolidation of facilities.  Yorkshire intends
to aggressively pursue this cost reduction program and is evaluating
additional cost reduction measures to further mitigate the effects of
Ofgem's final proposals and increasing competition in the electricity
supply business.  Yorkshire Group expects that the net result of
Ofgem's electricity supply and distribution price reductions and
competitive demands in the Supply business and Yorkshire's mitigation
efforts will be a decline in Yorkshire Group's results of operations
and a reduction

4.	REGULATORY MATTERS (continued)

in its cash flows which, in each case, may be significant.  With the
recent introduction of competition to the electricity supply market,
customers are now able to select their electricity supplier.
Significant additional costs have been incurred by the distribution
business to develop new systems for services to facilitate
competition.  The new services, termed "data management services"
include meter operation, data retrieval, processing and aggregation,
meter point administration and distribution use of system billing.

The phase-in of competition in the electricity supply market was
completed for all PESs in May 1999.  The total costs for re-
engineering and information technology work was (POUNDS)67 million.
Of such amount, approximately (POUNDS)19 million was accounted for in
Fiscal Year 1997, (POUNDS)31 million in Fiscal Year 1998,  (POUNDS)16
million in Fiscal Year 1999, and (POUNDS)1 million in the Transition
Period.  Ofgem made proposals in October 1999 (which were accepted by
Yorkshire) to allow Yorkshire recovery of (POUNDS)25 million over a
five year period ending March 31, 2003.  A further (POUNDS)7 million
is expected to be recovered through Pool cost recovery and other
national mechanisms and (POUNDS)8 million has been capitalized as
such amount is expected to provide future benefits to the Supply
business, with the balance of (POUNDS)27 million being expensed.  Of
the amount expensed, approximately (POUNDS)19 million was expensed in
Fiscal Year 1997, (POUNDS)2 million was expensed in Fiscal Year 1998
and (POUNDS)5 million was expensed in Fiscal Year 1999.  The
remaining (POUNDS)1 million was expensed in the Transition Period.
The Pool cost recovery mechanism referred to above pursuant to which
(POUNDS)7 million is expected to be recovered will be terminated with
the introduction of NETA.  It is expected that the arrangements under
NETA will allow the recovery of 1998 costs as planned.

OFFER also made proposals in October 1997 (which were accepted by
Yorkshire) to provide an annual allowance of (POUNDS)3 million for
the period 1998 through 2000 to cover related operating costs.  This
allowance has been retained for the period to 2004/05 under Ofgem's
final Distribution Price Control Formula published in December 1999
and in addition the set-up cost allowance of (POUNDS)5 million per
year has been extended for a further two years from 2002/03 to
2004/05.  The December 1999


4. REGULATORY MATTERS (continued)

distribution price control final proposal divides the data management
services allowance which covers both the set up and operating costs
described above between the electricity supply and distribution
businesses with two thirds of the allowance remaining in the
distribution business. This reflects the transfer of meter reading
and data collection activities to electricity supply.

The Regulator's proposals also provided that RECs should be
penalized as a result of the market opening being delayed beyond
April 1998.  Yorkshire has incurred a penalty of (POUNDS)3 million as
a consequence of the delay.  A provision for penalties of (POUNDS)3
million was included in the results for Fiscal Year 1998.


5.	COMMITMENTS AND CONTINGENCIES

Electricity and gas purchase agreements

As part of the sale of RPG during Fiscal Year 1999, certain
contracts were renegotiated.  This enabled Yorkshire to release its
balance sheet provision for uneconomic electricity and gas contracts.
In the light of renegotiated contracts, a reduced provision of
(POUNDS)32 million was created.  The new provision relates to a
financial instrument, which compensates RPG in respect of gas
purchases in excess of market price for a period up to Fiscal Year
2009.  The provision, for the net present value of expected future
payments, reflects management's expectation of market prices of
electricity (to which the contract is partially indexed) and future
gas prices.  The provision at December 31, 1999 was (POUNDS)29
million.

In addition, Yorkshire has agreed to purchase portions of the
output of YCL, a former subsidiary disposed of as part of the sale of
the generation business, for up to 20 years.

Yorkshire has entered into a medium-term gas purchase agreement
with a major gas supplier, which has a potential end date of October
2003.  Yorkshire also has a small number of Swing Contracts with
other parties for the purchase of gas, all on normal commercial
terms.  There are three contracts in total, which terminate in either
October 2002 or October 2003.

5.		COMMITMENTS AND CONTINGENCIES (continued)

Legal Proceedings

Yorkshire Group is routinely a party to legal proceedings arising
in the ordinary course of business which are not material, either
individually or in the aggregate.  Except as described below,
Yorkshire Group is currently not a party to any material legal
proceedings nor is it aware of any threatened material legal
proceedings.

Litigation is ongoing with respect to NGC and National Power's
use of actuarial surpluses declared in the ESPS.  The Pension
Ombudsman (a UK arbitrator appointed by statute) issued a "final
determination" in favor of complaints made by members of the ESPS
relating to NGC's use of the ESPS surplus to offset its additional
costs of early payment of pensions as a result of reorganization or
redundancy, together with additional contributions required after a
valuation.  Under that determination  the Pension Ombudsman directed
NGC to pay into ESPS the amount of that use of the surplus plus
interest.  The Pension Ombudsman's final determination was challenged
in the courts by NGC and National Power, who were also subject to a
similar complaint.  The High Court subsequently ruled that such use
of surplus was permissible.

On February 10, 1999, the Court of Appeal ruled that the
particular arrangements made by NGC and National Power to dispose of
the surplus, partly by cancelling liabilities relating to pension
costs resulting from early retirement, were invalid as they did not
comply fully with the rules and procedures for dealing with surplus
at that time.  However, the Court of Appeal did uphold the High
Court's ruling that NGC and National Power could benefit from pension
scheme surplus provided that the scheme rules allow and that the
interests of the members are taken into account.

Following a further hearing on May 25 and May 26, 1999 the Court
of Appeal ordered NGC and National Power to pay all sums properly
payable by them to their group trustees.  However, enforcement of the
order was stayed pending the outcome of any appeals to the House of
Lords, leave for which was granted.




5.		COMMITMENTS AND CONTINGENCIES (continued)

NGC and National Power have now initiated appeals in the House of
Lords.  NGC and National Power have also executed amendments which
purport to cancel their accrued contribution obligations arising from
the Court of Appeal's judgment.

