Exhibit 4.7

                        DEPARTMENT OF TRADE AND INDUSTRY



                        ELECTRICITY DISTRIBUTION LICENCE:
                               STANDARD CONDITIONS


                               UTILITIES ACT 2000


                DETERMINATION OF STANDARD LICENCE CONDITIONS FOR

                        ELECTRICITY DISTRIBUTION LICENCES





The  Secretary of State,  in exercise of the powers  conferred on her by section
33(1) and (2) of the Utilities Act 2000 ("the Act") hereby  determines  that the
attached  conditions shall be standard conditions for the purpose of electricity
distribution licences.

The standard  conditions  shall be incorporated  into  distribution  licences as
standard  conditions  with effect from the  commencement of section 33(3) of the
Act.




.................................
Nigel Peace
An official of the Department of Trade and Industry authorised
to act on behalf of the Secretary of State

27 September 2001


                                      -1-

<PAGE>

                               TABLE OF CONTENTS
                               -----------------
                                                                           Page

PART II.  THE STANDARD CONDITIONS                                              6

SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS                            6

Condition 1. Definitions and Interpretation                                    6

Condition 2. Application of Section C (Distribution Services Obligations)     32

Condition 3. Payments by Licensee to the Authority                            35


SECTION B.  GENERAL                                                           39

Condition 4.  Basis of  Charges  for Use of System  and  Connection  to
                System: Requirements for Transparency                         39

Condition 4A. Non-Discrimination  in  the  Provision  of  Use  of  System
                and Connection to System                                      45

Condition 4B. Requirement to Offer Terms for Use of System and Connection     46

Condition 4C. Functions of the Authority                                      52

Condition 5. Distribution System Planning Standard and Quality of Service     54

Condition 6. Safety and Security of Supplies Enquiry Service                  55

Condition 7. Provision of Information about Theft or Abstraction of
               Electricity, Damage and Meter Interference                     57

Condition 8. Provisions Relating to the Connection of Metering Equipment      58

Condition 9. Distribution Code                                                60

Condition 9A. Compliance with other Distribution Codes                        63

                                      -2-
<PAGE>

Condition 10. Balancing and Settlement Code and NETA Implementation           64

Condition 11. Change Co-ordination for NETA                                   68

Condition 12. Settlement Agreement for Scotland                               69

Condition 12A. Compliance with Trading Code in Scotland                       70

Condition 13. Change Co-ordination for the Utilities Act 2000                 71

Condition 14. The Master Registration Agreement                               73

Condition 15. Compliance with the Grid Codes                                  74

Condition 16. Security Arrangements                                           75

Condition 17.  Provision of Services for Persons who are of  Pensionable
                 Age or Disabled or Chronically Sick                          76

Condition 18. Provision of Services for Persons who are Blind or Deaf         77

Condition 19. Code of Practice on Procedures with Respect to Site Access      78

Condition 20. Payments in Relation to Standards of Performance                79

Condition 21. Complaint Handling Procedure                                    80

Condition 22. Preparation,  Review of and Compliance with Customer
                Service Codes                                                 81

Condition 23. Record of and Report on Performance                             83

Condition 24. Provision of Information to the Authority                       84

Condition 25. Long Term Development Statement                                 87

Condition 26. Compliance with CUSC                                            91

Condition 27. Not Used                                                        94

Condition 28. Not Used                                                        94

Condition 29. Disposal of Relevant Assets                                     95

Condition 30. Not Used                                                        98

                                      -3-
<PAGE>

Condition 31. Not Used                                                        98


SECTION C.  DISTRIBUTION SERVICES OBLIGATIONS                                 99

Condition 32. Interpretation of Section C (Distribution Services
                Obligations)                                                  99

Condition 32A. Convenience Customers                                         102

Condition 33. Not used                                                       103

Condition 34. Compulsory Acquisition of Land etc.                            104

Condition 35. Other Powers etc.                                              105

Condition 36. Basis of Charges for Distributor Metering and Data Services:
                Requirements for Transparency                                106

Condition 36A. Non-Discrimination in the Provision of Distributor Metering
                 and Data Services                                           108

Condition 36B. Requirement to Offer Terms for the Provision of
                 Distributor Metering and Data Services                      109

Condition 36C. Functions of the Authority                                    112

Condition  37. The  Metering  Point  Administration   Service  and
                 the  Master Registration Agreement                          114

Condition 38. Establishment of a Data Transfer Service                       118

Condition 39. Restriction on Use of Certain Information and Independence
                of the Distribution Business                                 121

Condition 40. Appointment of Compliance Officer                              128

Condition 41. Prohibition of Cross-Subsidies                                 132


                                      -4-

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Condition 42. Regulatory Accounts                                            133

Condition 42A. Change of Financial Year                                      139

Condition 43. Restriction on Activity and Financial Ring Fencing             141

Condition 44. Availability of Resources                                      144

Condition 45. Undertaking from Ultimate Controller                           147

Condition 46. Credit Rating of Licensee                                      149

Condition 47. Indebtedness                                                   150

Condition 48. Last Resort Supply: Payment Claims                             154

Condition 49. Incentive Scheme and Associated Information                    158

                                      -5-
<PAGE>

                        DEPARTMENT OF TRADE AND INDUSTRY


PART II. THE STANDARD CONDITIONS
--------------------------------

SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS
---------------------------------------------------

CONDITION 1. DEFINITIONS AND INTERPRETATION
-------------------------------------------

1.   In these standard conditions, unless the context otherwise requires:

      the "Act"

               means the Electricity Act 1989.

      "affiliate"

               in relation  to the  licensee  means any  holding  company of the
               licensee,  any  subsidiary of the licensee or any subsidiary of a
               holding  company of the  licensee in each case within the meaning
               of section 736, 736A and 736B of the Companies Act 1985.

      "alternative accounting  rules"

               for the purposes of standard  condition 42 (Regulatory  Accounts)
               only, has the meaning given in that condition.

      "amendment"

               for the purposes of standard  condition 49 (Incentive  Scheme and
               Associated  Information)  only,  has the  meaning  given  in that
               condition.
                                      -6-
<PAGE>



      "Application Regulations"

               means the Electricity  (Applications  for Licences and Extensions
               and Restrictions of Licences) Regulations 2001.


      "appropriate time"

               for the purposes of standard  condition 39 (Restriction on Use of
               Certain   Information  and   Independence  of  the   Distribution
               Business) only, has the meaning given in that condition.

      "auditors"

               means the  licensee's  auditors for the time being holding office
               in accordance with the requirements of the Companies Act 1985.

      "authorised"

               in relation  to any  business or  activity  means  authorised  by
               licence  granted  or treated  as  granted  under  section 6 or by
               exemption granted under section 5 of the Act.

      "authorised electricity operator"

               means any person  (other than the  licensee) who is authorised to
               generate,  transmit,  distribute, or supply electricity and shall
               include  any  person  who  has  made  an  application  to  be  so
               authorised which  application has not been refused and any person
               transferring  electricity to or from or across an  interconnector
               or Scottish  interconnection  or who has made an application  for
               use of an  interconnector  or Scottish the "Auth  interconnection
               which has not been refused.

                                      -7-
<PAGE>

      the "Authority"

               means the Gas and Electricity Markets Authority established under
               section 1 of the Utilities Act 2000.

      "BSC"

               for the  purposes  of Section B only,  has the  meaning  given in
               standard  condition 10 (Balancing  and  Settlement  Code and NETA
               Implementation).


      "BSC Framework Agreement"

               for  the  purposes  of  standard   condition  10  (Balancing  and
               Settlement  Code and NETA  Implementation)  only, has the meaning
               given in that condition.


      "bilateral agreement"

               for the purposes of standard  condition 26 (Compliance with CUSC)
               only, has the meaning given in that condition.

      "charge restriction
       conditions"

               for the purposes of standard  condition 49 (Incentive  Scheme and
               Associated  Information)  only,  has the  meaning  given  in that
               condition.


     "charging review date"

               for the purposes of standard  condition 49 (Incentive  Scheme and
               Associated  Information)  only,  has the  meaning  given  in that
               condition.


      "competent authority"

               for the purposes of standard  condition 39 (Restriction on Use of
               Certain   Information  and   Independence  of  the   Distribution
               Business) only, has the meaning given in that condition.

                                      -8-
<PAGE>

      "confidential information"

               for the purposes of standard  condition 39 (Restriction on Use of
               Certain   Information  and   Independence  of  the   Distribution
               Business) only, has the meaning given in that condition.

      "consolidated distribution business"

               for the purposes of standard  condition 42 (Regulatory  Accounts)
               only, has the meaning given in that condition.

      "construction agreement"

               for the purposes of standard  condition 26 (Compliance with CUSC)
               only, has the meaning given in that condition.


      "Consumer Council "

               means the Gas and  Electricity  Consumer  Council as  established
               under section 2 of the Utilities Act 2000.

      "convenience customers"

               means  customers  supplied  or  requiring  to be  supplied at any
               premises which are (i) connected to the  licensee's  distribution
               system;  and (ii) situated within the distribution  services area
               of a distribution services provider other than the licensee.

      "core industry documents"

               for  the  purposes  of  standard  conditions  10  (Balancing  and
               Settlement   Code  and  NETA

                                      -9-
<PAGE>


               Implementation) and 11 (Change  Co-ordination for NETA) only, has
               the meaning given in standard  condition 10; and for the purposes
               of standard  condition 26  (Compliance  with CUSC) only,  has the
               meaning given in that condition.


      "cross-default obligation"

               for the purposes of standard  condition 47  (Indebtedness)  only,
               has the meaning given in that condition.


      "current cost assets"

               for the purposes of standard  condition 42 (Regulatory  Accounts)
               only, has the meaning given in that condition.


      "CUSC"

               for the purposes of standard  condition 26 (Compliance with CUSC)
               only, has the meaning given in that condition.


      "CUSC Framework agreement"

               for the purposes of standard  condition 26 (Compliance with CUSC)
               only, has the meaning given in that condition.


      "customer"

               means any  person  supplied  or  requiring  to be  supplied  with
               electricity  at any  premises  in Great  Britain,  but  shall not
               include any  authorised  electricity  operator in its capacity as
               such.

                                      -10-
<PAGE>


      "data aggregation"

               has the meaning given in standard  condition 36B  (Requirement to
               Offer Terms for the  Provision of  Distributor  Metering and Data
               Services).

      "data processing"

               has the meaning given in standard  condition 36B  (Requirement to
               Offer Terms for the  Provision of  Distributor  Metering and Data
               Services).


      "data retrieval"

               has the meaning given in standard  condition 36B  (Requirement to
               Offer Terms for the  Provision of  Distributor  Metering and Data
               Services).


      "data transfer service"

               for the  purposes  of Section C only,  has the  meaning  given in
               standard  condition 32 (Interpretation of Section C (Distribution
               Services Obligations)).


      "declared net capacity"

               means, in relation to generation plant, the highest generation of
               electricity  at  the  main  alternator  terminals  which  can  be
               maintained  for an  indefinite  period  of time  without  causing
               damage to the plant, less so much of that capacity as is consumed
               by the plant.

      "disposal"

               for the  purposes of standard  condition 29 (Disposal of Relevant
               Assets) only, has the meaning given in that condition.

                                      -11-
<PAGE>

      "distribution arrangements"

               has the  meaning  given  in  standard  condition  25  (Long  Term
               Development Statement).


      "distribution business"

               means  a  business   of  the   licensee,   or  in   relation   to
               sub-paragraphs  (a) and  (b)  below,  and  except  to the  extent
               otherwise  specified  by  the  authority  in a  direction  to the
               licensee, any business of any affiliate or related undertaking of
               the licensee comprising:

               (a)  the  distribution  of  electricity  through  the  licensee's
                    distribution  system,  including  any  business in providing
                    connections to such system;

               (b)  the  provision of the services  specified in  sub-paragraphs
                    (c)  and  (d)  of  paragraph  1 of  standard  condition  36B
                    (Requirement to Offer Terms for the Provision of Distributor
                    Metering and Data Services); and

               (c)  the  provision of the services  specified in  sub-paragraphs
                    (a)  and  (b)  of  paragraph  1 of  standard  condition  36B
                    (Requirement to Offer Terms for the Provision of Distributor
                    Metering and Data Services),

               or   any business ancillary thereto.

                                      -12-

<PAGE>

      "Distribution Code"

               means a  distribution  code required to be prepared by a licensed
               distributor  pursuant to standard condition 9 (Distribution Code)
               and  approved by the  Authority as revised from time to time with
               the approval of the Authority.

      "distribution licence"

               means a distribution  licence granted or treated as granted under
               section 6(1)(c) of the Act.

      "distribution services area"

               has the meaning given at sub-paragraph 5(b) of standard condition
               2 (Application of Section C (Distribution Services Obligations)).


      "Distribution Services Direction"

               has the meaning  given in standard  condition 2  (Application  of
               Section C (Distribution Services Obligations)).

      "distribution services provider"

               means a  licensed  distributor  in whose  licence  Section  C has
               effect.


      "distribution system"

               means the system consisting  (wholly or mainly) of electric lines
               owned or operated by an authorised  distributor  and used for the
               distribution of electricity from grid supply points or generation
               sets or other entry  points (and bulk supply  points in Scotland)
               to the points of delivery to customers or authorised  electricity
               operators or any transmission company

                                    -13-
<PAGE>

               within   Great   Britain  in  its   capacity  as  operator  of  a
               transmission  system and includes any remote  transmission assets
               (owned by a  transmission  licensee  within  England  and  Wales)
               operated by such distributor and any electrical plant, meters and
               metering  equipment  owned or  operated  by such  distributor  in
               connection with the  distribution  of electricity,  but shall not
               include any part of a transmission system.

      "distributor metering and data services"

               for the  purposes  of Section C only,  has the  meaning  given in
               paragraph 9 of standard condition 36B (Requirement to Offer Terms
               for the Provision of Distributor Metering and Data Services).

      "domestic customer"

               means a  customer  supplied  or  requiring  to be  supplied  with
               electricity at domestic  premises (but excluding such customer in
               so far as he is  supplied  or requires to be supplied at premises
               other than domestic premises).

      "domestic premises"

               means  premises  at which a supply is taken  wholly or mainly for
               domestic purposes.

      "Electricity Arbitration Association"

               for the purposes of standard  condition 39 (Restriction on Use of
               Certain   Information  and   Independence  of  the   Distribution
               Business) only, has

                                      -14-
<PAGE>

               the meaning given in that condition.

      "electricity supplier"

               means any person authorised to supply electricity.

      "estimated costs"

               for  the  purposes  of  standard  condition  3  (Payments  by the
               Licensee to the  Authority)  only,  has the meaning given in that
               condition.


      "existing connection"

               means, in relation to any premises, an existing connection to the
               licensee's   distribution   system   which   does   not   require
               modification,  or a new or modified  connection to such system in
               respect  of which all works  have  been  completed,  such that in
               either case electricity is able to be supplied to the premises in
               accordance with the terms of the relevant supply agreement.


      "external distribution activities"

               for the purposes of standard  condition 39 (Restriction on Use of
               Certain   Information  and   Independence  of  the   Distribution
               Business) only, has the meaning given in that condition.


      "financial year"

               subject to  standard  condition  42A (Change of  Financial  Year)
               (where  applicable),  means a period of 12 months  beginning on 1
               April of each  year  and  ending  on 31  March  of the  following
               calendar year.

                                    -15-
<PAGE>

      "Fuel Security Code"

               for the  purposes  of Section B only,  has the  meaning  given in
               standard condition 16 (Security Arrangements).


      "generation set"

               means any plant or apparatus for the  production  of  electricity
               and  shall  where  appropriate   include  a  generating   station
               comprising more than one generation set.

      "Grid Code"

               means the Grid Code which each  transmission  company is required
               to prepare  and have  approved by the  Authority  as from time to
               time revised with the approval of the Authority.


      "grid supply point"

               means  any  point  at  which  electricity  is  delivered  from  a
               transmission system to any distribution system.


      "the handbook"

               for the purposes of standard  condition 42 (Regulatory  Accounts)
               only, has the meaning given in that condition.


      "holding company"

               means a company within the meaning of sections 736, 736A and 736B
               of the Companies Act 1985.

                                      -16-
<PAGE>

      "indebtedness"

               for the purposes of standard  condition 47  (Indebtedness)  only,
               has the meaning given in that condition.

      "information"

               includes any documents,  accounts, estimates, returns, records or
               reports  and  data in  written,  verbal  or  electronic  form and
               information  in any form or  medium  whatsoever  (whether  or not
               prepared  specifically  at the  request of the  Authority  or the
               Consumer Council) of any description specified by the Authority.

      "interconnection"

               means:

               the  275 kV  and  400  kV  circuits  between  and  including  the
               associated  switchgear at Harker  sub-station  in Cumbria and the
               associated switchgear at Strathaven sub-station in Lanarkshire;

               the  275  kV  transmission  circuit  between  and  including  the
               associated  switchgear  at  Cockenzie  in  East  Lothian  and the
               associated switchgear at Stella in Tyne and Wear; and

               the  400  kV  transmission  circuit  between  and  including  the
               associated   switchgear  at  Torness  in  East  Lothian  and  the
               associated switchgear at Stella in Tyne and Wear

                                      -17-
<PAGE>

               all as  existing  at the date on which the  transmission  licence
               comes into  force as from time to time  maintained,  repaired  or
               renewed,  together with any alteration,  modification or addition
               (other than  maintenance,  repair or renewal)  which is primarily
               designed to effect a permanent increase in one or more particular
               interconnection  capacities  as they exist  immediately  prior to
               such  alteration,  modification  or addition  and as from time to
               time maintained, repaired or renewed; and

               the  132 kV  transmission  circuit  between  and  including  (and
               directly connecting) the associated switchgear at Chapelcross and
               the associated switchgear at Harker sub-station in Cumbria; and

               the  132 kV  transmission  circuit  between  and  including  (and
               connecting,   via  Junction  V)  the  associated   switchgear  at
               Chapelcross and the associated  switchgear at Harker  sub-station
               in Cumbria

               all as  existing  at the date on which the  transmission  licence
               comes into force and as from time to time maintained, repaired or
               renewed.

