SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K
	(Mark One)
 (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 1999

OR

	(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ......................to.....................

                 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 )
<PAGE>
* 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 May 31, 1999


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

<PAGE>
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			      			                 22
UK Environmental Legislation			                         48
UK and EU Competition Law				                 49
Employees							         50
Presentation of Certain Information and
  Exchange Rates			 		                 51
Item 2   Properties							 51
Item 3   Legal Proceedings						 51
Item 4   Submission of Matters to a Vote of
           Security Holders			                         53

PART II

Item 5   Market for Registrant's Common Equity and
           Related Stockholder Matters				         54
Item 6   Selected Financial Data					 54
Item 7   Management's Discussion and Analysis of Results
           of Operations and Financial Condition		         61
Item 7A  Quantitative and Qualitative Disclosures About
           Market Risk					                 88
Item 8   Financial Statements and Supplementary Data		         89
Item 9   Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure	                144

PART III

Item 10  Directors and Executive Officers of
           the Registrant					        145
Item 11  Executive Compensation					        147
Item 12  Security Ownership of Certain Beneficial Owners
           and Management				                148
Item 13  Certain Relationships and Related Transactions	                149

PART IV

Item 14  Exhibits, Financial Statement Schedules, and
           Reports on Form 8-K					        150


Signatures								151

<PAGE>
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", "Business" and elsewhere 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; Year 2000 issues; 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.


<PAGE>
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

"Centrica" means Centrica plc, the former supply business of
British Gas plc

"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

"DGGS" means the Director General of Gas Supply

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

"Electricity Act" means the Electricity Act 1989
"EMFs" means electromagnetic fields
<PAGE>
"Energy Group" means The Energy Group plc

"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

"Green Tariffs" means electricity tariffs that incorporate
higher unit charges because the electricity is sourced from
renewable energy sources which currently have a higher
production cost

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

"GWh" means gigawatt hours

"Ionica" means Ionica Group plc

"km" means kilometers

"kV" means kilovolts

"kW" means kilowatts

"kWh" means kilowatt hours

"LV" means low voltage


<PAGE>
"March 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.

"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

"OFFER" means the Office of Electricity Regulation, the body
appointed by the Government of the UK to regulate the
electricity industry in Great Britain

"OFGAS" means the Office of Gas Regulation, the body appointed
by the Government of the UK to regulate the gas industry 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
<PAGE>
"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

"Regulator" means The Director General of Electricity Supply in
Great Britain

"RETA" means revised electricity trading arrangements

"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

"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.

"UK" means the United Kingdom

"UK GAAP" means accounting principles generally accepted in the
UK

"Unit" means kWh

"US" means the United States of America

"US GAAP" means accounting principles generally accepted in the
US

"US Parents" means AEP and NCE

"YCL" means Yorkshire CoGen Limited
<PAGE>
"YEPL" means Yorkshire Electric Power Limited, a subsidiary of
Yorkshire Electricity Group plc

"Yorkshire" means Yorkshire Electricity Group plc and its
subsidiaries

"Yorkshire Finance" means Yorkshire Power Finance 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


<PAGE>
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.
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.

Each of the US Parents holds an indirect 50% interest in
Yorkshire Group.  AEP holds such interest through its wholly-
owned subsidiary, AEP Resources.  NCE holds its 50% indirect
interest in Yorkshire Group through its wholly-owned subsidiary,
NC Enterprises, Inc., a Delaware corporation, which in turn
wholly-owns New Century International.

YORKSHIRE FINANCE

Yorkshire Finance was incorporated under the laws of the
Cayman Islands in August 1997.  Yorkshire Finance exists solely
for the purpose of operating as a financing vehicle for
Yorkshire Group and its affiliates.

YORKSHIRE

Yorkshire's principal businesses are the distribution of
electricity to approximately two million customers in its
Authorized Area and the supply of electricity primarily within
its Authorized Area.  As discussed below under "Business
Restructuring", Yorkshire began to operate the distribution and
Supply businesses as more self-sufficient businesses in Fiscal
Year 1999.  If efficient and effective, Yorkshire will still
provide certain services jointly for both businesses.

<PAGE>
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.  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, 1998, AEP generated consolidated
operating revenues of $6.3 billion and had consolidated assets
of approximately $19.5 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").
Under the merger agreement, each share of CSW common stock will
be converted into 0.6 share of AEP common stock.  Based on the
price of AEP's common stock on December 19, 1997, the
transaction would be valued at $6.6 billion.  The combined
company will be named American Electric Power Company, Inc. and
will be based in Columbus, Ohio.  The merger is conditional upon
the approvals of various state and federal regulatory agencies.

<PAGE>
Assuming the receipt of all required approvals, the merger is
currently expected to be consummated by the end of 1999.

Because of AEP's interest in Yorkshire Group and CSW's
interest in SEEBOARD, for the purposes of the UK Fair Trading
Act 1973, the merger of AEP's and CSW's UK interests into common
ownership qualifies for investigation by the UK Office of Fair
Trading ("OFT").

Following a submission to the OFT by AEP and CSW, the OFT on
January 22, 1999, issued an "invitation to comment" requesting
written representations about any competition or public interest
implications in relation to the AEP/CSW merger.  In accordance
with the concordat between the OFT and OFFER, the OFT consult
OFFER before advising the Secretary of State for Trade and
Industry whether a merger or acquisition should be referred to
the Competition Commission.  On February 5, 1999, OFFER issued a
consultation paper on the regulatory issues involved with
respect to the AEP/CSW merger and requested comments by February
19, 1999.

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, Oklahoma, Kansas
and Wyoming and approximately 1.1 million 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, transmission, distribution,
sale and transportation of natural gas.  In the year ended
December 31, 1998, NCE generated consolidated operating revenues
of $3.6 billion and had consolidated assets of approximately
$7.7 billion.

On March 25, 1999, NCE and Northern States Power Co. ("NSP")
announced that they had entered into a definitive merger
agreement.


<PAGE>
YORKSHIRE'S BUSINESSES

DISTRIBUTION BUSINESS

Yorkshire's distribution business consists of the ownership,
management and operation of the electricity distribution network
within Yorkshire's 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 price 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

Yorkshire's 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.


<PAGE>
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:

          At March 31,

                                 	     1999         1998        1997

Number of customers connected
Residential			          1,955,110    1,930,719   1,910,752

Commercial			            126,768      126,812     126,003

Industrial				     21,034       21,455      21,889


Total				          2,102,912    2,078,986   2,058,644

        						Fiscal Year

   					    1999         1998        1997
Electricity distributed (GWh)
Residential			           7,351        7,149       7,196

Commercial				   6,135        5,800       5,580

Industrial				   9,629       10,484      10,566


Total					  23,177       23,433      23,342

					          (In Millions)

Distribution operating revenues         (POUND)322    (POUND)309 (POUND)308
Distribution operating income           (POUND)153    (POUND)154 (POUND)127

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
Fiscal Year 1999 and the financial statements for Fiscal Year
1998 have been restated on this basis.  No restatement of the
Fiscal Year 1997 financial statements has been made.  See Part
II, Item 7, Management's Discussion and Analysis of Results of
Operations and Financial Condition, Results of Operations,
"Fiscal Year 1998 for the Successor Company Compared with Fiscal
Year 1997 for the Predecessor Company".


Competition in the Distribution Business


<PAGE>
Yorkshire has not experienced significant competition in its
distribution business.  Yorkshire 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.  For a
discussion of proposals impacting metering, see "The Electric
Utility Industry in Great Britain - Distribution of Electricity
- Price Control" and "Regulation Under the Electricity Act -
Separation of Electricity Distribution and Supply; Metering and
Meter Reading".

Since 1995 work to connect customers to the network has
become contestable as customers are able to provide their own
connections to the network 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.
The Regulator is looking for ways to increase competition in the
provision of connections.  Since 1995, in Yorkshire's 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
started in September 1998 and was completed for all PESs in May
1999.  Yorkshire presently estimates that the total costs for
re-engineering and information technology work will be (POUND)67
million.  Of such amount, approximately (POUND)19 million was
accounted for in Fiscal Year 1997, (POUND)31 million in Fiscal
Year 1998 and (POUND)16 million in Fiscal Year 1999, with
(POUND)1 million expected to be accounted for in Fiscal Year
2000.  The Regulator has made proposals (which have been
accepted by Yorkshire) to allow Yorkshire recovery of (POUND)25
million over a five year period ending March 31, 2003.  A
further (POUND)7 million is expected to be recovered through
Pool cost recovery and other national mechanisms and (POUND)8
million has been capitalized as such amount is

<PAGE>
expected to provide future benefits to the Supply business, with
the balance of (POUND)27 million being expensed.  Of the amount
expended, approximately (POUND)19 million was expensed in Fiscal
Year 1997, (POUND)2 million was expensed in Fiscal Year 1998 and
(POUND)5 million was expensed in Fiscal Year 1999.  The residual
amount of approximately (POUND)1 million will be expensed in
Fiscal Year 2000 as incurred.

The Regulator has also made proposals (which have been
accepted by Yorkshire) to provide an annual allowance of
(POUND)3 million for the period 1998 through 2000 to cover
related operating costs.  This allowance will be reviewed at the
time of the Distribution Price Control Formula Review in 2000.

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 (POUND)3
million as a consequence of the delay.  A provision for
penalties of (POUND)3 million was included in the results for
Fiscal Year 1998.

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 Fiscal Year 1999, Yorkshire invested
(POUND)181 million in the distribution system, of which
(POUND)125 million represented capital improvements in new
substations, cables and overhead lines and (POUND)56 million
represented expenditures related to the operation, repair and
maintenance of the distribution system.  Yorkshire is currently
completing its investment in DAMS that 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 Fiscal Year 1999, Yorkshire
restored services to 94.3% of all customers affected by faults
within three hours and on average a Yorkshire customer was
without power for only 53.6 minutes.

<PAGE>
Distribution Facilities

Electricity is transported across the Grid at 400 kV or 275
kV to 21 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 March 31, 1999, Yorkshire's distribution system consisted
of:

                        	LV	11kV	Above 11kV

Number of metered supplies  2,092,589	 1,683	   25
Total length of circuits     29,030km	20,296km	4,850km
Percentage underground	       91%	   51%	  26.5%

The primary distribution system consists of 21 grid supply
points from the Grid, an additional 68 supply points and 359
primary substations.  At March 31, 1999, the installed
transformer capacity with a secondary voltage higher than 650
volts at these substations was 20,857,000 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 13,110 indoor
substations, 2,453 outdoor substations and 16,681 pole mounted
substations.  At March 31, 1999, the installed transformer
capacity with a secondary voltage less than 650 v was 9,649,570
kVA.

SUPPLY BUSINESS

Electricity Supply

Yorkshire's electricity supply business consists of selling
electricity to end users, purchasing such electricity and
arranging for its distribution to those end users.  Under its
PES License, Yorkshire had an exclusive right to supply
electricity to Franchise Supply Customers between 1990 and 1998.
Between September 1998 and February 1999 competition was
introduced and the electricity supply business inside
Yorkshire's Authorized Area is now fully open to competition.



<PAGE>
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
non-franchise threshold was lowered to 100 kW in April 1994
allowing competition in the supply of electricity for these
customers while Franchise Supply Customers remained subject to
price regulation.  On September 14, 1998, competition was
introduced to the domestic electricity market in the UK.  Since
then the Regulator has announced several dates for the
introduction of competition in supply to residential and small
commercial customers for all 14 PES areas.  The process was
completed for all PES customers in May 1999.  Yorkshire opened
its full market to competition on February 22, 1999, making it
one of the first PESs to do so.  The Regulator, however,
proposed transitional price regulation for Designated Customers
for an initial period of two years from April 1, 1998, until an
adequate level of competition is established.  Yorkshire
subsequently indicated its acceptance of such proposals.  The
proposals (when taken together with the reduction in the Fossil
Fuel Levy which became effective on April 1, 1998) have resulted
in the implementation of small reductions, effective April 1,
1998, in the tariffs for Yorkshire's Designated Customers in its
Authorized Area compared to the corresponding tariffs in effect
in July 1997.  See "The Electric Utility Industry in Great
Britain - Fossil Fuel Levy".  The price controls also require 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 would result in a reduction of 0.06% to
prices for Designated Customers.  For Fiscal Year 2000 only the
price controls also require that any penalties for delayed
market start-up be passed to customers in the form of lower
prices or rebates.  OFFER has agreed to Yorkshire's request to
delay any change in prices until October 1999 when the Fossil
Fuel Levy is due to be revised.

Electricity Supply Risk Management

Yorkshire's electricity supply risk management efforts are
intended to hedge the risks associated with the purchase and
sale of electricity resulting from Pool price volatility.
Currently 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 Non-
Franchise Supply Customers are for twelve-month terms and
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
<PAGE>
electricity supply customer) to the extent that it has not
hedged such risk.  Yorkshire substantially hedges purchasing
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 the modified PES License, which became effective on
April 1, 1998, Yorkshire has a price cap on the prices it may
charge its Designated Customers in its 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,
which are entered into with generators.
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.  At the
present time, Yorkshire expects its electricity supply demand
for the Calendar Year 1999 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 a new system of trading arrangements is
targeted to be in place in Autumn 2000.  The new trading
arrangements will require participants to submit half hourly
forecasts of electricity supply and demand and endeavor to
balance contract positions and metered volumes with their half
hourly forecast.  There will be incentives, in the form of
imbalance payments, for generators and suppliers to meet their
commitments.  The precise nature of the incentives are currently
being debated.  Yorkshire is redefining current business
operations in order to manage and exploit the new market by
attempting 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 "The Electric Utility Industry in Great Britain
- Regulation Under the Electricity Act - Review of Energy
<PAGE>
Sources for Power Generation; Review of Electricity Trading
Arrangements".
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 field (the "Armada
Field") for approximately (POUND)27.8 million.  As of March 31,
1999, the Armada Field, which has a production life of
approximately 15 years, had proven resources of approximately
1.2 trillion cubic feet (84 billion cubic feet net to Yorkshire)
of gas and 68 million barrels of oil and oil equivalents (4.8
million barrels net to Yorkshire).  These resources, which were
last proven at October 1, 1997, are subject to review during
1999.  Delivery of such gas from the Armada Field began, on
schedule, in October 1997.  The development costs associated
with the Armada Field have been lower than originally
anticipated.  As of March 31, 1999, Yorkshire had invested
(POUND)60 million in the Armada Field including the initial
acquisition costs.  The net book value of the investment at
March 31, 1999 was (POUND)50 million.

Yorkshire markets gas to all sectors of the gas market which
has been open to competition since May 1998.  By the end of
Fiscal Year 1999, Yorkshire had entered into contracts and
supplied gas to more than 250,000 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 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 by this system.

Strategy for the Supply Business

<PAGE>
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 Non-
Franchise 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
Fiscal Year 1999, Yorkshire maintained a significant portion of
its existing business.  Yorkshire has also applied this strategy
to Non-Franchise Supply Customers outside its Authorized Area.
For example, in Fiscal Year 1999 Yorkshire was awarded new
contracts with customers such as British Steel, ICI, Smithkline
Beecham, Christian Salvesen and Tetleys.  Yorkshire has also
gained approximately 22,000 customers newly entered into the
national competitive market, from a network of agents as well as
significant new business from multi-site groups such as British
Telecom, Cellnet and local government authorities including
Bristol City Council and Swindon Borough Council.  A successful
channel partnership arrangement whereby the British Chamber of
Commerce promote Yorkshire has gained many small commercial
customers nationwide.

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.

Service initiatives are co-ordinated across Yorkshire through
a joint forum of the senior management of the distribution and
Supply businesses.

<PAGE>
During Fiscal Year 1999, major work has included the
integration of gas and electricity processes to reflect the
fully competitive sales environment in which Yorkshire now
operates.  Customer tracking and surveys have been developed
further to ensure that regular feedback is obtained from all
customer groups.

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
the Supply business 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 (loss):

					     Fiscal Year

                                          1999      1998       1997
Volume (GWh):
>100kW supply customers                 10,732     9,747     10,627

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

Total                                   21,676    20,236     21,116


					   (In Millions)

Supply operating revenues         (POUND)1,336 (POUND)1,211 (POUND)1,178

Supply operating income
(loss)                              (POUND)72     (POUND)32  (POUND)(132)

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
Fiscal Year 1999 and the financial statements for Fiscal Year
1998 have been restated on this basis.  No restatement of the
Fiscal Year 1997 financial statements has been made.  See Part
II, Item 7, Management's Discussion and Analysis of Results of
Operations and Financial Condition, Results of Operations,
"Fiscal Year 1998 for the Successor Company Compared with Fiscal
Year 1997 for the Predecessor Company".

The operating loss reported for the supply business for
Fiscal Year 1997 was affected by a (POUND)125 million provision
for uneconomic gas and electricity contracts, which was offset
by an intrabusiness elimination of (POUND)47 million.



<PAGE>
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 businesses (sharing common services where
it is effective and efficient to do so) and in a significant
down-sizing of the corporate center.

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 Energy Limited ("IVO").  IVO is a
subsidiary of Imatran Voima Oy, part of Finland's energy group
Forum.  RPG owns 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 (POUND)14 million.
The cash consideration received from IVO, including payment for
the intercompany balance and net of cash retained by RPG, was
(POUND)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 (POUND)18 million.

On December 31, 1998, Yorkshire entered into an unconditional
agreement to sell its subsidiary, YCL, to PowerGen CHP Limited,
a subsidiary of PowerGen plc.  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 (POUND)3 million.  The
consideration for the sale, including the payment for the
intercompany balance of (POUND)69 million, was (POUND)95
million.  The total gain on the sale is (POUND)15 million, of
which (POUND)8 million after tax was included in net income in
Fiscal Year 1999.  The remaining (POUND)7 million is deferred
and will be amortized over the life of contracts existing
between Yorkshire and YCL.

The remaining generating assets of Yorkshire, windpower
plants held within a 50:50 joint venture company, Yorkshire
Windpower Limited, were sold in February 1999 to PowerGen UK PLC
for a loss of (POUND)2 million.

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

YEAR 2000 ISSUES

A potentially world-wide problem has arisen with computer
programs and micro-processing chips due to the method used to
represent the year part of a date.  This may lead systems and
equipment to interpret incorrectly dates falling after December
31, 1999.  In addition, certain systems may fail to detect that
the Year 2000 is a leap year (see Part II, Item 7 "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" for further discussion of Year 2000 issues).

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.  This is in contrast to the
traditional US utility industry, in which vertically integrated
companies generally participate in all functions.