Yorkshire made similar use of actuarial surplus and, if it is
decided by the House of Lords that the sums concerned are all due to
the ESPS, the maximum amount receivable by the ESPS in respect of the
use of surplus by Yorkshire would be approximately (POUNDS)38 million
plus interest.

Yorkshire is considering, with EPSL (the Scheme's central co-
ordinating and policy body) and other member companies, the option of
executing similar retrospective deeds of amendment to those executed
by the two litigants: NGC and National Power.

An agreement has been reached between Yorkshire and its pension
trustees to the effect that no legal action for the recovery of
"outstanding" contributions will be initiated by the trustees against
Yorkshire prior to the House of Lords judgment on the NGC and
National Power appeals.  In consideration of this, Yorkshire will
waive any defense in this matter based on the six year statutory
limitation period, this waiver commencing from June 24, 1999, the
date when the agreement was first mooted and agreed in principle.

Operating leases

Yorkshire Group has commitments under operating leases with
various terms and expiration dates.  Rental expenses incurred for
operating leases in the Transition Period, Fiscal Year 1999 and
Fiscal Year 1998 were (POUNDS)6 million ($10 million), (POUNDS)3
million and (POUNDS)3 million respectively.




5. COMMITMENTS AND CONTINGENCIES (continued)

Future minimum commitments under these operating leases as of
December 31, 1999 are as follows:

Due during Calendar Year ending December 31,

			(POUNDS)
			(millions)
2000 				3
2001 				1
2002 				1
2003				1
2004 				1
Thereafter			8
Total			       15


Labor subject to Collective Bargaining Agreements

A majority of Yorkshire Group's employees are subject to one of
three collective bargaining agreements.  Such agreements are ongoing
in nature, and Yorkshire Group's employees participation level is
consistent with that of the electric utility industry in the UK.


6.	SEGMENT REPORTING

Yorkshire Group is primarily engaged in two industry segments:
electricity distribution, which involves the transmission of
electricity across its network to end users, and supply, which
involves bulk purchase of electricity and gas for delivery to its
customers.  This forms the basis for the identification of reportable
segments as shown below.  Included in "Other" are insignificant
operating subsidiaries as well as various corporate activities, and
non-allocated corporate assets.

Yorkshire Group's accounting policies for segments are the same
as those described in the summary of significant accounting policies.
Management evaluates segment performance based on segment income from
operations, which is shown below.

Intersegment sales primarily represent sales from the
distribution business to the supply business for use of the
distribution network.

6.	SEGMENT REPORTING (continued)

The results and capital expenditure attributable to the
generation business, which was disposed of during Fiscal Year 1999
has been treated as a discontinued operation, are excluded from the
segment information shown below.

Depreciation and amortization includes depreciation of fixed
asset investments, which is included within cost of sales in the
income statement.

Information technology support activities for Yorkshire Group
have been included in the results reported for the Supply business
from April 1, 1999.  The segment information for Fiscal Years 1999
and 1998 has been reclassified to conform to current period
presentation.
<PAGE>
<TABLE>
6. SEGMENT REPORTING (continued)

A summary of information about Yorkshire Group's operations by
segments follows (in millions):

<CAPTION>

					Nine Month Period Ended December 31, 1999

                     Distribution     Supply         Other       Eliminations   Consolidated
		                                                 and non-
		                                                 allocated
		                                                 items
		    (POUNDS) $       (POUNDS) $ (POUNDS)     $ (POUNDS)      $   (POUNDS)    $
<S>                  <C>   <C>       <C>   <C>    <C>    <C>    <C>       <C>	  <C>    <C>
Revenues from
  external customers   63    102     969   1,561      4      6       1        2   1,037  1,671
Intersegment sales    175    282      28      45      1      2    (204)    (329)      -      -
Depreciation and
  amortization         33     53      16      26      1      2      18       29      68    110
Income from
  operations          111    178      39      63     (5)    (8)    (18)     (29)    127    204
Total assets        1,013  1,633     455     733  2,710  4,368  (1,783)  (2,874)  2,395  3,860
Capital expenditure    72    116      28      45      -      -       -        -     100    161



				Year Ended March 31, 1999

	        Distribution       Supply            Other       Eliminations   Consolidated
		                                                 and non-
		                                                 allocated
		                                                 items
	            (POUNDS)       (POUNDS)         (POUNDS)     (POUNDS)       (POUNDS)

Revenues from
  external customers      63          1,295              8              -        1,366
Intersegment sales       259             51             15           (325)           -
Depreciation and
  amortization            38             17              4             25           84
Income from
  operations             153             69             (3)           (24)         195
Total assets             960            417          2,586         (1,616)       2,347
Capital expenditure      108             23              3              -          134



					Year Ended March 31, 1998

	        Distribution     Supply         Other       Eliminations   Consolidated
		                                             and non-
		                                             allocated
		                                             items
	            (POUNDS)    (POUNDS)      (POUNDS)      (POUNDS)         (POUNDS)

Revenues from
  external customers      53       1,169           12            -             1,234
Intersegment sales       256          53           30          (339)               -
Depreciation and
  amortization            35           6            5            25               71
Income from
  operations             154          33          (11)          (28)             148
Capital expenditure      134          23            4             -              161




6. SEGMENT REPORTING (Continued)

Non-allocated items within total assets consist of goodwill of
(POUNDS)902 million in the Transition Period and (POUNDS)925 million
in Fiscal Year 1999.

Non-allocated items within income from operations consist of
amortization of goodwill of (POUNDS)18 million in the Transition
Period and (POUNDS)25 million in both Fiscal Year 1999 and Fiscal
Year 1998.
</TABLE>

7.	LOSS ON INVESTMENT IN IONICA

Yorkshire Group's investment in Ionica was initially included in
its consolidated balance sheet at its fair value at acquisition on
April 1, 1997 of (POUNDS)54 million plus a subsequent additional
investment of (POUNDS)1 million.  The Company has written down the
carrying value of the investment to their estimate of fair value by
charging a loss of (POUNDS)11 million to the income statement during
Fiscal Year 1999.

The reduction in fair value of the investment was initially
recognized by management as "other than temporary" following
announcement by Ionica on May 22, 1998 that Ionica had been
unsuccessful in negotiating release of credit lines from existing
providers of bank finance and had been advised to obtain further
equity investment prior to seeking further bank funding.  On October
29, 1998 Ionica announced that it had appointed administrators for its
operating subsidiary due to its inability to obtain further investment
necessary to continue trading and expand its service.

On March 19, 1999 Yorkshire Group sold its investment in Ionica
for (POUNDS)2 million, recognizing a loss on sale of (POUNDS)1
million.