                                      -18-
<PAGE>

      "interconnector(s)"

               means the electric lines and electrical plant and meters owned or
               operated by a  transmission  company  solely for the  transfer of
               electricity  to or  from a  transmission  system  into  or out of
               England and Wales.

     "investment"

               for the  purposes  of Section C only,  has the  meaning  given in
               standard condition 43 (Restriction on Activity and Financial Ring
               Fencing).

     "investment grade issuer credit rating"

               for the  purposes  of Section C only,  has the  meaning  given in
               standard condition 46 (Credit Rating of Licensee).

     "licensed distributor"

               means any holder of a distribution licence.

      "licensee's Distribution Code"

               means  the  distribution  code  required  to be  prepared  by the
               licensee pursuant to standard condition 9 (Distribution Code) and
               approved by the  Authority  as revised from time to time with the
               approval of the Authority.

      "licensee's distribution system"

               means the distribution system owned or operated by the licensee.

      "Master Registration Agreement"

               means the agreement of that title referred to and comprising such
               matters as are set out in  standard  condition  37 (The  Metering
               Point   Administration

                                   -19-
<PAGE>

               Service and the Master Registration Agreement).

     "metering equipment"

               includes any electricity meter and any associated equipment which
               materially affects the operation of that meter.

     "Metering Point Administration Service"

               for the  purposes  of Section C only,  has the  meaning  given in
               standard  condition 32 (Interpretation of Section C (Distribution
               Services Obligations)).


     "metering point administration services"

               for the  purposes  of Section C only,  has the  meaning  given in
               standard  condition 32 (Interpretation of Section C (Distribution
               Services Obligations)).

     "Metering Point Administration Service operator"

               has the meaning given in standard  condition 38 (Establishment of
               a  Data  Transfer  Service).

     "non-domestic  customer"

               means a customer who is not a domestic customer.

      "other Distribution Codes"

               means  the   distribution   codes  which  the   holder(s)   of  a
               distribution  licence  (other than the  licensee) are required to
               draw up and have approved by the  Authority  pursuant to standard
               condition 9 (Distribution Code) of their distribution licence, as
               from time to time revised with the approval of the Authority.

                                      -20-
<PAGE>

      "owned"

               in relation to an electricity  meter or other  property  includes
               leased and cognate expressions shall be construed accordingly.

      "participating interest"

               has the meaning given by section 260 of the Companies Act 1985 as
               amended by section 22 of the Companies Act 1989.

      "permitted purpose"

               for the  purposes  of Section C only,  has the  meaning  given in
               standard  condition 32 (Interpretation of Section C (Distribution
               Services Obligations)).

      "Pooling and Settlement Agreement"

               means the  agreement of that title  approved by the  Secretary of
               State as from time to time amended.

      "regulatory instructions and guidance"

               for the purposes of standard  condition 49 (Incentive  Scheme and
               Associated  Information)  only,  has the  meaning  given  in that
               condition.

      "related undertaking"

               in relation to the licensee  means any  undertaking  in which the
               licensee has a participating interest.

      "relevant asset"

               means any asset for the time being forming part of the licensee's
               distribution  system,  any control  centre for use in conjunction
               therewith,  and any  legal or  beneficial  interest  in land upon
               which any of the

                                      -21-
<PAGE>

               foregoing is situate (which for the purposes of property  located
               in  Scotland  means  any  estate,  interest,  servitude  or other
               heritable  or  leasehold  right  in or over  land  including  any
               leasehold  interests  or other  rights  to  occupy or use and any
               contractual or personal  rights  relating to such property or the
               acquisition thereof).


      "relevant duties"

               for the  purposes  of standard  condition  40  (Appointment  of a
               Compliance   Officer)   only,  has  the  meaning  given  in  that
               condition.

      "relevant proportion"

               for  the  purposes  of  standard  condition  3  (Payments  by the
               Licensee to the  Authority)  only,  has the meaning given in that
               condition.

      "relevant year"

               for  the  purposes  of  standard  condition  3  (Payments  by the
               Licensee to the  Authority)  only,  has the meaning given in that
               condition;  and for the  purposes of standard  condition 48 (Last
               Resort  Supply:  Payment  Claims) only,  has the meaning given in
               that condition.

     "relinquishment of operational control"

               for the  purposes of standard  condition 29 (Disposal of Relevant
               Assets) only, has the meaning given in that condition.

     "remote transmission assets"

               means any electric lines,  electrical  plant or meters in England
               and  Wales   owned  by  a   transmission

                                      -22-
<PAGE>

               company ("the owner transmission company") which:

               (a)  are embedded in the  licensee's  distribution  system or the
                    distribution  system of any authorised  distributor  and are
                    not directly  connected by lines or plant owned by the owner
                    transmission  company  to a  sub-station  owned by the owner
                    transmission company; and

               (b)  are by agreement between the owner transmission  company and
                    the licensee or such authorised  distributor  operated under
                    the direction and control of the licensee or such authorised
                    distributor.

     "Scottish interconnection"

               means  such  part  of  the  interconnection  as  is  situated  in
               Scotland.

     "Secretary of State's costs"

               for the purposes of standard condition 3 (Payments by Licensee to
               the Authority) only, has the meaning given in that condition.

     "separate business"

               for the purposes of standard  condition 39 (Restriction on Use of
               Certain   Information  and   Independence  of  the   Distribution
               Business) only, has the meaning given in that condition.

     "the scheme"

               for the purposes of standard  condition 49 (Incentive  Scheme and

                                      -23-
<PAGE>

               Associated  Information)  only,  has the  meaning  given  in that
               condition.

     "Settlement Agreement for Scotland"

               has the  meaning  given  in  standard  condition  12  (Settlement
               Agreement for Scotland).


      "settlement purposes"

               means for the purposes of  settlement as set out in the Balancing
               and Settlement Code or the Settlement Agreement for Scotland.

      "specified information"

               for the purposes of standard  condition 49 (Incentive  Scheme and
               Associated  Information)  only,  has the  meaning  given  in that
               condition.

      "standby"

               means the periodic or intermittent supply or sale of electricity:

               (a)  to an  authorised  electricity  operator  to make  good  any
                    shortfall  in  the   availability  of  electricity  to  that
                    operator  for the purposes of its supply of  electricity  to
                    persons seeking such supply; or

               (b)  to a customer  of the  licensee  to make good any  shortfall
                    between the customer's  total supply  requirements  and that
                    met either by its own generation or by electricity  supplied
                    by an

                                      -24-
<PAGE>

                    electricity supplier other than the licensee.

     "statutory accounts"

               means the accounts that the licensee prepares under the Companies
               Act 1985 (as amended by the Companies Act 1989).

     "subsidiary"

               means a subsidiary  within the meanings of sections 736, 736A and
               736B of the Companies Act 1985.

      "supply licence"`

               means a supply  licence  granted  or  treated  as  granted  under
               section 6(1)(d) of the Act.


     "top-up"

               means  the  supply  or sale of  electricity  on a  continuing  or
               regular basis:

               (a)  to an  authorised  electricity  operator  to make  good  any
                    shortfall  in  the   availability  of  electricity  to  that
                    operator  for the purposes of its supply of  electricity  to
                    persons seeking such supply; or

               (b)  to a customer  of the  licensee  to make good any  shortfall
                    between the customer's  total supply  requirements  and that
                    met either by its own generation or by electricity  supplied
                    by an electricity supplier other than the licensee.

                                      -25-
<PAGE>

     "trading code"

                    for the purposes of Section B only, has the meaning given in
                    standard  condition  12A  (Compliance  with  Trading Code in
                    Scotland).

     "transmission company"

                    means  the  holder  for the  time  being  of a  transmission
                    licence.


     "transmission licence"

                    means a transmission  licence  granted or treated as granted
                    under section 6(1)(b) of the Act.


      "transmission system"

                    means a system consisting (wholly or mainly) of high voltage
                    electric lines owned or operated by a  transmission  company
                    and  used  for the  transmission  of  electricity  from  one
                    generating station to a sub-station or to another generating
                    station,   or  between   sub-stations  or  to  or  from  any
                    interconnector or Scottish  interconnection  in question and
                    in relation to Scotland  including  any  interconnector  and
                    Scottish interconnection,  and includes any electrical plant
                    and meters owned or operated by the transmission  company in
                    connection  with the  transmission  of electricity but shall
                    not include any remote transmission assets.


      "ultimate controller"

                    means:

                    (a)  a holding company of the licensee which is

                                      -26-
<PAGE>

                    not itself a subsidiary of another company; and

                    (b)  any  person  who  (whether  alone or with a  person  or
                         persons  connected  with  him)  is  in  a  position  to
                         control, or to exercise significant influence over, the
                         policy of the  licensee or any  holding  company of the
                         licensee by virtue of:

                         (i)  rights under contractual  arrangements to which he
                              is a party or of which he is a beneficiary; or


                         (ii) rights of ownership  (including  rights  attached
                              to or deriving from securities or rights under a
                              trust) which are held by him or of which  he is a
                              beneficiary;

                         but excluding  any director or employee of a corporate
                         body in his capacity as such; and

                    (c)  for the  purposes  of  sub-paragraph  (b),  a person is
                         connected  with another person if they are party to any
                         arrangement  regarding  the exercise of any such rights
                         as are described in that paragraph.

     "undertaking"

                    has the meaning  given by section 259 of the  Companies  Act
                    1985.

                                      -27-
<PAGE>

     "unmetered supply"

                    means a supply of  electricity to premises which is not, for
                    the  purpose of  calculating  the  charges  for  electricity
                    supplied  to the  customer  at such  premises,  measured  by
                    metering equipment.

     "use of system"

                    means  use of the  licensee's  distribution  system  for the
                    distribution of electricity by the licensee for any person.


     "use of system charges"

                    means  charges made or levied or to be made or levied by the
                    licensee  for  the  provision  of  services  as  part of the
                    distribution  business to any person as more fully described
                    in standard  condition 4 (Basis of Charges for Use of System
                    and Connection to System: Requirements for Transparency) but
                    shall not include connection charges.


2.   Any words or  expressions  used in the  Utilities Act 2000 or Part I of the
     Act shall,  unless the contrary intention  appears,  have the same meanings
     when used in the standard conditions.

3.   Except where the context  otherwise  requires,  any reference to a numbered
     standard condition (with or without a letter) or Schedule is a reference to
     the standard  condition (with or without a letter) or Schedule bearing that
     number in this licence,  and any reference to a numbered paragraph (with or
     without a letter) is a reference  to the  paragraph  bearing that number in
     the  standard  condition  or Schedule in which the

                                      -28-

<PAGE>

     reference occurs, and reference to a Section is a reference to that Section
     in these standard conditions.

4.   These standard conditions shall have effect as if, in relation to a licence
     holder who is a natural person, for the words "it", "its" and "which" there
     were  substituted  the words "he",  "him",  "his",  "who" and  "whom",  and
     cognate expressions shall be construed accordingly.

5.   Except  where the context  otherwise  requires,  a reference  in a standard
     condition to a paragraph  is a reference  to a paragraph  of that  standard
     condition and a reference in a paragraph to a sub-paragraph  is a reference
     to a sub-paragraph of that paragraph.

6.   Any reference in these standard conditions to -

          (a)  a provision thereof;

          (b)  a provision  of the standard  conditions  of  electricity  supply
               licences, or

          (c)  a provision of the standard conditions of electricity  generation
               licences,

          (d)  a  provision   of  the   standard   conditions   of   electricity
               transmission licences,

          shall,  if these  standard  conditions  or the standard  conditions in
          question  come to be  modified,  be  construed,  so far as the context
          permits,  as a  reference  to the  corresponding  provision  of  these
          standard  conditions or the other  standard  conditions in question as
          modified.

7.   In  construing  these  standard  conditions,  the  heading  or title of any
     standard condition or paragraph shall be disregarded.

8.   Any  reference in a standard  condition  to the purposes of that  condition
     generally  is a reference  to the  purposes of that  standard  condition as
     incorporated  in this  licence and as  incorporated  in each other  licence
     under section 6(1)(c) of the Act (whenever granted) which incorporates it.

                                      -29-
<PAGE>

9.   Where any  obligation  of the  licence is  required  to be  performed  by a
     specified  date or time,  or  within a  specified  period,  and  where  the
     licensee has failed so to perform,  such  obligation  shall  continue to be
     binding and  enforceable  after the  specified  date or time,  or after the
     expiry of the specified period (but without prejudice to all the rights and
     remedies available against the licensee by reason of the licensee's failure
     to perform by that date or time, or within that period).

10.  Anything  required  by or under  these  standard  conditions  to be done in
     writing may be done by facsimile transmission of the instrument in question
     or by other electronic means and, in such case -

     (a)  the original  instrument  or other  confirmation  in writing  shall be
          delivered  or  sent  by  pre-paid  first-class  post  as  soon  as  is
          reasonably practicable, and

     (b)  where the means of transmission had been agreed in advance between the
          parties  concerned,  in the absence of and pending such  confirmation,
          there shall be a rebuttable  presumption  that what was received  duly
          represented the original instrument.

11.  The definitions  referred to in this condition may include some definitions
     which  are not  used or not used  exclusively  in  Sections  A and B (which
     Sections are incorporated in all distribution licences). Where:

     (a)  any definition is not used in Sections A and B, that definition shall,
          for the purposes of this licence, be treated:

          (i)  as part of the standard condition or conditions (and the Section)
               in which it is used;

                                      -30-
<PAGE>


          (ii) as not  having  effect  in the  licence  until  such  time as the
               standard  condition  in which the  definition  is used has effect
               within  the  licence  in  pursuance   of  standard   condition  2
               (Application of Section C (Distribution Services Obligations);

     (b)  any  definition  which is used in Sections A and B is also used in one
          or more other Sections:

          (i)  that  definition  shall only be modifiable in accordance with the
               modification   process   applicable   to  each  of  the  standard
               conditions in which it is used; and

          (ii) if any such  standard  condition  is  modified so as to omit that
               definition,  then  the  reference  to  that  definition  in  this
               condition shall automatically cease to have effect.

                                      -31-
<PAGE>

CONDITION 2.  APPLICATION OF SECTION C (DISTRIBUTION SERVICES OBLIGATIONS)
--------------------------------------------------------------------------

1.   Where the Secretary of State provides, by a scheme made under Schedule 7 to
     the Utilities Act 2000,  for Section C (in whole or in part) to have effect
     within this licence:

     (a)  paragraphs 4 to 8 shall cease to be suspended and shall have effect in
          the licensee's licence; and

     (b)  the  licensee  shall be obliged  to comply  with the  requirements  of
          Section C (in whole or, as the case may be, in part) of this licence,

     from the date the said scheme  takes  effect.  Such  provision  made by the
     Secretary of State in the said scheme shall be treated, for the purposes of
     paragraphs  5, 6,  and 7 of this  condition,  as if it were a  Distribution
     Services Direction made by the Authority.

2.         Until -

          (a)  the Secretary of State provides,  by a scheme made under Schedule
               7 to the Utilities Act 2000,  for Section C (in whole or in part)
               to have effect within this licence; or

          (b)  the Authority has issued to the licensee a direction  pursuant to
               paragraph 4,

          the standard conditions in Section C (in whole or, as the case may be,
          in part) shall not have effect within this  licence;  and the licensee
          shall not be obliged to comply with any of the requirements of Section
          C (in whole or, as the case may be, in part) of this licence.

                                      -32-
<PAGE>

3.   Except where paragraph 1 applies to the licensee, paragraphs 4 to 8 of this
     standard  condition  shall be  suspended  and shall  have no effect in this
     licence until such time as the Authority, with the consent of the licensee,
     issues to the licensee a notice  ending the  suspension  and  providing for
     those  paragraphs  to have effect in this licence with effect from the date
     specified in the notice.

4.   The Authority  may, with the consent of the licensee,  issue a direction (a
     "Distribution  Services Direction").  Where the Authority has issued to the
     licensee a  Distribution  Services  Direction  the standard  conditions  in
     Section C (in whole or,  as the case may be,  in part)  shall  have  effect
     within this  licence  from the date  specified  in the  direction;  and the
     licensee shall be obliged to comply with the  requirements of Section C (in
     whole or, as the case may be, in part) to the  extent  and  subject  to the
     terms specified in such direction.

5.   A Distribution Services Direction:

     (a)  may specify that the standard  conditions in Section C (in whole or in
          part) are to have effect in this licence;

     (b)  shall specify or describe an area (the  "distribution  services area")
          within which the  licensee  shall be obliged to comply with any of the
          requirements  of Section C (in whole or, as the case may be, in part);
          and

     (c)  shall specify  whether or not the  requirements of Section C (in whole
          or, as the case may be, in part) apply to convenience customers.

6.   The Authority may, with the consent of the licensee:

     (a)  vary the terms (as set out in the Distribution  Services  Direction or
          elsewhere) under which Section C (or parts thereof) has effect in this
          licence; or

                                      -33-
<PAGE>

     (b)  provide  for  Section C (or parts  thereof) to cease to have effect in
          this licence.

7.   The  variation or  cessation  provided for in paragraph 6 shall take effect
     from the date  specified in the variation or cessation  notice given to the
     licensee by the Authority.

8.   With  effect  from  the  date of  cessation  referred  to in  paragraph  7,
     paragraphs 4 to 7 of this  condition  shall be suspended and shall cease to
     have effect in this licence,  but the Authority may at any time thereafter,
     with the consent of the licensee,  give to the licensee a notice ending the
     suspension and providing for those  paragraphs to have effect again in this
     licence with effect from the date specified in the notice.

                                      -34-
<PAGE>

CONDITION 3. PAYMENTS BY LICENSEE TO THE AUTHORITY
--------------------------------------------------

1.   The licensee shall, at the times stated,  pay to the authority such amounts
     as are determined by or under this condition.