INDUSTRY STRUCTURE

Great Britain has two separate but connected electricity
markets, each with a different commercial framework.  In England
and Wales electricity is produced by generators, the largest of
which are National Power, PowerGen and Nuclear Electric plc, a
subsidiary of British Energy.  Electricity is transmitted
through the Grid by NGC and distributed by the twelve RECs in
their respective Authorized Areas.  Most customers are currently
supplied with electricity by their local REC, although there are
other suppliers holding second-tier electricity supply licenses,
including other generators and RECs, who are competing to supply
all electricity supply customers in those markets which are open
to competition.

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.

<PAGE>
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 Electricite de
France, through which electricity can be transferred between
France and England and Wales.

Virtually all electricity generated in England and Wales is
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.

INDUSTRY BACKGROUND

The industry structure described above was put in place in
March 1990 in order to introduce competition into the generation
and supply of electricity.  At the same time, a licensing regime
was introduced for the electricity industry both in England and
Wales as well as in Scotland.

The RECs, which at that time collectively owned NGG were
privatized in December 1990.  National Power and PowerGen were
partly privatized in March 1991 (with the balance of the UK
government's holdings being sold to investors in March 1995).
Scottish Power and Scottish and Southern were privatized in June
1991 and British Energy was privatized in July 1996.  By
December 1995, most of the RECs' ownership of NGG had been
publicly sold, and NGG was listed on the London Stock Exchange.
Since the summer of 1995, all of the RECs have been acquired or
merged.

In 1990, the vast majority of generating capacity in England
and Wales was owned by three generators.  However, since that
time competition in generation has increased 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 the
Regulator, National Power and PowerGen have disposed of an
aggregate of 6,000 MW of generating capacity to Energy Group.
<PAGE>
Further plant disposals of 4,000 MW each are expected as both
companies seek electricity supply acquisitions.

Industry combinations involving (i) Southern Electric plc and
Scottish Hydro-Electric plc (now known as Scottish and Southern
Energy plc), (ii) PowerGen plc and East Midlands Electricity plc
(iii) National Power plc and the supply business of Midlands
Electricity plc, and (iv) Electricite de France and London
Electricity have raised a number of regulatory and competitive
issues in the UK electric utilities industry.  National Power's
acquisition has 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.  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.

Competition in electricity supply has been progressively
introduced both in England and Wales and in Scotland.  The RECs
in England and Wales, and Scottish Power and Scottish and
Southern in Scotland, have become subject to increasing
competition as the electricity supply Franchise within each
Authorized Area has been gradually removed.  In April 1990,
electricity users with a Peak Demand in excess of 1 MW became
Non-Franchise Customers of a REC and therefore were allowed to
choose their electricity supplier.  In April 1994, the Non-
Franchise Customer class was expanded to include users with a
Peak Demand in excess of 100 kW.

On September 14, 1998, competition was introduced to the
domestic electricity market in the UK.  Since then the Regulator
has announced several dates for the introduction of competition
in electricity supply to residential and small commercial
customers for all 14 PES areas.  In May 1999 the process was
completed for all PES customers.  Yorkshire opened its full
market to competition on February 22, 1999 making it one of the
first PESs to do so.

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
<PAGE>
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 the Regulator.

Price Control

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.  RPI is a measure of inflation, and equals 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 a RECs business
costs, the RPI calculation may not accurately reflect the price
changes affecting RECs.  The Xd factor is established by the
Regulator 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 current Distribution Price
Control Formula permits RECs to partially retain additional
revenues due to increased distribution of units and allows for a
pound for pound increase in operating profit for efficient
operations and reduction of expenses within a review period.
However, during the next Distribution Price Control Formula
review, the Regulator may reduce any such increase in operating
profit to the extent he determines it not to be a function of
efficiency savings or, if genuine efficiency savings have been
made, he determines that customers should benefit through lower
prices in the future.

Upon privatization, the Regulator set different Xd factors
for each of the RECs to permit annual price increases by the
RECs of between 0% and 2.5% (1.3% for Yorkshire) greater than
RPI for the five year period ending on March 31, 1995.
Following a scheduled distribution price review by the Regulator
of all twelve RECs in August 1994, the Regulator required an
overall real reduction in regulated distribution prices for
<PAGE>
Fiscal Year 1996 of between 11% and 17% (14% for Yorkshire) from
the previous year, and set the Xd factor for the subsequent four
year period ending on March 31, 2000, to subtract 2% from RPI in
each such year.  Also in connection with the August 1994
distribution price review, the Regulator, (i) halved from 100%
to 50% the extent to which distribution revenues would be
allowed to vary with the number of units of electricity
distributed and (ii) determined numbers of Authorized Area
customers based on REC forecasts for each year through and
including Fiscal Year 2000, allowing distribution revenues to
vary by 50% of the predetermined annual change in such forecast
numbers.  The stated intention of the Regulator in introducing
this change was "to remove any artificial incentive on the
companies to sell more electricity, while retaining a general
incentive for companies to seek out and meet the needs of their
customers".  In light of information concerning the financial
position of the RECs that emerged during the unsuccessful bid by
Trafalgar House plc for Northern Electric plc (one of the RECs)
and representations by Consumers' Committees and others, the
Regulator conducted an unscheduled distribution price review of
all twelve RECs in July 1995.  As a result of this unscheduled
review, the Regulator revised regulated distribution prices for
the four year period ending on March 31, 2000, requiring 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.

The Distribution Price Control Formula is being reviewed.
Following completion of the review, the Regulator will make a
proposal for a revised formula to apply from April 1, 2000.  If
a REC does not agree with the proposal the Regulator may refer
the proposal to the Competition Commission and, following the
publication of the report of the Competition Commission, the
Regulator may make appropriate modifications to the REC's PES
License.

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 the previous year, the
maximum average charge per unit distributed is reduced by an
amount to reflect the excess income received, to which is added
interest.  In the event of undercharging, the Distribution Price
<PAGE>
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 the Regulator.  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 the Regulator 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 the Regulator 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, the Regulator 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, the Regulator
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.

Operations related to the metering of network connections to
non half-hourly metered customers (generally residential and
other small customers) are subject to the metering component of
the Distribution Price Control Formula.  Such price controls are
scheduled to be discontinued from April 1, 2000, at which time
competitive market pricing is scheduled to be introduced.  In a
joint statement issued in January 1998, the Regulator and OFGAS
made proposals concerning competition in meter reading.  See
"The Electric Utility Industry in Great Britain - Regulation
Under the Electricity Act - Separation of Distribution and
Electricity Supply; Metering and Meter Reading".  Competitive
market pricing already exists for operations related to the
metering of network connections to half-hourly metered
customers.

<PAGE>
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, the Regulator 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.

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 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
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.

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 the Regulator 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
<PAGE>
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.

Current Electricity Supply Price Regulation

The Regulator indicated in his electricity supply price
restraint proposals published in October 1997, which proposals
Yorkshire accepted, that price regulation for electricity supply
to all Designated Customers within Yorkshire's Authorized Area,
would be extended beyond March 31, 1998, until an adequate level
of competition is established, and at least until March 31,
2000.

The license modifications that have been implemented to
effect the new controls between 1998 and 2000 take the form of a
series of price caps on the tariffs applicable to residential
and small business customers.  The new controls also require an
additional 3% below inflation reduction effective April 1, 1999.
The license modifications also discontinued the automatic pass-
through of costs previously passed through to residential and
business customers below 100kW, consisting primarily of
purchased power costs.  The correction factor, which annually
adjusted prices for any imbalance between forecast and actual
costs, was also discontinued from April 1, 1998.  Price caps for
Fiscal Year 2000 took account of the residual correction factor
from Fiscal Year 1998.
<PAGE>
In addition, the license modifications provide for an
allowable charge to cover the additional cost of providing data
management services that are required to be provided by each
REC.  For a discussion of the costs associated with these data
management services, see "Yorkshire's Businesses - Distribution
Business - Data Management Services".  The duration and level of
the allowances for operating costs are being reviewed together
with the Distribution Price Control.  The license modifications
also provide for restraints on pre-payment meter charges.

On June 10, 1999, the Regulator published a preliminary
consultation document entitled "Review of Domestic and Small
Business Electricity Supply Price Regulation A Consultation
Document".  The document outlines the issues for consideration
during the review of maximum price restraints for each of the
PESs.  The present price restraints apply to Designated
Customers and are due to expire on March 31, 2000.

The document discusses the operation of the existing maximum
price restraints and requests views on a number of issues
including options for future price regulation.  These include:

- continuation of the existing form of RPI-X price restraints,
with possible modification to the scope of the restraints and
the treatment of generation costs;

- a system of relative price regulation that links prices
offered to certain protected customer groups to the prices
offered to a "marker" group of customers for which
competition is seen to give adequate protection; and

- removal of price restraints from April 1, 2000, and relying
instead on conditions in the supply licenses and powers
forthcoming under the Competition Act 1998 to protect
customers (see "UK and EU Competition Law").

Responses are requested by July 9, 1999.  The Regulator
expects to publish initial proposals for future price regulation
later this year.

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
<PAGE>
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, the Regulator published a framework
document describing the delivery and implementation of revised
electricity trading arrangements ("RETA") based upon market
trading arrangements in commodities markets elsewhere.  See "The
Electric Utility Industry in Great Britain - Regulation under
the Electricity Act - Regulatory Development: Review of
Electricity Trading Arrangements".

<PAGE>
Fossil Fuel Levy

All the RECs are obligated 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.  The
Regulator sets the rate of the Fossil Fuel Levy annually and
collects and redistributes the revenues from it.  The current
Fossil Fuel Levy is 0.7% of the value of sales of electricity
made in England and Wales and has been 0.0% of the value of
sales of electricity made in Scotland since April 1, 1999.

Climate Change Levy

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

The tax change has been pre-announced in order to give
businesses time to adjust.

Yorkshire submitted a response to the UK government on May
28, 1999.  The main points of the response included the
following:-

-	Yorkshire urged prompt agreement of requirements for levy
collection so that changes to billing systems can be made in
a timely manner;
-	Yorkshire believed that energy supply companies should only be
responsible for billing a standard rate of levy;
-	Yorkshire believed that customers using the Green Tariff
should have the climate change levy rebated.

At the present time it is not possible to quantify the cost
to Yorkshire of the implementation of such a levy.

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.  The Electricity Act established the industry
structure described above so as to enable privatization to take
place.  The Electricity Act also created the institutional
framework under which the industry is currently regulated,
including the office of the Regulator, who is appointed by the
Secretary of State.  The last Regulator, Professor Stephen
<PAGE>
Littlechild, was appointed for a five year term commencing
September 1, 1989, and was reappointed in 1994 for a further
five year term which would have ended on August 31, 1999, but
has since left following the appointment of a joint energy
regulator with responsibilities for gas and electricity.  The
formal title of the Regulator is Director General of Electricity
Supply and head of OFFER.

On September 24, 1998, the Secretary of State for Trade and
Industry announced the appointment of Callum McCarthy as the
next Director General of Gas Supply from November 1, 1998, and
Director General of Electricity Supply from January 1, 1999.
Mr. McCarthy was appointed as the first Energy Regulator for
Great Britain subject to legislation to amalgamate the
regulatory regime for gas and electricity.  Both appointments
will run until October 31, 2003.On June 16, 1999, the UK
government announced that the new name for the combined
Office of Electricity Regulation and Office of Gas Supply
will be the Office of Gas and Electricity Markets (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
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 certain functions relating 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.

<PAGE>
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.

Regulatory Developments

	Review of the Regulatory Framework

On June 30, 1997, the UK government announced its intention
to conduct a comprehensive review of the regulatory framework
governing the electricity distribution and supply businesses in
England and Wales, as well as the regulatory framework
applicable to other privatized utilities.  The review culminated
in proposals of the UK government designed to revise utility
regulation in the UK.  Among the main proposals were the
retention of the "RPI-X" as the fundamental basis for price
regulation; increased transparency and consistency of
regulation; the merger of OFFER and OFGAS; the separate
licensing of the distribution and electricity supply businesses
of the PESs; the amendment of the statutory duties of utility
regulators to provide a new primary duty to exercise their
functions in the manner best calculated to protect the interests
of the consumers in the short and long term, wherever possible
through promoting competition; and adapting price regulation to
distinguish between income earned through companies' own efforts
<PAGE>
and income which results from other factors.  Some of these
proposals would require primary legislation.

Yorkshire submitted comments on the proposals on May 29,
1998.  In summary, Yorkshire welcomed the review of regulation
and supported the objectives of fairness and efficiency as the
key to promoting customer interests and allowing the industry to
develop, but suggested that the existing regulatory system had
delivered significant benefits to customers and that any changes
should not undermine such benefits.  Yorkshire also supported
the creation of a single energy regulator and procedural changes
to foster greater consistency in decision making.  Furthermore
while agreeing with the need to consider the separation of the
electricity supply and distribution businesses, Yorkshire
suggested that the licenses could be separated without forcing
divestiture of such businesses and that the costs and overheads
in putting in place any new arrangements should be minimized.

On July 27, 1998 the UK Government published its conclusions
(the "July Response").

The UK Government intends to introduce legislation to set a
long term stable regulatory framework for the next decade which
is designed to ensure lower prices and high quality service for
customers at home and in businesses.

The July Response included a number of significant
conclusions of the UK Government.  Among the more significant
conclusions are the retention of "RPI-X" as the fundamental
basis of price regulation, with potential refinement to reflect
the March Green Paper principles on price regulation; regulators
should have a new primary duty to protect the interests of
consumers, while ensuring that regulated companies can finance
their functions; the electricity and gas regulators should be
replaced as soon as possible with a single energy regulator and
OFFER and the Office of Gas Regulation should be merged; and
legislation should be introduced to provide for separate
licenses for the supply and the distribution of electricity.

On May 20, 1999, OFFER published a further consultation paper
as part of the review of the electricity distribution price
controls due to take effect from April 1, 2000.  The paper
contains information about quality of supply and levels of
operating costs and capital expenditure in the distribution
business of PESs.  The main points include: the reaffirmation of
the benefits of RPI-X as the principal price control mechanism;
a determination to improve some of the other incentives
associated with the RPI-X price regime as currently practiced;
and a proposal to reallocate approximately (POUND)280 million of
operating costs from the distribution businesses nationally to
<PAGE>
other PES businesses, chiefly electricity supply.  The Regulator
said the document was a major step forward in OFFER's thinking
on distribution price controls and demonstrated their
"determination to be more open about price control issues and
methods".  The paper did not reach conclusions about the levels
of cost savings achievable by the PESs in the next review period
and consequently does not propose specific new price controls
for any PES.

Separation of Distribution and Electricity Supply; Metering
and Meter Reading

On May 13, 1998, the Regulator issued a consultation paper on
the separation of the distribution and electricity supply
businesses of PESs and the future treatment of metering and
meter reading.  The material proposals and recommendations set
out in the consultation paper are as follows:

1. Full separation of the ownership of the electricity supply
and distribution businesses is recommended and appropriate
interim arrangements should be contemplated for separate
companies to comprise the electricity distribution and supply
activities, acting independently of each other.
2. Measures should be introduced to ensure that each PES
electricity supply subsidiary operates at arm's length from
the distribution subsidiary.  These measures would include
separate contracts between the electricity supply and
distribution businesses, avoiding the sharing of facilities
between the businesses, requiring separate management teams
for the two businesses and minimizing corporate headquarters
activities.
3. The distribution company should be responsible for the
maintenance and operation of the network and have a statutory
duty to develop and maintain an efficient, co-ordinated and
economical system of electricity distribution to facilitate
competition in generation and electricity supply.  It should
connect any person to the network on reasonable terms and act
as a "last resort" meter reading service, bought in from meter
reading companies, for those suppliers not wishing to provide
the service themselves.
4. All electricity suppliers should be placed on the same
legislative footing and tariff supply should be replaced by
supply under contract.  License conditions would be introduced
to protect customers and competitors against dominant
suppliers.
5. Metering services should be open to competition and
arrangements for transmission in Scotland should be brought
into line with those in England and Wales.

In its June 1998 response to this consultation paper,
Yorkshire supported separate licenses allowing separate
regulation of electricity supply and distribution activities,
but opposed the measures proposed by OFFER on ownership and
stringent operating separation.  In opposing such measures,
Yorkshire, among other things, questioned whether the
potentially high costs of implementing such measures were
justified.  Yorkshire concluded that its position was consistent
with the UK Government's proposals in the Utility Review and the
position of other PESs.

The Regulator issued a further consultation on separation of
businesses in November 1998.  This second consultation paper
also proposed major reform of the metering and meter reading of
PES's, including the need to introduce competition in all
metering activities by April 2000.  Yorkshire responded to this
consultation paper, stressing the significant degree of
separation that already exists within Yorkshire and highlighting
the high potential cost of additional operational separation.

On May 19, 1999, the Regulator issued a "Proposals and
Consultation" Paper on business separation.  OFFER concluded
that business separation is necessary to prevent cross subsidy,
to protect information held in the distribution business, to
equalize services provided by the distribution business and to
remove perceptions that unfair service is being provided and
ensure that decision making is properly carried out within the
distribution business.  OFFER also set out a framework for new
license obligations requiring the full separation of electricity
supply and distribution.  OFFER propose that plans be drawn up
for separation but considered that in some cases "common
services" may still be shared provided there is no cross
subsidy, sharing of confidential information or distortion of
competition.  In addition, OFFER detailed the plan for the
provision of metering services, including the requirement for
distributors to offer and provide meters and their maintenance,
a last resort obligation on distributors to procure a meter
reading service, an obligation on suppliers to ensure all
metering services are in place (which they could provide
themselves) and an obligation on PES suppliers to continue to
provide a prepayment infrastructure.

OFFER expressed some skepticism about cost estimates
submitted in response to previous consultations and indicate
that they believe that the actual costs will be much lower than
previous estimates and, therefore, considered that cost recovery
through the distribution price control mechanism should not be
assumed.

Responses to this consultation paper are requested by
June 30, 1999.

Should the Regulator require such steps to be taken to
increase business separation, then significant costs would be
incurred.  Yorkshire is continuing to seek to reduce the
potential requirements and to achieve recovery of costs.

The Regulator's reviews of business separation and price
controls are expected to be completed in November 1999.

Review of Energy Sources for Power Generation; Review of
Electricity Trading Arrangements

On June 25, 1998, the UK Government issued a consultation
paper on its review of energy sources for power generation.  The
preliminary general conclusions of the review were:

1. There are basic flaws in the existing electricity market
arrangements which need to be corrected to ensure that the UK
Government can achieve its policy of diverse, secure and
sustainable energy supplies at competitive prices for
consumers, while protecting the environment; and

2. The prices for electricity consumers have been excessive and,
in the absence of restrictions, a decrease of at least 10% in
wholesale electricity prices should be possible in the medium
term.