<PAGE>
<TABLE>
8.	INCOME TAXES

Yorkshire Group's income tax expense (benefit) consists of the
following (in millions):
<CAPTION>

			 9 Month Period Ended      Year Ended  Year Ended
	                       December 31,            March 31,  March 31,
			          1999                   1999        1998
			      (POUNDS)     $         (POUNDS)      (POUNDS)
<S>                         <C>          <C>             <C>           <C>
Current 		     34           55             (10)          (5)
Discontinued operation 	     (8)         (13)              -            -
Deferred		    (20)         (32)             15            4

Total			      6           10               5           (1)


The following is a reconciliation of the difference between the
amount of income taxes computed by multiplying book income before
income taxes by the statutory rate, and the amount of income taxes
reported (in millions):


					9 Month Period Ended      Year Ended
						  December 31,       March 31,
					           1999         1999     1998
					    (POUNDS)        $  (POUNDS)(POUNDS)

Income before taxes and
  extraordinary loss including
  income from discontinued
  operations of (POUNDS)- nil,
  (POUNDS)6 million and (POUNDS)11 million
  before income taxes		         	47       76       68      16

Income taxes computed at
  statutory rate (tax rate 30%)        		14       23       20       5
Effect of change in tax rate
  on deferred taxes		          	 -        -       (6)    (12)
Permanent differences		          	 5        8        8      10
Discontinued operation		         	(8)     (13)       -       -
Adjustment to tax liabilities	         	(4)      (6)      (12)     -
Other					        (1)      (2)      (5)     (4)

Total income tax expense
  (credit)				         6       10        5      (1)


The tax effect of temporary differences between the carrying
amounts of assets and liabilities in the consolidated balance sheet
and their respective tax bases, which give rise to deferred tax
assets and liabilities, are as follows (in millions):
8.	INCOME TAXES (continued)


				    December 31, 1999  March 31, 1999
				     (POUNDS)      $        (POUNDS)
Deferred tax liabilities:
  Property related temporary
    differences			        181        292            207
  Pension			 	 33         53             27
  Provision for electricity and
    gas contracts		         (9)       (15)            (9)
  Other				         (8)       (13)            (8)

Net deferred tax liability	        197        317            217
Portion included in current
  liabilities			          2          3              3

Long-term deferred tax liability         195       314            214

The tax years since 1994 are currently under review by the Inland
Revenue in the UK.  In the opinion of management, the settlement of
open years will not have a material adverse effect on results of
operations, financial position or cash flows of Yorkshire Group.

</TABLE>
9.	FINANCIAL INSTRUMENTS

Yorkshire utilizes CFDs to mitigate its exposure to volatility in
the prices of electricity purchased through the Pool.  Such contracts
allow Yorkshire to effectively convert the majority of its
anticipated Pool purchases from variable market prices to fixed
prices.  CFDs are in place to hedge a portion of electricity
purchases on approximately 14,520 GWh through the year 2003.
Accordingly, the gains and losses on such contracts are deferred and
recognized as electricity is purchased.  Management's estimate of the
fair value of CFDs outstanding at December 31, 1999 and March 31,
1999 is a net liability of (POUNDS)46 million ($74 million) and
(POUNDS)6 million, respectively.  This estimate is based on
management's projections of future prices of electricity.

Yorkshire is exposed to losses in the event of non-performance by
counterparties to its CFDs.  To manage this credit risk, Yorkshire
selects counterparties based on their credit ratings, limits its
exposure to any one counterparty, and monitors the market position of
the programs and its relative market position with each counterparty.
There was no non-performance by counterparties at December 31, 1999
and March 31, 1999.



9. FINANCIAL INSTRUMENTS (continued)

Yorkshire Group has entered into interest rate cap agreements as
part of its risk management policy and to mitigate the effects of
interest rate changes.  Under these agreements counterparties have
agreed to pay amounts to Yorkshire Group equal to the excess of
variable interest rate obligations over fixed cap interest rate
obligations in consideration of a fixed non-returnable premium
payment.  Receipts from counterparties are recognized as a reduction
in interest expense.  Premium payments are recognized as an increase
in interest expense over the term of the agreement.  At December 31,
1999, Yorkshire Group was party to interest rate cap agreements with
a notional value of (POUNDS)40 million which were at a fixed cap
interest rate of 7.5%.

In February 1998, Yorkshire Group issued $350 million aggregate
principal amount of 6.154% Senior Notes due 2003 and $300 million
aggregate principal amount of 6.496% Senior Notes due 2008.  Upon
issuance of these notes, to hedge the currency exposure related to
having sterling cash flows and dollar interest payments, cross-
currency swaps were taken out, maturing in 2003 and 2008.

In June 1998, Yorkshire Group issued $275 million aggregate
principal amount of 8.08% Trust Securities due 2038.  In order to
hedge the resulting currency exposure cross currency swaps were taken
out which mature in 2008.  One of these swaps was partially cancelled
in December 1999 following the repurchase by Yorkshire Group of Trust
Securities with a face value of approximately $3 million.

Payments to counterparties in respect of cross-currency swaps are
recorded as an interest expense.

At December 31, 1999 and March 31, 1999 Yorkshire Group was party
to cross-currency swap agreements with a notional value of
(POUNDS)560 million and (POUNDS)562 million respectively.

The estimated fair values of Yorkshire Group's financial
instruments are as follows (in millions):


9.	FINANCIAL INSTRUMENTS (continued)


		                     December 31, 1999        March 31, 1999
							      Carrying  Fair
			       Carrying Amount    Fair Value  Amount  Value
		              (POUNDS)       $ (POUNDS)    $  (POUNDS)(POUNDS)
Long term debt
(including Trust Securities)   (1,139) (1,836) (1,149) (1,852) (1,279) (1,393)
Cross currency swap agreements      -       -     (52)    (84)      -     (67)

The fair value of long-term debt is estimated based on quoted
market prices for the same or similar issues or the current rates
offered to Yorkshire Group for debt of the same remaining maturities.
The fair values of cross currency swap and interest rate cap
agreements are determined by reference to prices available from the
markets on which these instruments are traded.

The book value and fair value of the interest rate cap at
December 31, 1999 and March 31, 1999 was (POUNDS)nil.