2.   In respect of each  relevant  year at the  beginning  of which the licensee
     holds this licence,  the licensee  shall pay to the Authority the aggregate
     of:

     (a)  an amount which is the relevant  proportion of the estimated  costs of
          the Authority during the year in question;

     (b)  an amount which is the relevant  proportion of the estimated  costs of
          the Consumer Council during the year in question;

     (c)  an amount  which is the relevant  proportion  of the  estimated  costs
          incurred in the previous  relevant year by the Competition  Commission
          in connection  with  references made to it with respect to the licence
          or any other electricity distribution licence;

     (d)  an amount which is the relevant proportion of the Secretary of State's
          costs during the year in question;

     (e)  an amount which is the relevant  proportion of the difference (being a
          positive or negative amount), if any, between:

          (aa) any  costs  estimated  by  the  Authority  or,  in  the  case  of
               sub-paragraph  2(d),  the  Secretary  of  State  in the  previous
               relevant year under sub-paragraphs 2(a), (b), (c), and (d); and

                                      -35-
<PAGE>

          (bb) the actual  costs of the  Authority,  the Consumer  Council,  the
               Competition  Commission (in connection  with that  reference) and
               the Secretary of State for the previous  relevant year or, in the
               case of the Competition  Commission,  for the relevant year prior
               to the previous relevant year; and

     (f)  in respect of the  relevant  year ending on 31 March  2002,  an amount
          which is the relevant  proportion of the actual  unrecovered  costs of
          the Director General of Electricity Supply and the Relevant Consumers'
          Committees.

3.   The amounts  determined in accordance with paragraph 2 shall be paid by the
     licensee to the Authority in two instalments, with:

     (a)  the first  instalment  being due for  payment by 30 June in each year;
          and

     (b)  the second instalment being due for payment by 31 January in each year

     provided  that,  in each case, if the Authority has not given notice of the
     amount of the  instalment  due at least 30 days  before  the  payment  date
     stated above, the licensee shall pay the amount due within 30 days from the
     actual giving of notice by the Authority to the licensee  (whenever  notice
     is given).

4.   Where the licensee  fails to pay the amount  determined in accordance  with
     paragraph 2 within 30 days of the due date set out in paragraph 3, it shall
     pay  simple  interest  on the amount at the rate which is from time to time
     equivalent  to the base  rate of  NatWest  Bank plc or, if there is no such
     base rate,  such base rate as the  Authority may designate for the purposes
     hereof.

5.   In relation to any data or  information  specified  by the  Authority  in a
     direction given for the purposes of this condition generally,  the licensee
     shall submit a certificate  to the  Authority,  approved by a resolution of
     the board of  directors  of the  licensee  and

                                      -36-
<PAGE>


     signed by a director  of the  licensee  pursuant to that  resolution.  Such
     certificate  shall be  submitted  to the  Authority  each  year on the date
     specified by the Authority.  Each certificate shall be in the following
     form -

     "In  the  opinion  of  the  directors  of  [the  licensee],  all  data  and
     information  provided to the Authority on [date  provided to the Authority]
     for the  purposes of enabling the  Authority  to calculate  the licence fee
     payable by [the licensee] pursuant to standard condition 3 (Payments by the
     Licensee to the Authority) is accurate."

6.   In this condition:

     "estimated costs"

                    means costs estimated by the Authority as likely to be:

                    (a)  the costs of the  Authority  and the consumer  Council;
                         and

                    (b)  the costs incurred by the Competition Commission,  such
                         estimate  having regard to the views of the Competition
                         Commission.

     "relevant proportion"

                    means  the  proportion  of  the  costs  attributable  to the
                    licensee in  accordance  with  principles  determined by the
                    Authority for the purposes of this  condition  generally and
                    notified to the licensee.

         "relevant year"

                    means a year  beginning on 1 April of each calendar year and
                    ending on 31 March of the following calendar year.

         "Secretary of State's costs"

                    means costs estimated by the Secretary of State as likely to
                    be his costs in relation to:

                                      -37-
<PAGE>

                    (a)  the  establishment  of the  Authority  and the Consumer
                         Council; and

                    (b)  Schedule 7 to the Utilities Act 2000.

5.   In sub-paragraph 2(f) of this condition:

     "Director General of Electricity Supply"

                    means the office  previously  established under section 1 of
                    the Act;

     "Relevant Consumers' Committees"

                    means the committees  previously  appointed  by the Director
                         General of  Electricity  Supply under section 2 of that
                         Act

                                      -38-
<PAGE>

SECTION B. GENERAL
------------------

CONDITION 4. BASIS OF CHARGES FOR USE OF SYSTEM AND CONNECTION TO SYSTEM:
-------------------------------------------------------------------------
REQUIREMENTS FOR TRANSPARENCY
-----------------------------


1.   The licensee  shall as soon as  practicable  prepare  statements  in a form
     approved by the Authority  setting out the basis upon which charges will be
     made for the provision of:

     (a)  use of system; and

     (b)  connections to the licensee's distribution system,

     in each  case in such form and with such  detail as shall be  necessary  to
     enable any person to make a  reasonable  estimate of the charges  which the
     person would become liable to pay for the provision of such  services,  and
     (without  prejudice to the foregoing)  including the information set out in
     paragraphs 2 and 3 respectively.


2.   The statement referred to at sub-paragraph 1(a) shall include:

     (a)  a schedule of charges for the distribution of electricity under use of
          system;

     (b)  a schedule of adjustment factors to be made in respect of distribution
          losses,  in the form of  additional  supplies  required to cover those
          distribution losses;

     (c)  the methods by which and the  principles on which the charges (if any)
          for   availability   of   distribution   capacity  on  the  licensee's
          distribution system will be made;

     (d)  a schedule  of charges in  respect of  accounting  and  administrative
          services; and

     (e)  a schedule of the charges (if any) which may be made for the provision
          and installation of any electrical plant at entry or exit points,  the
          provision and  installation of which are ancillary to the grant of use
          of system, and for the maintenance of such electrical plant.

                                      -39-
<PAGE>

3.   The statement referred to at sub-paragraph 1(b) shall include:

     (a)  a schedule  listing those items  (including  the carrying out of works
          and the provision  and  installation  of electric  lines or electrical
          plant) of  significant  cost liable to be required  for the purpose of
          connection  (at entry or exit points) to the  licensee's  distribution
          system  for  which  connection  charges  may be  made  or  levied  and
          including (where  practicable)  indicative  charges for each such item
          and (in other  cases) an  explanation  of the methods by which and the
          principles on which such charges will be calculated;

     (b)  the methods by which and the  principles  on which any charges will be
          made in  respect  of  extension  or  reinforcement  of the  licensee's
          distribution system rendered (in the licensee's  discretion) necessary
          or appropriate  by virtue of providing  connection to or use of system
          to any person seeking connection;

     (c)  the methods by which and the  principles on which  connection  charges
          will be made in  circumstances  where the electric lines or electrical
          plant to be installed are (at the  licensee's  discretion)  of greater
          size or capacity  than that  required  for use of system by the person
          seeking connection;

     (d)  the  methods  by  which  and  the  principles  on  which  any  charges
          (including  any  capitalised  charge)  will be made  for  maintenance,
          repair and replacement  required of electric lines or electrical plant
          provided  and  installed  for making a  connection  to the  licensee's
          distribution system;

     (e)  (save to the extent that such  matters are  included in any  agreement
          offered in accordance  with standard  condition  36B  (Requirement  to
          Offer  Terms  for the  Provision  of  Distributor  Metering  and  Data
          Services)  the  methods by which and  principles  on which any charges
          will be made for the  provision  of special  metering or  telemetry or
          data processing equipment by the licensee for the purposes of enabling
          any person who is party to the Pooling and Settlement Agreement and/or
          the Balancing and  Settlement  Code to comply with its  obligations in
          respect of metering thereunder, or for the performance by the licensee
          of any service in relation to such metering thereto; and

                                      -40-

<PAGE>

     (f)  the methods by which and  principles on which any charges will be made
          for  disconnection  from the  licensee's  distribution  system and the
          removal   of   electrical   plant   and   electric   lines   following
          disconnection.

4.   Connection  charges for those items referred to in paragraph 3 shall be set
     at a level which will enable the licensee to recover:

     (a)  the  appropriate  proportion  to be  determined  having  regard to the
          factors set out in paragraph 4 of STANDARD  condition 4B  (Requirement
          to Offer Terms for Use of System and Connection) of the costs directly
          or  indirectly  incurred in carrying out any works,  the  extension or
          reinforcement of the licensee's  distribution  system or the provision
          and installation, maintenance, repair, and replacement or (as the case
          may be)  removal  following  disconnection  of any  electric  lines or
          electrical plant; and

     (b)  a reasonable rate of return on the capital represented by such costs.

5.   If so requested and subject to paragraphs 6 and 10, the licensee  shall, as
     soon as practicable and in any event within 28 days (or where the Authority
     so approves  such longer  period as the  licensee  may  reasonably  require
     having regard to the nature and  complexity of the request)  after the date
     referred to in paragraph 12 give or send to any person  making such request
     a statement  showing  present and future circuit  capacity,  forecast power
     flows  and  loading  on the part or parts  of the  licensee's  distribution
     system specified in the request and fault levels for each distribution node
     covered by the request and containing:

     (a)  such further  information  as shall be reasonably  necessary to enable
          such person to identify and evaluate the opportunities  available when
          connecting  to and
                                      -41-
<PAGE>


          making use of the part or parts of the licensee's  distribution system
          specified in the request; and

     (b)  if so requested,  a commentary prepared by the licensee indicating the
          licensee's  views  as to the  suitability  of the part or parts of the
          licensee's  distribution  system  specified  in the  request  for  new
          connections and the distribution of further quantities of electricity.

6.   The licensee shall include in every statement given or sent under paragraph
     5 the information required by that paragraph except that the licensee may:

     (a)  with the prior consent of the Authority  omit from any such  statement
          any  details as to circuit  capacity,  power  flows,  loading or other
          information,  disclosure of which would, in the view of the Authority,
          seriously and  prejudicially  affect the  commercial  interests of the
          licensee or any third party; and

     (b)  omit  information  the disclosure of which would place the licensee in
          breach  of  standard  condition  39  (Restriction  on Use  of  Certain
          Information  and  Independence  of  the  Distribution   Business)  (if
          applicable).

7.   The licensee:

     (a)  shall, at least once in every year,  review the information set out in
          the statements  prepared in accordance  with paragraph 1 in order that
          the  information  set  out in such  statements  shall  continue  to be
          accurate in all material respects; and

     (b)  may, with the approval of the  Authority,  from time to time alter the
          form of such statements.

8.   The licensee  shall send a copy of the  statements  prepared in  accordance
     with paragraph 1 and of any revision of such statements, to the Authority.

                                      -42-
<PAGE>

9.   The  licensee  shall  give  or send a copy of the  statements  prepared  in
     accordance with paragraph 1, or (as the case may be) of the latest revision
     of such statements,  to any person who requests a copy of such statement or
     statements.

10.  The licensee may make a charge for any statement  given or sent pursuant to
     paragraph  9 of an amount  which shall not exceed the amount  specified  in
     directions issued by the Authority for the purposes of this condition based
     on the Authority's estimate of the licensee's reasonable costs of providing
     such a statement.

11.  The  licensee  may within 10 days after  receipt of the request  provide an
     estimate  of its  reasonable  costs  in the  preparation  of any  statement
     referred to in paragraph 5, and its  obligation  to provide such  statement
     shall be conditional on the person  requesting  such statement  agreeing to
     pay the amount  estimated or such other amount as the  Authority  may, upon
     application  of the  licensee  or the  person  requesting  such  statement,
     direct.

12.  For the purposes of  paragraph  5, the date  referred to shall be the later
     of:

     (a)  the date of receipt of the request referred to in paragraph 5; or

     (b)  the date on which the  licensee  receives  agreement  from the  person
          making the request to pay the amount estimated or such other amount as
          is determined  by the  Authority (as the case may be) under  paragraph
          11.

13.  The  licensee  shall,  not less than 5 months prior to the date on which it
     proposes to amend its use of system charges in respect of any agreement for
     use of system,  send to the Authority a notice  setting out the  licensee's
     proposals in relation to such amendment together with an explanation of the
     proposed amendment  (including a statement of any assumptions on which such
     proposals are based),  and the licensee shall send a copy of

                                      -43-
<PAGE>

     such  notice to any person who has  entered  into an  agreement  for use of
     system under standard  condition 4B  (Requirement to Offer Terms for Use of
     System and Connection).

14.  Except with the prior  consent of the  Authority,  the  licensee  shall not
     amend its use of system  charges  in respect  of any  agreement  for use of
     system save to the extent that it has given prior  notice of the  amendment
     in accordance  with paragraph 13 and such amendment  reflects the proposals
     made in the notice  (subject  only to revisions  consequent  upon  material
     changes  in the  matters  which  were  expressed,  in the  statement  which
     accompanied  the notice,  to be  assumptions  on which the  proposals  were
     based).

                                      -44-
<PAGE>

CONDITION 4A. NON-DISCRIMINATION IN THE PROVISION OF USE OF SYSTEM AND
----------------------------------------------------------------------
CONNECTION TO SYSTEM
--------------------

1.   In the  carrying  out  of  works  for  the  purpose  of  connection  to the
     licensee's  distribution system, or in providing for the modification to or
     retention  of an  existing  connection  to  its  distribution  system,  the
     licensee shall not discriminate  between any persons or class or classes of
     persons.

2.   In the  provision  of use of system  the  licensee  shall not  discriminate
     between any persons or class or classes of persons.

3.   Without  prejudice to paragraphs 1 and 2, and subject to the  provisions of
     standard  condition 4 (Basis of Charges for Use of System and Connection to
     System),  the licensee  shall not make charges for the  provision of use of
     system to any person or class or classes of persons  which  differ from the
     charges for such  provision  to any other person or to any class or classes
     of  persons,  except  in so  far as  such  differences  reasonably  reflect
     differences in the costs associated with such provision.

4.   The  licensee  shall not in setting its charges  for  connection  or use of
     system  restrict,   distort  or  prevent  competition  in  the  generation,
     transmission, distribution or supply of electricity.

                                      -45-
<PAGE>

CONDITION 4B. REQUIREMENT TO OFFER TERMS FOR USE OF SYSTEM AND CONNECTION
-------------------------------------------------------------------------

1.   On application  made by any person the licensee shall (subject to paragraph
     4) offer to enter into an agreement for use of system:

     (a)  to accept into the licensee's  distribution system at such entry point
          or  points  and  in  such  quantities  as  may  be  specified  in  the
          application,  electricity  to be  provided  by or on  behalf  of  such
          person; and/or

     (b)  to distribute  such  quantities of  electricity  as are referred to in
          sub-paragraph (a) (less any distribution losses) at such exit point or
          points on the  licensee's  distribution  system and to such  person or
          persons as the applicant for use of system may specify.

2.   On  application  made by any person for a  connection,  the licensee  shall
     offer  terms for making the  connection  pursuant to section 16 and section
     16A of the Act. Such offer of a connection shall comply with the provisions
     of this condition.

3.   Where the licensee:


     (i)  makes an  offer  to enter  into a  connection  agreement  pursuant  to
          section 22 of the Act; or


     (ii) replies to a request for a connection  made to it under section 16A of
          the Act

     the licensee shall, in making the offer or replying to the applicant,  make
     detailed provision regarding:

                                      -46-
<PAGE>

     (a)  the  carrying  out of the  works  (if any)  required  to  connect  the
          licensee's   distribution   system  to  any  other   system   for  the
          transmission or distribution of electricity,  and for the obtaining of
          any consents necessary for such purpose;

     (b)  the  carrying  out of the  works  (if  any)  in  connection  with  the
          extension  or  reinforcement  of the  licensee's  distribution  system
          rendered (in the  licensee's  discretion)  appropriate or necessary by
          reason  of  making  the  connection  or  modification  to an  existing
          connection  and for the  obtaining of any consents  necessary for such
          purpose;

     (c)  (save to the extent that such  matters are  included in any  agreement
          offered in accordance  with standard  condition  36B  (Requirement  to
          Offer  Terms  for the  Provision  of  Distributor  Metering  and  Data
          Services)) the installation of appropriate meters (if any) required to
          enable the licensee to measure  electricity  being  accepted  into the
          licensee's  distribution system at the specified entry point or points
          or leaving such system at the specified exit point or points;

     (d)  the installation of such switchgear or other apparatus (if any) as may
          be required for the  interruption  of supply where the person  seeking
          connection or modification of an existing  connection does not require
          the provision of top-up or standby; and

     (e)  (save to the extent that such  matters are  included in any  agreement
          offered in accordance  with standard  condition  36B  (Requirement  to
          Offer  Terms  for the  Provision  of  Distributor  Metering  and  Data
          Services)  the  installation  of special  metering,  telemetry or data
          processing  equipment  (if any) for the purpose of enabling any person
          who is  party to the  Pooling  and  Settlement  Agreement  and/or  the
          Balancing  and  Settlement  Code  whilst  such  agreement  is still in
          existence to comply with its obligations in respect to metering or the

                                      -47-
<PAGE>

          performance  by the  licensee  of any  service  in  relation  to  such
          metering thereunder.

4.   In making an offer  pursuant to this condition to enter into any connection
     agreement or in replying to a request for  connection  under section 16A of
     the Act, the licensee shall set out:

     (a)  the date by which in the case of an agreement  under  paragraph 2, any
          works required to permit access to the licensee's  distribution system
          (including  for this  purpose  any works to  reinforce  or extend  the
          licensee's distribution system) shall be completed,  time being of the
          essence unless, in the case of connection  agreements only,  otherwise
          agreed between the parties;

     (b)  the  charges  to be paid in  respect of the  services  required,  such
          charges (unless manifestly inappropriate):

          (i)  to be  presented  in  such  a  way  as to  be  referable  to  the
               statements  prepared in accordance  with  paragraph 1 of standard
               condition 4 (Basis of Charges for Use of System and Connection to
               System:  Requirements for  Transparency) or any revision thereof;
               and

          (ii) to be  set  in  conformity  with  the  requirements  of  standard
               condition 4 (Basis of Charges for Use of System and Connection to
               System: Requirements for Transparency); and

          (iii)  in the case of a connection agreement under paragraph 2,
               additionally  to be set in conformity  with the  requirements  of
               paragraph 5.

     (c)  such other detailed terms in respect of each of the services  required
          as are or may be appropriate for the purpose of the agreement.