Problems identified during the review included:

1. Despite the fact of substantial new gas-fired power
generation entry into the market, competition has not
significantly increased nor has the price of electricity
decreased as expected;

2. Although the Pool ensures that electricity is available to
all when needed, it has led to distortions which have
affected the choice of energy sources for power stations;
such distortions have favored gas plants which are operated
inflexibly over flexible coal plants and have led to an
increase in construction of gas-fired stations to the
detriment of coal-fired stations;

3. Given that electricity cannot be stored, gas fired stations
must be modified to provide for the ability to produce
electricity on demand, similar to coal-fired capacity;

 <PAGE>
4. Independent consultants have focused on several technical
issues that must be reviewed if there is to be further growth
in gas-fired combined cycle gas turbine generation; and

5. As a result of the distorted market, dependence on gas could
increase, which raises concerns over diversity and security
of supply of energy power generation.

The UK Government's statement noted that the Regulator has
identified significant problems in the Pool and market
structure.  He recommended (i) reforming the electricity trading
arrangements to ensure that all plants play a full role in
competition and (ii) addressing the market power of the major
generators.

The UK Government agreed with the necessity of reforming the
market structure but noted that the time needed for such reform
could be lengthy.  Accordingly, the UK Government is applying a
stricter policy on power station consents while the reform
agenda is addressed.

Yorkshire submitted its response to the consultation document
on July 20, 1998.  In general, Yorkshire supported the UK
Government's overall objective to develop secure, diverse and
sustainable supplies of energy at competitive prices and agreed
that energy policy should be consistent with a competitive
industrial sector and the long term energy needs of the UK.
Yorkshire agreed with the UK Government's proposal to reform the
electricity trading arrangements and to reduce the market power
of the two major generators, but expressed its concern at the
prospect of a more strict consent policy for gas-fired
generation projects.  Yorkshire urged that the review be
completed as swiftly as possible and that the final measures
taken not interfere with the commercial development of
competitive generation projects.

On October 8, 1998 the UK Government issued the conclusions
of this review in a White Paper: "Conclusions on the Review of
Energy Sources for Power Generation and Government Response to
Fourth and Fifth Reports of the Trade and Industry Committee".

The White Paper was presented by the UK Government as a
radical program to reform electricity trading arrangements,
forming part of a key government policy to ensure secure,
diverse and sustainable supplies of energy at competitive
prices.

The reform program comprised:

<PAGE>
1. reform of the electricity trading arrangements in England and
Wales;

2. seeking opportunities for divestment by the major coal-fired
generators to ensure competition in, and more intensive use
of, coal-fired flexible plant;

3. pressing forward with competition in electricity supply for
all customers;

4. a proper regulatory framework separating distribution from
electricity supply activities;

5. resolving the technical issues about the growth of gas;

6. continuing to press for open energy markets in Europe.

On November 30, 1998, the Regulator published a framework
document describing the delivery and implementation of revised
electricity trading arrangements ("RETA") 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.

The RETA 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.

The Regulator and the Department for Trade and Industry are
leading the RETA Program, supported by a Program Director, a
Development and Implementation Steering Group (DISG) with
various expert groups and a Program Management Board.

The Program Director will be responsible for delivering RETA
to the required standard and in doing so will need to identify
the effects of the program and co-ordinate the overall industry
change.  DISG will be responsible for developing the detail of
the new arrangements and the Program Management Board will
define and control a portfolio of projects to implement the
conclusions of DISG.

As a result of the implementation of RETA 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.  For further details of how the Pool
works, see "The Electric Utility Industry in Great Britain - The
Pool ".
<PAGE>
The initial target date for implementation of RETA was April
2000, assuming it was possible to obtain the unanimous agreement
of industry participants to the relevant license amendments.

The Program Director's office has taken the view that,
because of the difficulties in obtaining agreement of all the
parties, primary legislation will be necessary.


As a result, the earliest date for implementation is now Autumn 2000.


Future of Gas and Electricity Regulation
On October 21, 1998, the UK Government published a
Consultation Paper in relation to modernizing the framework for
utility regulation entitled: "Public Consultation Paper on the
Future of Gas and Electricity Regulation".  This Consultation
Paper further described the reform program identified above.

On November 13, 1998, Yorkshire responded to this
consultation paper.  In its response, Yorkshire:

- Supported both the introduction of separate licensing for
electricity supply and distribution activities and also the
proposal to establish separate legal companies (which could
be in common ownership) for each.  It stated its belief that
the costs associated with this change must be recognized in
the price control mechanism and that forced separation of
ownership is unnecessary.

- Stated its belief that a radical split of operational
arrangements is not in the interests of customers and that
companies should not be forced to operate electricity supply
and distribution separately unless the benefits outweigh the
costs.
-  Stated its belief that suppliers should be placed on an equal
footing in the competitive electricity supply market.

Social Action Plan

On May 17, 1999, OFFER & OFGAS published a joint discussion
document on proposals to strengthen their social action plans.
The original plans were published in June 1998 in response to
the March Green Paper.

The document sets out some 30 specific areas for
consideration and comment.  Five possible priority measures are
listed as:-
<PAGE>
1. ensuring customers using expensive payment options have an
informed choice of alternatives and a better means of
accessing cheaper methods, overcoming barriers to electricity
and gas suppliers' access to cost-effective prepayment meter
systems and other regular payment methods; and putting in
place measures to resolve the difficulties encountered by
prepayment meter customers; and

2. ensuring electricity and gas suppliers enter an effective
dialogue with customers in debt, in particular to overcome
barriers to disadvantaged customers participating more
actively in the competitive market through better information
and a reconsideration of the rules on debt and encouraging
the development and availability of new, alternative and cost
effective payment methods and tariffs which meet the
particular needs of disadvantaged customers; and

3. encouraging and developing innovative schemes to improve
energy efficiency in disadvantaged households; and

4. cutting costs to customers through price controls and
ensuring greater competition in generation; and

5. ensuring companies report on their activities under the plan.

The Regulator has requested views by July 16, 1999, and will
then publish for consultation a revised draft social action
plan, proposing an agenda for action over the next 5 years, with
a view to publishing the final social action plan by the end of
December 1999.

Consumers' Committee

The Regulator 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).  Each
committee comprises a chairman appointed by the Regulator after
consultation with the Secretary of State and between 10 and 20
other members appointed by the Regulator after consultation with
the committee chairman.  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 the Regulator on any other
matter which warrants discussion or which is referred to it by
the Regulator.

<PAGE>
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 broad functions; acting as consumer
advocates, drawing attention to areas requiring action and
publishing information and advice.

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 his continued monitoring of the electric utility
industry, the Regulator 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.  The Regulator
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
<PAGE>
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 "The Electric Utility
Industry in Great Britain - Supply of Electricity - Current
Electricity Supply Price Regulation".

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 the Regulator ("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.

The Regulator 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 Franchise market.
The Regulator 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.  In June 1996, the
Regulator stated that he had indicated to Energy Group, in the
context of its acquisition of 6,000 MW of generating capacity
from National Power and PowerGen, that he would be favorably
inclined to relax the own-generation limits of Energy Group
subject to the Regulator and Energy Group agreeing to license
modifications as set out in a consultation paper which he had
published in August 1995.

The Regulator 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 comprise 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.  The Regulator
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
<PAGE>
data transfer service.  Preparations were made to provide these
services as part of a program of work and in October 1997 the
Regulator 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, will 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
<PAGE>
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.

Following the acquisition of Yorkshire by Yorkshire Group,
the Regulator proposed that Yorkshire's PES License be modified,
by agreement, to take into account the fact that the PES License
is now held by a subsidiary company.  In particular, the
Regulator proposed that the license be modified to provide that,
with few exceptions, the only business activities which
Yorkshire is permitted to undertake directly are its PES
electricity supply business, second-tier electricity supply
business and its distribution business.  The license
modifications also require Yorkshire to ensure that it has
sufficient management resources and financial resources and
facilities to conduct its electricity supply and distribution
businesses and to comply with its statutory and license
obligations.  Yorkshire is required to provide an annual
certificate to the Regulator approved by the Yorkshire Board of
Directors and signed by a Director to that effect and in the
interim to notify the Regulator immediately of any changes
threatening the validity of such certificates.  Additionally,
the license modifications require Yorkshire to obtain from AEP
and NCE legally enforceable undertakings in favor of Yorkshire
that they and their subsidiaries will refrain from any action
which would be likely to cause Yorkshire to breach any of its
obligations under the Electricity Act or the PES License.
Further, the consent of the Regulator is required for Yorkshire
to create security over its assets, to incur indebtedness or to
give guarantees, unless the transaction is on normal commercial
and arm's length terms and for a "permitted purpose" (which
refers to the electricity supply, distribution or generation
business, or any business conducted by Yorkshire or its
affiliates or subsidiaries on March 31, 1997) or the transaction
involves any businesses whose aggregate revenues in any
financial year do not exceed 5% of the aggregate turnover of the
electricity supply, second-tier electricity supply and
distribution businesses in the previous financial year.  The
consent of the Regulator is also required before Yorkshire may
transfer assets or make loans to affiliates or subsidiaries
except for certain specified purposes, including payment of
dividends out of distributable reserves, repayments of capital,
and payments on normal commercial and arm's length terms for
goods, services or assets supplied.  These provisions are
subject to an overriding provision in the PES License which
prevents any REC from disposing of (which would include creating
a security interest in) distribution assets without the
Regulator's express prior consent.  Additionally, the license
modifications require Yorkshire to use reasonable efforts to
<PAGE>
maintain the investment grade credit ratings of its debt.
Finally, because Yorkshire is now owned by Yorkshire Group, the
Regulator required Yorkshire to obtain from AEP and NCE legally
enforceable undertakings to provide information to Yorkshire, as
licensee, in order to comply with requirements of the Regulator.
These modifications to the PES License have been agreed to by
Yorkshire and took effect on December 15, 1997 and the required
undertakings were also provided on December 15, 1997.

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

1. 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 the Regulator can regulate a company
effectively after it has been taken over and to help ensure
the financial stability of the PES (the "Ring-Fencing
Conditions");

2. 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;

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

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

5. to make the payment of dividends and other distributions by a
PES expressly conditional on compliance with the Ring-Fencing
Conditions in the license.

Yorkshire provided comments on the consultation paper on
March 25, 1998.  Yorkshire indicated that the proposed
modifications described in paragraphs (1) and (5) immediately
above were unnecessary and that the other proposals were, in
some cases, unclear and/or unnecessarily wide in their effect.
Further proposals generally include the comments regarding
clarification and the need to avoid such unnecessary wide

<PAGE>
effect.  These further proposals have been accepted by
Yorkshire.

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 the Regulator 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 generating station
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.
The current scientific research is inconclusive as to whether
EMFs may 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
<PAGE>
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
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 (POUND)6.5 million on environmental
compliance in Fiscal Year 1999, approximately (POUND)3.5 million
of which was of a capital nature.  This level of expenditure is
expected to continue in future Fiscal Years.

UK AND EU COMPETITION LAW

Yorkshire's businesses are subject to the competition rules
of both the UK and the EC.

In January 1993, the UK implemented the EU Utilities
Directive on the procedures to be followed for the award of
supply and works contracts by utility companies, including
electricity utilities.  This directive was replaced by EU
Directive 93/36, which was implemented by the UK in December
1996 and which covers service contracts as well as supply and
work contracts.  Those contracts that exceed the relevant
financial thresholds have to be advertised in the Official
Journal of the European Communities.  Suppliers and contractors
who believe they have suffered harm from failure to implement
the correct procedure in awarding the contract are able to
institute proceedings in the English High Court.  The European
Commission also has the power to intervene prior to the award of
a contract.  Yorkshire Group believes that Yorkshire has
complied with any obligations it may have under those
regulations but the interpretation and application of those
regulations and of the  EU directives which they implement is
not free from doubt and no assurance can be given that any claim
for damages against Yorkshire for breach of the rules would be
unsuccessful.

The Competition Act will from March 1, 2000, introduce
prohibitions of anti-competitive agreements and of abuse of a
dominant position modeled on EC competition law.  In contrast to
much of the old law, which it sweeps away, the Competition Act
is primarily concerned with the practical effects of business
arrangements on competition in the market place.  The
competition authorities will have strong new powers to uncover
anti-competitive activities.  Firms engaged in anti-competitive
activities in the UK could face fines of up to 10% of UK
turnover and open themselves up to challenge in court by
customers and competitors.
<PAGE>
The Competition Act will be enforced by the Director General
of Fair Trading and various utility sector regulators.  These
regulators have concurrent powers with the Director General of
Fair Trading ("Director General") so that a sector regulator may
give guidance, consider complaints about alleged breaches of the
prohibitions, impose interim measures, consider notifications
for a decision, grant exemptions, carry out investigations,
impose penalties and enforce decisions.  The Director General
alone, however, has the power to issue guidance on penalties and
to make and amend the Director General's rules which set out the
procedures to be followed during investigations or enforcement
proceedings under the Competition Act.  In order to ensure full
co-ordination between the sector regulators and the Director
General, a Concurrency Working Party was formed in 1997.  The
Working Party will continue in operation after the Competition
Act is implemented.  The Office of Fair Trading has issued a
formal consultation draft on the concurrent application of the
Competition Act to the regulated industries which explains how
cases will be handled in practice, and how it is intended to
ensure consistency of decision making.

The principal aim behind this reform is to align the UK
competition legislation more closely to the EC system and to
make UK competition law more effective.  Article 85 of the EC
Treaty prohibits agreements which have as their object or effect
the prevention, restriction or distortion of competition in the
EC, whilst Article 86 prohibits abuses by one or more companies
of a dominant position in the whole or a substantial part of the
EC.  The new UK prohibitions will introduce similar (but not
identical) rules at national level.

EMPLOYEES

Yorkshire had 4,335 employees (approximately 4,202 full-time
equivalent) at the end of Fiscal year 1999.  Yorkshire Power
Group Ltd has no employees because it is a holding company with
no operations.  Approximately 62% 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.


<PAGE>
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 March 31,
1999 of $1.6143 = (POUND)1.  See note 1 ''Summary of Significant
Accounting Policies'', to Yorkshire Group's consolidated
financial statements for Fiscal Year 1999 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 March 31, 1999, Yorkshire had interests in approximately
15,000 network properties, comprising principally sub-station
sites.

Non-Network Land and Buildings

At March 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 March 31, 1999, was (POUND)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 currently is 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 has requested an injunction against the
continued use of, and the return of, such confidential
<PAGE>
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.  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 canceling 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 each has three months in which to initiate
appeals to the House of Lords.  It is expected that any hearing
by the House of Lords will not take place before 2000.

Yorkshire has made similar use of actuarial surplus.  Pension
deficiency costs totaling (POUND)33 million have been offset
against actuarial surplus.  Management is in the process of
reviewing the Court of Appeal's decision and any potential
impact of this decision on its results of operations and
financial condition.  The final outcome of this matter cannot
yet be determined.

<PAGE>
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 each of the three Fiscal
Years ended March 31, 1997 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 Fiscal Years 1999 and 1998 and the consolidated balance
sheet data of the Successor Company at the end of each such
Fiscal Year 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
Predecessor Company and 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 Predecessor Company and 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 (POUND)74 million incurred as a
result of the financing of the Acquisition, (ii) amortization of
(POUND)24 million related to goodwill recorded in connection
with the Acquisition, (iii) additional depreciation expense of
(POUND)6 million as a result of the revaluation of certain fixed
assets in connection with the Acquisition and (iv) removal of
the effect
<PAGE>
of recording the provision of (POUND)78 million for certain
uneconomic gas and electricity contracts, the loss of (POUND)7
million on certain interest rate swap agreements and the write-
down of (POUND)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 15 to the Successor Company Financial Statements).


<PAGE>
<TABLE>
<CAPTION>
Predecessor Company

					           Fiscal Year
				            1997        1996          1995
				          (POUND)     (POUND)        (POUND)
					      (Amounts in Millions)
<S>                                      <C>          <C>           <C>
Consolidated Income Statement Data:
   Operating revenues		           1,331       1,431         1,464

   Operating income (1)		              52         214           215
   Other income, net (2)	              20         313            16
   Interest expense, net	             (33)        (20)          (12)
   Provision for income taxes (3)             13         114            78

Net income		                      26         393           141


							             March 31,
     					   1997         1996          1995
				 	 (POUND)      (POUND)       (POUND)
					      (Amounts in Millions)

Consolidated Balance Sheet Data:
   Fixed assets				    796         769            747
   Total assets				  1,375       1,408          1,367
   Total shareholders' equity		    359         399            517
   Long-term debt			    419         424            305
   Short-term debt and current portion
     of long-term debt			     87          90             91


					           Fiscal Year
    					   1997        1996            1995
					 (POUND)     (POUND)         (POUND)
					  (Amounts in Millions, Except Ratios)

Other Consolidated Data:
   EBIT (4)			            72         527             231
   EBITDA (4)	 			   122         569            272
   Cash flow from operations		    96         222            201
   Cash used in investing activities	   (51)         (8)          (101)
   Cash used in financing activities	   (76)       (114)           (67)
   Ratio of earnings to fixed charges (5)   1.8        12.0           10.5
</TABLE>

Successor Company
<PAGE>
<TABLE>
<CAPTION>
                                                 Successor        Successor
                                                                  Pro Forma
					       Fiscal Year      Fiscal Year
  					           1999          1998      1997
					    (POUND)    $(6)     (POUND)   (POUND)
							      (Amounts in Millions)
<S>                                          <C>      <C>       <C>       <C>
Consolidated Income Statement Data:
   Operating revenues			     1,366    2,205     1,234     1,331

   Operating income (1)		  	       195      315       148       106
   Other income, (loss) net (2)	               (11)     (18)      (39)       20
   Interest expense, net		      (122)    (197)     (104)     (100)
   Provision (credit) for income
     taxes			    	         3        5        (4)       17
   Income from continuing operations
     before extraordinary item and
     discontinued operation		        59       95         9         9
   Income from discontinued
     operation (8)                               4        6         8         -
   Gain on disposal of discontinued
     operation (8)                              24       39         -         -
   Income before extraordinary item	        87      140        17         9
   Extraordinary loss (7)		         -        -      (134)        -

Net income (loss)		  	        87      140      (117)        9



					             March 31
					          1999          1998
 					       (POUND)      $(6)   (POUND)
	   				        (Amounts in Millions)

Consolidated Balance Sheet Data:
   Fixed assets				          985      1,590     1,060
   Total assets				        2,347      3,789     2,462
   Total shareholders' equity		          410        662       323
   Long-term debt				1,103      1,781     1,026
   Short-term debt and current
     portion of long-term debt	                  150        242       324
   Short-term debt refinanced
     June 1998			    	            -          -       164
   Company obligated mandatorily
     redeemable Trust Securities of
     junior subordinated deferrable
     interest debentures	         	  168        271         -
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                                         Successor     Successor
                                                                       Pro Forma
					                Fiscal Year   Fiscal Year
                				    1999        1998       1997
				                (POUND)   $(6) (POUND)    (POUND)
		         		   (Amounts in Millions, Except Ratios)
<S>                                            <C>        <C>    <C>         <C>
Other Consolidated Data:
   EBIT before extraordinary
     item (4)/(7)	  	                184       297    109         126
   EBITDA before extraordinary
     item (4)/(7)	   		        268       433    180         206
   Cash flow from operations		         31        50     62
   Cash used in investing activities              -         - (1,639)
   Cash (used in) provided by
     financing activities	   	        (54)      (87) 1,391
   Ratio of earnings to fixed
     charges (5)			        1.4       1.4    1.0         1.2
</TABLE>

EBIT, EBITDA and ratio of earnings to fixed charges have been
calculated from income statement data excluding amounts
attributable to the generation business, which 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 (POUND)191 million,
(POUND)280 million and 1.5 respectively.  For Fiscal Year 1998,
these items would be (POUND)122 million, (POUND)200 million and
1.1 respectively.