10.	PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in
millions):

				     December 31, 1999   March 31, 1999
				      (POUNDS)      $          (POUNDS)

Distribution network		        1,214     1,956           1,141
Non-network land and buildings	           38        61              37
Other				          180       290             149
Consumer contributions		         (288)     (464)           (261)

				        1,144     1,843           1,066
Accumulated depreciation	         (139)     (224)            (96)

Property, plant and equipment, net      1,005     1,619             970



10.	PROPERTY, PLANT AND EQUIPMENT (continued)

Arrangements have been put in place to entitle the British
Government to a proportion of any property gain (above certain
thresholds) accruing as a result of disposals, or events treated as
disposals for these purposes, occurring after March 31, 1990 in
relation to land in which Yorkshire had an interest at that date
(and, in certain circumstances, land in which Yorkshire acquires an
interest thereafter from other members of the electricity industry)
and any buildings on that land.  These arrangements will last until
March 31, 2000.


11.	LONG-TERM DEBT

Long-term debt consisted of the following (in millions):


				    December 31, 1999       March 31, 1999
				     (POUNDS)         $           (POUNDS)

7.25% Guaranteed Eurobonds, due 2028	   198       319              198
8.625% Eurobonds, due 2005		   151       243              151
9.25% Eurobonds, due 2020		   207       334              207
6.154% Senior Notes, due 2003		   215       346              215
6.496% Senior Notes, due 2008		   185       298              185
8.08% Trust Securities, due 2038	   166       268              168
Syndicated Credit Facility		     -         -              130
0% Unsecured Loan, due 2000-2009	     1         2                1

European Investment Bank:
   7.52% credit facility,
      due 1999-2002			    11        18               15
   6.55% credit facility,
      due 1997-2000			     5         8                9

Total					 1,139     1,836            1,279
Less current maturities			    (9)      (15)              (8)

Less Trust Securities			  (166)     (268)           (168)

Long-term debt, net of current
  maturities and Trust Securities	   964     1,553            1,103



11.	LONG-TERM DEBT (continued)

Long-term debt outstanding at December 31, 1999 is payable as
follows (in millions):

					       (POUNDS)       $
For the calendar years ended December 31,

2000 						     9         15
2001						     4          6
2002 						     4          6
2003 						   215        347
2004 						     -          -
Thereafter					   907      1,462

Total						 1,139      1,836



In addition (POUNDS)165 million of short-term debt was replaced,
in February 2000, by long-term debt maturing no earlier than 2005.

Yorkshire Capital Trust I, (the "Trust"), is a statutory business
trust created for the sole purpose of issuing trust securities and
investing the proceeds in an equivalent amount of Junior Subordinated
Deferrable Interest Debentures, Series A due 2038 issued by Yorkshire
Power Finance Limited (YPF), a subsidiary of YPG.  On June 9, 1998
the Trust issued 11,000,000 shares of 8.08% Trust Securities at the
liquidation amount of $25 per Trust Security.  The Trust invested the
$275 million proceeds in an equivalent amount of 8.08% Junior
Subordinated Deferrable Interest Debentures, Series A due 2038 of YPF
which in turn loaned the net proceeds to YPG.  Substantially all of
the Trust's assets will consist of the Junior Subordinated Deferrable
Interest Debentures.  YPG considers that the mechanisms and
obligations relating to the Trust Securities issued for its benefit,
taken together, constitute a full and unconditional guarantee by it
of the Trust's payment obligations with respect to the Trust
Securities.

The issue raised net proceeds of (POUNDS)162 million, which was
used as working capital and for the repayment of short-term debt.



12.	SHORT-TERM DEBT

Short-term debt consisted of the following (in millions):

				December 31, 1999     March 31, 1999
			       (POUNDS)       $        (POUNDS)

Syndicated credit facility	  100        161          108
Bank loans	    	            1          2           24
Bills of exchange		   20         32            -
Loan notes			   10         16           10

Total			          131        211          142


At December 31, 1999 and March 31, 1999 the weighted average
interest rate was 6.0% and 6.1%, respectively.

A syndicated credit facility was entered into during Fiscal Year
1999, which consisted of four tranches: Tranche A, a (POUNDS)150
million 364 day revolving credit with a one-year extension option
(reduced to (POUNDS)100 million in Fiscal Year 1999 and subsequently
cancelled on April 21, 1999); Tranche B, a (POUNDS)130 million 5 year
term loan cancelled on December 15, 1999; Tranche C, a (POUNDS)50
million 5 year revolving credit facility and Tranche D, a (POUNDS)220
million 5 year revolving credit facility.  The interest rates on the
facilities are based on LIBOR plus a margin of 0.25%, plus the cost
imputed to the lenders of compliance with central bank and regulator
requirements.  The facilities contain certain restrictive covenants
which include a minimum earnings to interest ratio.

12.	SHORT-TERM DEBT (continued)

The acquisition of YEG was financed in part by the issuance of
(POUNDS)22 million of loan notes to former YEG shareholders.  These
notes are redeemable at the option of the holder, on March 31, 1998
and thereafter on each March 31 prior to March 31, 2002.  (POUNDS)6
million of notes were redeemed at March 31, 1998 and a further
(POUNDS)6 million at March 31, 1999.  Any loan notes outstanding at
March 31, 2002 shall be repaid in full at that date.  The interest
rate on the notes is reset semi annually at 1% below the rate at
which National Westminster Bank plc is offering six month sterling
deposits of (POUNDS)5 million in the London inter-bank market.  At
December 31, 1999, and March 31, 1999 the interest rate on the notes
was 5.0% and 4.2%, respectively.

At December 31, 1999 and March 31, 1999 unused committed bank
facilities were available to the Company in the amount of (POUNDS)135
million ($218 million) and (POUNDS)262 million, respectively.
Commitment fees of approximately 1/10 of 1% of the unused committed
bank facilities are required to maintain the facilities existing at
December 31, 1999, which have expiration dates in Calendar Year 2003.
In addition, the Company has commercial paper programs which provide
for the issuance, at a discount, of up to $550 million at face value
in commercial paper with short-term maturities (up to 364 days).


13.	SHORT-TERM DEBT REFINANCED

On December 15, 1999 Yorkshire cancelled tranche B of the
Syndicated loan facility, a (POUNDS)130 million 5 year term loan.
This was replaced with two (POUNDS)65 million loans on 364 day terms.
The two loans were used to bridge the gap between the cancellation of
tranche B and the issue of the Pass-Through Asset Trust Securities in
February 2000.  Yorkshire repaid the loans on February 16, 2000.