                                      -48-
<PAGE>


5.   For the  purpose of  determining  an  appropriate  proportion  of the costs
     directly or  indirectly  incurred in carrying  out works under an agreement
     for providing a connection or  modification  to or retention of an existing
     connection, the licensee shall have regard to:

     (a)  the  benefit  (if any) to be  obtained  or likely in the  future to be
          obtained  by the  licensee  or any  other  person  as a result  of the
          carrying out of such works whether by reason of the  reinforcement  or
          extension of the  licensee's  distribution  system or the provision of
          additional entry or exit points on such system or otherwise;

     (b)  the  ability  or likely  future  ability of the  licensee  to recoup a
          proportion of such costs from third parties; and

     (c)  the principles that:

          (i)  no charge will normally be made for reinforcement of the existing
               distribution system if the new or increased load requirement does
               not exceed 25 per cent of the existing  effective capacity at the
               relevant points on the system; and

          (ii) charges will not generally take into account system reinforcement
               carried out at more than one  voltage  level above the voltage of
               connection.

6.   The licensee shall offer terms for agreements in accordance with paragraphs
     2 and 4 as soon as practicable and (save where the Authority  consents to a
     longer period) in any event not more than the period specified in paragraph
     7 after  receipt  by the  licensee  (or its  agent)  from any  person of an
     application  containing all such

                                      -49-

<PAGE>
     information  as the  licensee  may  reasonably  require  for the purpose of
     formulating the terms of the offer.

7. For the purposes of paragraph 6, the period specified shall be:

     (a)  in the case of persons seeking the provision of use of system only, 28
          days;

     (b)  in the case of persons  seeking  connection  or a  modification  to an
          existing connection, 3 months; and

     (c)  in the case of  persons  seeking  use of  system in  conjunction  with
          connection or a modification to an existing connection, 3 months.

8.   The licensee  shall not be obliged  pursuant to this  condition to offer to
     enter or to enter into any agreement:

     (a)  under  paragraphs  2 and 4 if to do so would be likely to involve  the
          licensee being:

          (i)  in breach of its duties under section 9 of the Act;

          (ii) in breach of any regulations  made under section 29 of the Act or
               of any other enactment relating to safety or standards applicable
               in respect to the distribution business;


          (iii)in breach of the Grid Codes or the licensee's  Distribution Code;
               or

          (iv) in breach of the conditions; or

                                      -50-
<PAGE>


          (b)  under paragraph 2 or 4, if the person making the application does
               not undertake to be bound, in so far as applicable,  by the terms
               of the licensee's  Distribution  Code or the applicable Grid Code
               from time to time in force; or

          (c)  under  paragraphs 2 and 4, if to do so would be likely to involve
               the  licensee  doing  something  which,  without  the  consent of
               another  person,  would require the exercise of a power conferred
               by any  provision  of  Schedules  3 or 4 to the  Act;  where  the
               licence  does not  provide for that  provision  to have effect in
               relation  to it; and any  necessary  consent has not, at the time
               the request is made, been given.

9.   The licensee shall within 28 days  following  receipt of a request from any
     person,  give or send to such person such  information in the possession of
     the licensee as may be  reasonably  required by such person for the purpose
     of completing an  application  under the  Application  Regulations  or such
     provisions  to like effect  contained  in any further  regulations  then in
     force made pursuant to sections 6(3), 60 and 64(1) of the Act.

                                      -51-

<PAGE>

CONDITION 4C. FUNCTIONS OF THE AUTHORITY
----------------------------------------

1.   If, after a period which appears to the Authority to be reasonable  for the
     purpose, the licensee has failed to enter into an agreement with any person
     entitled or claiming to be  entitled  thereto  pursuant to a request  under
     standard  condition  4B  (Requirement  to Offer Terms for Use of System and
     Connection)  for  use  of  system,  or an  agreement  for  connection,  the
     Authority may, on the  application  of such person or the licensee,  settle
     any terms of the agreement in dispute  between the licensee and that person
     in such manner as appears to the Authority to be  reasonable  having (in so
     far as relevant) regard in particular to the following considerations:

     (a)  that  such a  person  should  pay  to the  licensee,  in the  case  of
          provision of use of system,  the use of system  charges  determined in
          accordance  with  standard  condition  4 (Basis of Charges  for Use of
          System and Connection to System: Requirements for Transparency); and

          in the  case  of  provision  of a  connection  or  modification  to an
          existing  connection  to  the  system,  the  whole  or an  appropriate
          proportion (as  determined in accordance  with paragraph 4 of standard
          condition  4B  (Requirement  to  Offer  Terms  for Use of  System  and
          Connection))  of the costs  referred  to in  paragraph  4 of  standard
          condition  4 (Basis of  Charges  for Use of System and  Connection  to
          System:  Requirements  for  Transparency),  together with a reasonable
          rate of return on the capital represented by such costs;

     (b)  that the  performance  by the  licensee of its  obligations  under the
          agreement  should  not cause it to be in  breach  of those  provisions
          referred  to  at   sub-paragraph   8(a)  of  standard   condition   4B
          (Requirement to Offer Terms for Use of System and Connection);

                                      -52-
<PAGE>

     (c)  that any  methods  by which  the  licensee's  distribution  system  is
          connected to any other system for the  transmission or distribution of
          electricity  accord (in so far as applicable to the licensee) with the
          applicable Distribution Codes and Grid Codes; and

     (d)  that the terms and  conditions  of the  agreement  so  settled  by the
          Authority  and of any other  agreements  entered  into by the licensee
          pursuant to a request  under  standard  condition 4B  (Requirement  to
          Offer Terms for Use of System and Connection)  should be in as similar
          a form as is practicable.

2.   In so far as any person  entitled  or  claiming  to be entitled to an offer
     under standard  condition 4B  (Requirement to Offer Terms for Use of System
     and  Connection)  wishes to proceed on the basis of an agreement as settled
     by the  Authority  pursuant to paragraph 1, the  licensee  shall  forthwith
     enter into and implement such agreement in accordance with its terms.

3.   If either party to such agreement proposes to vary the contractual terms of
     any agreement  for use of system,  for the provision of a connection or for
     the modification to an existing  connection to the licensee's  distribution
     system,  entered into  pursuant to standard  condition 4B  (Requirement  to
     Offer Terms for Use of System and  Connection)  or under this  condition in
     any manner  provided for under such  agreement,  the Authority  may, at the
     request of that party,  settle any dispute  relating to such  variation  in
     such manner as appears to the Authority to be reasonable.

                                      -53-

<PAGE>

CONDITION 5. DISTRIBUTION SYSTEM PLANNING STANDARD AND QUALITY OF SERVICE
-------------------------------------------------------------------------

1.   The licensee shall plan and develop the licensee's  distribution  system in
     accordance  with a  standard  not less  than  that  set out in  Engineering
     Recommendation  P.2/5  (October 1978 revision) of the  Electricity  Council
     Chief  Engineers'  Conference  in so far as  applicable to it or such other
     standard of planning as the licensee  may,  following  consultation  (where
     appropriate)  with  the  transmission  company  and  any  other  authorised
     electricity  operator liable to be materially affected thereby and with the
     approval of the Authority, adopt from time to time.

2.   The licensee  shall within 3 months after this  condition  comes into force
     draw up and submit to the  Authority  for its approval a statement  setting
     out  criteria  by which the  quality  of  performance  of the  licensee  in
     maintaining the licensee's  distribution system's security and availability
     and quality of service may be measured.

3.   The licensee  shall within 2 months  after the end of each  financial  year
     submit to the Authority a report  providing  details of the  performance of
     the  licensee  during the  previous  financial  year  against the  criteria
     referred to in paragraphs 1 and 2.

4.   The  Authority may  (following  consultation  with the licensee and,  where
     appropriate,  with  the  transmission  company  and  any  other  authorised
     electricity  operator  liable  to be  materially  affected  thereby)  issue
     directions  relieving the licensee of its obligation  under  paragraph 1 in
     respect of such  parts of the  licensee's  distribution  system and to such
     extent as may be specified in the directions.

                                      -54-

<PAGE>

CONDITION 6. SAFETY AND SECURITY OF SUPPLIES ENQUIRY SERVICE
------------------------------------------------------------

1.   The  licensee  shall  establish,  or  procure  the  establishment  of,  and
     subsequently operate and maintain,  or procure the subsequent operation and
     maintenance  of, an enquiry  service for use by any person for the purposes
     of receiving reports and offering information, guidance or advice about any
     matter or incident which:

     (a)  affects  or is likely  to  affect  the  maintenance  of the  security,
          availability  and  quality of service of the  licensee's  distribution
          system; or

     (b)  arises  from or in  connection  with the  operation  of, or  otherwise
          relates to, the licensee's distribution system and which causes danger
          or requires  urgent  attention or is likely to cause danger or require
          urgent attention.

2.   The  service  established,  operated  and  maintained  in  accordance  with
     paragraph 1 shall:

     (a)  be provided without charge by the licensee to the user at the point of
          use;

     (b)  ensure that all reports and  enquiries  are  processed in a prompt and
          efficient  manner whether made by telephone,  in writing or in person;
          and

     (c)  be available to receive and process telephone reports and enquiries at
          all times on every day of each year.

3.   In the  establishment  and operation and maintenance of the enquiry service
     in accordance with paragraph 1 the licensee shall not discriminate  between
     any persons or class or classes of persons.

4.   In the  establishment,  operation and maintenance of the enquiry service in
     accordance  with  paragraph 1 the licensee  shall not restrict,  distort or
     prevent competition in the supply of electricity.

                                      -55-
<PAGE>


5.   The licensee  shall have in force at all times a statement  approved by the
     Authority  setting out details of the service to be provided in  accordance
     with  paragraph  1,  and  the  licensee  shall  give or send a copy of such
     statement to any person requesting it.


6.   The  licensee  shall  give to the  Authority  notice of any  amendments  it
     proposes to make to the statement prepared under paragraph 5, and shall not
     make such amendments until either:

     (a)  a period of one month from the date of the notice has expired; or

     (b)  prior to the expiry of such  period,  the  licensee  has  obtained the
          written approval of the Authority to such amendments.

7.   The  licensee  shall  take  steps to  inform  each  authorised  electricity
     operator  which uses the service of any change to the address or  telephone
     number of such service  established,  operated and maintained in accordance
     with paragraph 1, as soon as is practicable  but in any event prior to such
     change becoming effective.

                                      -56-
<PAGE>

CONDITION 7. PROVISION OF INFORMATION ABOUT THEFT OR ABSTRACTION OF ELECTRICITY,
--------------------------------------------------------------------------------
DAMAGE AND METER INTERFERENCE
------------------------------

1.   Where a person  other  than the  licensee  is the  owner of any  electrical
     plant, electric lines or meter the licensee shall, as soon as is reasonably
     practicable,  inform that person of any  incident  where the  licensee  has
     reason to believe:

     (a)  that there has been damage to such electrical plant,  electric line or
          metering equipment; or

     (b)  that there has been interference with the metering  equipment to alter
          its  register  or prevent it from duly  registering  the  quantity  of
          electricity supplied;

     provided that the licensee  shall not be obliged to inform the owner of any
     electrical  plant,  electrical  line or meter of any such incident where it
     has reason to believe that the damage or interference referred to above was
     caused by such owner.

2.   Where the  licensee,  in the  course of  providing  services  to any person
     supplying  electricity  to premises  directly  connected to the  licensee's
     distribution system, has reason to believe that:

     (a)  there  has been  damage  to any  electrical  plant,  electric  line or
          metering  equipment  through  which such  premises are  supplied  with
          electricity; or

     (b)  there has been interference with the metering  equipment through which
          such  premises  are  supplied to alter its register or prevent it from
          duly registering the quantity of electricity supplied,

     the licensee shall, as soon as reasonably  practicable,  inform that person
     (the person  supplying  electricity  to the  premises in  question)  of the
     incident in question.

                                      -57-
<PAGE>

CONDITION 8. PROVISIONS RELATING TO THE CONNECTION OF METERING EQUIPMENT
------------------------------------------------------------------------

1.   On application made by any person the licensee shall,  subject to paragraph
     5,  offer to enter into an  agreement  authorising  that  person to connect
     metering equipment to the licensee's distribution system.

2.   In making an offer to enter into an agreement specified in paragraph 1, the
     licensee shall set out:

     (a)  the  date  from  which  the   applicant  is  authorised  to  undertake
          connections;

     (b)  the procedures to be adopted by the applicant when making connections,
          with particular regard to those relating to safety; and

     (c)  such  other  detailed  terms  as are or may  be  appropriate  for  the
          purposes of the agreement.

3.   The  licensee  shall  offer  terms  for an  agreement  in  accordance  with
     paragraph 1 as soon as practicable  and (save where the Authority  consents
     to a longer period) in any event not more than 28 days after receipt by the
     licensee from any person of an application  containing all such information
     as the licensee may reasonably  require for the purpose of formulating  the
     terms of the offer.

4.   In the offering of the terms in accordance  with  paragraph 1, the licensee
     shall not show undue preference to or exercise undue discrimination against
     any  person or class or classes  of  persons  and shall not offer  terms or
     operate in such a way as to restrict, distort or prevent competition.

5.   The licensee  shall not be obliged  pursuant to this  condition to offer to
     enter or to enter  into any  agreement  where to do so would be  likely  to
     cause  the  licensee  to be in

                                      -58-
<PAGE>

     breach  of those  provisions  referred  to at  paragraph  7(a) of  standard
     condition 4B (Requirement to Offer Terms for Use of System and Connection).

6.   If, after a period which appears to the Authority to be reasonable  for the
     purpose, the licensee has failed to enter into an agreement with any person
     entitled or claiming to be  entitled  thereto  pursuant to a request  under
     this condition, the Authority may, on the application of such person or the
     licensee, settle any terms of the agreement in dispute between the licensee
     and  that  person  in  such  manner  as  appears  to  the  Authority  to be
     reasonable.

7.   If the licensee or other party to such agreement proposes to vary the terms
     of any  agreement  entered  into  pursuant to this  condition in any manner
     provided for under such agreement, the Authority may, at the request of the
     licensee or other party to such agreement,  settle any dispute  relating to
     such variation in such manner as appears to the Authority to be reasonable.

8.   In so far as any person  entitled  or  claiming  to be entitled to an offer
     under this  condition  wishes to proceed on the basis of an  agreement or a
     variation to it as settled by the Authority pursuant to paragraphs 6 and 7,
     the licensee  shall  forthwith  enter into and implement  such agreement or
     variation in accordance with its terms.

                                      -59-

<PAGE>

CONDITION 9. DISTRIBUTION CODE
------------------------------

1.   The licensee shall in consultation  with authorised  electricity  operators
     liable to be materially  affected  thereby prepare and at all times have in
     force and shall  implement and (subject to paragraph 10 of this  condition)
     comply with a Distribution Code:

     (a)  covering all material technical aspects relating to connections to and
          the operation and use of the licensee's  distribution system or (in so
          far  as  relevant  to  the  operation   and  use  of  the   licensee's
          distribution  system) the operation of electric  lines and  electrical
          plant  connected to the  licensee's  distribution  system and (without
          prejudice to the foregoing) making express provision as to the matters
          referred to in paragraph 5 below; and

     (b)  which is designed so as:

          (i)  to  permit  the  development,  maintenance  and  operation  of an
               efficient,   co-ordinated   and   economical   system   for   the
               distribution of electricity; and

          (ii) to  facilitate  competition  in  the  generation  and  supply  of
               electricity.

2.   The Distribution  Code in force at the date this condition comes into force
     shall be sent to the Authority for its  approval.  Thereafter  the licensee
     shall (in consultation with authorised  electricity  operators liable to be
     materially  affected  thereby)  periodically  review  (including  upon  the
     request of the Authority)  the  Distribution  Code and its  implementation.
     Following any such review, the licensee shall send to the Authority:

     (a)  a report on the outcome of such review; and

     (b)  any proposed  revisions to the Distribution  Code from time to time as
          the licensee (having regard to the outcome of such review)  reasonably
          thinks  fit for  the  achievement  of the  objectives  referred  to in
          sub-paragraph 1(b); and

     (c)  any written  representations or objections from authorised electricity
          operators  (including any proposals by such operators for revisions to
          the  Distribution  Code

                                      -60-
<PAGE>

          not  accepted by the  licensee  in the course of the  review)  arising
          during the consultation process and subsequently maintained.

3.   Revisions to the Distribution Code proposed by the licensee and sent to the
     Authority  pursuant to paragraph 2 must  receive the prior  approval of the
     Authority before being implemented.

4.   Having regard to any written  representations or objections  referred to in
     sub-paragraph 2(c), and following such further consultation (if any) as the
     Authority may consider  appropriate,  the  Authority  may issue  directions
     requiring  the licensee to revise the  Distribution  Code in such manner as
     may be specified in the directions, and the licensee shall forthwith comply
     with any such directions.

5.   The Distribution Code shall include:

     (a)  a distribution planning and connection code containing:

          (i)  connection  conditions  specifying  the  technical,   design  and
               operational  criteria to be complied with by any person connected
               or seeking connection to the licensee's distribution system; and

          (ii) planning conditions  specifying the technical and design criteria
               and  procedures to be applied by the licensee in the planning and
               development of the licensee's distribution system and to be taken
               into account by persons connected or seeking  connection with the
               licensee's distribution system in the planning and development of
               their own plant and systems; and

     (b)  a distribution  operating code  specifying the conditions  under which
          the licensee  shall  operate the  licensee's  distribution  system and
          under which  persons  shall  operate  their plant and/or  distribution
          systems in relation to the licensee's  distribution  system, in so far
          as  necessary  to protect the  security and quality of supply and safe
          operation of the licensee's  distribution system under both normal and
          abnormal operating conditions.

                                      -61-
<PAGE>


6.   The licensee  shall give or send a copy of the  Distribution  Code (as from
     time to time revised) to the Authority.

7.   The  licensee  shall  (subject to  paragraph  8) give or send a copy of the
     Distribution  Code (as from time to time revised) to any person  requesting
     the same.

8.   The  licensee may make a charge for any copy of the  Distribution  Code (as
     from time to time  revised)  given or sent  pursuant  to  paragraph 7 of an
     amount  which will not exceed any amount  specified  for the time being for
     the purposes of this condition in directions issued by the Authority.