(1)	Notable operating expenses include:

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

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

Fiscal Year 1997 - (i) a provision of (POUND)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 (POUND)125 million to the supply
business offset by an intrabusiness elimination of (POUND)47
million and (ii) a charge of (POUND)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 (POUND)37 million was charged to the
supply business and (POUND)13 million was charged to the
distribution business.
<PAGE>
Fiscal Year 1995 - reorganization costs of (POUND)8
million.

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

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

Fiscal Year 1998 - an unrealized loss of (POUND)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 (POUND)15 million.

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

Fiscal Year 1995 - one-time termination payment received
from Stockholm Stadshus AB of (POUND)17 million.


(3)	Fiscal Year 1996 includes a tax charge of (POUND)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 March 31, 1999 of $1.6143=
(POUND)1.  See "Note 1. Summary of Significant Accounting
Policies" to the Consolidated Financial Statements of the
Successor.

<PAGE>
(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 (POUND)24
million (net of related income taxes of (POUND)31 million).


<PAGE>
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 with the consolidated financial
statements and the notes thereto of the Predecessor 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.

Financing the Acquisition

Yorkshire Group indirectly acquired ownership of Yorkshire by
means of a cash offer commenced on February 24, 1997 and
declared wholly unconditional on April 1, 1997.  The Acquisition
was completed through the payment of cash consideration of
(POUND)1,457 million and the issuance of loan notes in the
amount of (POUND)22 million.  The total consideration, including
acquisition costs, was (POUND)1,496 million.  The Acquisition
was financed by cash contributions of (POUND)220 million from
each of AEP and NCE and from borrowings under a (POUND)1,140
million five year term loan and revolving facility agreement
dated February 24, 1997.  On July 31, 1997, this term loan and
revolving facility agreement was replaced by a new credit
facility (the "1997 Credit Facility").  The 1997 Credit Facility
matured on July 30, 1998 and was refinanced through a series of
transactions, including entering into a (POUND)550 million
syndicated credit facility.  See "Management's Discussion and
Analysis of Results of Operations and Financial Condition -
Liquidity and Capital Resources" included elsewhere in this
document for additional information.


<PAGE>
Accounting for the Acquisition

The recorded assets and liabilities of Yorkshire at March 31,
1997 were (POUND)1,375 million and (POUND)1,016 million,
respectively.  In accordance with the purchase method of
accounting, the assets and liabilities acquired have been
recorded based on an allocation of the purchase price.
Effective April 1, 1997, Yorkshire's assets were increased by
(POUND)222 million to their fair value of (POUND)1,597 million,
reflecting principally: (a) an increase of (POUND)138 million in
the value of Yorkshire's distribution network in excess of its
depreciated cost basis; (b) an increase in the pension asset for
the defined benefit pension plan of (POUND)55 million; and (c)
an increase in the value of an equity investment in Ionica of
(POUND)23 million.  Yorkshire's liabilities were increased by
(POUND)79 million to their fair value of (POUND)1,095 million,
reflecting principally: (a) an increase in the deferred tax
liability of (POUND)67 million; and (b) an increase of (POUND)14
million in the market value of long-term borrowings.  The excess
of the purchase price plus Acquisition costs, totaling
(POUND)1,496 million, over the fair value of assets acquired net
of liabilities assumed, totaling (POUND)502 million, resulted in
goodwill of (POUND)994 million which is being amortized over a
40 year period.  The consolidated financial statements of the
Predecessor Company discussed below do not reflect the foregoing
adjustments.

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.

The potential exists for additional distribution price
reductions based upon further review by the Regulator.  The next
scheduled Distribution Price Control Formula review is expected
to be completed later this year and will be effective from April
2000.  Future cost efficiency initiatives may not result in
sufficient savings to offset price reductions.  Price reductions
are mitigated by the inclusion of the UK Retail Price Index in
the determination of the Distribution Price Control Formula.
Because the maximum average price in any year is 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.  See Part 1, Item 1,
"The Electric Utility Industry in Great Britain - Distribution
of Electricity - Price Control".

<PAGE>
Under its PES License, Yorkshire had an exclusive right to
supply electricity to Franchise Supply Customers between 1990
and 1998.  Between September 1998 and February 1999 competition
was introduced and the electricity supply business inside
Yorkshire's Authorized Area is now fully open to competition.

Prior to the introduction of 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 non-franchise
threshold was lowered to 100 kW in April 1994 allowing
competition in the supply of electricity for these customers
while Franchise Supply Customers remained subject to price
regulation.  On September 14, 1998 competition was introduced to
the domestic electricity market in the UK.  Since then the
Regulator has announced several dates for the introduction of
competition in supply to residential and small commercial
customers for all 14 PES areas.  The process was completed for
all PES customers with effect from May 24, 1999.  Yorkshire
opened its full market to competition on February 22, 1999,
making it one of the first PESs to do so.  The Regulator,
however, proposed transitional price regulation for Designated
Customers for an initial period of two years from April 1998
until an adequate level of competition is established.
Yorkshire subsequently indicated its acceptance of such
proposals.

The license modifications that have been implemented to
effect the new controls between 1998 and 2000 take the form of a
series of price caps on the tariffs applicable to residential
and small business customers.  The new controls also require an
additional 3% below inflation reduction effective April 1, 1999.
The license modifications also discontinued the automatic pass-
through of costs previously passed through to residential and
business customers below 100kW, consisting primarily of
purchased power costs.  See Part 1, Item 1, "The Electric
Utility Industry in Great Britain - Supply of Electricity -
Current Electricity Supply Price Regulation".

The Regulator is currently reviewing the need for electricity
supply price restraints concurrently with the ongoing review of
the Distribution Price Control Formula.

Significant additional costs have been incurred to develop
new systems for services to facilitate competition.  Yorkshire
Group presently estimates that total costs for re-engineering
and information technology work will be (POUND)67 million.  Of
such amount, approximately (POUND)19 million was expensed in
Fiscal Year 1997, (POUND)2 million in Fiscal Year 1998 and
(POUND)5 million in Fiscal Year 1999.  The Regulator has made
proposals (which have been
<PAGE>
accepted by Yorkshire) to allow Yorkshire recovery of (POUND)25
million over a five year period ending March 31, 2003.  A
further (POUND)7 million is expected to be recovered through
Pool cost recovery and other national mechanisms and (POUND)8
million has been capitalized as such amount is expected to
provide future benefits to the Supply business.  As a result of
the above, the residual amount of approximately (POUND)1
million, which will not be recovered or capitalized, will be
expensed in Fiscal Year 2000 as incurred.

The Regulator has also made proposals (which have been
accepted by Yorkshire) to provide an annual allowance of
(POUND)3 million for the period 1998 through 2000 to cover
related operating costs.  This cost recovery will be reviewed at
the time of the Distribution Price Control Formula Review in
2000.

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 (POUND)3
million as a consequence of the delay.  A provision for
penalties of (POUND)3 million was included in the results for
Fiscal Year 1998.

Separation of Distribution and Electricity Supply

On May 19, 1999, the Regulator issued a "Proposals and
Consultation" Paper on business separation.  OFFER concluded
that business separation is necessary to prevent cross subsidy,
to protect information held in the distribution business, to
equalize services provided by the distribution business, to
remove perceptions that unfair service is being provided and
ensure that decision making is properly carried out within the
distribution business.  OFFER also set out a framework for new
license obligations requiring the full separation of electricity
supply and distribution.  OFFER propose that plans be drawn up
for separation but considered that in some cases "common
services" may still be shared provided there is no cross
subsidy, sharing of confidential information or distortion of
competition.

Requirements in respect of metering services were also
discussed in the Paper (see Part I, Item I, "Regulation Under
the Electricity Act, Regulatory Development, Separation of
Distribution and Electricity Supply; Metering and Meter
Reading").

Although a significant degree of separation already exists
within Yorkshire, should the Regulator require such steps to be
taken to increase business separation, then significant costs
would be incurred.  Yorkshire is continuing to seek to reduce
the potential requirements and to achieve recovery of costs.
<PAGE>
Responses to this consultation paper are requested by June
30, 1999 and the Regulator's reviews of business separation are
expected to be completed in November 1999.

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 Supply
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 (POUND)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 (POUND)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 (POUND)6 million.


<PAGE>
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 businesses (sharing common services where it is
effective and efficient to do so).

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.  RPG owns 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 (POUND)14 million.  The cash consideration
received from IVO, including payment for the intercompany
balance and net of cash retained by RPG, was (POUND)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 (POUND)18 million.

On December 31, 1998 Yorkshire entered into an unconditional
agreement to sell its subsidiary, YCL, to PowerGen CHP Limited,
a subsidiary of PowerGen plc.  YCL owns three combined heat and
power plants and seven peaking facilities with a total declared
capacity of 70 MW which are 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 (POUND)3 million.  The
consideration for the sale, including the payment for the
intercompany balance of (POUND)69 million, was (POUND)95
million.  The total gain on the sale is (POUND)15 million, of
which (POUND)8 million after tax was included in net income in
Fiscal Year 1999.  The remaining (POUND)7 million is deferred
and will be 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 (POUND)2
million.

Substantially all of the cash received from these sales, net
of fees and cash retained by RPG, approximately (POUND)136
million, was used to reduce the debt of Yorkshire Group.
<PAGE>
These transactions complete the disposal of Yorkshire's
generation business.

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

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 (POUND)54 million plus a
subsequent additional investment of (POUND)1 million.
Management have written down the book value of the investment by
charging losses of (POUND)41 million before taxes in Fiscal Year
1998 and (POUND)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 (POUND)2 million and recognized a further loss on
sale of (POUND)1 million.

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.

<PAGE>
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 electricity supply risk management efforts are
intended to hedge the risks associated with the purchase and
sale of electricity resulting from Pool price volatility.
Currently 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
greater than 100kW supply customers are for twelve-month terms
and 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 the modified PES License, which became effective on
April 1, 1998, Yorkshire has a tariff cap on the prices it may
charge its Designated Customers in its Authorized Area.  Because
the maximum price is fixed for these customers, Yorkshire is at
risk from upward movements in electricity purchase costs.  This
risk is mitigated by hedging purchase contracts, mainly through
CFDs, which are entered into with generators.

CFDs are contracts predominantly between generators and
suppliers, which fix the major elements of the price of
electricity for a contracted quantity 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.  At the present time,
<PAGE>
Yorkshire expects its electricity supply demand for the Calendar
Year 1999 to be substantially hedged through various types of
agreements, including CFDs.

Yorkshire's ability to manage its electricity 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 purchases mainly going through the Pool
is under review, and a new system of trading arrangements is
targeted to be in place in Autumn 2000.  The new trading
arrangements will require participants to submit half hourly
forecasts of electricity supply and demand and endeavor to
balance contract positions and metered volumes with their half
hourly forecast.  There will be incentives, in the form of
imbalance payments, for generators and suppliers to meet their
commitments.  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
attempting 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.

Gas is sourced from Yorkshire's interest in the Armada Field,
a purchase agreement with a major gas supplier designed to meet
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 Yorkshire's gas business
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.

<PAGE>
As of March 31, 1999, the calculated VaR was as follows:

				    ((POUND) millions)

Electricity		                  2
Gas				          2

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.


<PAGE>
Foreign Currency Exchange Rate Risk

Yorkshire Group is partly funded by US dollar-denominated
debt.  Changes in the US dollar/pounds 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 interest rate
swaps and foreign currency swaps to manage the cash flow and
translation risks arising.

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, foreign
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 foreign currency swaps match the US dollar
quarterly coupon payments under the Trust Securities until 2008.
The nominal value of the foreign currency swaps is $265 million.
The risks arising from the mismatches in the maturity dates and
principal values of the Trust Securities and the foreign
currency swaps are not considered material.

All US dollar cash flows under other US dollar denominated
debt issued by Yorkshire Group are matched by cash flows under
foreign 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 swaps and foreign currency
swaps to manage its exposures to interest rate and foreign
currency exchange rate movements associated with US dollar-
denominated debt.  Yorkshire Group uses interest rate caps to
manage its cash flow exposures to pound sterling-denominated
debt, which bears interest at variable rates.  Other financial
instruments may be used in the future.

At March 31, 1999, fixed interest rates were payable on 81%
of debt and interest rate caps covered a further 3% of debt.
The average debt maturity was 14 years.


<PAGE>
The following table presents by fiscal year of maturity date,
as at 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 foreign currency swaps and
interest rate cap.
<TABLE>
<CAPTION>
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             (POUND)8 (POUND)9  (POUND)4  (POUND)4   -        (POUND)550  (POUND)575 (POUND)690
    Average interest
      rate	       7.0%     7.0%      7.5%      7.5%       -         8.3%        8.3%

Variable interest rate
  Pound sterling-
  denominated debt
    Amount            (POUND)131 -        -         -         (POUND)130 -          (POUND)261 (POUND)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%

Foreign 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            -           -       -       (POUND)215   -        (POUND)347 (POUND)562

    Average interest
      rate            -           -        -       8.1%        -         8.8%      8.5%

Interest rate cap

    Nominal amount    -            -       (POUND)40-         -          -         (POUND)40 (POUND)-
    Interest rate     -            -       7.5%     -         -          -         7.5%
</TABLE>

-	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.

<PAGE>
-	The variable interest rate pound sterling-denominated debt
comprises: (POUND)238 million of borrowings under Yorkshire
Group's syndicated credit facility; (POUND)13 million under
uncommitted credit facilities; and (POUND)10 million of loan
notes on which the interest rate is reset semi-annually, with
the next reset being made on September 30, 1999, 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 March 31, 1999, was 14 days.

Year 2000 Issues

A potentially world-wide problem has arisen with computer
programs and micro-processing chips due to the method used to
represent the year part of a date.  This may lead systems and
equipment to interpret incorrectly dates falling after December
31, 1999.  In addition, certain systems may fail to detect that
the Year 2000 is a leap year.

Company State of Readiness:

Yorkshire Group has established a program which tests,
repairs or replaces, as necessary, both computer hardware and
software including mainframe, servers, applications, and
embedded chips including those in the electricity distribution
network.

Work has been prioritized in accordance with business risk.
The highest priority has been given to those activities which
potentially impact on safety and/or continuity of electricity
supply to customers.

Testing and remediation of these highest priority systems are
now complete.

The problem is also being addressed with third parties with
whom Yorkshire Group has material relationships, including
suppliers, generators, customers and government organizations
and regulators.  Assurances are being sought from key suppliers
regarding their state of Year 2000 readiness.  However these
third parties nonetheless represent a risk that cannot be
assessed with precision or controlled with certainty.

Yorkshire Group is actively involved in national forums with
other members of the electricity industry and other utilities
(such as gas, telecommunications and water) to share good
practice and to provide consolidated information to the UK
Department of Trade and Industry and to the UK Electricity
Industry Regulator regarding progress.

<PAGE>
Yorkshire Group's program has been independently assessed on
behalf of the Regulator.  The Regulator reported above-average
progress and that Yorkshire Group is on target for timely
completion of the program.

Progress on readiness of critical systems is shown below.

                              I T Systems               Non-I T Systems

Year 2000 Program             Completion                Completion
Phases                        Date/                     Date/
                              Estimated                 Estimated
                              Completion    Percentage  Completion    Percentage
                              Date          Complete    Date          Complete

Program Initiation Phase
  Mobilization of the         October 30,   100%        October 30,   100%
Program, including            1997                      1997
establishing awareness,
structure and budgets and:
  Performance of High Level
Business Impact Analysis
including establishing key
issues for each business
area.

Project Scoping Phase
  Sizing the problems,        March 31,     100%        May 31,        100%
including gathering           1998                      1998
detailed inventory
information and
additional risk analysis
and:
  Determining costed
business solutions,
including examination of
options to achieve date
conformance in the time
required.

Project Delivery Phase

  Management of the           August 31,      85%       April 13,      100%
implementation cycle and      1999                      1999
delivery of the project.


Costs to Address the Company's Year 2000 Issue

Yorkshire Group has expended (POUND)13 million to March 31,
1999 on the Year 2000 Program and estimates spending an
additional (POUND)6 million to achieve Year 2000 readiness.  Of
this (POUND)19 million, approximately (POUND)15 million will be
expensed as incurred and (POUND)4 million will be capitalized.
Yorkshire Group intends to fund these expenditures through
internal sources.  Although significant, the cost of becoming
Year 2000 ready is not expected to have a material impact on
Yorkshire Group's results of operations, cash flows or financial
condition.

<PAGE>
Risks of the Company's Year 2000 Issues

Yorkshire Group is implementing a detailed series of tests to
minimize the possibility of service or business interruption
related to Year 2000 issues.  Yorkshire Group believes, based on
the current tests, that the distribution system will be able to
distribute electricity after December 31, 1999.  The results of
these tests increase confidence, but do not guarantee error free
operations.  Yorkshire Group is taking prudent steps to prepare
for the Year 2000 issues.

The applications posing the greatest business risk to
Yorkshire Group's operations should they experience Year 2000
problems are the power distribution systems, telecommunications
systems, energy trading systems and billing systems.  The
potential problems related to erroneous processing by, or
failure of, these systems are power service interruptions to
customers, interrupted revenue collection and poor customer
relations.

Due to the complexity of the problem and the interdependent
nature of systems, if Yorkshire Group's corrective actions,
and/or the actions of others not affiliated with Yorkshire
Group, fail for critical applications, Year 2000 - related
issues may materially adversely affect Yorkshire Group.

Year 2000 Contingency Plans

Yorkshire Group has well established contingency plans that
have been tested.  These plans are being reviewed to develop
additional procedures to deal specifically with situations that
could arise in relation to the Year 2000 problem.  A risk based
approach has been adopted and should be completed by the end of
September 1999.

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.