Yorkshire Power Pass-Through Asset Trust 2000-1 (the "PATS
Trust") is a New York common law trust, the sole assets of which
consist of (i) a 100% beneficial interest in (POUNDS)155 million
principal amount of Reset Senior Notes due February 15 2020 (the
"Senior Notes") issued by Yorkshire Finance 2 ("YPF2"), a subsidiary
of Yorkshire Power Group (YPG) and (ii) the rights of the PATS Trust
under a currency swap with UBS AG, London Branch (the "Currency
Swap") and an option granted to UBS AG, London Branch (the "Call
Option").

13.	SHORT-TERM DEBT REFINANCED (continued)

The PATS Trust has issued $250 million, principal amount of its
8.25% Pass-Through Asset Trust Securities due February 15, 2005 (the
"Certificates"). All of the US Dollar proceeds from the offering by
the PATS Trust of the Certificates have been swapped by the PATS
Trust with UBS AG, London Branch for (POUNDS) Sterling pursuant to
the Currency Swap. The PATS Trust has used the (POUNDS) Sterling,
together with the proceeds received by the PATS Trust from UBS AG,
London Branch under the Call Option to purchase the Senior Notes
issued by YPF2.  YPF2 has loaned the net proceeds to YPG and
subsidiaries. YPG has issued a guarantee that fully and
unconditionally guarantees the due and punctual payment of principal
and interest on the Senior Notes.

The issue raised net proceeds of (POUNDS)165 million, after
deducting an allowance for issue costs, which was used as working
capital and for the repayment of debt, including repayment of the
loans described above.


14.	DISCONTINUED OPERATIONS

Yorkshire's generation business was disposed of during Fiscal
Year 1999.  In respect of the sale proceeds of (POUNDS)136 million
were received (net of fees and cash disposed of), which were used to
reduce debt.  A gain on sale of (POUNDS)24 million, net of income
taxes of (POUNDS)31 million was included in net income for Fiscal
Year 1999.

A favorable adjustment to tax liabilities of (POUNDS)8 million,
in respect of the disposal, has been recognized in the Transition
Period.



15	BUSINESS RESTRUCTURING

In December 1997, Yorkshire announced a planned business
restructuring intended to enable it to meet increased competition and
react to potential regulatory developments in the energy markets in
the UK.  The restructuring has resulted in the distribution and
supply businesses becoming more self-sufficient (sharing common
services where it is effective and efficient to do so).

As a result of the business restructuring, approximately 291
positions were eliminated, which related principally to the
distribution business in Fiscal Year 1999 and corporate center
employees in Fiscal Year 1998.  A charge of approximately (POUNDS)5
million was recorded in Fiscal Year 1999 (relating to 131 positions)
together with (POUNDS)10 million in Fiscal Year 1998 (relating to 160
positions) to reflect the cost of these workforce reductions.

The amount of the provision reflected in the balance sheets at
December 31, 1999 and March 31, 1999 is (POUNDS)nil and (POUNDS)2
million respectively.  There has been no significant change to the
estimate of costs incurred or the number of positions eliminated.

Business Streamlining

Yorkshire plans to streamline its distribution and Supply
workforces and has announced a reduction of approximately 350
positions (260 positions from the distribution business and 90
positions from the supply business) during 2000 and a further 75
positions from the distribution business in 2001. A provision of
approximately (POUNDS)7 million has been recorded in January 2000 to
reflect the cost of the 350 reductions in 2000.



16. UNAUDITED QUARTERLY FINANCIAL INFORMATION


The following amounts reflect the treatment of the generation
business (disposed of during Fiscal Year 1999) as a discontinued
operation for Fiscal Years 1999 and 1998.

			Quarterly Periods Ended 1999
(in (POUNDS) millions)	June 30   September 30   December 31

Operating revenues	    316            329           392
Operating income	     34             32            61
Net income 		      2              6            33

A favorable adjustment to tax liabilities of (POUNDS)8 million in
respect of the disposal of Yorkshire's generation business during
Fiscal Year 1999, has been recognized during the last quarter in the
Transition Period.  Yorkshire's portfolio of energy contracts is
structured so that, compared to Fiscal Year 1999, higher CFD costs
are incurred in summer months, with comparatively lower CFD costs
anticipated in winter months.

			Quarterly Periods Ended 1998/99
(in (POUNDS) millions)
		      June 30   September 30   December 31  March 31

Operating revenues	  292         301         379          394
Operating income	   46          44          56           49
Net income 		   20          12          45           10

The quarter ended December 31, 1998 includes a gain on sale of
discontinued operation of (POUNDS)24 million (net of income taxes of
(POUNDS)31 million).

			 Quarterly Periods Ended 1997/98
(in (POUNDS) millions)
			June 30  September 30  December 31  March 31

Operating revenues	    25           270          349       358
Operating income	    29            39           48        32
Net income (loss) before
Extraordinary item	     5            21           16       (25)
Net income 		     5          (113)          16       (25)

The quarter ended September 30, 1997 includes an extraordinary
loss of (POUNDS)134 million for windfall tax.  The quarter ended
March 31, 1998 includes an unrealized loss following the reduction in
fair value of Yorkshire Group's investment in Ionica of (POUNDS)41
million.




17.	UNAUDITED INCOME STATEMENT FOR THE
    NINE MONTH PERIOD ENDED DECEMBER 31, 1998


						Nine Month Period Ended
						   December 31, 1998
						     (in millions)

                                                           (POUNDS)

OPERATING REVENUES . . . . . . . . . . . .                      972

COST OF SALES. . . . . . . . . . . . . . .                      632

GROSS MARGIN . . . . . . . . . . . . . . .                      340

OPERATING EXPENSES:
  Maintenance. . . . . . . . . . . . . . .                       45
  Depreciation and Amortization. . . . . .                       56
  Selling, General and Administrative. . .                       93

       INCOME FROM OPERATIONS. . . . . . .                      146

OTHER (EXPENSE) INCOME:
  Loss on Investment in Ionica . . . . . .                      (11)
  Other Income, net. . . . . . . . . . . .                        4
       Total Other (Expense) Income, net .                       (7)

NET INTEREST EXPENSE:
  Interest Expense . . . . . . . . . . . .                      (99)
  Interest Income. . . . . . . . . . . . .                        5
       Net Interest Expense. . . . . . . .                      (94)

INCOME FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES. . . . . . . . . . .                       45

(BENEFIT) FOR INCOME TAXES. . . . . . . . .                      (4)

INCOME FROM CONTINUING OPERATIONS BEFORE
  EXTRAORDINARY ITEM AND DISCONTINUED
    OPERATIONS . . . . . . . . . . . . . .                       49

INCOME FROM DISCONTINUED OPERATION
  NET OF INCOME TAXES OF (POUNDS)1. . . . . . . .                 3

GAIN ON DISPOSAL OF DISCONTINUED
  OPERATION NET OF INCOME TAXES OF
    (POUNDS)30  . . . . . . . . . . . . . . . . .                25

NET INCOME (LOSS). . . . . . . . . . . . .                       77





Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Management of Yorkshire Group

The following table sets forth certain information with respect to the
executive officers and directors of Yorkshire Group as of  December 31,
1999:

Name			Age	Position

Dr. E. Linn Draper, Jr.	57	Chairman and Director
Donald M. Clements, Jr.	50	Director
Armando A. Pena		54	Chief Financial Officer and Director
Wayne H. Brunetti	57	Vice Chairman and Director
Richard C. Kelly	53	Director
Paul J. Bonavia		48	Director

As of January 1, 2000, Mr Brunetti became Chairman of Yorkshire Group
and Dr Draper became Vice Chairman.