9.   In  preparing,  implementing  and  complying  with  the  Distribution  Code
     (including in respect of the  scheduling of  maintenance  of the licensee's
     distribution system), the licensee shall not unduly discriminate between or
     unduly prefer any person or class or classes of persons.

10.  The  Authority  may  (following   consultation  with  the  licensee)  issue
     directions relieving the licensee of its obligations under the Distribution
     Code in respect of such parts of the licensee's  distribution system and to
     such extent as may be specified in the directions.

                                      -62-

<PAGE>

CONDITION 9A. COMPLIANCE WITH OTHER DISTRIBUTION CODES
------------------------------------------------------


1.   The licensee  shall comply with the  provisions  of the other  Distribution
     Codes insofar as applicable to the licensee or the licensee's  distribution
     business.

2.   The Authority may, following consultation with the licensed  distributor(s)
     responsible  for  any  other   Distribution   Code(s)  and  any  authorised
     electricity operators directly affected thereby, issue directions relieving
     the licensee of its  obligation  in paragraph 1 in respect of such parts of
     the other  Distribution  Code(s)  and to such  extent  and  subject to such
     conditions as may be specified in those directions.

                                      -63-

<PAGE>

CONDITION 10.  BALANCING AND SETTLEMENT CODE AND NETA IMPLEMENTATION


1.   Insofar as the licensee shall distribute or offer to distribute electricity
     within any area of England and Wales,  the licensee shall be a party to the
     BSC Framework Agreement and shall comply with the BSC.

2.   The  licensee  shall  comply  with  the  programme   implementation  scheme
     established in accordance with paragraph 3 as modified from time to time in
     accordance with paragraph 5.

3.   The programme implementation scheme is a scheme designated by the Secretary
     of State setting out the steps,  including  without  limitation steps as to
     the matters  referred to in paragraph  4, to be taken (or  procured) by the
     licensee  (and/or by authorised  electricity  operators)  which are, in the
     Secretary of State's opinion,  appropriate in order to give full and timely
     effect to:

          (a)  any  modifications  made to this  licence and to the  licences of
               authorised  electricity  operators  by  the  Secretary  of  State
               pursuant to the power vested in him under section 15A of the Act;

          (b)  any conditions  imposed by any exemption from the  requirement to
               hold any such licence; and

          (c)  the matters envisaged by such modifications and conditions.

4.   The programme implementation scheme may include provisions, inter alia,

          (a)  to secure or facilitate the amendment of any of the core industry
               documents;

          (b)  to secure that any systems,  persons or other resources  employed
               in the implementation of the Pooling and Settlement Agreement may
               be employed in the implementation of the BSC;

                                      -64-
<PAGE>

          (c)  for the giving of the  indemnities  against  liabilities to which
               parties to the Pooling and Settlement Agreement may be exposed;

          (d)  for securing  the  co-ordinated  and  effective  commencement  of
               implementation  of and  operations  under the BSC,  including the
               testing,  trialling  and start-up of the systems,  processes  and
               procedures  employed  in  such  implementation  and  employed  by
               authorised  electricity  operators and others in connection  with
               such operations;

          (e)  for co-ordinating the  administration  and  implementation of the
               BSC  and  the   administration  of  the  Pooling  and  Settlement
               Agreement;

          (f)  for the  licensee to refer to the  Authority  for  determination,
               whether  of its  own  motion  or as  provided  in  the  programme
               implementation  scheme,  disputes,  as to matters  covered by the
               scheme,  between persons who are required (by conditions of their
               licences  or  exemptions)  or who have  agreed to comply with the
               scheme or any part of it; and

          (g)  for the Authority, in the circumstances set out in the scheme, to
               require that  consideration  be given to the making of a proposal
               to modify  the BSC and,  if so,  to  require  the  making of such
               proposal  in the manner set out in the  scheme,  such power to be
               exercisable  at any time within the period of 12 months after the
               start of the first period for trading under the BSC as determined
               by the Secretary of State.


5.       (a) The Secretary of State may at any time direct,  in accordance with
             the  provisions  of the  programme  implementation  scheme,  that
             the programme implementation scheme be modified in the manner set
             out in such direction, in order to give (or continue to give) full
             and timely effect to the matters described in paragraph 3.

                                      -65-
<PAGE>
          (b)  The  Secretary of State shall serve a copy of any such  direction
               on the licensee, and thereupon the licensee shall comply with the
               scheme as modified by the direction.

6.   If  there  is  any  conflict  between  the  requirements  contained  in the
     programme  implementation  scheme pursuant to paragraph 4(a) and/or imposed
     on the licensee by paragraphs 2 and 5 of this condition,  and those imposed
     on the licensee by any other  condition,  the  provisions  of  paragraph(s)
     4(a), 2 and/or 5 (as appropriate) shall prevail.

7.   Without  prejudice to paragraph  2, the licensee  shall use all  reasonable
     endeavours  to do such things as may be requisite and necessary in order to
     give full and timely  effect to the  modifications  made to this licence as
     determined  by the  Secretary of State  pursuant to the power vested in him
     under  section  15A of the Act (and to give full and  timely  effect to the
     matters envisaged by such modifications).

8.       In this condition:

         "BSC"

                    means the  balancing and  settlement  code required to be in
                    place,  pursuant to the transmission  licence granted to the
                    transmission  company in England and Wales,  as from time to
                    time modified.

         "BSC Framework Agreement"

                    means the  agreement of that title,  in the form approved by
                    the   Secretary   of  State,   by  which  the  BSC  is  made
                    contractually binding between the parties to that agreement,
                    as from  time to  time  amended,  with  the  consent  of the
                    Secretary of State.

         "core industry documents"

                    mean those documents which:

                                      -66-
<PAGE>

               (a)  in the  Secretary  of State's  opinion are central  industry
                    documents associated with the activities of the licensee and
                    authorised  electricity  operators,  the  subject  matter of
                    which  relates  to or is  connected  with  the  BSC  or  the
                    balancing and settlement arrangements, and


               (b)  have been so designated by the Secretary of State.

                                      -67-

<PAGE>

CONDITION 11. CHANGE CO-ORDINATION FOR NETA



1.   Insofar as the licensee shall distribute or offer to distribute electricity
     within  any  area of  England  and  Wales,  the  licensee  shall  take  all
     reasonable  measures  to  secure  and  implement   (consistently  with  the
     procedures  applicable under or in relation to the core industry  documents
     to which it is party (or in relation to which it holds rights in respect of
     amendment) as modified or replaced  from time to time),  and shall not take
     any steps to prevent or unduly  delay,  changes to those  documents, such
     changes  being  changes  which  are  appropriate  in order to give full and
     timely effect to and/or in consequence of any  modification  which has been
     made to the BSC.

2.   For the purposes of paragraph 1, core  industry  documents  has the meaning
     given in paragraph 8 of standard  condition 10  (Balancing  and  Settlement
     Code and NETA Implementation).

                                      -68-

<PAGE>


CONDITION 12. SETTLEMENT AGREEMENT FOR SCOTLAND
-----------------------------------------------


1.   In so  far  as  the  licensee  shall  distribute  or  offer  to  distribute
     electricity  within  any  area  of  Scotland  or to  the  extent  that  the
     Settlement Agreement for Scotland may apply in respect of the activities of
     the  distribution  business,  the  licensee  shall comply with the relevant
     provisions of the Settlement Agreement for Scotland.

2.   In this condition:

     "Settlement  Agreement for Scotland"  means the agreement of that title, as
     nominated  by the  Authority  for the  purposes  of this  condition,  to be
     prepared in  accordance  with and  comprise  such matters as are set out in
     special condition I (The Settlement  Agreement for Scotland) of each of the
     electricity  distribution licences of SP Distribution Limited, and Scottish
     Hydro-Electric  Power Distribution Limited (and any other name by which any
     of these companies come to be known), as from time to time revised with the
     approval of the Authority.

                                      -69-

<PAGE>

CONDITION 12A. COMPLIANCE WITH THE TRADING CODE IN SCOTLAND
-----------------------------------------------------------

1.   (a)  Insofar as the licensee  shall  distribute  or offer to distribute
          electricity  within any area of Scotland,  the  licensee  shall comply
          with the  provisions  of the  Trading  Code during any period that the
          licensee is a member of the trading system  established by the Trading
          Code,  including  any  requirements  thereunder  for  the  Authority's
          approval or consent,  for  compliance  with  directions  issued by the
          Authority or relating to determinations made by the Authority.

     (b)  The Authority may (following  consultation  with such other members of
          such trading system as the Authority shall consider appropriate) issue
          directions   relieving   the   licensee   of  its   obligation   under
          sub-paragraph  (a) in respect of such parts of the Trading Code and to
          such extent as may be specified in those directions.

2.     In this condition:

         "Trading Code"

                    means the trading  code  required to be adopted  pursuant to
                    standard  condition  D2 (Trading  Code for  Scotland) of the
                    standard conditions of transmission licences and approved by
                    the Authority as from time to time revised with the approval
                    of the Authority.

                                      -70-
<PAGE>

CONDITION 13.  CHANGE CO-ORDINATION FOR THE UTILITIES ACT 2000
--------------------------------------------------------------

1.   The licensee  shall take all  reasonable  measures to secure and implement,
     and shall not take any steps to prevent or unduly  delay,  such  changes to
     the industry framework documents as are necessary or expedient to give full
     and timely effect to the provisions of the Utilities Act 2000.

2.   In complying  with  paragraph 1, the licensee shall act in the case of each
     industry  framework  document   consistently  with  the  change  procedures
     currently  applicable  to that  document,  except  where  to do so would be
     inconsistent  with any  provision of the Utilities Act 2000, in which event
     that provision shall take precedence.

3.   For the purposes of this condition,  "industry  framework  document" means,
     subject  to  paragraph  4, any of the  following  documents  to  which  the
     licensee is a party,  or in relation to which it holds rights in respect of
     amendment  or   termination,   together  with  any   documents   which  are
     supplemental or ancillary thereto:

     (a)  the Pooling and Settlement Agreement;

     (b) the Balancing and Settlement Code;

     (c)  Master  Connection  and Use of System  Agreement or the Connection and
          Use of System Code;

     (d)  the Settlement Agreement for Scotland;

     (e)  the Master Registration Agreement;

     (f)  the Data Transfer services Agreement;

     (g)  the Radio Teleswitch Agreement;

     (h)  any Grid Code or Scottish Grid Code;

     (i)  any Distribution Code;

     (j)  the Trading Code;

                                      -71-
<PAGE>

     (k)  the Fuel Security Code;

     (l)  any   agreement   for   use   of   an   interconnector   or   Scottish
          interconnection; and

     (m)  any agreement for the provision of distribution  use of system,  meter
          provision  services,   meter  maintenance  services,   data  retrieval
          services,  data processing  services,  data aggregation  services,  or
          prepayment meter services.

4.   Where the Authority considers that the list of industry framework documents
     set  out in  paragraph  3  should  be  modified  for the  purposes  of this
     condition generally,  the licensee shall discuss any proposed  modification
     (including  addition)  to the  list in good  faith  and use all  reasonable
     endeavours to agree such modification with the Authority.

5.   This  condition  shall cease to have effect on 30 June 2002 or such earlier
     date as the Authority may specify in a direction  given for the purposes of
     this condition generally.

                                      -72-

<PAGE>

CONDITION 14. THE MASTER REGISTRATION AGREEMENT
-----------------------------------------------


1.   The licensee  shall be a party to and shall comply with the  provisions  of
     the Master Registration Agreement.

                                      -73-

<PAGE>

CONDITION 15. COMPLIANCE WITH THE GRID CODES
--------------------------------------------

1.   The licensee  shall comply with the provisions of every Grid Code in so far
     as applicable to it.

2.   The Authority may (following  consultation  with the  transmission  company
     responsible  for the relevant  Grid Code) issue  directions  relieving  the
     licensee of its  obligation  under  paragraph 1 in respect of such parts of
     such Grid Code and to such extent and subject to such  conditions as may be
     specified in those directions.

                                      -74-

<PAGE>

CONDITION 16. SECURITY ARRANGEMENTS
-----------------------------------

1.   Insofar as the licensee shall distribute or offer to distribute electricity
     within any area of England and Wales,  the  licensee  shall comply with the
     provisions of the Fuel Security Code and such provisions  shall have effect
     as if they were set out in this licence.

2.   Insofar as the licensee shall distribute or offer to distribute electricity
     within any area of Scotland:

     (a)  if so directed in directions  issued by the Authority for the purposes
          of this condition, the licensee shall, not later than such date as may
          be specified in such directions, enter into an agreement designated by
          the Secretary of State for the purposes of this condition  relating to
          compliance  with  directions  issued by the  Secretary  of State under
          section 34 and/or section 35 of the Act; and

     (b)  the licensee shall comply with and perform its  obligations  under any
          agreement which it enters into pursuant to sub-paragraph (a) above.

3.   In this condition:

     "Fuel Security Code"

                    means the document of that title  designated  as such by the
                    Secretary of State as from time to time amended.

                                      -75-
<PAGE>

CONDITION 17. PROVISION OF SERVICES FOR PERSONS WHO ARE OF PENSIONABLE AGE OR
-----------------------------------------------------------------------------
DISABLED OR CHRONICALLY SICK
----------------------------

1.   The licensee  shall,  no later than 1 November 2001,  prepare and submit to
     the  Authority  for its approval a code of practice  detailing  the special
     services the licensee will make available for domestic customers who are of
     pensionable age or disabled or chronically sick.

2.   The code of practice shall include arrangements whereby the licensee will:


     (a)  maintain a register of customers who have special  communication needs
          or depend on  electricity  for  medical  reasons by virtue of being of
          pensionable  age or  disabled  or  chronically  sick,  and who require
          advance notice of planned  interruptions to the supply of electricity,
          comprising the relevant details of each customer who requests or whose
          supplier requests his inclusion on it;


     (b)  give to all customers so registered,  either via the relevant supplier
          or, where  appropriate,  directly,  in respect of interruptions to the
          supply  of  electricity,   such  information  and  advice  as  may  be
          appropriate  and is of such  nature as shall be set out in the code of
          practice,  provided  that where the licensee is providing the supplier
          with any such information, the licensee shall provide such information
          as soon as is practicable; and


     (c)  in the case where the request  for the  inclusion  in the  register is
          made directly to the licensee,  provide the relevant supplier with the
          relevant  details in such form and at such intervals as is relevant to
          the supplier's licence obligations.


3.   This  condition  is subject to the  provisions  of  standard  condition  22
     (Preparation, Review of and Compliance with Customer Service Codes).

                                      -76-

<PAGE>

CONDITION 18. PROVISION OF SERVICES FOR PERSONS WHO ARE BLIND OR DEAF
---------------------------------------------------------------------

1.   The licensee  shall,  no later than 1 November 2001,  prepare and submit to
     the  Authority  for its approval a code of practice  detailing  the special
     services the licensee will make  available  for domestic  customers who are
     disabled by virtue of being blind or partially sighted,  or deaf or hearing
     impaired.


2.   The code of practice shall include arrangements by which the licensee will,
     on request, in each case free of charge:


     (a)  make  available to blind and partially  sighted  domestic  customers a
          facility for enquiring or  complaining  about any service  provided by
          the licensee, by telephone or other appropriate means; and


     (b)  make available to deaf and hearing impaired domestic customers,  being
          in possession of appropriate  equipment,  facilities to assist them in
          enquiring or complaining about any service provided by the licensee.

3.   This  condition  is subject to the  provisions  of  standard  condition  22
     (Preparation, Review of and Compliance with Customer Service Codes).

                                      -77-

<PAGE>

CONDITION 19. CODE OF PRACTICE ON PROCEDURES WITH RESPECT TO SITE ACCESS
------------------------------------------------------------------------

1.   The licensee  shall,  no later than 1 November 2001,  prepare and submit to
     the  Authority  for  its  approval  a code  of  practice  setting  out  the
     principles and procedures the licensee will follow in respect of any person
     acting on its behalf who requires access to customers' premises.

2.   The code of practice  shall  include  procedures  calculated to ensure that
     persons visiting customers' premises on behalf of the licensee:

     (a)  possess the skills necessary to perform the required duties;

     (b)  are readily identifiable to members of the public;

     (c)  use passwords provided for vulnerable customers;

     (d)  are appropriate persons to visit and enter customers' premises;

     (e)  are able to inform customers,  on request, of a contact point for help
          and advice they may require in relation to the safety and  security of
          the supply of the electricity; and

     (f)  comply with the provisions of the Rights of Entry (Gas and Electricity
          Boards) Act 1954.

3.   This  condition  is subject to the  provisions  of  standard  condition  22
     (Preparation, Review of and Compliance with Customer Service Codes).

                                      -78-
<PAGE>


CONDITION 20.  PAYMENTS IN RELATION TO STANDARDS OF PERFORMANCE
---------------------------------------------------------------


1.   The  licensee  shall not  enter  into a use of  system  agreement  with any
     electricity  supplier  that  does  not  provide  for the  licensee  to make
     payments in respect of the performance of the distribution  business of the
     licensee to the  electricity  supplier  for the benefit of any  customer of
     that electricity  supplier  equivalent to such sums as would have been paid
     pursuant to any provision of Regulations made under section 39A of the Act.

                                      -79-

<PAGE>

CONDITION 21. COMPLAINT HANDLING PROCEDURE
------------------------------------------


1.   The licensee  shall,  no later than 1 November 2001,  prepare and submit to
     the Authority  for its approval a code of practice  detailing the procedure
     for handling  complaints from domestic  customers about the manner in which
     the licensee conducts its distribution business.

2.   Any procedure  established in accordance  with this condition shall specify
     the periods  within which it is intended  that  different  descriptions  of
     complaint should be processed and resolved.

3.   This  condition  is subject to the  provisions  of  standard  condition  22
     (Preparation, Review of and Compliance with Customer Service Codes).