<PAGE>
RESULTS OF OPERATIONS

Fiscal Year 1999 Compared with Fiscal Year 1998

Earnings

Income from continuing operations before extraordinary item
and discontinued operations increased by (POUND)50 million
(556%) from (POUND)9 million for Fiscal Year 1998 to (POUND)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 (POUND)12 million in Fiscal Year 1999 compared with a write
down of (POUND)41 million in Fiscal Year 1998 and a (POUND)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 (POUND)153 million, (POUND)72 million and (POUND)(6)
million for the distribution, supply and other segments,
respectively.  Income (loss) from those segments in Fiscal Year
1998 was (POUND)154 million, (POUND)32 million and (POUND)(10)
million, respectively.

In addition to the factors discussed above, which affect net
income (loss), the net loss for Fiscal Year 1998 includes an
extraordinary charge of (POUND)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 (POUND)132 million (11%),
from (POUND)1,234 million in Fiscal Year 1998 to (POUND)1,366
million in Fiscal Year 1999.  This increase is analyzed as
follows:

							     Operating Revenues
							     Increase (Decrease)
							   from  Fiscal Year 1998
							     to Fiscal Year 1999
							         (POUND) millions

     Distribution						    13
     Supply							   125
     Other   							    (6)

     Total operating revenues				           132

<PAGE>
Revenues from the distribution business increased by
(POUND)13 million (4%), from (POUND)309 million in Fiscal Year
1998 to (POUND)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 increased by (POUND)125 million (10%) to
(POUND)1,336 million from (POUND)1,211 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 (POUND)125 million,
(POUND)70 million relates to gas supply.

Gross Margin

Gross margin increased by (POUND)88 million (24%), from
(POUND)372 million in Fiscal Year 1998 to (POUND)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.

<PAGE>
Operating Costs

Operating expenses increased by (POUND)41 million (18%) from
(POUND)224 million in Fiscal Year 1998 to (POUND)265 million in
Fiscal Year 1999.  This increase was due primarily to a
(POUND)36 million increase in selling, general and
administrative costs, together with a (POUND)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
(POUND)11 million before taxes, in addition to the (POUND)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 (POUND)2 million, recognizing a further loss on sale
of (POUND)1 million.

Net Interest Expense

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


<PAGE>
Income Taxes

Fiscal Year 1999 was favorably affected by a (POUND)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 (POUND)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 (POUND)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.

Fiscal Year 1998 for the Successor Company Compared with Fiscal
Year 1997 for the Predecessor Company

Earnings

Income from operations increased by (POUND)96 million (185%)
from (POUND)52 million for Fiscal Year 1997 to (POUND)148
million for Fiscal Year 1998.  The increase was largely due to
the effect of the following items included in income from
operations for Fiscal year 1997: (i) a (POUND)78 million
provision for uneconomic gas and electricity contracts, which
resulted in a charge of (POUND)125 million to the supply
business offset by an intrabusiness elimination of (POUND)47
million; (ii) a (POUND)50 million charge for information system
development costs to prepare for the opening of the competitive
electricity market in 1998 and to replace billing and collection
systems, of which (POUND)37 million was charged to the supply
business and (POUND)13 million was charged to the distribution
business; (iii) a (POUND)8 million charge incurred for advisers'
fees in respect of the Acquisition; and  (iv) a (POUND)6 million
write-down of the value of non-operational property.  The
favorable effect on the comparative income from operations was
partly offset by the following items included in income from
operations for Fiscal Year 1998: (i) a provision of (POUND)10
million for restructuring costs; (ii) a provision of (POUND)5
million for committed costs arising from delays in opening up
the competitive market, (iii) amortization of goodwill of
(POUND)25 million; (iv) additional marketing costs of (POUND)8
million; and (v) additional depreciation of (POUND)7 million
arising from the revaluation of distribution network assets in
connection with the Acquisition.  These additional costs were
mitigated by a decrease in net periodic pension costs of
(POUND)13 million, due to an increase in the market value of the
pension fund and a change in
<PAGE>
respect of identifying the element of costs to be capitalized
within the distribution network reducing operating expenses by
(POUND)15 million.  In addition, income from operations as
reported for Fiscal Year 1998 is stated after removing that
attributable to the generation business (shown as a discontinued
operation), whereas the Predecessor Company accounts for Fiscal
Year 1997 have not been restated to show the generation business
as discontinued.  Income for operations attributable to the
generation business for Fiscal Year 1998 was (POUND)13 million.

Income (loss) from operations by segments for Fiscal Year
1998 was (POUND)154 million, (POUND)32 million and (POUND)(10)
million for the distribution, supply and other segments,
respectively.  Income (loss) from those segments in Fiscal Year
1997 was (POUND)127 million, (POUND)(132) million and (POUND)10
million, respectively.  The basis of segmental reporting was
changed during Fiscal Year 1999 to comply with the requirements
of SFAS No. 131, and the Successor Company financial statements
for Fiscal Year 1998 have been restated on this basis.  No
restatement of the Predecessor Company financial statements for
Fiscal Year 1997 has been made in this respect.  The principal
effects of this change have been to move the results of the gas
supply business from the "other" category to "supply"; to
include the results of electricity meter reading activity in
"supply" rather than "distribution" and to include the results
of the non-regulated activities of the distribution business in
"distribution" rather than "other".  The result of the above
changes is to report segmental information for Fiscal Year 1998
on the same basis as that used by management to evaluate
segmental performance, rather than on a regulatory basis as
previously reported.

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

Net interest expense rose from (POUND)33 million for Fiscal
Year 1997 to (POUND)104 million for Fiscal Year 1998 principally
as a result of the financing costs associated with the increased
amount of debt incurred in connection with the Acquisition.

Net income decreased by (POUND)143 million, from (POUND)26
million in Fiscal Year 1997 to a loss of (POUND)117 million in
Fiscal Year 1998.  In addition to the variances discussed above,
the net loss for Fiscal Year 1998 includes an extraordinary
charge of (POUND)134 million for the windfall tax enacted by the
UK government in July 1997.  The windfall tax was not deductible
for UK corporation tax purposes.  Net income before this
extraordinary charge for Fiscal Year 1998 was (POUND)17 million.

<PAGE>
Revenues

Operating revenues decreased by (POUND)97 million (7%) from
(POUND)1,331 million in Fiscal Year 1997 to (POUND)1,234 million
during Fiscal Year 1998 as follows:

							     Operating Revenues
							     Increase (Decrease)
							   from  Fiscal Year 1997
							     to Fiscal Year  1998
							         (POUND) millions

     Distribution						     1
     Supply							    33
     Other							   (80)
     Effect of the generation business
       being treated as a discontinued
         operation in Fiscal Year 1998		                   (51)
     Total operating revenues				           (97)

Revenues from the distribution business increased by (POUND)1
million from (POUND)308 million for Fiscal Year 1997 to
(POUND)309 million for Fiscal Year 1998.  Units distributed
increased by 0.4% in Fiscal Year 1998, offset by a decrease in
the maximum allowable average price of units distributed as a
result of the application of the revised Distribution Price
Control Formula.  The effect of the adjustments made to the
basis of the segment information, as described above, was to
increase distribution business revenues for Fiscal Year 1998 by
(POUND)4 million.

Franchise Supply Customers, who were generally residential
and small commercial customers, comprised 52% of total sales
volume for Fiscal Year 1998.  The volume of unit sales of
electricity for Franchise Supply Customers was influenced
largely by the number of customers in the Authorized Area,
weather conditions and prevailing economic conditions.  Unit
sales to Non-Franchise Supply Customers, who were typically
large commercial and industrial businesses, constituted 48% of
total sales volume for Fiscal Year 1998.  Sales to Non-Franchise
Supply Customers were 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.

Overall revenues produced by the supply business increased by
(POUND)33 million (3%) to (POUND)1,211 million from (POUND)1,178
million for Fiscal Year 1997.  Revenues from the supply of gas
of (POUND)74 million are included in supply revenues for Fiscal
Year 1998.  (Such revenues were included in the "other" category
in Fiscal Year 1997.)  Revenues from the supply of electricity
decreased partly due to a reduction of 8% in sales volume to
Non-Franchise
<PAGE>
Supply Customers as a result of increased competition and partly
due to reduced cost of sales, the benefits of which are passed
on to customers.

Other revenues decreased by (POUND)80 million primarily due
to the inclusion of gas supply revenues in "supply" for Fiscal
Year 1998, which were included in the "other" category for the
Predecessor Company in Fiscal Year 1997.

Cost of Sales

Cost of sales decreased by (POUND)70 million (8%) from
(POUND)932 million in Fiscal Year 1997 to (POUND)862 million in
Fiscal Year 1998.  This decrease was due principally to the
reduction in units supplied and reductions in the Fossil Fuel
Levy.  In addition, the exclusion of cost of sales attributable
to the generation business (shown as discontinued) from Fiscal
Year 1998 has an impact of (POUND)20 million.

Operating Expenses

Operating expenses decreased by (POUND)123 million (35%) from
(POUND)347 million in Fiscal Year 1997 to (POUND)224 million in
Fiscal Year 1998.  The reduction in operating expenses was
mostly as a result of the following expenses included in Fiscal
Year 1997: (i) a (POUND)78 million provision for uneconomic gas
and electricity contracts made for the net present value of
expected future payments in excess of anticipated recoverable
amounts, reflecting expectations of market prices for
electricity following the opening of the competitive electricity
market in 1998 and future gas prices; (ii) a (POUND)50 million
charge for information system development costs, including
(POUND)19 million relating to the opening of the competitive
electricity market in 1998 and a (POUND)31 million charge
relating to the replacement of billing and collection systems;
(iii) a (POUND)8 million charge incurred for advisers' fees in
respect of the Acquisition; and (iv) a (POUND)6 million write-
down of the value of non-operational property.  The comparative
decrease in operating expenses was lessened by the following
operating expenses included in Fiscal Year 1998: (i) a provision
of (POUND)10 million for restructuring costs; (ii) a provision
of (POUND)5 million for committed costs arising from delays in
opening up the competitive market; (iii) amortization of
goodwill of (POUND)25 million; (iv) additional marketing costs
of (POUND)8 million; and (v) additional depreciation of (POUND)7
million arising from the revaluation of distribution network
assets in connection with the Acquisition.  The decrease in net
periodic pension costs of (POUND)13 million and the increase in
capitalized distribution costs of (POUND)15 million partly
offset the above increases in operating expenses for Fiscal Year
1998.  Operating expenses attributable

<PAGE>
to the generation business (shown as discontinued) amounted to
(POUND)18 million for Fiscal Year 1998.

Other Income Expense - Loss on Investment in Ionica

An unrealized loss of (POUND)41 million before taxes was
charged in Fiscal Year 1998 following the reduction in fair
value of Yorkshire Group's investment in Ionica.  See
"Significant Factors and Known Trends - Investment in Ionica".

Net Interest Expense

Net interest expense increased by (POUND)71 million from
(POUND)33 million during Fiscal Year 1997 to (POUND)104 million
in Fiscal Year 1998, principally as a result of the financing
costs associated with the 1997 Credit Facility entered into to
finance the Acquisition.  To partially refinance the
Acquisition, Yorkshire entered into short-term borrowing
arrangements totaling (POUND)1,034 million, a portion of which
was replaced by (POUND)593 million of long-term debt issued in
January and February 1998.

Income Taxes

Yorkshire Group's effective income tax rate, excluding the
windfall tax, decreased from 33% for Fiscal Year 1997 to (6)%
for Fiscal Year 1998.  The effective rate in Fiscal Year 1998
was affected by the (POUND)12 million favorable impact of the
reduction in the UK corporation tax rate from 33% to 31% as
discussed above, partially offset by the amortization of
goodwill, which is not deductible for UK income tax purposes.

Windfall Tax

Yorkshire Group recorded an extraordinary charge of
(POUND)134 million during Fiscal Year 1998 for the windfall tax
enacted by the UK government in July 1997.  This windfall tax
was not deductible for UK corporation 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.

<PAGE>
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 (POUND)197
million guaranteed Eurobonds, the February 1998 issuance of
(POUND)400 million of senior notes, the June 1998 issuance of
(POUND)162 million Trust Securities and the entering into of a
(POUND)550 million syndicated credit facility in July 1998.

The syndicated credit facility consists of four tranches
which are: Tranche A a (POUND)150 million 364 day revolving
credit with a one-year extension option (reduced to (POUND)100
million in Fiscal Year 1999 and subsequently canceled on April
21, 1999); Tranche B a (POUND)130 million 5 year term loan;
Tranche C a (POUND)50 million 5 year revolving credit facility
and Tranche D a (POUND)220 million 5 year revolving credit
facility.  Tranches A and B were drawn down to repay the 1997
Credit Facility.  At March 31, 1999 amounts outstanding under
the above facility were as follows: Tranche A - (POUND)100
million; Tranche B - (POUND)130 million and Tranche C - (POUND)8
million.

At March 31, 1999, in addition to cash flow from Yorkshire's
operations available for distribution indirectly to Yorkshire
Group, Yorkshire Group had (POUND)262 million available under
the syndicated credit facility, as its primary source of
liquidity.

Yorkshire Group also will 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 and amounts
available under the syndicated credit facility.

The principal source of funds of Yorkshire Group during
Fiscal Year 1999 were (POUND)31 million from operations, which
reflects interest paid of (POUND)104 million and tax paid of
(POUND)67 million, in respect of the second installment of the
windfall tax; (POUND)162 million from the issue of Trust
Securities; (POUND)550 million available under the syndicated
credit facility (reduced to (POUND)500 million during the year)
and (POUND)136 million from the sale of the generation business.
During this period, Yorkshire Group utilized (POUND)279 million
to refinance the 1997 Credit Facility and (POUND)149 million for
capital expenditures.  Proceeds from asset sales (excluding the
sale of the generation business) totaled (POUND)11 million.

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

The principal sources of funds of Yorkshire during Fiscal
Year 1997 were (POUND)96 million from operations, which reflects
interest paid of (POUND)42 million and tax paid of (POUND)30
million.  During Fiscal Year 1997, Yorkshire invested (POUND)121
million in capital expenditures and long-term investments and
paid dividends of (POUND)71 million.  Proceeds from asset sales
totaled (POUND)73 million.

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 Fiscal Years 1999
and 1998 capital expenditures, net of customer contributions,
were (POUND)149 million and (POUND)191 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 1998.  This filing indicated Yorkshire's current projection
of approximately (POUND)542 million in capital expenditures for
the five year period.  Approximately (POUND)443 million
(expressed in Fiscal Year 1996 prices) has already been spent in
Fiscal Years 1999, 1998, 1997 and 1996 related to this five year
projection.

<PAGE>
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
54% 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 33,275 GWh of electricity at March
31, 1999 and 20,010 GWh at March 31, 1998.  Yorkshire's
electricity sales volumes were 21,676 GWh, 20,236 GWh and 21,116
GWh for Fiscal Years 1999, 1998 and 1997 respectively.

Management believes that cash flow from operations, together
with its 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.

New Accounting Standards

Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income" was adopted by Yorkshire Group
in Fiscal Year 1999.  SFAS No. 130 established the standards for
reporting and displaying components of "comprehensive income",
which is the total of net income and all transactions not
included in the net income affecting equity except those with
shareholders.  There were no material differences between
comprehensive income and net income in Fiscal Year 1999 or 1998.

<PAGE>
During Fiscal Year 1999, Yorkshire Group adopted the American
Institute of Certified Public Accountants' Statement of Position
(SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use".  The SOP requires the
capitalization and amortization of certain costs of acquiring or
developing internal use computer software.  The adoption of the
SOP did not have a material effect on results of operation or
financial condition.

SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" was adopted by Yorkshire Group during
Fiscal Year 1999.  SFAS No. 131 establishes reporting standards
for annual and interim financial statements for which separate
financial information is available and regularly evaluated by
the chief operating decision maker in allocating resources and
reviewing performance, and requires the restatement of prior
period comparative information.  Adoption of the standard did
not affect results of operations, cash flows or financial
condition.

During Fiscal Year 1999, Yorkshire Group adopted SFAS No.
132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits".  The standard revises the disclosure
requirements in respect of pensions and other post retirement
benefits and requires that prior period comparative information
be restated.  The standard does not change the measurement or
recognition requirements for post retirement benefit accounting
and its adoption did not affect results of operations, cash
flows or financial condition.

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: a proposal has
been made to delay 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 an asset, liability or firm commitment; variable
cash flows of forecasted transactions; or foreign currency
exposure.  The accounting/reporting for changes in a
derivative's fair value (gains and losses) depend 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.

<PAGE>
EITF Issue No. 98-10, "Accounting for Contracts Involved in
Energy Trading and Risk Management Activities", was issued
during Fiscal Year 1999 to address the application of mark-to-
market accounting for energy trading contracts and will be
effective for fiscal years beginning after December 15, 1998.
Management does not believe that this consensus will have a
significant effect in the near-term, as most of Yorkshire
Group's energy contracts are related to serving customer needs.

The AICPA issued SOP 98-5 "Reporting the Costs of Start-up
Activities" during Fiscal Year 1999.  The SOP clarifies the
accounting and reporting for one-time start-up activities and
organization costs, and is effective for fiscal years beginning
after December 15, 1998.  The adoption of this standard is not
expected to have a material effect on results of operations,
cash flows or financial condition.

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.

<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Yorkshire Power Group Limited and Subsidiaries (Successor
Company) and Yorkshire Electricity plc and Subsidiaries
(Predecessor Company)

<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
   						     Page
Yorkshire Electricity Group plc and Subsidiaries

Independent Auditors' Report                           90
Consolidated Statement of Income                       91
Consolidated Statement of Changes in
  Shareholders' Equity                                 92
Consolidated Statement of Cash Flows                   93
Notes to the Consolidated Financial Statements         95

Yorkshire Power Group Limited and Subsidiaries

	Unaudited Pro Forma Consolidated Statement
  of Income                                           109

Yorkshire Power Group Limited and Subsidiaries

Independent Auditors' Report                          111
Consolidated Statements of Income                     112
Consolidated Balance Sheets                           113
Consolidated Statements of Changes in
  Shareholders' Equity                                115
Consolidated Statements of Cash Flows                 116
Notes to the Consolidated Financial Statements        118

<PAGE>
YORKSHIRE ELECTRICITY GROUP PLC AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF YORKSHIRE ELECTRICITY GROUP PLC

We have audited the accompanying consolidated statements of
income, changes in shareholders' equity and cash flows of
Yorkshire Electricity Group plc and its subsidiaries (the
"Company") for the year ended March 31, 1997 (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 audit.

We conducted our audit in accordance with generally
accepted auditing standards in 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 audit provides a reasonable basis for our
opinion.