Dr. E. Linn Draper, Jr.   Has been a Director and Chairman of Yorkshire
Group since February 1997.  Since April 1993 has been Chairman of the Board
of Directors of AEP and all of its major subsidiaries.  In March 1992,
appointed President of AEP and President and Chief Operating Officer of
American Electric Power Service Corporation.  Serves as a Director of BCP
Management, Inc. and CellNet Data Systems, Inc.

Donald M. Clements, Jr.   Has been a Director of Yorkshire Group since
February 1997.  Since October 1995, has been President of AEP Resources,
Inc.  Joined American Electric Power Service Corporation in September 1994
as Senior Vice President and became Executive Vice President in December
1996.  From 1978 to 1994, was employed with Gulf States Utilities Company.

Armando A. Pena.   Since February 1997, has been a Director, and, since
July 1997, has been Chief Financial Officer of Yorkshire Group.  Since
January 1998, has been Chief Financial Officer, and, since March 1996,
Senior Vice President of American Electric Power Service Corporation.
Since November 1995, has been Treasurer of AEP and all of AEP's major
subsidiaries.  From 1989 to March 1996, was Vice President-Finance of
American Electric Power Service Corporation.

Wayne H. Brunetti.   Has been a Director of Yorkshire Group since
February 1997.  Since August 1997, has been President and Chief Operating
Officer of NCE.  Since July 1994, has been the President and became Vice
Chairman and Chief Executive Officer of Public Service Company of Colorado
in September 1997.  Joined Public Service Company of Colorado in July 1994
as President and Chief Operating Officer.

Richard C. Kelly.   Has been a Director of Yorkshire Group since
February 1997.  Since August 1997, has been Executive Vice President and
Chief Financial Officer of NCE.  From 1990 to 1997, was Senior Vice
President of Public Service Company of Colorado.

Paul J. Bonavia.		Has been a Director of Yorkshire Group since
December 1998.  Since December 1997, has been Senior Vice President and
General Counsel of NCE.  From March 1997 to December 1997 was Of Counsel at
LeBoeuf, Lamb, Greene & MacRae, LLP.  From 1991 to February 1997, was
Senior Vice President at Dominion Resources, Inc.


Management of Yorkshire Finance and Yorkshire Finance 2

The following table sets forth certain information with respect to the
Boards of Directors of Yorkshire Finance as of December 31, 1999 and
Yorkshire Finance 2 as of January 7, 2000:

Name				Age	Position

Graham J. Hall			56	Director
Roger Dickinson			53	Director
Andrew G. Donnelly		44	Director

Graham J. Hall.   Has been a Director of Yorkshire Finance since August
1997 and a Director of Yorkshire Finance 2 since January 2000.  Since
January 1998, has been the Chief Executive of Yorkshire.  From April 1997
to December 1997, was the Group Operations Director of Yorkshire.  From
1990 through 1997, was the Group Executive Director, Distribution of
Yorkshire.

Roger Dickinson.   Has been a Director of Yorkshire Finance since
August 1997 and a Director of Yorkshire Finance 2 since January 2000.
Since 1989, has been Group Company Secretary and Solicitor of Yorkshire.

Andrew G. Donnelly.   Has been a Director of Yorkshire Finance since
December 1997 and a Director of Yorkshire Finance 2 since January 2000.
Since January 1998, has been Finance Director of Yorkshire.  From January
1996 through December 1997, was Group Financial Controller of Yorkshire.
From 1993 to 1996, was Financial Controller, System Division of Yorkshire.


ITEM 11.   EXECUTIVE COMPENSATION


Management Compensation of Yorkshire Group

The officers and directors of Yorkshire Group listed above (each an
"AEP/NCE Officer or Director", as applicable) receive no cash or non-cash
compensation as a result of their services performed for Yorkshire Group.
The salaries of all AEP/NCE Officers and Directors are paid by either AEP
or NCE, as applicable, solely for the services performed by them for either
AEP or NCE, as applicable.


Management Compensation of Yorkshire Finance and Yorkshire Finance 2

The directors of Yorkshire Finance and Yorkshire Finance 2 listed above
receive no cash or non-cash compensation as a result of their services
performed for Yorkshire Finance and Yorkshire Finance 2.  The salaries of
all directors listed immediately above are paid by Yorkshire solely for
their services performed for Yorkshire.



Item 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


Yorkshire Power Group Ltd is wholly owned indirectly by AEP and NCE.
The following table shows the number of shares of common stock of AEP and
NCE, respectively, owned by the directors and executive officers of
Yorkshire Power Group Limited as of December 31, 1999:


Name                      Title of Security   Number of Shares
	                         	      Beneficially
					      Owned  (1)

Dr. E. Linn Draper, Jr.   AEP Common Stock	8,670  (2)(3)

Donald M. Clements, Jr.   AEP Common Stock    	1,424  (2)

Armando A. Pena           AEP Common Stock    	5,306  (2)

Wayne H. Brunetti         NCE Common Stock  	378,123  (4)(5)(6)

Richard C. Kelly          NCE Common Stock  	111,215  (4)(6)(7)

Paul J. Bonavia           NCE Common Stock   	88,848  (4)(6)


Directors and executive officers of Yorkshire Power Group Ltd as a group (6
persons)
                          AEP Common Stock  	15,400(8)

                          NCE Common Stock 	578,186	(8)


(1)	"Beneficial ownership" means the sole or shared power to vote, or to
direct the voting of, a security and/or investment power with respect
to a security.

(2)	Includes shares of AEP common stock held in the AEP Savings Plan as
follows: Dr. Draper 3,449 shares, Mr. Clements 1,424 shares and Mr.
Pena 3,791 shares.