                                      -80-

<PAGE>

CONDITION 22. PREPARATION, REVIEW OF AND COMPLIANCE WITH CUSTOMER SERVICE CODES
-------------------------------------------------------------------------------

1.   This condition  applies to any code of practice  required to be prepared by
     the licensee  pursuant to standard  condition 17 (Provision of Services for
     Persons  who are of  Pensionable  Age or  Disabled  or  Chronically  Sick),
     standard  condition 18  (Provision of Services for Persons who are Blind or
     Deaf),  standard condition 19 (Code of Practice on Procedures in Respect of
     Site Access) and standard  condition 21 (Complaint  Handling  Procedure) of
     this licence.

2.   In first preparing such a code the licensee shall, prior to submitting that
     code to the Authority,  consult the Consumer  Council and shall have regard
     to any representations  made by the Consumer Council about such code or the
     manner in which it is likely to be operated.

3.   Where before the expiry of 30 days of the licensee  first  submitting  such
     code to the Authority for its approval the Authority  notifies the licensee
     that the Authority considers the code is not sufficient for the purposes of
     meeting the requirements of this licence, the licensee shall forthwith make
     such changes as the Authority may require.

4.   The licensee shall,  whenever  requested to do so by the Authority,  review
     such  code and the  manner  in which it has been  operated,  with a view to
     determining  whether any modification should be made to it or to the manner
     of its operation.

5.   In carrying  out any such review the  licensee  shall  consult the Consumer
     Council and shall have regard to any  representations  made by the Consumer
     Council  about  such code or the  manner in which it is likely to be or (as
     the case may be) has been operated.

                                      -81-
<PAGE>

6.   The licensee shall submit any revision of such code which, after consulting
     the Consumer Council in accordance with paragraph 5, the licensee wishes to
     make,  to the  Authority  for its  approval and  following  its approval in
     writing shall then revise the code accordingly.

7.   The licensee shall:

     (a)  as soon as  practicable  following the  preparation of any code or any
          revision made to it send to the  Authority and the Consumer  Council a
          copy of such code or such  revision (in each case in the form approved
          by the Authority);

     (b)  at least once in each year,  draw the attention of those  customers to
          whom  such  code  applies,  to the  existence  of the code and of each
          substantive  revision  of it and to the  means by which a copy of such
          code may be  inspected  in its latest  form,  in such manner as in the
          reasonable opinion of the licensee will give adequate publicity to it;
          and

     (c)  give or send  free of charge a copy of such code (as from time to time
          revised) to any person who requests it.

8.   No changes may be made to any code  otherwise  than in accordance  with the
     foregoing procedures.

9.   The  licensee  shall  ensure,  so far as  reasonably  practicable,  that it
     complies with such  arrangements  or procedures (as the case may be) as are
     contained in or described by any code to which this  condition  applies and
     approved by the  Authority  or any  revision  to such code  approved by the
     Authority.

                                      -82-

<PAGE>

CONDITION 23. RECORD OF AND REPORT ON PERFORMANCE
-------------------------------------------------

1.   The  licensee  shall  keep  a  record  of  its  general  operation  of  the
     arrangements mentioned in standard conditions 17 to 22 and if the Authority
     so directs in writing,  of its operation of any particular cases specified,
     or of a description specified, by the Authority.

2.   The licensee shall keep a statistical record of its performance in relation
     to the provision of services to domestic customers.

3.   The licensee shall, from time to time as required by the Authority, provide
     to the  Authority  and to the  Consumer  Council  such  of the  information
     contained in the records  prepared in accordance with paragraphs 1 and 2 as
     the Authority may request in writing.

4.   As soon as is reasonably  practicable  after the end of each calendar year,
     the licensee  shall  submit to the  Authority  and the  Consumer  Council a
     report dealing with the matters mentioned in paragraphs 1 and 2 in relation
     to that year and shall:

     (a)  publish  the  report  so  submitted  in  such  manner  as  will in the
          reasonable  opinion of the licensee secure adequate  publicity for it;
          and

     (b)  send a copy of it free of charge to any person requesting one,

     except that, in performing its  obligations  under  sub-paragraphs  (a) and
     (b), the licensee shall exclude from the report such information as appears
     to it to be necessary or expedient to ensure that, save where they consent,
     individual  domestic  customers  referred  to  therein  cannot  readily  be
     identified.

5.   The report shall be presented,  so far as is reasonably  practicable,  in a
     standard  form  designated  by the  Authority  for  the  purposes  of  this
     condition.

                                      -83-
<PAGE>

CONDITION 24. PROVISION OF INFORMATION TO THE AUTHORITY
-------------------------------------------------------

1.   Subject to paragraphs 5 and 7, the licensee shall furnish to the Authority,
     in such manner and at such times as the Authority may  reasonably  require,
     such  information and shall procure and furnish to it such reports,  as the
     Authority may reasonably  require or as may be necessary for the purpose of
     performing:

     (a)  the functions conferred on it by or under the Act; and

     (b)  any  functions  transferred  to or  conferred  on it by or  under  the
          Utilities Act 2000.

2.   The  licensee  shall  procure  from each  company or other person which the
     licensee  knows  or  reasonably  should  know is at any  time  an  ultimate
     controller of the licensee a legally  enforceable  undertaking in favour of
     the  licensee  in a form  specified  by the  Authority  that that  ultimate
     controller ("the information  covenantor")  will give to the licensee,  and
     will procure that any person (including,  without  limitation,  a corporate
     body)  which is a  subsidiary  of, or is  controlled  by,  the  information
     covenantor (other than the licensee and its subsidiaries)  will give to the
     licensee,  all such  information as may be necessary to enable the licensee
     to comply  fully with the  obligation  imposed on it in  paragraph  1. Such
     undertaking shall be obtained within 7 days of such corporate body or other
     person in question  becoming an ultimate  controller  of the  licensee  and
     shall  remain in force for so long as the  licensee  remains  the holder of
     this licence and the information  covenantor remains an ultimate controller
     of the licensee.

3.   The licensee shall deliver to the Authority  evidence  (including a copy of
     each such  undertaking)  that the licensee has complied with the obligation
     to procure undertakings  pursuant to paragraph 2, and shall comply with any
     direction from the Authority to enforce any undertaking so procured.

                                      -84-
<PAGE>

4.   The licensee  shall not, save with the consent in writing of the Authority,
     enter (directly or indirectly)  into any agreement or arrangement  with any
     ultimate  controller of the licensee or, where the ultimate controller is a
     corporate  body,  any of the  subsidiaries  of  such a  corporate  ultimate
     controller (other than the subsidiaries of the licensee) at a time when:

     (a)  an undertaking  complying with paragraph 2 is not in place in relation
          to that ultimate controller; or

     (b)  there is an unremedied breach of such undertaking; or

     (c)  the licensee is in breach of the terms of any direction  issued by the
          Authority under paragraph 3 of this condition.

5.   The  licensee  shall not be required by the  Authority  to furnish it under
     this  condition  with  information  for the purpose of the  exercise of its
     functions under section 47 of the Act.


6.   The  licensee  shall,  if so  requested  by the  Authority,  give  reasoned
     comments on the accuracy and text of any  information  or advice (so far as
     relating  to  its  activities  as  holder  of an  electricity  distribution
     licence) which the Authority  proposes to publish pursuant to section 48 of
     the Act.

7.   This  condition  shall not require the licensee to produce any documents or
     give any information  which it could not be compelled to produce or give in
     evidence in civil proceedings before a court.

8.   The power of the Authority to call for information  under this condition is
     in addition to the power of the Authority to call for information  under or
     pursuant  to any other  condition.  There shall be a  presumption  that the
     provision  of  information  in  accordance  with  any  other  condition  is
     sufficient for the purposes of that condition,  but that presumption  shall
     be rebutted,  if the  Authority  states in writing that in its opinion such


                                      -85-
<PAGE>
     further  information  is,  or is likely  to be,  necessary  to enable it to
     exercise functions under the condition in question.

                                      -86-
<PAGE>

CONDITION  25.  LONG TERM DEVELOPMENT STATEMENT
-----------------------------------------------

1.   The purposes of this condition are:

     (a)  to secure the  provision  by the  licensee of  information  which will
          assist  any  person  who  contemplates   entering  into   distribution
          arrangements   with  the   licensee  to  identify   and  evaluate  the
          opportunities for doing so; and

     (b)  to ensure the general  availability of such  information in the public
          domain.

2.   Where the  Authority  gives the licensee a direction to do so, the licensee
     shall  prepare and maintain a statement in such form as may be specified in
     the direction  for the purposes of this  condition  generally,  containing,
     with respect to each of the 5 succeeding years on a rolling basis beginning
     with  1st  April  in  any  year,  such  information  as  it  is  reasonably
     practicable for the licensee to provide which  identifies or relates to the
     matters specified in paragraph 4.

3.   The direction specified in paragraph 2 may be given by the Authority at any
     time during a year.  Any statement to be prepared by the licensee  pursuant
     to  paragraph  2 shall be  prepared  within 3 months  of the  giving of the
     direction.  The  licensee  shall be  obliged  to  include in the first such
     statement prepared the information  referred to in paragraph 2 with respect
     to each year of the 5 succeeding  years on a rolling basis  beginning  with
     1st April of the year in which the direction is given.

4.   The matters referred to at paragraph 2 are:

          (a)  the use likely to be made of the licensee's distribution system;

          (b)  the likely development of the licensee's distribution system;

          (c)  the likely  development  of those  facilities  which the licensee
               expects to be taken into account from time to time in determining
               charges for making connections to its distribution system and for
               use of system;

                                      -87-
<PAGE>

          (d)  the  licensee's  plans for  modifying  its  distribution  system,
               including  works  which it  expects  to be  carried  out for that
               purpose  within  the  forthcoming  2 years  (from the date of the
               statement);

          (e)  the identification of those parts of the licensee's  distribution
               system  which are  likely to reach the limit of their  capability
               during the succeeding 5 year period,  including those parts which
               may experience  thermal  overloading,  voltage problems or excess
               fault levels;

          (f)  the  licensee's  plans to  alleviate  or  rectify  any  predicted
               shortcomings   in  the   operation   and/or   capability  of  its
               distribution system; and

          (g)  (where applicable) how the actual developments in the recent past
               compared  with  the  licensee's   plans   contained  in  previous
               statements.

5.   Any statement to be prepared by the licensee  pursuant to paragraph 2 shall
     be prepared within 3 months of the giving of the relevant direction.

6.   Except in so far as the Authority otherwise consents, the licensee shall on
     an  annual  basis  prepare  a  revision  of any  statement  prepared  under
     paragraph 2 so as to ensure that, so far as is reasonably practicable,  the
     information in the revised statement is up to date.

7.   The licensee  shall,  subject to any requirement to comply with the listing
     rules (within the meaning of Part IV of the Financial Services Act 1986) of
     The Stock Exchange and with paragraph 8 -


     (a)  furnish the  Authority  with a copy of the  statement  prepared  under
          paragraph  2 and of each  revision  of the  statement  prepared  under
          paragraph 6;

                                      -88-
<PAGE>


     (b)  in such form and manner as the  Authority  may direct,  publish such a
          summary of the  statement or, as the case may be, of a revision of the
          statement  as will  assist a person in  deciding  whether to ask for a
          copy of the statement;

     (c)  prepare a version of the statement or revision which excludes,  so far
          as is practicable,  any such matter as is mentioned in paragraph 8 and
          send a copy  thereof  to any  person  who asks for one and makes  such
          payment  to the  licensee  in  respect  of the cost  thereof as it may
          require not  exceeding  such amount as the  Authority may from time to
          time approve for the purposes hereof.

8.   In complying with the  requirements  of paragraph  7(b), the licensee shall
     have regard to the need for excluding, so far as is practicable, any matter
     which  relates to the  affairs of a person  where the  publication  of that
     matter would or might seriously and prejudicially affect his interests.

9.   Any question  arising under  paragraph 8 as to whether the  publication  of
     some  matter  which  relates  to the  affairs  of a  person  would or might
     seriously and prejudicially affect his interests shall be determined by the
     Authority.

10.  A direction  given under  paragraph 2 is only effective where the Authority
     has informed the licensee of its intention to do so in a notice which:

     (a)  states the date on which it is proposed that the direction should take
          effect;

     (b)  sets out the proposed  contents of the  direction  with respect to the
          form in which the statement is to be prepared and  maintained  for the
          purposes of this condition;

     (c)  specifies  the time (not  being less than 28 days from the date of the
          notice)  within  which  representations  with  respect to the proposed
          direction may be made,

     and has considered any representations  which are duly made by the licensee
     and are not withdrawn.

                                      -89-
<PAGE>

11.  Any  consultation  undertaken by the Authority with the holder of a licence
     granted under section 6(1)(c) of the Act before the  determination  of this
     standard  condition by the Secretary of State  pursuant to section 33(1) of
     the Utilities Act 2000 shall be effective for the purposes of paragraph 10.


12.  In  this  condition,   "distribution  arrangements"  includes  distribution
     arrangements which relate to -

         (a)      the utilisation of the licensee's distribution system; and

         (b)      connections to the licensee's distribution system.

                                      -90-

<PAGE>


CONDITION 26. COMPLIANCE WITH CUSC
----------------------------------

1.   Insofar as the licensee distributes or offers to distribute to any premises
     situated in England and Wales,  the  licensee  shall be a party to the CUSC
     Framework  Agreement  and shall comply with the CUSC and, if it is party to
     the agreement  known as the Master  Connection and Use of System  Agreement
     ("MCUSA"),  execute such other  documents as shall be stated as required to
     be made in any  direction  issued by the  Authority to enable the MCUSA and
     its supplemental agreements and ancillary service agreements (as defined or
     referred to in MCUSA) and any associated  agreements  derived from MCUSA to
     be amended appropriately into the CUSC Framework Agreement, CUSC, bilateral
     agreements,   construction  agreements  and,  so  far  as  is  appropriate,
     associated  agreements  derived from CUSC so as to maintain  continuity  of
     contractual relationships.

2.   The  licensee  shall  take all  reasonable  steps to secure  and  implement
     (consistently  with the procedures  applicable  under or in relation to the
     core industry  documents to which it is a party (or in relation to which it
     holds rights in respect of amendment) as  modified or replaced from time to
     time), and shall not take any steps to prevent or unduly delay,  changes to
     those documents,  such changes being changes which are appropriate in order
     to give full and timely effect to and/or in consequence of any modification
     which has been made to the CUSC.

3.   For the avoidance of doubt,  paragraph 2 is without prejudice to any rights
     of approval,  veto or direction in respect of proposed  changes to the core
     industry documents which the Authority may have.

4.   In this condition:

         "bilateral agreement"

                    means an  agreement  between  the  holder of a  transmission
                    licence in England and Wales and a

                                      -91-
<PAGE>

                    CUSC  user  supplemental  to the CUSC  relating  to a direct
                    connection  to  that  transmission  system  identifying  the
                    relevant connection site and setting out other site specific
                    details in relation to that  connection to the  transmission
                    system,   including   provisions   relating  to  payment  of
                    connection charges.

         "construction agreement"

                    means an  agreement  between  the  holder of a  transmission
                    licence in  England  and Wales and a CUSC user in respect of
                    construction works required on that transmission  system and
                    the  associated  construction  works  of the  CUSC  user  in
                    relation to a connection  to the  transmission  system or in
                    relation to a generating station connected to a distribution
                    system  in  England  and  Wales,  whether  for  the  initial
                    connection or a modification of the connection.

         "core industry documents"

                    means  those  documents  which have been  designated  by the
                    Secretary of State as such.

         "CUSC"

                    means the  Connection  and Use of System Code required to be
                    in place pursuant to the transmission licence granted to the
                    transmission  company in England and Wales,  as from time to
                    time modified.

         "CUSC Framework Agreement"

                    means the  agreement of that title,  in the form approved by
                    the   Secretary  of  State,   by  which  the

                                      -92-
<PAGE>

                    CUSC is made  contractually  binding  between the parties to
                    that  agreement,  as  amended  from  time to time  with  the
                    approval of the Secretary of State.

                                      -93-

<PAGE>


CONDITION 27.  NOT USED
-----------------------


CONDITION 28.  NOT USED
-----------------------


                                      -94-


<PAGE>


CONDITION 29. DISPOSAL OF RELEVANT ASSETS
-----------------------------------------

1.   The licensee  shall not dispose of or relinquish  operational  control over
     any  relevant  asset  otherwise  than  in  accordance  with  the  following
     paragraphs of this condition.

2.   Save as provided in paragraph 3, the licensee  shall give to the  Authority
     not less than two months' prior written  notice of its intention to dispose
     of or relinquish operational control over any relevant asset, together with
     such further  information  as the  Authority  may request  relating to such
     asset or the  circumstances of such intended  disposal or relinquishment of
     control or to the intentions in regard  thereto of the person  proposing to
     acquire such asset or operational control over such asset.

3.   Notwithstanding  paragraphs  1  and  2,  the  licensee  may  dispose  of or
     relinquish operational control over any relevant asset:

     (a)  where:

          (i)  the  Authority  has issued  directions  for the  purposes of this
               condition containing a general consent (whether or not subject to
               conditions) to:

               (aa) transactions of a specified description; or

               (bb) the disposal of or  relinquishment  of  operational  control
                    over relevant assets of a specified description; and

          (ii) the  transaction  or the relevant  assets are of a description to
               which such directions apply and the disposal or relinquishment is
               in  accordance  with any  conditions  to  which  the  consent  is
               subject; or

     (b)  where  the  disposal  or  relinquishment  of  operational  control  in
          question  is  required  by  or  under  any  enactment  or  subordinate
          legislation.

4.   Notwithstanding  paragraph  1, the  licensee  may dispose of or  relinquish
     operational  control over any relevant  asset as is specified in any notice
     given under paragraph 2 in circumstances where:

                                      -95-
<PAGE>


     (a)  the Authority confirms in writing that it consents to such disposal or
          relinquishment (which consent may be made subject to the acceptance by
          the licensee or any third party in favour of whom the  relevant  asset
          is proposed to be  disposed or  operational  control is proposed to be
          relinquished to) of such conditions as the Authority may specify; or

     (b)  the Authority does not inform the licensee in writing of any objection
          to such disposal or relinquishment of control within the notice period
          referred to in paragraph 2.