In our opinion, such consolidated financial statements
present fairly, in all material respects, the results of
operations and cash flows of Yorkshire Electricity Group plc
and its subsidiaries for the year ended March 31, 1997 in
conformity with generally accepted accounting principles in
the United States of America.

Deloitte & Touche
Leeds
United Kingdom
July 15, 1997

<PAGE>
<TABLE>
YORKSHIRE ELECTRICITY GROUP PLC AND SUBSIDIARIES
(Predecessor Company)
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED MARCH 31, 1997
(In Millions)
<CAPTION>
							    Year Ended
							  March 31, 1997
							     (POUND)
<S>                                                            <C>
OPERATING REVENUES					      1,331

COST OF SALES		   			                932

GROSS MARGIN		  			                399

OPERATING EXPENSES
Maintenance						         76
Depreciation							 50
Provision for uneconomic gas and electricity contracts	         78
Selling, general and administrative				 93
Systems development costs (Note 8)				 50

Income from operations					         52

OTHER INCOME (EXPENSE)
National Grid transaction (Note 9):
     Realized gain on sale of National Grid Group plc	          1
     Realized gain on sale of PSB Holdings Limited		  6
Dividend income							  2
Equity in loss of associates					 (4)
Gain on sale of associate					 15


Total other income, net					         20


Interest expense					        (55)
Interest income							 22

Net interest expense	  			                (33)


INCOME BEFORE INCOME TAXES             			         39

PROVISION FOR INCOME TAXES					 13


NET INCOME						         26
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
YORKSHIRE ELECTRICITY GROUP PLC AND SUBSIDIARIES
(Predecessor Company)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 1997
(In Millions, Except Shares and Per Share Amounts)

<CAPTION>
				                                                         Unrealized
				                                                          Gain on
				                                 Additional              Available
				                 Share     Capital  Paid-in    Retained   for Sale
				                Shares     Amount   Capital    Earnings  Investments  Total
		                                           (POUND)  (POUND)   (POUND)     (POUND)    (POUND)
<S>                                             <C>         <C>     <C>       <C>         <C>        <C>
Balance, March 31, 1996	                       158,555,100  108     89        188         14         399
Common shares issued	                           576,226   -       3          -          -           3
Gain on sale of NGG shares	                         -   -       -          -         (1)         (1)
Revaluation of PSB shares
  to fair market value		                         -   -       -          -          6           6
Realization of gain on
  sale of PSB		            	                 -   -       -          -         (6)         (6)
Net income			                         -   -       -         26          -          26
Dividends declared                                       -   -       -        (68)         -         (68)


Balance, March 31, 1997	                       159,131,326  108     92        146         13         359
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
YORKSHIRE ELECTRICITY GROUP PLC AND SUBSIDIARIES
(Predecessor Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31, 1997
(In Millions)
<CAPTION>
									  Year Ended
           								 March 31, 1997
									    (POUND)
<S>                                                                         <C>
Cash flows from operating activities:
Net income						   	            26
Adjustments to reconcile net income to net cash
  provided by operating activities:
Depreciation							            50
Write off of capitalized system costs				            22
Deferred income taxes							   (24)
Gain on disposal of investments					            (7)
Equity in loss of associates						     4
Gain on sale of associate						   (15)
Changes in assets and liabilities:
   Receivables						 	            14
   Provisions for uneconomic electricity and gas contracts	            78
   Electricity purchases						   (11)
   Payments received in advance					           (41)


Net cash provided by operating activities				    96


Cash flows from investing activities:
Capital expenditures						          (103)
Proceeds from sale of fixed assets					    29
Proceeds from sale of associate					            26
Loans (advanced to) repaid by associate				            (3)
Purchases of long-term investments					   (18)
Proceeds from sale of PSB						    10
Sale (purchases) of short-term investments				     8

Net cash used in investing activities				           (51)


Cash flows from financing activities:
Proceeds from issuance of common stock				             3
Repayments of long-term debt						    (5)
Net change in short-term debt						    (3)
Dividends paid								   (71)

Net cash used in financing activities				           (76)

Decrease in cash and cash equivalents				           (31)

Beginning of period cash and cash equivalents			           252

End of period cash and cash equivalents				           221
</TABLE>

<PAGE>
<TABLE>
        YORKSHIRE ELECTRICITY GROUP PLC AND SUBSIDIARIES
(Predecessor Company)
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
FOR THE YEAR ENDED MARCH 31, 1997
(In Millions)
<CAPTION>
								        Year Ended
								      March 31, 1997
									     (POUND)
<S>                                                                          <C>
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:

Cash paid for interest	    					             42

Cash paid for income taxes						     30
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

YORKSHIRE ELECTRICITY GROUP PLC AND SUBSIDIARIES
(Predecessor Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Yorkshire Electricity Group plc, ("YEG" or the
"Company") 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.  The Company's main business, the distribution
and supply of electricity to customers in its franchise
area (the "Franchise Area") in the North of England, is
regulated under the terms of a Public Electricity Supply
License ("PES License") by the Office of Electricity
Regulation ("OFFER").

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

The Company 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.

Basis of presentation

The consolidated financial statements of the Company
are presented in pounds sterling ((POUND)) and in
conformity with accounting principles generally accepted
in the United States of America.  The Company is not
subject to 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" do not apply.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Principles of consolidation

The consolidated financial statements include the
accounts of the Company and its wholly-owned and
majority-owned subsidiaries and have been prepared from
records maintained by the Company in the UK.  Significant
intercompany items are eliminated in consolidation.

Use of estimates

The preparation of 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 and reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Unbilled revenue

The Company records revenue net of value added tax
("VAT") and accrues revenues for service provided but
unbilled at the end of each reporting period.

Recovery of Regulated Income

Charges for distribution of electricity and supply to
customers with a maximum demand under 100 kW are subject
to a price control formula set out in the Company's PES
license which allows a maximum charge per unit of
electricity.  Differences in the charges, or in the
purchase cost of electricity, can result in the under or
over-recovery of revenues in a particular period.

Where there is an over-recovery of supply or
distribution business revenues against the regulated
maximum allowable amount, revenues are deferred in an
amount equivalent to the over-recorded amount.  The
deferred amount is deducted from operating revenues and
included in other current liabilities.


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments

The Company 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
the Company'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.  The Company 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.

The Company enters into interest rate 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.  The Company accounts
for its interest rate swaps in accordance with Statement
of Financial Accounting Standards No. 80, "Accounting for
Futures Contracts" and various Emerging Issues Task Force
pronouncements.  If the interest rate 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 interest rate swap.  If
the debt instrument being hedged by the interest rate
swaps were to be extinguished, any gain or loss
attributable to the swap would be recognized in the
period of the transaction.

Cash and cash equivalents

The Company 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

The Company records book depreciation expense 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 10
Vehicles and mobile plant				            Up to 10

Income taxes

The Company 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
carryforwards 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.	RETIREMENT BENEFITS

Pension plans

The Company operates two schemes, one based on defined
contributions and a second based on defined benefits.

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
was less than (POUND)1 million for the Fiscal Year ended
March 31, 1997.

2.	RETIREMENT BENEFITS (continued)

Defined benefits

The Company participates in the Electricity Supply
Pension Scheme, 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.

The Company uses the projected unit credit actuarial
method for accounting purposes.  Amounts funded to the
pension are primarily invested in equity and fixed income
securities.

Statement of Financial Accounting Standards No. 87
"Employers' Accounting For Pensions" ("SFAS 87") was
effective for fiscal years beginning after December 15,
1988.  The provisions of SFAS No. 87 were initially
adopted by the Company on April 1, 1992.

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

								 March 31,
							         1997
							           %

Discount rate						         8.0
Annual salary rate increase				         6.0
Long-term rate of return on plan assets		                 9.0

The components of the plan's net periodic pension cost
during the period are shown below (in millions):
							Year Ended March 31,
							         1997
							      (POUND)

Service cost (benefits earned during the period)	          10
Interest cost on projected benefit obligation	                  52
Actual return on plan assets				         (89)
Net amortization and deferral				          33

Net periodic pension cost				           6




3.	REGULATORY MATTERS

The distribution business of the Company 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 kilowatt hours) that the Company can charge.  The DPCF
is usually set for a five-year period, subject to more
frequent adjustments as determined necessary by the
Director General of Electricity Supply (the "Regulator").
At each review, the Regulator can adjust the value of
certain elements in the DPCF.  The Company's allowed
distribution revenues were reduced by a 14% below
inflation reduction and a 13% below inflation reduction
on April 1, 1995 and 1996, respectively, following a
review by the Regulator.  On April 1, 1997, the Company's
allowed distribution revenues were decreased by a 3%
below inflation reduction, and there will be further
annual 3% below inflation reductions on April 1, 1998 and
April 1, 1999.

The Company's electricity supply business is also
regulated by the Regulator, and prices are established
based upon the Supply Price Control Formula, which is
similar to the DPCF; however it currently allows full
pass through for all properly incurred costs.

The non-franchise electricity supply market, which
typically includes larger commercial and industrial
customers was opened to competition for all customers
with usage above 1MW upon privatization of the industry
in 1990.  The non-franchise electricity supply markets of
100 kW or more were opened to full competition in April
1994.

Currently, the Company, under its PES license, has the
exclusive right to supply electricity to residential and
small commercial and industrial customers within its
Franchise Area.  However, it is anticipated that the
electricity supply market will become fully competitive
over a several month period beginning September 1998.


4.	COMMITMENTS AND CONTINGENCIES

Electricity and Gas Purchase Agreements

The Company and its subsidiaries have entered into
contracts for purchases of electricity and gas for a
period of up to 2009.  A provision of (POUND)78 million
has been made for the net present value of expected
future payments in excess of anticipated recoverable
amounts, reflecting management's current expectations of
market prices for electricity following the opening of
the competitive market for franchise supply customers and
future gas prices.  The actual net costs are highly
sensitive to movements in future prices.  The Company's
provision includes amounts in respect of contracts with
a non wholly-owned subsidiary.

The Company has additional contracts with unaffiliated
parties relating to the purchase of gas which expire by
October 2005, the terms of which are immaterial with
respect to quantity and price, both annually and in the
aggregate.

Legal proceedings

The Company is a party to legal proceedings arising in
the ordinary course of business which are not material,
either individually or in the aggregate, nor is it
currently aware of any threatened material legal
proceedings.

Operating leases

The Company has commitments under operating leases
with various terms and expiration dates.  At March 31,
1997 estimated minimum rental commitments for non-
cancelable operating leases were (POUND)2 million and
(POUND)1 million for Fiscal Years 1998 and 1999,
respectively.  Rental expenses incurred for operating
leases was (POUND)4 million during Fiscal Year 1997.

Labor subject to collective bargaining agreements

The majority of the Company's employees are subject to
one of three collective bargaining agreements.  Such
agreements are ongoing in nature, and the Company's
employees' participation level is consistent with that of
the electric utility industry in the UK.
5.	SEGMENT REPORTING

The Company is primarily engaged in two electric
industry segments; distribution, which involves the
transmission of electricity across its network to its
customers, and supply, which involves bulk purchase of
electricity from the Pool for delivery to the
distribution networks.  Included in "Other" are
insignificant operating subsidiaries of the Company as
well as various corporate activities, and non-allocated
corporate assets.  Intersegment sales primarily represent
sales from distribution to supply for use of the
distribution networks.

A summary of information about the Company's
operations by segments follows (in millions):
<TABLE>
						         Year Ended March 31, 1997
<CAPTION
				    Distribution    Supply   Other   Eliminations   Consolidated
				      (POUND)    (POUND)    (POUND)    (POUND)        (POUND)
<S>                                    <C>        <C>          <C>       <C>           <C>
Operating revenues                     308        1,178        172       (327)         1,331
Operating income                       127         (132)        10         47             52
Depreciation	                        30            1         19          -             50
</TABLE>
6.	INCOME TAXES

The Company's income tax expense consists of the
following (in millions):

							          Year Ended March 31,
								      1997
  							            (POUND)

Current 							       37
Deferred							      (24)

Total								       13



6. INCOME TAXES (continued)

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):
						         Year Ended March 31,
							     1997
		  				           (POUND)

Pre-tax income 						       39

Income taxes computed at statutory rate 		       13
National Grid transactions:
   Gain on sale of PSB excluded from
     taxable income					       (2)
Permanent differences					        6
Other							       (4)

Total income tax expense				       13

The tax years since Fiscal Year 1993 are currently
under review by the Inland Revenue in the UK.  In the
opinion of management, the final settlement of open years
will not have a material effect on the financial position
or results of operations.



7.	FINANCIAL INSTRUMENTS

The Company utilizes CFDs to mitigate its exposure to
volatility in the prices of electricity purchased through
the Pool.  Such contracts allow the Company to
effectively convert the majority of its anticipated Pool
purchases from market prices to fixed prices.  CFDs are
in place to hedge a portion of electricity purchases on
approximately 30,662 GWh through the year 2009.
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 March 31, 1997 is a net liability of
(POUND)22 million.  This estimate is based on
management's projections of future prices of electricity.
The net liability will be recovered through electricity
costs passed through to franchise customers during Fiscal
Year 1998.

The Company is exposed to losses in the event of non-
performance by counterparties to its CFDs.  To manage
this credit risk, the Company 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.

As part of its risk management policy, the Company
enters into interest rate swap agreements under which
counterparties have agreed to pay amounts to the Company
equal to variable interest obligations in consideration
of amounts payable by the Company equivalent to fixed
rates of interest.  If the counterparty to the interest
rate swap was to default on contractual payments, the
Company could be exposed to increased costs related to
replacing the original agreement.  At March 31, 1996, the
Company was party to interest rate swap agreements with a
notional value of (POUND)89 million which were at fixed
interest rates varying between 6.64% and 10.98%.  During
Fiscal Year 1997, the Company terminated these agreements
at a cost of (POUND)7 million.



8.	SYSTEMS DEVELOPMENT COSTS

During the Fiscal Year 1997, a (POUND)50 million
charge to earnings was recorded for costs incurred
related to information systems development costs
pertaining to the opening up of the competitive
electricity market in 1998.  It is management's opinion
that, at this stage in the development of the future
commercial and regulatory environment, it would not be
prudent to capitalize these costs.

9.	NATIONAL GRID INVESTMENT

In December 1995 the Company sold its investment in
NGG, recognizing a gain on sale of (POUND)56 million.  In
the year to March 31, 1997 further consideration of
(POUND)6 million was received.

10.	EMPLOYEE OPTION AND SHARE PLANS

The Company operates various employee option and share
plans.  During Fiscal Year 1995, an Executive Long Term
Share Incentive Scheme for certain eligible Executive
Directors was introduced.  Under the scheme amounts (as
determined by the earnings per share and market value
growth of YEG) were paid to a trust to be utilized to
purchase Company shares.  After the final determination
of the amounts in the first cycle of 1998, the shares
were to have been released to participants.  Amounts
transferred were expensed.  54,025 shares were held in
trust at March 31, 1997.

On July 1, 1996 a trust related to the Company's
Profit Sharing Scheme purchased 243,356 ordinary shares
of the Company for (POUND)1,769,198 or (POUND)7.27 per
share.  64 shares were allocated to each eligible
employee.  The net cost of acquiring the shares and
maintaining the trust was borne by the Company.

In connection with the acquisition, all shares held in
the above trusts were transferred to employees in
accordance with the provisions of the schemes.


10.	EMPLOYEE OPTION AND SHARE PLANS (continued)

The Company had two option plans, the Executive Share
Option Scheme and the Savings-Related Share Option
Scheme.  The Executive Share Option Scheme provides for
the granting of stock options to purchase ordinary shares
to certain key executives of the Company at the
discretion of the Remuneration Committee of the Company.
The options vest three years from the date of grant and
expire ten years after the date of grant.  Options to
purchase ordinary shares of the Company have been granted
to employees under the Savings-Related Share Option
Schemes adopted in 1996 and 1997.  The options vest five
years from date of grant and expire five and a half years
after the date of grant.

The following table summarizes the transactions of the
share option scheme for the year ended March 31, 1997:

								          Weighted
						                Number    Average
						                    of   Exercise
						                Shares      Price
							                    (POUND)

Unexercised options outstanding - March 31, 1996	     2,451,817     5.13
Granted							     1,059,218     5.97
Exercised					  	       576,226     4.05
Forfeited						       118,865     4.01
Expired							           642     1.75

Unexercised options outstanding - March 31, 1997	     2,815,302     5.72

Exercisable options - March 31, 1997			       129,781     4.87



In connection with the acquisition, holders of any
outstanding options were given the opportunity to
exercise their options and sell their shares to Yorkshire
Holdings plc at a price of (POUND)9.27 per share.  If the
holders of the options did not exercise their options,
such options were cash canceled and the holders were paid
(POUND)9.27 per share less the option's exercise price.

10.	EMPLOYEE OPTION AND SHARE PLANS (continued)

The Company accounts for its stock-based compensation
schemes in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to
Employees".  Compensation expense of (POUND)1 million was
recognized in 1997.  Because of the change in control of
the Company and the immaterial impact on net income of
applying the fair value method, the disclosures required
by Statement of Financial Accounting Standard No 123,
"Accounting for Stock-Based Compensation," have not been
presented.


11. SUBSEQUENT EVENTS

On February 24, 1997 the Boards of American Electric
Power Company, Inc. ("AEP") and Public Service Company of
Colorado ("PS Colorado") announced the terms of a cash
offer for Yorkshire Electricity Group plc to be made by
Yorkshire Holdings plc, a subsidiary of Yorkshire Power
Group Limited.  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 those Yorkshire Electricity Group plc shares
outstanding at the end of the requisite notice period.
Yorkshire Holdings plc completed its purchase of the
shares of YEG during April and May 1997 through payment
of cash consideration of (POUND)1.457 billion and the
issuance of loan notes to former YEG shareholders in the
amount of (POUND)22 million.

Windfall tax

On July 2, 1997 the British Government announced a
`windfall tax' to be applied at that date to companies
privatized by flotation and regulated by relevant
privatization statutes.  A decrease in the UK statutory
income tax rate from 33% to 31% was also included in the
legislation.  The Company will record a charge to income
of (POUND)134 million for the windfall tax and an income
tax benefit as a result of the change in the UK statutory
income tax rate of approximately (POUND)12 million during
the quarter ending September 30, 1997.  The windfall tax
is not deductible for UK income tax purposes and is
payable in two equal installments on or before December
1, 1997 and 1998.

11.	SUBSEQUENT EVENTS (continued)

Business restructuring

On December 4, 1997 a planned business restructuring
was announced.  The restructuring will result in the
company's main divisions (electricity distribution and
energy supply) becoming self sufficient businesses within
the group structure.  A separate ownership structure will
be pursued for the generation business.  As a result of
the restructuring approximately 160 positions will no
longer be required.  The estimated cost of this
restructuring is (POUND)10 million.