(3)	Includes 5,221 shares of AEP common stock held in joint tenancy with
Dr. Draper's wife.

(4)	Includes shares of NCE common stock which the following have the right
to acquire as of December 31, 1999, through the exercise of options,
currently exercisable or exercisable within 60 days, granted under
the  NCE Omnibus Incentive Plan and the predecessor PSCo Omnibus
Incentive Plan as follows: Mr. Brunetti 348,334 Mr. Kelly 100,000 and
Mr. Bonavia 88,000 shares.

(5) Includes 29,127 shares of NCE common stock held in joint tenancy.

(6)	Includes shares of NCE stock held in the NCE's Employee Savings and
Stock Option Plan as follows: Mr. Brunetti 662, Mr. Kelly 2,876 and
Mr. Bonavia 148.

(7)	Includes 263 shares of NCE common stock held by Mr. Kelly's wife in the
NCE Savings Plan.

(8) 	Represents less than 1% of outstanding common stock of AEP or NCE, as
applicable.


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


TRANSACTIONS WITH MANAGEMENT AND OTHERS

None

CERTAIN BUSINESS RELATIONSHIPS

See Items 10 and 11 herein.

INDEBTEDNESS OF MANAGEMENT

None

TRANSACTIONS WITH PROMOTERS

None


Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a) 	The following documents are filed as a part of this report on this
Form 10-K:

(1)    Financial Statements:
The financial statements and the related reports of independent
public accountants and auditors filed as a part of this annual
report are listed under Item 8 herein.

(2)    Financial Statement Schedules:
Consolidated Valuation and Qualifying Accounts (Schedule II)

All other schedules are omitted because they are not applicable
or the required information is contained in the financial
statements or notes thereto.

(3)   Exhibits:
Exhibits are listed in the Exhibit Index on pages 141 to 145.

(b)	Reports on Form 8-K:

The registrant has not filed any reports on Form 8-K during the last
quarter of the Transition Period.

A report on Form 8-K, dated December 20 1999, was filed during the
quarter ended March 31, 2000, under Item 5 of Form 8-K, in respect of
the supply and distribution price control reviews.

<PAGE>



	SIGNATURES

Pursuant to the requirements of the Sections 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant, Yorkshire Power Group
Limited, certifies that it has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in London, England on
March 16, 2000.


YORKSHIRE POWER GROUP LIMITED



By:	/s/Armando A. Pena
Director and Chief Financial
Officer



Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

	Signature 	 Title				 Date

(i)	Principal Executive Officer:
	 /s/*Wayne H Brunetti.


			Chairman of the Board   	March 16, 2000
			and Director


(ii)	Principal Financial Officer
	and Principal Accounting Officer:


				Chief Financial Officer March 16, 2000
 	/s/Armando A. Pena	and Director



(iii) A Majority of the Directors
	*Dr. E. Linn Draper, Jr.
	*Donald M Clements, Jr.
	*Richard C Kelly
	*Paul J Bonavia



*BY	Authorized Representative March 16, 2000
/s/Armando A. Pena, Attorney-in-Fact	in the United States


<PAGE>

INDEPENDENT AUDITORS' REPORT

To The Shareholders and Board of Directors of Yorkshire Power Group
Limited and Subsidiaries

We have audited the consolidated financial statements of Yorkshire
Power Group Limited and its subsidiaries (the "Company") as of December 31,
1999, March 31, 1999 and March 31, 1998, and for the 9 month period ended
December 31, 1999, and the years ended March 31, 1999 and March 31, 1998,
and have issued our report thereon dated March 16, 2000.  Our audits also
included the financial statement schedule of the Company, listed in Item
14.  This financial statement schedule is the responsibility of the
Company's management.  Our responsibility is to express an opinion based on
our audits.  In our opinion, such financial statement schedule, when
considered in relation to the corresponding basic financial statements
taken as a whole, presents fairly in all material respects the information
set forth therein.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Columbus, Ohio

March 16, 2000

<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED
(Successor Company)

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Millions)
<CAPTION>

Column A                 Column B            Column C          Column D       Column E
			                     Additions
			Balance at   Charged to   Charged to                 Balance at
			Beginning of Costs and      Other                    End of
		        Period       Expenses      Accounts    Deductions    Period
Description             (POUNDS)     (POUNDS)      (POUNDS)    (POUNDS)      (POUNDS)
<S>                         <C>         <C>         <C>          <C>           <C>
9 month period ended December 31, 1999

Deducted from Assets:
   Accumulated Provision for
     Uncollectible Accounts  9           4           -           4(a)          9

                             9           4           -           4             9



Year ended March 31, 1999

Deducted from Assets:
   Accumulated Provision for
     Uncollectible Accounts  6           9          -            6(a)          9

                             6           9          -            6             9



Year ended March 31, 1998

Deducted from Assets:
   Accumulated Provision for
     Uncollectible Accounts  6          6           -            6(a)         6

                             6          6           -            6            6

(a)	Uncollectible accounts written-off
</TABLE>


EXHIBIT INDEX

Certain of the following exhibits, designated with an asterisk (*), are
filed herewith.  The exhibits not so designated have heretofore been filed
with the Commission and, pursuant to 17 C.F.R. 229.10(d) and 240.12b-32,
are incorporated herein by reference to the documents indicated in
parentheses following the descriptions of such exhibits. Certain
instruments which define the rights of holders of debt securities of
Yorkshire Power Group Limited and its subsidiaries are not filed herewith
pursuant to Item 601 (b)(4)(iii)(A) of Regulation S-K, 17 C.F.R. 229.
Yorkshire Power Group Limited agrees to furnish a copy of each such
instrument to the SEC upon request.


Exhibit
Number	Description


3.1	Memorandum and Articles of Association of Yorkshire Power Group
Limited (Designated in Registration 333-47925 as Exhibit 3.1).

3.2	Certificate of Incorporation of Yorkshire Power Group Limited
(Designated in Registration 333-47925 as Exhibit 3.2).

4.1	Subordinated Indenture dated as of June 1, 1998 among Yorkshire
Power Group Limited, Yorkshire Power Finance Limited, Banque
Generale du Luxembourg, and The Bank of New York (Annual Report on
Form 10-K for the fiscal year ended March 31, 1998, File No. 333-
47925, Exhibit 4.1).