5.     In this condition:

         "disposal"

                    means:

                    (a) in relation to disposal of a relevant  asset situated in
                    England  and  Wales  includes  any  sale,  gift,   exchange,
                    assignment, lease, licence, loan, mortgage, charge, or grant
                    of  any  other   encumbrance   or  the   permitting  of  any
                    encumbrance to subsist or any other disposition;

                    (b) in relation to disposal of a relevant  asset situated in
                    Scotland includes the grant of any disposition,  conveyance,
                    contract of excambion, any lease, assignation,  licence, the
                    grant of any right of possession,  loan,  standard security,
                    floating  charge  to a  third  party,  or the  grant  of any
                    servitude right,  wayleave or any other transaction or event
                    which  is  capable  under  any  enactment  or rule of law of
                    affecting

                                      -96-
<PAGE>

                    the title to a registered interest in land

                    and  "dispose"  and cognate  expressions  shall be construed
                    accordingly;

         "relinquishment of operational control"

                    includes, without limitation, entering into any agreement or
                    arrangement  whereby operational control of a relevant asset
                    or  relevant  assets  is not or  ceases to be under the sole
                    management of the licensee.

                                      -97-
<PAGE>


CONDITION 30.  NOT USED
-----------------------


CONDITION 31.  NOT USED
-----------------------

                                      -98-

<PAGE>

SECTION C.  DISTRIBUTION SERVICES OBLIGATIONS
---------------------------------------------

CONDITION 32.  INTERPRETATION OF SECTION C (DISTRIBUTION SERVICES OBLIGATIONS)
------------------------------------------------------------------------------

1.   In this Section of the standard  conditions,  unless the context  otherwise
     requires:

     "data transfer catalogue"

                    has  the  meaning  given  at  paragraph   5(c)  of  standard
                    condition 37 (The Metering Point Administration  Service and
                    the Master Registration Agreement).

         "data transfer service"

                    means the data transfer  service and service  facility to be
                    established,  operated and  maintained by the  licensee,  in
                    conjunction  and  co-operation  with all other  distribution
                    services  providers,  in accordance  with and comprising the
                    elements set out in standard  condition 38 (Establishment of
                    a Data Transfer Service).

         "Metering Point Administration Service"

                    means the service to be established, operated and maintained
                    by the licensee in  accordance  with  standard  condition 37
                    (The Metering  Point  Administration  Service and the Master
                    Registration Agreement).

                                      -99-

<PAGE>

         "metering point administration services"

                    means the  services  of the  Metering  Point  Administration
                    Service established in accordance with standard condition 37
                    (The Metering  Point  Administration  Service and the Master
                    Registration  Agreement)  or,  where the  context  requires,
                    means  the  equivalent   services   provided  by  any  other
                    distribution   services  provider  in  accordance  with  the
                    provisions of its distribution licence.

         "permitted purpose"

                    means the purpose of all or any of the following:

                    (a)  the  distribution  business  or any other  business  or
                         activity  within the limits of  paragraph 4 of standard
                         condition 43  (Restriction  on Activity  and  Financial
                         Ring Fencing);

                    (b)  any  business or activity  to which the  Authority  has
                         given  its  consent  in  writing  in  accordance   with
                         paragraph 3 (d) of condition 43;and

                    (c)  without  prejudice to the  generality of  sub-paragraph
                         (a),  any  payment  or  transaction  lawfully  made  or
                         undertaken  by  the  licensee  for  a  purpose   within
                         sub-paragraphs  1(b)(i)

                                     -100-
<PAGE>

                         to (vii) of standard condition 47 (Indebtedness);

                                     -101-

<PAGE>

CONDITION 32A.  CONVENIENCE CUSTOMERS
-------------------------------------

1.   The  licensee  shall  establish  and  maintain  an  accurate  list  of  any
     convenience customers.

2.   The licensee shall update the list referred to in paragraph 1 at least once
     in every period of 12 months.

                                     -102-

<PAGE>


CONDITION 33.  NOT USED
-----------------------

                                     -103-


<PAGE>

CONDITION 34. COMPULSORY ACQUISITION OF LAND ETC.
-------------------------------------------------

1.   The powers and rights conferred by or under the provisions of Schedule 3 to
     the Act (Compulsory Acquisition of Land etc. by Licence Holders) shall have
     effect in relation to the  licensee to enable the  licensee to carry on the
     activities authorised by this licence and which:

     (a)  are comprised within its distribution business; and

     (b)  are carried on within the  distribution  services area or  necessitate
          the use of the licensee's distribution system, including any extension
          of or addition to the licensee's  distribution system,  whether or not
          connected to such system.


                                     -104-
<PAGE>


CONDITION 35.  OTHER POWERS ETC.
--------------------------------

1.   The powers and rights conferred by or under the provisions of Schedule 4 to
     the Act (Other  Powers  etc.  of  Licence  Holders)  shall  have  effect in
     relation to the licensee to enable the licensee to carry on the  activities
     authorised by this licence and which:

          (a)  are comprised within its distribution business; and

          (b)  are  carried  on  within  the   distribution   services  area  or
               necessitate  the  use  of  the  licensee's  distribution  system,
               including  any  extension  of  or  addition  to  the   licensee's
               distribution system, whether or not connected to such system.

                                     -105-

<PAGE>

CONDITION 36. BASIS OF CHARGES FOR DISTRIBUTOR METERING AND DATA SERVICES:
-------------------------------------------------------------------------
REQUIREMENTS FOR TRANSPARENCY
-----------------------------


1.   The licensee  shall as soon as  practicable  prepare  statements  in a form
     approved by the Authority  setting out the basis upon which charges will be
     made  for the  provision  of  each of the  distributor  metering  and  data
     services,  in each  case in such  form and  with  such  detail  as shall be
     necessary to enable any person to make a reasonable estimate of the charges
     to which the person  would become  liable to pay for the  provision of such
     services  and of the other terms,  likely to have a material  impact on the
     conduct of the person's business,  upon which the service would be provided
     and (without prejudice to the foregoing)  including the information set out
     in paragraph 2.

2.   The  statements  referred  to at  paragraph  1 shall  include a schedule of
     charges for each of the  distributor  metering and data services,  together
     with an  explanation  of the methods by which and the  principles  on which
     such charges will be calculated.

3.   The  Authority  may,  upon the  written  request of the  licensee,  issue a
     direction  relieving the licensee of its  obligations  under paragraph 1 to
     such extent and subject to such terms and  conditions  as the Authority may
     specify in that direction.

4.   The licensee  shall not in setting its charges for, or in setting the other
     terms that will apply to the provision of any of the  distributor  metering
     and  data  services,  restrict,  distort  or  prevent  competition  in  the
     generation,  distribution  or supply of  electricity or in the provision of
     meter maintenance or data retrieval services.

5.   The licensee:

                                     -106-
<PAGE>


     (a)  shall, at least once in every year,  review the information set out in
          the statements  prepared in accordance  with paragraph 1 in order that
          the  information  set  out in such  statements  shall  continue  to be
          accurate in all material respects; and

     (b)  may, with the approval of the  Authority,  from time to time alter the
          form of such statements.

6.   The licensee shall send a copy of the statement prepared in accordance with
     paragraph 1, and of each revision of such statement, to the Authority.

7.   The  licensee  shall  give  or  send a copy of the  statement  prepared  in
     accordance with paragraph 1, or (as the case may be) of the latest revision
     of such  statement,  to any person who requests a copy of such statement or
     statements.

8.   The licensee may make a charge for any statement  given or sent pursuant to
     paragraph  7 of an amount  which shall not exceed the amount  specified  in
     directions issued by the Authority for the purposes of this condition based
     on the Authority's estimate of the licensee's reasonable costs of providing
     such a statement.

                                     -107-

<PAGE>


CONDITION 36A. NON-DISCRIMINATION IN THE PROVISION OF DISTRIBUTOR METERING AND
------------------------------------------------------------------------------
DATA SERVICES
-------------

1.   In the provision of any of the distributor metering and data services,  the
     licensee shall not discriminate  between any persons or class or classes of
     persons.

2.   Without prejudice to paragraph 1, and subject to the provisions of standard
     condition 36 (Basis of Charges for Distributor  Metering and Data Services:
     Requirements for Transparency), the licensee shall not make charges for the
     provision  of any of the  distributor  metering  and data  services  to any
     person or class or classes of persons  which  differ  from the  charges for
     such  provision to any other person or class or classes of person except in
     so far as such  differences  reasonably  reflect  differences  in the costs
     associated with such provision.

                                     -108-

<PAGE>


CONDITION 36B. REQUIREMENT TO OFFER TERMS FOR THE PROVISION OF DISTRIBUTOR
--------------------------------------------------------------------------
METERING AND DATA SERVICES
--------------------------

1.   This condition sets out the obligations relating to the following services:

     (a)  the provision of metering  equipment  which,  at the discretion of the
          licensee,  may be metering  equipment  which is owned by him or by any
          person other than the person making such application;

     (b)  the installation, commissioning, testing, repair, maintenance, removal
          and replacement of metering equipment;

     (c)  metering point  administration  services pursuant to and in accordance
          with the Master Registration Agreement; and

     (d)  data transfer services.

2.   On application made by any person, the licensee shall (subject to paragraph
     6)  offer  to  enter  into  an  agreement  for  the  provision  within  its
     distribution   services   area  of  such  of  the  services   described  in
     sub-paragraphs 1(a), (b) and (c) as may be required.

3.   On application  made by any person the licensee shall (subject to paragraph
     6) offer to enter into an  agreement  for the  provision  of data  transfer
     services.

4.   In making an offer  pursuant to this condition to enter into any agreement,
     the licensee shall set out:

     (a)  the date by which the services  required shall be provided (time being
          of the essence, unless otherwise agreed between parties);

     (b)  the  charges  to be paid in  respect of the  services  required,  such
          charges (unless manifestly inappropriate):

          (i)  to be  presented  in  such  a  way  as to  be  referable  to  the
               statements  prepared in accordance  with  paragraph 1 of standard
               condition 36 (Basis of

                                     -109-
<PAGE>

               Charges for Distributor Metering and Data Services:  Requirements
               for Transparency) or any revision thereof;

          (ii) to be  set  in  conformity  with  the  requirements  of  standard
               condition 36 (Basis of Charges for Distributor  Metering and Data
               Services: Requirements for Transparency); and

     (c)  such other detailed terms in respect of each of the services  required
          as are or may be appropriate for the purpose of the agreement.

5.   The licensee shall offer terms for agreements in accordance with paragraphs
     2 and 3 as soon as practicable and (save where the Authority  consents to a
     longer  period)  in any event not more than 28 days  after  receipt  by the
     licensee (or its agent) from any person of an  application  containing  all
     such information as the licensee may reasonably  require for the purpose of
     formulating the terms of the offer.

6.   The licensee  shall not be obliged  pursuant to this  condition to offer to
     enter or to enter into any agreement if to do so would be likely to involve
     the licensee being:

     (a)  in breach of its duties under section 9 of the Act;

     (b)  in breach of any  regulations  made under  section 29 of the Act or of
          any other  enactment  relating to safety or  standards  applicable  in
          respect of the distribution business;

     (c)  in breach of any Grid Code or Distribution Code; or

     (d)  in breach of the conditions.

7.   The licensee shall undertake each of the services  referred to in paragraph
     1 in the most efficient and economic  manner  practicable  having regard to
     the alternatives available and the other requirements of the licence and of
     the Act in so far as they relate to the provision of those services.

                                     -110-
<PAGE>


8.   In the  provision  of any of the  services  referred to in  paragraph 1 the
     licensee shall not restrict,  distort or prevent  competition in the supply
     of electricity.

9.   The services  referred to in paragraph 1 shall  collectively be referred to
     as the distributor  metering and data services.  For the avoidance of doubt
     distributor  metering  and data  services as  referred  to in this  licence
     excludes data retrieval, data processing and data aggregation.

10.    In this condition:
         "data retrieval"

                    means services comprising any or all of the following:

                    the  retrieval and  verification  of meter reading data from
                    electricity  meters  and the  delivery  of such  data to any
                    person for the purpose of data processing.

         "data processing"

                    means services comprising any or all of the following:

                    the  processing,  validation and estimation of meter reading
                    data, and the creation, processing and validation of data in
                    respect of the  consumption of electricity at premises which
                    receive an unmetered  supply,  and the delivery of such data
                    to any person for the purpose of data aggregation.

         "data aggregation"

                    means services comprising any or all of the following:

                    the  collation  and summation of meter reading data (whether
                    actual  or  estimated)   and  of  data  in  respect  of  the
                    consumption  of  electricity  at premises  which  receive an
                    unmetered  supply,  and the  delivery  of  such  data to any
                    person for settlement purposes.

                                     -111-

<PAGE>

CONDITION 36C. FUNCTIONS OF THE AUTHORITY
-----------------------------------------

1.   If, after a period which appears to the Authority to be reasonable  for the
     purpose, the licensee has failed to enter into an agreement with any person
     entitled or claiming to be  entitled  thereto  pursuant to a request  under
     standard  condition  36B  (Requirement  to Offer Terms for the Provision of
     Distributor  Metering  and  Data  Services),  the  Authority  may,  on  the
     application  of such  person  or the  licensee,  settle  any  terms  of the
     agreement in dispute between the licensee and that person in such manner as
     appears to the  Authority to be  reasonable  having (in so far as relevant)
     regard in particular to the following considerations:

     (a)  that the  performance  by the  licensee of its  obligations  under the
          agreement  should  not cause it to be in  breach  of those  provisions
          referred to at paragraph 6 of standard  condition 36B  (Requirement to
          Offer  Terms  for the  Provision  of  Distributor  Metering  and  Data
          Services); and

     (b)  that the terms and  conditions  of the  agreement  so  settled  by the
          Authority  and of any other  agreements  entered  into by the licensee
          pursuant to a request under  standard  condition 36B  (Requirement  to
          Offer  Terms  for the  Provision  of  Distributor  Metering  and  Data
          Services) should be in as similar a form as is practicable.

2.   In so far as any person  entitled  or  claiming  to be entitled to an offer
     under standard  condition 36B (Requirement to Offer Terms for the Provision
     of Distributor  Metering and Data Services)  wishes to proceed on the basis
     of the agreement as settled by the  Authority  pursuant to paragraph 1, the
     licensee  shall  forthwith  enter  into and  implement  such  agreement  in
     accordance with its terms.

3.   If either party to such agreement proposes to vary the contractual terms of
     any agreement for the provision of any of the distributor metering and data
     services  entered into pursuant to standard  condition 36B  (Requirement to
     Offer Terms for the Provision of

                                     -112-
<PAGE>


     Distributor  Metering and Data  Services)  or this  condition in any manner
     provided for under such  agreement,  the  Authority  may, at the request of
     that party, settle any dispute relating to such variation in such manner as
     appears to the Authority to be reasonable.

4.   The  Authority  may  (following   consultation  with  the  licensee)  issue
     directions  relieving  the  licensee  of  its  obligations  under  standard
     condition 36B  (Requirement to Offer Terms for the Provision of Distributor
     Metering  and Data  Services)  relating to  distributor  metering  and data
     services in respect of such parts of that  condition  and to such extent as
     may be specified in the directions.

                                     -113-

<PAGE>

CONDITION 37. THE METERING POINT ADMINISTRATION SERVICE AND THE MASTER
----------------------------------------------------------------------
REGISTRATION AGREEMENT
----------------------

1.   The  licensee  shall  establish,  or  procure  the  establishment  of,  and
     subsequently operate and maintain,  or procure the subsequent operation and
     maintenance of, a service to be known as the "Metering Point Administration
     Service."

2.   The Metering Point  Administration  Service shall,  within the distribution
     services area, fulfil the following functions:

(a)  the  maintenance  of such a  register  of  technical  and other  data as is
     necessary to facilitate supply by any electricity  supplier to all premises
     connected to the  licensee's  distribution  system within the  distribution
     services  area or, where so  requested,  connected to another  distribution
     system within the  distribution  services  area and to meet the  reasonable
     requirements  of  electricity  suppliers  in respect of such  premises  for
     information for settlement purposes, including (where so required):

     (i)  the  identity  of  the  electricity  supplier  responsible  under  the
          Balancing and Settlement Code (where the distribution services area is
          within England and Wales) and/or the Settlement Agreement for Scotland
          (where the  distribution  services  area is within  Scotland)  for the
          metering point at such premises;

     (ii) the type of metering equipment installed at each such premises; and

     (iii)a unique  and  accurate  address  of each such  premises  so far as is
          reasonably  practicable  having regard to the nature and source of the
          information provided to the licensee;

(b)  the amendment of the register  maintained in accordance with  sub-paragraph
     (a) to reflect changes of electricity supplier in respect of any premises;

                                     -114-

<PAGE>

(c)  the provision,  in a timely and efficient manner, of such data contained in
     the register as is reasonably required and requested to:

     (i)  any electricity supplier or agent thereof;

     (ii) any person  identified in the Balancing and Settlement Code (where the
          distribution  services  area is within  England and Wales)  and/or the
          Settlement  Agreement for Scotland  (where the  distribution  services
          area is within  Scotland) as an appropriate  person for the receipt of
          data for settlement purposes; and

     (iii)any  person  identified  in  the  Master  Registration   Agreement  as
          entitled  to such data for the  purpose  of  facilitating  changes  of
          electricity supplier in respect of any premises; and

(d)  the  maintenance of an enquiry service for the provision to any customer or
     an electricity supplier, on request and free of charge to that customer, of
     such  data  contained  in the  register  as is  relevant  to the  supply of
     electricity  to premises  which are (or are to be) owned or occupied by the
     customer,  and the  taking  of such  steps  as will in the  opinion  of the
     licensee  secure  adequate  publicity  for  the  operation  of the  enquiry
     service.

3.   The licensee shall use its best endeavours, in conjunction and co-operation
     with all other distribution  services providers,  to prepare and maintain a
     form of agreement to be known as the Master Registration Agreement.

4.   The Master Registration Agreement shall be an agreement made between:

     (a)  on the one part,  the  licensee  and all other  distribution  services
          providers  in  their   capacity  as   providers   of  metering   point
          administration services; and

     (b)  on the other part:

                                     -115-
<PAGE>


          (i)  all  electricity  suppliers  (or their  agents) which require the
               provision of metering point administration services from at least
               one distribution services provider; and

          (ii) such other persons as are, for settlement  purposes,  appropriate
               parties to the agreement.