Ionica

Following a profits warning issued by Ionica in
November 1997, the fair value of the Company's investment
in Ionica decreased from (POUND)54 million at April 1,
1997 to (POUND)30 million at December 31, 1997.  The
reduction is not regarded by management as a permanent
diminution in value.


12.	UNAUDITED QUARTERLY FINANCIAL INFORMATION

				 Quarterly Periods Ended 1996/97
(in (POUND) millions)	    June 30   September 30   December 31  March 31

Operating revenues	      307         298           369          357
Operating income (loss)        46          49            25          (68)
Net income (loss)	       25          28            24          (51)


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

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 Yorkshire Electricity Group
plc (the "Predecessor Company") adjusted to reflect the items
described in notes (1) through (4) below as if the indirect
acquisition of the Predecessor Company (the "Acquisition") by
Yorkshire Power Group Limited (the "Successor Company") had
occurred at April 1, 1996.
<TABLE>
						                  (In Millions)

			            Predecessor                                Pro Forma for
			               Period					  the Year Ended
			          April 1, 1996 to	      Adjustments        March 31, 1997
			          March 31, 1997
<CAPTION>
				    (POUND)    (1)       (2)      (3)      (4)  (POUND)     $(5)
<S>                                  <C>        <C>       <C>      <C>      <C>  <C>         <C>
Operating revenues	             1,331      -         -        -        -    1,331       2,149
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
</TABLE>

(1)	To reflect the interest expense recorded in connection with the
Acquisition financed by (POUND)22 million loan notes issued by
Yorkshire Holdings plc (''Yorkshire Holdings'') and (POUND)1,034
million in short-term debt incurred by the Successor Company and share
capitalization of (POUND)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 (POUND)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 ((POUND)78 million), loss on interest rate swap
agreements ((POUND)7 million) and write-down of non-operational
properties ((POUND)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.


(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
March 31, 1999 of $1.6143 = (POUND)1.  See Note 1 ''Summary of
Significant Accounting Policies'' to Yorkshire Group's consolidated
financial statements for the year ended March 31, 1999 included
elsewhere in this document.


During the pro forma Fiscal Year 1997, the Predecessor
Company incurred expenses of (POUND)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.

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 March 31, 1999 and March 31, 1998, and
the related consolidated statements of income, changes in
shareholders' equity and cash flows for the years then ended
(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 generally
accepted auditing standards.  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 March 31, 1999 and March 31, 1998, and the results of
their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.

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.  The translation of the financial statement
amounts into US dollars has been made solely for the
convenience of readers in the United States of America.


Deloitte & Touche LLP
Columbus, Ohio
June 9, 1999

<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
CONSOLIDATED STATEMENTS OF INCOME
 (In Millions)

<CAPTION>
				 			      Year Ended March 31,
                                                            1999                1998
						    (POUND)          $         (POUND)
							        (See Note 1)
<S>                                                 <C>          <C>           <C>
OPERATING REVENUES			 	    1,366        2,205         1,234

COST OF SALES		  			      906        1,462           862

GROSS MARGIN					      460          743           372

OPERATING EXPENSES
  Maintenance					       69          111            64
  Depreciation and amortization		               76          123            71
  Selling, general and administrative	              115          186            79
  Restructuring charges			                5            8            10

INCOME FROM OPERATIONS	 		              195          315           148
OTHER INCOME EXPENSE
  Loss on investment in Ionica		              (12)         (20)          (41)
  Other income, net				        1            2             2
    Total Other Income (Expense), Net	              (11)         (18)          (39)
NET INTEREST EXPENSE
  Interest expense			 	     (126)        (203)         (117)
  Interest income				        4            6            13
    Net interest expense			     (122)        (197)         (104)

INCOME FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES	 		               62          100             5

PROVISION (CREDIT) FOR INCOME TAXES	                3            5            (4)

INCOME FROM CONTINUING OPERATIONS
  BEFORE EXTRAORDINARY ITEM AND
    DISCONTINUED OPERATION			       59           95             9

INCOME FROM DISCONTINUED OPERATION
  NET OF INCOME TAXES OF (POUND)2 ($3)
    AND (POUND)3				        4            6             8

GAIN ON DISPOSAL OF DISCONTINUED
  OPERATION NET OF INCOME TAXES OF
    (POUND)31 ($50)				       24           39             -

INCOME BEFORE EXTRAORDINARY ITEM		       87          140            17

EXTRAORDINARY LOSS - UK WINDFALL TAX	                -            -          (134)
NET INCOME (LOSS)			               87          140          (117)
The accompanying notes are an integral part of these consolidated financial statements.
 </TABLE>

<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
CONSOLIDATED BALANCE SHEETS
(In Millions)
<CAPTION>
					            March 31, 1999      March 31, 1998
 	   				          (POUND)         $          (POUND)
ASSETS					              (See Note 1)
<S>                                                 <C>      <C>             <C>
FIXED ASSETS
   Property, plant and equipment, net
     of accumulated depreciation
       of (POUND)96 ($155) and (POUND)53             970      1,566           992
   Construction work in progress	              15         24            68

Total fixed assets			             985      1,590         1,060


CURRENT ASSETS
   Cash and cash equivalents		              12         19            35
   Investments				              26         42            41
   Accounts receivable, less
     provision for uncollectibles
       of (POUND)9 ($15) and (POUND)6	             100        162            62
   Unbilled revenue			              84        136            78
   Other					      44         71            50

Total current assets	  		             266        430           266


OTHER ASSETS
   Goodwill, net of accumulated
     amortization of (POUND)50 ($81)
 and (POUND)25                                       925      1,493           969
   Investments, long-term		              51         82            73
   Prepaid pension asset		              98        158            75
   Other non-current assets		              22         36            19

Total other assets			           1,096      1,769         1,136


Total assets		  		           2,347      3,789         2,462

</TABLE>

The accompanying notes are an integral part of this consolidated
balance sheet.

<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
CONSOLIDATED BALANCE SHEETS
 (In Millions, Except Shares)
<CAPTION>
					                March 31, 1999            March 31, 1998
					                (POUND)         $             (POUND)
								 (See Note 1)
SHAREHOLDERS' EQUITY AND LIABILITIES
<S>                                                    <C>           <C>           <C>
SHAREHOLDERS' EQUITY
   Share capital, (POUND)1 par value common shares,
      440,000,100 in 1999 and 1998, authorized,
      440,000,002 in 1999 and 1998
      issued and outstanding		  	         440           710            440
   Retained deficit			                 (30)          (48)          (117)

Total shareholders' equity		                 410           662            323

LONG-TERM DEBT				               1,103         1,781          1,026

SHORT-TERM DEBT REFINANCED JUNE 1998                       -             -            164

Company-Obligated Mandatorily Redeemable
   Trust Securities of Subsidiary Holding
   Solely Junior Subordinated Deferrable
   Interest Debentures			                 168           271              -

OTHER NON-CURRENT LIABILITIES
   Deferred income taxes		                 214           345            208
   Provision for uneconomic
     electricity and gas contracts	                  30            49             84
   Other					          13            21             15

Total other non-current liabilities	                 257           415            307

CURRENT LIABILITIES
   Current portion of long-term debt                       8            13              5
   Short-term debt			                 142           229            319
   Accounts payable			                  77           124             82
   Accrued liabilities and
     deferred income			                  85           137             63
   Income taxes payable			                  37            60             40
   Windfall tax payable			                   -             -             67
   Other current liabilities		                  60            97             66

Total current liabilities		                 409           660            642

Total liabilities				       1,937         3,127          2,139

COMMITMENTS AND CONTINGENCIES (NOTE 5)

Total shareholders' equity and
  liabilities				               2,347         3,789          2,462
</TABLE>

The accompanying notes are an integral part of this consolidated
balance sheet.
<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In Millions, Except Shares)
<CAPTION>
For the year ended March 31, 1999

				    Share Capital        Retained
				   Shares    Amount      Deficit     Total
					      (POUND)     (POUND)     (POUND)
<S>                             <C>            <C>         <C>        <C>
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 year ended March 31, 1998

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

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


<PAGE>
<TABLE>
YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
<CAPTION>
							      Year Ended March 31,
							     1999             1998
						      (POUND)        $        (POUND)
<S>                                                    <C>           <C>        <C>
Cash flows from operating activities:
Net income (loss)				        87           140        (117)
Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
   Gain on sale of discontinued operation	       (24)          (39)          -
   Depreciation of fixed asset investments
     included in cost of sales			         8            13           -
   Depreciation					        56            91          53
   Amortization					        25            40          25
   Gain on sale of fixed assets		                (3)           (5)         (3)
   Loss on investment in Ionica		                12            19          41
   Deferred income taxes				15            24           4
Changes in assets and liabilities:
   Receivables and unbilled revenue		       (44)          (71)         34
   Prepaid pension asset			       (23)          (37)        (14)
   Provisions for uneconomic electricity
     and gas contracts				       (11)          (18)          6
   Accounts payable				        (5)           (8)          3
   Windfall tax payable				       (67)         (108)         67
   Other current assets				        (4)           (6)        (10)
   Other				  	         9            15         (27)
Net cash provided by operating activities	        31            50          62

Cash flows from investing activities:
   Proceeds from sale of discontinued
     operation					       136          220            -
   Capital expenditures				      (149)        (241)        (191)
   Proceeds from sale of property,
     plant and equipment		    	        11           18           20
   Purchase of Yorkshire Electricity
     Group plc				  	        -             -       (1,474)
   Other		 			        2             3            6
Net cash used in investing activities	                -             -       (1,639)
Cash flows from financing activities:
   Proceeds from issuance of
     Trust Securities		 		      162          261             -
   Proceeds from issuance of long-term debt	      130          210           593
   Proceeds from issuance of common stock	        -            -           440
   Payments to terminate interest rate
     swap agreements				        -            -           (14)
   Repayments of long-term debt		               (5)          (8)           (5)
   Net change in short-term debt		     (341)        (550)          377
Net cash (used in) provided by
  financing activities				      (54)         (87)        1,391
Decrease in cash and cash equivalents	              (23)         (37)         (186)
Beginning of year cash and cash
  equivalents					       35           56           221
End of year cash and cash equivalents	               12           19            35
</TABLE

<PAGE>

</TABLE>
<TABLE>
       YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR YEAR ENDED MARCH 31, 1998
(In Millions)
<CAPTION>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

						           Year Ended March 31,
						         1999               1998
						  (POUND)        $         (POUND)
<S>                                                 <C>         <C>          <C>
Cash paid for interest				    104         168          132

Cash paid for income taxes			     67         108           77
</TABLE>

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Yorkshire Group issued (POUND)22 million of loan notes
during Fiscal Year 1998 to former shareholders of Yorkshire
Electricity Group plc ("YEG") (see notes 12 & 13).

The accompanying notes are an integral part of these
consolidated financial statements.

YORKSHIRE POWER GROUP LIMITED AND SUBSIDIARIES
(Successor Company)
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 the
Office of Electricity Regulation ("OFFER").

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 ((POUND)) 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 ((POUND)) and in US dollars
($) solely for the convenience of the reader, at the
exchange rate of (POUND)1 = $1.6143, the closing mid-
point in London on March 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, and the
estimated cost of borrowed funds used during
construction.  Customer contributions towards
construction of distribution-related assets reduce the
cost of such assets.

During Fiscal Year 1998, Yorkshire Group changed its
estimates in respect of identifying the element of costs
to be capitalized within the distribution network.  This
change in estimate increased the amount capitalized in
Fiscal Year 1998 by (POUND)15m.

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 10
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 (note 13).


1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments

Yorkshire Group accounts for investments in 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 flotation and regulated by relevant
privatization statutes. Yorkshire Group recorded an
extraordinary loss of (POUND)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 Fiscal Years 1999 and 1998 was less than (POUND)1
million in each year.

Defined benefit
Yorkshire participates in the Electricity Supply
Pension Scheme ("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.
<TABLE>
				                     March 31, 1999      March 31, 1998
						     (POUND)         $       (POUND)
							     (amounts in millions)
<CAPTION>
Reconciliation of Projected Benefit Obligation
<S>                                                     <C>      <C>           <C>
Projected benefit obligation
  at April 1                                            740      1,195         664
Service cost                                              9         15           9
Interest cost                                            43         69          50
Plan participants' contributions                          2          3           2
Actuarial loss                                           44         71          54
Prior service cost incurred                              14         23           -
Benefits paid                                           (40)       (65)        (39)
Projected benefit obligation
  at March 31                                           812      1,311         740


Reconciliation of Fair Value of Plan Assets

Fair value of plan assets
  at April 1                                            855      1,380         725
Actual return on plan assets                             84        136         160
Employer contributions                                    7         11           7
Plan participants' contributions                          2          3           2
Benefits paid                                           (40)       (64)        (39)
Fair value of plan assets
  at March 31                                           908      1,466         855



3.	RETIREMENT BENEFITS (continued)


Funded Status


Funded status                                             96        155         115
Unrecognized net actuarial gain                          (11)       (18)        (40)
Unrecognized prior service cost                           13         21           -

Prepaid pension cost                                      98        158          75

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

					    March 31, 1999        March 31, 1998
				                   %                 %

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



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

								           Year Ended March 31,
								         1999              1998
								     (POUND)       $      (POUND)

Service cost                                                              9       15        9
Interest                                                                 43       69       50
Expected return on plan assets		                                (70)    (113)     (66)
Net amortization and deferral		                                  1        2        -

Net periodic pension credit		                                (17)     (27)      (7)


</TABLE>

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
Director General of Electricity Supply (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.  The DPCF
is currently under review and new arrangements will be
effective from April 1, 2000.

Yorkshire's electricity supply business is also
regulated by the Regulator.  Until March 31, 1998 prices
were established based upon the Supply Price Control
Formula.  New price controls took effect from April 1,
1998.  These new controls apply to the supply to all
Designated Customers (residential and small business
customers whose annual consumption is under 12,000 kWh)
within the Yorkshire Authorized Area.  They will apply
until an adequate level of competition is established and
at least until March 31, 2000.  The Regulator is
currently reviewing the need for electricity supply price
restraints concurrently with the ongoing review of the
Distribution Price Control Formula.

The license modifications that have been implemented
to effect the new controls between 1998 and 2000 take the
form of a series of price caps on the tariffs applicable
to residential and small business customers.  The new
controls also require an additional 3% reduction in
revenues below the applicable rate of inflation,
effective April 1, 1999.  The license modifications also
discontinued the automatic pass-through of costs
previously passed through to residential and small
business customers, consisting primarily of purchased
power costs.

On September 14, 1998 the domestic electricity market
opened up to competition in the UK.  The process was
completed for all PES customers with effect from May 24,
1999.  Yorkshire opened its full market to competition on
February 22, 1999, making it one of the first PESs to do
so.

4.	REGULATORY MATTERS (continued)

To facilitate competition, significant additional
costs have been incurred to develop "data management
service" systems.  Yorkshire presently estimates that it
will incur costs totaling (POUND)67 million for re-
engineering and information technology work.  Of such
amount, approximately (POUND)19 million was expensed in
Fiscal Year 1997, (POUND)2 million in Fiscal Year 1998
and (POUND)5 million in Fiscal Year 1999.  The Regulator
has made proposals (which have been accepted by
Yorkshire) to allow Yorkshire recovery of (POUND)25
million over a five year period ending March 31, 2003.  A
further (POUND)7 million is expected to be recovered
through Pool cost recovery and other national mechanisms
and (POUND)8 million is expected to be capitalized as
such amount is expected to provide future benefits to the
supply business.  As a result of the above, the residual
amount of approximately (POUND)1 million, which will not
be recovered or capitalized, will be expensed in Fiscal
Year 2000 as incurred.

The Regulator has also made proposals (which have been
accepted by Yorkshire) to provide an annual cost recovery
of (POUND)3 million for the period 1998 through 2000 to
cover operating costs.  This cost recovery will be
reviewed at the time of the Distribution Price Control
Formula Review in 2000.

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 (POUND)3 million as a consequence of the
delay.  A provision for penalties of (POUND)3 million was
included in the results for Fiscal Year 1998.


5.	COMMITMENTS AND CONTINGENCIES

Electricity and gas purchase agreements

At March 31, 1998 a provision of (POUND)84 million had
been made in respect of electricity and gas purchase
contracts entered into by Yorkshire and its subsidiaries.
The provision was for the estimated net present value of
expected future payments in excess of anticipated
recoverable amounts, reflecting management's expectations
of market prices for electricity following the opening of
the competitive market to Franchise Supply Customers and
future gas prices.

5.	COMMITMENTS AND CONTINGENCIES (continued)

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
(POUND)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 March 31, 1999 was
(POUND)30 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.

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.


5.	COMMITMENTS AND CONTINGENCIES (continued)

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 canceling
liabilities relating to pension costs resulting from
early retirement, were invalid as they did not comply
fully with the Scheme 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 each
has three months in which to initiate appeals to the
House of Lords.  It is expected that any hearing by the
House of Lords will not take place before 2000.

Yorkshire has made similar use of actuarial surplus.
Pension deficiency costs totaling (POUND)33 million have
been offset against actuarial surplus.  Management is in
the process of reviewing the Court of Appeal's decision
and any potential impact of this decision on its results
of operations and financial condition.  The final outcome
of this matter cannot yet be determined.

Operating leases

Yorkshire Group has commitments under operating leases
with various terms and expiration dates.  At March 31,
1999, estimated minimum rental commitments for non-
cancelable operating leases were (POUND)4 million and
(POUND)1 million for Fiscal Years 2000 and 2001
respectively.  At March 31, 1998, estimated minimum
rental commitments for non-cancelable operating leases
were (POUND)3 million for Fiscal Year 1999.  Rental
expenses incurred for operating leases in Fiscal Years
1999 and 1998 were (POUND)3 million ($5 million) and
(POUND)3 million, respectively.


5.	COMMITMENTS AND CONTINGENCIES (continued)

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 its
customers, and supply, which involves bulk purchase of
electricity and gas for delivery to the distribution
networks.  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 as the measure of segment profit below.

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

The results and capital expenditure attributable to
the generation business, which 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.