4.2	First Supplemental Indenture dated as of June 1, 1998 among
Yorkshire Power Group Limited, Yorkshire Power Finance Limited,
Banque Generale du Luxembourg and The Bank of New York (Annual
Report on Form 10-K for the fiscal year ended March 31, 1998, File
No. 333-47925, Exhibit 4.2).

4.3	Certificate of Trust of Yorkshire Capital Trust I (Designated in
Registration 333-47925 as Exhibit 4.4).

4.4	Trust Agreement of Yorkshire Capital Trust I (Designated in
Registration 333-47925 as Exhibit 4.5).

4.5	Amended and Restated Trust Agreement of Yorkshire Capital Trust I
dated as of June 1, 1998 (Annual Report on Form 10-K for the fiscal
year ended March 31, 1998, File No. 333-47925, Exhibit 4.5).

4.6	Trust Securities Guarantee Arrangement dated as of June 1, 1998
between Yorkshire Power Group Limited and The Bank of New York
(Annual Report on Form 10-K for the fiscal year ended March 31,
1998, File No. 333-47925, Exhibit 4.6).

4.7	Deposit Agreement dated as of June 1, 1998 between Yorkshire Power
Finance Limited and The Bank of New York (Annual Report on Form 10-K
for the fiscal year ended March 31, 1998, File No. 333-47925,
Exhibit 4.7).

4.8	Indenture, dated as of February 1, 1998 among Yorkshire Power Finance
Limited, Yorkshire Power Group Limited, The Bank of New York and
Banque Generale du Luxembourg (Annual Report on Form 10-K for the
fiscal year ended March 31, 1998, File No. 333-47925, Exhibit 4.8).

4.9	First Supplemental Indenture, dated as of February 25, 1998, among
Yorkshire Power Finance Limited, Yorkshire Power Group Limited, The
Bank of New York and Banque Generale du Luxembourg (Annual Report on
Form 10-K for the fiscal year ended March 31, 1998, File No. 333-
47925, Exhibit 4.9).

4.10	Second Supplemental Indenture, dated as of February 25, 1998, among
Yorkshire Power Finance Limited, Yorkshire Power Group Limited, The
Bank of New York and Banque Generale du Luxembourg (Annual Report on
Form 10-K for the fiscal year ended March 31, 1998, File No. 333-
47925, Exhibit 4.10).

4.11	Deposit Agreement, dated as of February 1, 1998 between The Bank of
New York and Yorkshire Power Finance Limited (Annual Report on Form
10-K for the fiscal year ended March 31, 1998, File No. 333-47925,
Exhibit 4.11).

4.12	Trust Deed, dated January 17, 1995, between Yorkshire Electricity
Group plc and Bankers Trust Company Limited (Annual Report on Form
10-K for the fiscal year ended March 31, 1998, File No. 333-47925,
Exhibit 4.12).

4.13 First Supplement, dated July 27, 1995, between Yorkshire Electric
Group plc and Bankers Trust Company Limited (Annual Report on Form
10-K for the fiscal year ended March 31, 1998, File No. 333-47925,
Exhibit 4.13).

10.1	Yorkshire Electricity Group plc Public Electricity Supply License
dated March 26, 1990 as modified by modifications dated March 30,
1994, March 31, 1995, September 25, 1995, December 11, 1997,
December 30, 1997 and March 31, 1998 (Designated in Registration
333-47925 as Exhibit 10.1).

10.2	Second Tier License to Supply Electricity for England and Wales for
Yorkshire Electricity Group plc dated June 8, 1990 (Designated in
Registration 333-47925 as Exhibit 10.2).

10.3	Modifications to Yorkshire Electricity Group plc Second Tier License
to Supply Electricity for England and Wales dated October 24, 1990,
April 22, 1992, March 11, 1994, April 29, 1994 and January 19, 1998
(Designated in Registration 333-47925 as Exhibit 10.3).

10.4	Second Tier License to Supply Electricity for Scotland for Yorkshire
Electricity Group plc dated March 25, 1991 (Designated in
Registration 333-47925 as Exhibit 10.4).

10.5	Modifications to Yorkshire Electricity Group Second Tier License to
Supply Electricity for Scotland dated June 15, 1992, June 30, 1993,
March 11, 1994 and January 20, 1998 (Designated in Registration 333-
47925 as Exhibit 10.5).

10.6	Pooling and Settlement Agreement dated March 30, 1990 among
Yorkshire Electricity Group plc, National Grid Company plc and other
parties (Designated in Registration 333-47925 as Exhibit 10.6).


10.7	Master Connection and Use of System Agreement dated as of March
30, 1990 among The National Grid Company plc and its users
(including Yorkshire Electricity Group plc) (Designated in
Registration 333-47925 as Exhibit 10.7).

10.8	Master Agreement dated as of October 25, 1995 among The National
Grid Holding plc, The National Grid Company plc, Yorkshire
Electricity Group plc and the other RECs (Designated in
Registration 333-47925 as Exhibit 10.8).

10.9	Memorandum of Understanding among the National Grid Group plc,
Yorkshire Electricity Group plc and the other RECs, dated November
17, 1995 (Designated in Registration 333-47925 as Exhibit 10.9).

10.10		Master Registration Agreement dated as of June 1, 1998 among
Yorkshire Electricity Group plc, Energy Pool Funds Administration
Limited and other parties (Annual Report on Form 10-K for the
Fiscal Year ended March 31, 1998, File No. 333-47925, Exhibit
10.11).

10.11		Settlement Agreement for the Electricity Industry in Scotland,
dated as of August 14, 1998 (Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, File No. 333-47925, Exhibit
10.1).

10.12		Agreement for (POUNDS)220 million Credit Facility, dated July 22,
1998, for Yorkshire Electricity Group plc arranged by Citibank,
N.A. and Deutsche Bank AG London (Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998, File No. 333-47925,
Exhibit 10.2).

*10.13	Supplemental Agreement dated December 13, 1999, relating to a Credit
Facility for Yorkshire Electricity Group plc arranged by Citibank,
N.A. and Deutsche Bank AG London incorporating an Agreement for a
(POUNDS)50,000,000 Revolving Credit Facility dated July 22, 1998
for Yorkshire Electricity Group plc arranged by Citibank N.A. and
Deutsche Bank AG London.

*10.14	Yorkshire Electricity Group plc Public Electricity Supply License
modifications dated September 17, 1999.


*12.1	Computation of ratios of earnings to fixed charges.

*21.1	List of subsidiaries of Yorkshire Power Group Limited

*24.1	Power of Attorney of certain officers and directors of Yorkshire
Power Group Limited.

*27.1	Financial Data Schedule.