6. SEGMENT REPORTING (continued)

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

<TABLE>

						Year Ended March 31, 1999

<CAPTION>
		   Distribution   Supply          Other         Eliminations      Consolidated
		                                                  and non-
		                                                  allocated
		                                                  items
	           (POUND)   $    (POUND)     $   (POUND)    $    (POUND)     $   (POUND)    $
<S>                   <C>    <C>   <C>     <C>       <C>    <C>  <C>      <C> 	  <C>	 <C>
Revenues from
  external customers   63    102   1,295   2,090      8     13       -        -   1,366  2,205
Intersegment sales    259    418      41      66     46     74    (346)    (558)      -      -
Depreciation and
  amortization         38     62      16      26      5      8      25       40      84    136
Income from
  operations          153    247      72     116     (6)   (10)    (24)     (38)    195    315
Total assets          960  1,550     396     639  2,607  4,208  (1,616)  (2,608)  2,347  3,789
Capital expenditure   108    174      21      34      5      8       -        -     134    216



						Year Ended March 31, 1998

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

Revenues from
  external customers          53          1,169      12         -           1,234
Intersegment sales           256             42      54      (352)          -
Depreciation and
  amortization                35              5       6        25              71
Income from
  operations                 154             32     (10)      (28)            148
Total assets                 859            335   2,508    (1,240)          2,462
Capital expenditure          134             20       7         -             161

</TABLE>

Non-allocated items within total assets consist of
goodwill of (POUND)925 million in Fiscal Year 1999 and
(POUND)969 million in Fiscal Year 1998.

Non-allocated items within income from operations
consist of amortization of goodwill of (POUND)25 million
in both Fiscal Years 1999 and 1998.



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 (POUND)54 million
plus a subsequent additional investment of (POUND)1
million.  The Company has written down the carrying value
of the investment to their estimate of fair value by
charging a loss of (POUND)41 million to the income
statement during Fiscal Year 1998, together with a further
loss of (POUND)11 million in 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 (POUND)2 million, recognizing a loss on
sale of (POUND)1 million.


8.	INCOME TAXES

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


						 Year Ended March 31,
					          1999                   1998
		   		        (POUND)           $            (POUND)

Current 	  		           (10)         (16)             (5)
Deferred				    15           24               4

Total		  		             5            8              (1)



8.	INCOME TAXES (continued)

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):

<TABLE>
 					         Year Ended March 31,
						           1999                  1998
<CAPTION>
						    (POUND)          $         (POUND)
<S>                                                 <C>          <C>           <C>
Income before taxes and
  extraordinary loss including
  income from discontinued
  operations of (POUND)6 million
  and (POUND)11 million before
  income taxes			                      68          110             16

Income taxes computed at
  statutory rate (30% in 1999
    and 31% in 1998)		                      20           32              5
Effect of change in tax rate
  on deferred taxes		                      (6)         (10)           (12)
Permanent differences		                       8           13             10
Adjustment to tax liabilities	                     (12)         (19)             -
Other					              (5)          (8)            (4)

Total income tax expense
  (credit)	       			               5            8             (1)

</TABLE>
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):
<TABLE>
<CAPTION>
						 March 31, 1999   March 31, 1998
					    (POUND)          $         (POUND)
<S>                                            <C>        <C>            <C>
Deferred tax liabilities:
  Property related temporary
    differences			                207        334            230
  Pension				         27         44             22
  Provision for electricity and
    gas contracts			         (9)       (15)           (26)
  Other				                 (8)       (13)           (18)

Net deferred tax liability	                217        350            208
Portion included in current
  liabilities			                  3          5              -

Long-term deferred tax liability                214        345            208
</TABLE>
8.	INCOME TAXES (continued)

The tax years since 1993 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.


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 33,275 GWh through the year 2013.
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 March 31, 1999 and March 31, 1998 is a net
liability of (POUND)6 million ($10 million) and (POUND)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.

As part of its risk management policy, Yorkshire Group
has entered into interest rate swap agreements under
which counterparties have agreed to pay amounts to
Yorkshire Group equal to variable interest obligations in
consideration of amounts payable by Yorkshire Group
equivalent to fixed interest rate obligations.  At March
31, 1998, Yorkshire Group was party to interest rate swap
agreements with a notional value of (POUND)150 million
which were at fixed interest rates varying between 7.275%
and 7.335%.  At March 31, 1999 Yorkshire Group was not
party to any interest rate swaps.


9.	FINANCIAL INSTRUMENTS (continued)

Yorkshire Group has entered into interest rate cap
agreements, as part of its risk management policy, to
mitigate the effects of interest rate changes, under
which 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.  At March 31, 1999 Yorkshire Group was party to
interest rate cap agreements with a notional value of
(POUND)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 US dollar interest and principal
payments, cross currency swaps were entered into,
maturing in 2003 and 2008.

Under the cross currency swaps, the two parties agree
to an initial exchange of principal amounts in two
different currencies, periodic payments by each party of
amounts of currency interest calculated at a fixed
interest rate on the principal currency amount they
initially received and, at maturity, the reversal of the
initial exchange.

Yorkshire Group has entered into cross currency swaps
under which Yorkshire Group, in the initial exchange, has
received pounds sterling and paid US dollars and
periodically makes pound sterling interest payments in
exchange for US dollar interest receipts.

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.

At March 31, 1999 and March 31, 1998 Yorkshire Group
was party to cross currency swap agreements with a
notional value of (POUND)562 million and (POUND)400
million, respectively.


9.	FINANCIAL INSTRUMENTS (continued)
<TABLE>
The estimated fair values of Yorkshire Group's
financial instruments are as follows (in millions):
<CAPTION>
				      March 31, 1999                March 31, 1998

	 			 Carrying Amount     Fair Value   Carrying    Fair
		  			                              Amount   Value
			     (POUND)      $        (POUND)      $    (POUND)  (POUND)
<S>                            <C>    <C>          <C>      <C>      <C>     <C>
Long-term debt
  (including Trust
  Securities)	               (1,279)(2,065)      (1,393)  (2,249)  (1,031) (1,074)

Cross currency
  swap agreements                  -      -          (67)     (108)       -     (39)

Interest rate
  swap agreements                  -      -            -        -          -    (11)

Interest rate cap
  agreements                       -      -            -        -        -        -

</TABLE>
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.


10.	PROPERTY, PLANT AND EQUIPMENT
<TABLE>
Property, plant and equipment consisted of the
following (in millions):
<CAPTION>
							  March 31, 1999    March 31, 1998
						      (POUND)         $          (POUND)
<S>                                                      <C>       <C>             <C>
Distribution network		                         1,141     1,842           1,009
Generation				                     -         -             115
Non-network land and buildings	                            37        60              38
Other					                   149       240             112
Consumer contributions		                          (261)     (421)           (229)

			  			         1,066     1,721           1,045
Accumulated depreciation		                   (96)     (155)            (53)

Property, plant and equipment, net                         970     1,566             992

</TABLE>

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
<TABLE>
Long-term debt consisted of the following (in millions):
<CAPTION>

						      March 31, 1999     March 31, 1998
							 (POUND)      $            (POUND)
<S>                                                        <C>       <C>              <C>
7.25% Guaranteed Eurobonds, due 2028	                   198       319              197
8.625% Eurobonds, due 2005		                   151       244              152
9.25% Eurobonds, due 2020		                   207       334              208
6.154% Senior Notes, due 2003		                   215       347              215
6.496% Senior Notes, due 2008		                   185       299              185
8.08% Trust Securities			                   168       271                -
Syndicated Credit Facility		                   130       210                -
0% Unsecured Loan, due 2004		                     1         2                -

European Investment Bank:
   7.52% credit facility,
      due 1999-2002			                    15        24               15
   6.55% credit facility,
      due 1997-2000		 	                     9        15               13
   8.05% amortizing term loan,
     due 2009		                                     -         -               46

Total			 			         1,279     2,065            1,031
Less current maturities			                    (8)      (13)              (5)

Less Trust Securities			                  (168)     (271)               -

Long-term debt, net of current
  maturities and Trust Securities	                 1,103     1,781            1,026



11.	LONG-TERM DEBT (continued)

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

						     (POUND)          $
For the Fiscal Years

2000 						         8          13
2001						         9          15
2002 						         4           6
2003 						       219         354
2004 						       130         210
Thereafter					       909       1,467

Total						     1,279       2,065
</TABLE>


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 to be 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 (POUND)162 million,
which was used as working capital and for the repayment
of short-term debt.

For a discussion of the syndicated credit facility,
refer to Note 12, "Short-Term Debt" below.

12.	SHORT-TERM DEBT
<TABLE>
Short-term debt consisted of the following (in millions):
<CAPTION>
						     March 31, 1999     March 31, 1998
					       (POUND)          $           (POUND)
<S>                                               <C>       <C>              <C>
Term loan and revolving
  credit facility			            -          -             303
Syndicated credit facility	                   108       174               -
Bank loans				            24        39               -
Loan notes				            10        16              16

Total			              		   142       229             319

</TABLE>
At March 31, 1999 and March 31, 1998 the weighted
average interest rate was 6.1% and 7.9%, respectively.

The term loan and revolving credit facility agreement
was a (POUND)1.085 billion credit facility.  This credit
facility consisted of two parts which were Facility A
(term loan facility) for (POUND)1.035 billion and
Facility B (revolving credit facility) for (POUND)50
million, both repayable on July 30, 1998.

Amounts outstanding under the term loan and revolving
credit facility agreement described above were repaid
during Fiscal Year 1999.  A syndicated credit facility
was entered into during Fiscal Year 1999, which consists
of four tranches: Tranche A a (POUND)150 million 364 day
revolving credit with a one-year extension option
(reduced to (POUND)100 million in Fiscal Year 1999 and
subsequently canceled on April 21, 1999); Tranche B a
(POUND)130 million 5 year term loan; Tranche C a
(POUND)50 million 5 year revolving credit facility and
Tranche D a (POUND)220 million 5 year revolving credit
facility.  The interest rates on the facilities are based
on LIBOR plus a margin, which ranges from 0.25% to 0.325%
dependent inter alia on the borrowing entity, plus the
cost imputed to the lenders of compliance with central
bank and regulator requirements.  The facilities contain
certain restrictive covenants which include a maximum
consolidated net debt to capitalization ratio and a
minimum earnings to interest ratio.

12.	SHORT-TERM DEBT (continued)

The acquisition of YEG was financed in part by the
issuance of (POUND)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.  (POUND)6 million of
notes were redeemed at March 31, 1998 and a further
(POUND)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 (POUND)5 million in the London inter-bank
market.  At March 31, 1999, and March 31, 1998 the
interest rate on the notes was 4.2% and 6.6%,
respectively.

At March 31, 1999 and March 31, 1998 unused committed
bank facilities were available to the Company in the
amount of (POUND)262 million ($423 million) and
(POUND)275 million, respectively.  Commitment fees of
approximately 1/10 of 1% of the unused committed bank
facilities are required to maintain the facilities
existing at March 31, 1999, which have expiration dates
between 2000 and 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.	ACQUISITION

On February 24, 1997 the joint venture partners of the
Company announced the terms of a cash offer for YEG 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 those YEG shares
outstanding at the end of the requisite notice period.

Yorkshire Holdings plc completed its purchase of the
shares of YEG during April and May 1997 through payment
of cash consideration of (POUND)1.457 billion and the
issuance of loan notes to former YEG shareholders in the
amount of (POUND)22 million.


13.	ACQUISITION (continued)

The acquisition was financed by cash contributions of
(POUND)220 million from each of the joint venture
partners, against which shares in the Company were
subsequently allotted, and short-term borrowings.

The purchase price of YEG has been allocated to the
underlying assets and liabilities based on fair values at
the acquisition date.  The acquisition cost exceeded the
fair market value of net assets acquired, including
(POUND)17 million of acquisition related costs, by
(POUND)994 million and is considered goodwill.

The net purchase price of (POUND)1.496 billion was
allocated as follows at April 1, 1997 (in millions):

						              (POUND)

Property, plant and equipment				         939
Prepaid pension asset					          61
Current assets						         464
Investments						         133
Goodwill						         994
Current liabilities					        (367)
Other liabilities					        (728)

Purchase price						       1,496



14.	EMPLOYEE OPTION AND SHARE PLANS

Prior to the acquisition of YEG by the Company,
employees of YEG were eligible to participate in the 1997
and 1996 Savings-Related Share Option Schemes, Executive
Share Option Scheme, Profit Sharing Scheme and/or the
Long Term Incentive Scheme.  In connection with the
acquisition, employees were given the opportunity to
exercise their options granted under the Savings-Related
Share Option Schemes and the Executive Share Option
Scheme and sell their shares to Yorkshire Holdings plc at
a price of (POUND)9.27 per share.  If the holders of the
options did not exercise their options, such options were
cash canceled, that is the holders were paid (POUND)9.27
per share less the option's exercise price.  There were
2,815,302 options outstanding, at April 1, 1997.  During
the year ended March 31, 1998, 2,675,674 options were
cash canceled and 139,628 options were exercised.  At
March 31, 1998 there were no outstanding options.

14.	EMPLOYEE OPTION AND SHARE PLANS (continued)

In connection with the acquisition, all shares of YEG
issued under the Long Term Incentive Scheme, as well as
the National Grid Group plc shares held in trust for the
benefit of certain option holders, were transferred to
employees in accordance with vesting rights as previously
established and the related schemes and trusts were
terminated.


15.	DISCONTINUED OPERATIONS

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


16. 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 (POUND)5 million
was recorded in Fiscal Year 1999 (relating to 131
positions) together with (POUND)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 March 31, 1999 and
1998 is (POUND)2 million and (POUND)10 million
respectively.


17.	UNAUDITED QUARTERLY FINANCIAL INFORMATION


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


						Quarterly Periods Ended 1998/99
(in (POUND) 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 (POUND)24 million (net
of income taxes of (POUND)31 million).



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

Operating revenues		    257         270          349          358
Operating income		     29          39           48           32
Net income (loss) before
  extraordinary item	              5          21           16          (25)
Net income (loss)		      5        (113)          16          (25)


The quarter ended September 30, 1997 includes an
extraordinary loss of (POUND)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 (POUND)41
million.



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 March 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	56		Director
Richard C. Kelly	52		Director
Paul J. Bonavia		47		Director

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.  From 1991 to July
1994, was President and Chief Executive Officer of Management
Systems International, a management consulting firm.

Richard C. Kelly.   Has been a Director of Yorkshire Group
since February 1997.  Since August 1997, has been Executive
Vice President, Finance and Support Services and Chief
Financial Officer of NCE.  From 1990 to February 1998, was
Chief Financial Officer 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 LeBoeut, Lamb, Greene
& MacRae, LLP.  From 1991 to February 1997 was Senior Vice
President at Dominion Resources, Inc.


Management of Yorkshire Finance

The following table sets forth certain information with
respect to the Board of Directors of Yorkshire Finance as of
March 31, 1999:

Name			Age		Position

Graham J. Hall		55		Director
Roger Dickinson		52		Director
Andrew G. Donnelly	43		Director

Graham J. Hall.   Has been a Director of Yorkshire Finance
since August 1997.  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.  Since 1989, has been Group Company
Secretary and Solicitor of Yorkshire.

Andrew G. Donnelly.   Has been a Director of Yorkshire
Finance since December 1997.  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

The directors of Yorkshire Finance listed above receive no
cash or non-cash compensation as a result of their services
performed for Yorkshire Finance.  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 March 31, 1999:


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

Dr. E. Linn Draper, Jr.   AEP Common Stock      8,248	(2)(3)

Donald M. Clements, Jr.   AEP Common Stock      1,319	(2)

Armando A. Pena           AEP Common Stock      5,007	(2)

Wayne H. Brunetti         NCE Common Stock    372,859	(4) (5) (6)

Richard C. Kelly          NCE Common Stock    110,711	(4) (6) (7)

Paul J. Bonavia           NCE Common Stock     88,548	(4)(6)



Directors and executive officers of Yorkshire Power Group Ltd as a
group (6 persons)
                          AEP Common Stock     14,574	(8)

                          NCE Common Stock    572,118	(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 5,278 shares, Mr.
Clements 1,319 shares and Mr. Pena 3,565 shares.

(3)	Includes 4,970 shares of AEP common stock held in joint
tenancy with Dr. Draper's wife.

(4)	Includes shares of NCE common stock in the form of
unexercised stock options awarded pursuant to the Omnibus
Incentive Plan as follows: Mr. Brunetti 348,334, Mr.
Kelly 100,000 and Mr. Bonavia 88,000 shares.

(5) Includes 23,864 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
661, Mr. Kelly 2,872 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 156
to 159.

(b)	Reports on Form 8-K:

The registrant has not filed any reports on Form 8-K
during the last quarter of Fiscal Year 1999.

A report on Form 8-K was filed on April 9, 1999 in
respect of a change in year end.




	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 June 9, 1999.


YORKSHIRE POWER GROUP LIMITED



By:	/S/A. 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:
	 *Dr. E. Linn Draper, Jr.


		Chairman of the Board	 June 9, 1999
	and Director


(ii)	Principal Financial Officer
	and Principal Accounting Officer:


		Chief Financial Officer	 June 9, 1999
/s/ A. A. Pena)	and Director



(iii)	A Majority of the Directors
	*Donald M Clements, Jr.
	*Wayne H Brunetti
	*Richard C Kelly
	*Paul J Bonavia



*BY	Authorized Representative  June 9, 1999
 /S/ A. A. Pena, Attorney-in-Fact	in the United States



INDEPENDENT AUDITORS' REPORT

To The Shareholders and Board of Directors of Yorkshire
Electricity Group plc and Subsidiaries

We have audited the consolidated financial statements of
Yorkshire Electricity Group plc and its subsidiaries (the
"Company") for the year ended March 31, 1997 and have issued
our report thereon dated July 15, 1997.  Our audit 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 audit.
In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.


Deloitte & Touche
Leeds
United Kingdom

July 15, 1997

<PAGE>
<TABLE>

YORKSHIRE ELECTRICITY GROUP PLC
(Predecessor Company)
<CAPTION>
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Millions)

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
<S>                           <C>            <C>        <C>           <C>      <C>
			      (POUND)       (POUND)    (POUND)       (POUND)  (POUND)
Deducted from Assets:
   Accumulated Provision for
     Uncollectible Accounts     7             5         -            6(a)      6
   Investment Provision          -            2         -            -         2

Year Ended March 31, 1997       7             7         -            6         8


 (a)	Uncollectible accounts written-off



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 March 31, 1999 and 1998, and for each of the
2 years in the period ended March 31, 1999, and have issued
our report thereon dated June 9, 1999.  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 basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.


Deloitte & Touche LLP
Columbus, Ohio

June 9, 1999


YORKSHIRE POWER GROUP LIMITED
(Successor Company)

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


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
				         (POUND)      (POUND)       (POUND)    (POUND)       (POUND)

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.


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 Agreement for (POUND)1,085,000,000 Credit Facility for
Yorkshire Power Group Limited between Yorkshire Power
Group Limited and the Union Bank of Switzerland
(Designated in Registration 333-47925 as Exhibit 10.10).

10.11	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).

10.12	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).

10.13	Agreements for (POUND)550 million Credit Facility, each
dated July 22, 1998, for Yorkshire Power Group Limited,
among Yorkshire Power Group Limited and the banks' named
therein (Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998, File No. 333-47925, Exhibit
10.2).

*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.

*27.1	Financial Data Schedule.