5.   The Master Registration Agreement shall comprise:

     (a)  terms for the provision of metering point  administration  services in
          accordance  with the  requirements  of paragraph 2 and the  equivalent
          requirements in the  distribution  licences of all other  distribution
          services providers;

     (b)  provisions to facilitate,  and procedures and practices to be followed
          by  electricity  suppliers  in  relation  to  changes  of  electricity
          supplier in respect of any premises;

     (c)  a  catalogue  of  definitions,  flows  and  forms of such  data as may
          require to be transferred by or to parties to the Master  Registration
          Agreement,  or as between any persons for  settlement  purposes or for
          any related purposes (the "data transfer catalogue");

     (d)  arrangements  for the variation of the Master  Registration  Agreement
          following  consultation with the parties,  or  representatives  of the
          parties, to that agreement;

     (e)  provisions  (which  shall  require  to be  approved  in advance by the
          Authority)  by virtue of which  the  whole or  specified  parts of the
          Master  Registration  Agreement  shall  not be  capable  of  variation
          without the prior approval of the Authority; and

     (f)  such other matters as are or may be appropriate  for the  development,
          maintenance and operation of an efficient, co-ordinated and economical

                                     -116-
<PAGE>

          system  for  the  supply  of  electricity   and  for  the  purpose  of
          facilitating competition in electricity supply.

                                     -117-

<PAGE>

CONDITION 38. ESTABLISHMENT OF A DATA TRANSFER SERVICE
------------------------------------------------------

1.   The licensee shall use its best endeavours, in conjunction and co-operation
     with all other distribution services providers:

     (a)  to  establish,  or to procure  the  establishment  of, a service to be
          known as the data transfer service; and

     (b)  subsequently  to operate and  maintain,  or to procure the  subsequent
          operation and maintenance of, such data transfer service in accordance
          with the provisions of this condition.

2.   The data transfer service shall:

     (a)  provide a network  over which may be made all of the  electronic  data
          transfers specified at paragraph 3;

     (b)  operate and maintain that network; and

     (c)  provide a connection to that network, on request, to any person who is
          or will be a party to any of the electronic  data transfers  specified
          at paragraph 3.

3.   The electronic  data transfers  specified at this paragraph are those which
     are reasonably  required for any of the purposes set out at paragraph 4 and
     which are made between:

     (a)  a Metering Point  Administration  Service  operator and an electricity
          supplier or any agent thereof;

     (b)  a  Metering  Point  Administration  Service  operator  and any  person
          identified  in the  Balancing and  Settlement  Code or the  Settlement
          Agreement  for  Scotland as an  appropriate  person for the receipt of
          data from the  Metering  Point  Administration  Service  operator  for
          settlement purposes;
                                     -118-
<PAGE>

     (c)  any   transmission   company  (or  any  agent   thereof)  or  Scottish
          Electricity  Settlements  Limited  or its  successor  in title (or any
          agent thereof) and an electricity supplier (or any agent thereof);

     (d)  an electricity supplier (or any agent thereof) and another electricity
          supplier (or any agent thereof);

     (e)  an electricity supplier and any of its agents;

     (f)  different agents of the same electricity supplier;

     (g)  electricity  suppliers  (or their  agents)  and  generators  (or their
          agents)  which are parties to the  Settlement  Agreement for Scotland;
          and

     (h)  Scottish Electricity Settlements Limited or its successor in title (or
          any agent  thereof)  and any  person (or any agent  thereof)  who is a
          party to or complies with the Settlement Agreement for Scotland.

4.     The purposes of this paragraph are to:

     (a)  meet  obligations  with respect to the transfer of data for settlement
          purposes;

     (b)  communicate meter reading and meter standing data;

     (c)  facilitate the provision of metering point administration services;

     (d)  communicate distribution use of system information; and

     (e)  fulfil such other requirements relating to the transfer of data as may
          be requisite for the supply of electricity to customers and compliance
          by electricity suppliers with the Master Registration Agreement.

5.   The data transfer  service shall,  where relevant,  transmit data in a form
     which complies with the provisions of the data transfer catalogue.

6.   In fulfilling its obligations  under paragraph 1 the licensee shall not, or
     (if appropriate) shall ensure that any third party acting on the licensee's
     instruction or behalf shall not,

                                     -119-
<PAGE>

     restrict,  distort or prevent competition in the provision of meters, meter
     maintenance,   data  retrieval,   data  processing,   data  aggregation  or
     prepayment  meter services and markets for any of the distributor  metering
     and data services.


7.   Any obligation placed on the licensee under standard  conditions 36A to 36C
     in respect of the  provision of the data  transfer  service  shall (for the
     purposes of those  conditions)  be treated as a requirement on the licensee
     to use its best endeavours,  in conjunction and co-operation with all other
     distribution  services  providers,  to fulfil that obligation or to procure
     the fulfilment of that obligation by a third party, and standard conditions
     36A to 36C shall apply  mutatis  mutandis to the provision of data transfer
     services by the distribution  services providers acting  co-operatively and
     by means of procurement of third party services.

8.   Further,  in  relation  to the  provision  of data  transfer  services  the
     reference  at  paragraph  1 of standard  condition  36C  (Functions  of the
     Authority)  to the licensee  failing to enter into an agreement  shall be a
     reference  to the  licensee,  in  conjunction  with all other  distribution
     services  providers,  failing to enter into,  or failing to procure  that a
     third party enters into, an agreement for the provision of those services.

9.     In this condition:


          "Metering Point Administration Service operator"

                    means  the  licensee  or  any  other  distribution  services
                    provider in its  capacity  as a provider  of metering  point
                    administration services.

                                     -120-

<PAGE>


CONDITION 39. RESTRICTION ON USE OF CERTAIN INFORMATION AND INDEPENDENCE OF
---------------------------------------------------------------------------
THE DISTRIBUTION BUSINESS
-------------------------

1.   Any information relating to or deriving from the management or operation of
     the  distribution  business shall,  for the purposes of this condition,  be
     treated as confidential information.

2.   The licensee  shall not (and shall procure that its  affiliates and related
     undertakings  shall  not)  disclose  or  authorise  access to  confidential
     information:

     (a)  save to the extent provided by sub-paragraphs  3(a) to (d), to such of
          its (or its affiliates' or related undertakings')  employees,  agents,
          advisers,  consultants or contractors as are engaged in, or in respect
          of, the management or operation of any supply business; or

     (b)  save to the extent permitted by paragraph 3, to any other person.

3.   The  licensee  shall (and shall  procure  that its  affiliates  and related
     undertakings   shall)   disclose  or  authorise   access  to   confidential
     information only:

     (a)  in the following circumstances, namely;

          (i)  to  such of its (or its  affiliates'  or  related  undertakings')
               employees,  agents,  advisers,  consultants or contractors as are
               engaged in, or in respect of, the  management or operation of the
               distribution business or any external distribution activities and
               require access to the information for that purpose; and

          (ii) to  personnel of any other  holder of a  distribution  licence (a
               distribution licence holder) engaged in the external distribution
               activities  of that  distribution  licence  holder to the  extent
               necessary for the performance by such personnel of those external
               distribution  activities,  and the use by such  personnel of that
               information for that purpose;

                                     -121-
<PAGE>

provided that  effective  arrangements  are maintained in place at all times for
ensuring  that no further  disclosure  of any  information  supplied or obtained
pursuant to this  paragraph is made and that such  information  is used only for
the purpose of the distribution business or any external distribution activities
of the licensee

     (b)  where the licensee (or any  affiliate  or related  undertaking  of the
          licensee)  is required or permitted to disclose  such  information  by
          virtue of:

          (i)  any requirement of a competent authority;

          (ii) the  conditions  of any  licence  granted  under  the  Act or any
               document  referred to in such a licence with which it is required
               by virtue of the Act or that licence to comply;

          (iii) any other requirement of law; or

          (iv) the rules of the  Electricity  Arbitration  Association or of any
               judicial  or other  arbitral  process or  tribunal  of  competent
               jurisdiction;

     (c)  where such  information  was  provided by or relates to any person who
          has notified (or otherwise  agreed with) the licensee that it need not
          be treated as confidential; or

     (d)  where such information,  not being information provided by or relating
          to any person  other than the  licensee,  is placed by the licensee in
          the public domain,

     and in each case the licensee  shall  disclose or  authorise  access to the
     confidential information only insofar as is necessary or appropriate in all
     the circumstances.

4.   The licensee shall use all reasonable  endeavours to ensure that any person
     who is in  possession  of or has  access  to  confidential  information  in
     accordance with  sub-paragraph 3(a) shall use such information only for the
     purposes  of  the  distribution   business  or  any  external  distribution
     activities.

5.   For the purpose of facilitating  its compliance with paragraphs 1 to 4, the
     licensee shall establish and shall thereafter  maintain the full managerial
     and operational

                                     -122-
<PAGE>

     independence  of the  distribution  business and any external  distribution
     activities from each other business (whether or not a separate business) of
     the licensee and of its affiliates and related undertakings.

6.   In order to facilitate its compliance  with paragraphs 1 to 5, the licensee
     shall ensure that:

     (a)  the  distribution  business is provided with such  premises,  systems,
          equipment,   facilities,  property,  personnel,  data  and  management
          resources as are necessary for its efficient and effective  management
          and operation of such business;

     (b)  no  business  of  the  licensee  (or  of  any   affiliate  or  related
          undertaking of the licensee) other than the distribution business, may
          use or have access to:

          (i)  premises or parts of premises  occupied by persons engaged in, or
               in respect of, the  management  or operation of the  distribution
               business or any external distribution activities;

          (ii) systems for the recording, processing or storage of data to which
               persons engaged in, or in respect of, the management or operation
               of  the  distribution   business  or  any  external  distribution
               activities also have access;

          (iii)equipment,  facilities or property employed for the management or
               operation   of  the   distribution   business  or  any   external
               distribution activities; or

          (iv) the  services  of  persons  who  are  (whether  or not  as  their
               principal   occupation)   engaged  in,  or  in  respect  of,  the
               management  or  operation  of the  distribution  business  or any
               external distribution activities; and

     (c)  it can and does,  insofar as is legally  possible,  prevent any person
          who has ceased to be engaged in, or in respect of, the  management  or
          operation of the  distribution  business  from being engaged in, or in
          respect of, the  activities of any other  business of the licensee (or
          of any affiliate or related  undertaking  of

                                     -123-
<PAGE>

          the licensee) until the expiry of an appropriate time from the date on
          which the person ceased to be engaged by the distribution business.

7.   The  Authority  may,  upon the  written  request of the  licensee,  issue a
     direction relieving the licensee of its obligations under paragraphs 1 to 6
     to such extent and subject to such terms and  conditions  as the  Authority
     may specify in that direction - where:

     (a)  it is not reasonably  practicable  for the licensee to comply with any
          aspect of those obligations;

     (b)  in the case of  paragraphs 2 to 4, a failure to comply with any aspect
          of those obligations would be of a trivial nature; or

     (c)  in the case of paragraph 5 and  sub-paragraph  6(b), any  arrangements
          for the use of or access to premises, systems, equipment,  facilities,
          property or personnel by both the distribution  business and any other
          business of the licensee (or of any  affiliate or related  undertaking
          of the licensee):

          (i)  do  not  involve  a  cross-subsidy  being  either  given  to  the
               distribution business by such other business or received from the
               distribution business by such other business;

          (ii) obtain for the distribution  business,  in the most efficient and
               economical  manner  possible,  the use of the relevant  premises,
               systems, equipment, facilities, property or personnel; and

          (iv) do not restrict, distort or prevent competition in the generation
               or supply of electricity.

8.   Where,  subsequent to the issue of a direction pursuant to paragraph 7, the
     criteria set out at  sub-paragraph  7(a), (b) or (c) cease to be satisfied,
     the Authority may withdraw the direction or modify any terms and conditions
     which may be specified in it.

                                     -124-
<PAGE>

9.   For the  purposes of  paragraphs  7 and 8 the  Authority  shall,  following
     consultation  with the  licensee,  determine any question as to whether the
     criteria set out at  sub-paragraph  7(a),  (b) or (c) are or continue to be
     satisfied.

10.

     (a)  This  paragraph  applies only in  circumstances  in which the licensee
          does not itself carry out any  distributor  metering and data services
          as part of the  distribution  business but those services are provided
          for it by an agent acting  independently  of the licensee which is not
          an affiliate of the licensee and in which the licensee holds no shares
          or other financial interest (`a metering agent')

     (b)  Where  paragraph (a) applies,  the licensee may disclose  confidential
          information  to its metering agent  notwithstanding  that the metering
          agent  provides  distributor  metering  and data  services  to others,
          provided that the licensee  maintains,  and procures that the metering
          agent also maintains,  in place at all times effective arrangements so
          that the metering agent does not disclose  information relating to the
          distribution  business to any affiliate or related  undertaking of the
          licensee  except to the extent  necessary  for the  metering  agent to
          provide  distributor  metering  and  data  services  as  part  of  the
          distribution business to that affiliate or related undertaking.

11.  In this condition:

         "appropriate time"

                    means 3 months,  or such shorter period as the Authority may
                    approve in respect of any person or class of persons.

         "competent authority"

                    means the Secretary of State, the Authority,  the compliance
                    officer,  the Stock  Exchange,

                                     -125-
<PAGE>

                    the  Panel  on  Take-overs  and  Mergers,  or any  local  or
                    national  agency,  regulatory body,  authority,  department,
                    inspectorate,   minister  (including  Scottish   Ministers),
                    ministry,  official or public or statutory  person  (whether
                    autonomous or not) of, or of the  government  of, the United
                    Kingdom,  the  United  States of  America,  or the  European
                    Community.

         "confidential information"

                    has the meaning given at paragraph 1.

         "external distribution activities"

                    means any  business  of the  licensee  or any  affiliate  or
                    related  undertaking of the licensee comprising or ancillary
                    to  the  maintenance,  repair  or  operation  of,  or  other
                    activities in connection with any  electricity  distribution
                    system other than the  licensee's  distribution  system (`an
                    external distribution system').

         "Electricity Arbitration Association"

                    means the  unincorporated  members' club of that name formed
                    inter alia to promote the efficient  and economic  operation
                    of the procedure for the  resolution of disputes  within the
                    electricity  supply  industry  by  means of  arbitration  or
                    otherwise in accordance with its arbitration rules.

                                     -126-
<PAGE>

         "separate business"

                    means the  distribution  business taken  separately from any
                    other business of the licensee, but so that where all or any
                    part of such  business  is  carried  on by an  affiliate  or
                    related  undertaking  of  the  licensee  such  part  of  the
                    business  as is  carried  on by that  affiliate  or  related
                    undertaking  shall  be  consolidated  with  any  other  such
                    business  of the  licensee  (and of any other  affiliate  or
                    related  undertaking)  so  as  to  form  a  single  separate
                    business.

                                     -127-
<PAGE>

CONDITION 40.  APPOINTMENT OF COMPLIANCE OFFICER
------------------------------------------------

1.   The licensee shall no later than 28 days after the date of the  Authority's
     direction  prepare a statement in a form approved by the Authority  setting
     out the  practices,  procedures  and systems which the licensee has adopted
     (or intends to adopt) to ensure its compliance with the relevant duties.

2.   The licensee may  periodically  revise the information set out in and, with
     the approval of the Authority,  alter the form of the statement prepared in
     accordance  with paragraph 1 and shall,  at least once in every year during
     which this  licence is in force,  review such  statement  in order that the
     information  set out therein shall  continue to be accurate in all material
     respects.

3.   The licensee shall send a copy of the statement prepared in accordance with
     paragraph  1, and of each  revision of such  statement in  accordance  with
     paragraph 2, to the Authority.

4.   The licensee shall,  following  consultation with the Authority,  appoint a
     competent  person (who shall be known as the "compliance  officer") for the
     purpose  of  facilitating  compliance  by the  licensee  with the  relevant
     duties.

5.   The  licensee  shall at all times  engage the  services  of the  compliance
     officer  for the  performance  of such  duties  and  tasks as the  licensee
     considers it  appropriate  to assign to him for the  purposes  specified at
     paragraph  4,  which  duties  and  tasks  shall  include  those  set out at
     paragraph 8.

6.   The licensee shall procure that the compliance officer:

     (a)  is provided with such staff, premises, equipment, facilities and other
          resources; and

                                     -128-
<PAGE>

     (b)  has  such   access  to  its   premises,   systems,   information   and
          documentation

     as, in each case, he might reasonably  expect to require for the fulfilment
     of the duties and tasks assigned to him.

7.   The licensee shall make  available to the compliance  officer a copy of any
     complaint or representation  received by it from any person in respect of a
     matter arising under or by virtue of standard  condition 39 (Restriction on
     Use of Certain  Information and Independence of the Distribution  Business)
     or in relation to any of the practices,  procedures and systems  adopted by
     the licensee in accordance with the statement referred to at paragraph 1.

8.   The duties and tasks assigned to the compliance officer shall include:

     (a)  providing  relevant  advice and  information  to the  licensee for the
          purpose of ensuring its compliance with the relevant duties;

     (b)  monitoring the effectiveness of the practices,  procedures and systems
          adopted by the licensee in accordance  with the statement  referred to
          at paragraph 1;

     (c)  investigating any complaint or representation made available to him in
          accordance with paragraph 7;

     (d)  recommending  and  advising  upon the  remedial  action which any such
          investigation has demonstrated to be necessary or desirable;

     (e)  providing  relevant  advice and  information  to the  licensee for the
          purpose of ensuring its effective implementation of:

          (i)  the practices,  procedures and systems adopted in accordance with
               the statement referred to at paragraph 1; and

          (ii) any remedial action  recommended in accordance with sub-paragraph
               (d); and
                                     -129-
<PAGE>

     (f)  reporting annually to the directors of the licensee in respect of each
          year after this condition comes into force as to his activities during
          the period  covered by the report,  including  the  fulfilment  of the
          other duties and tasks assigned to him by the licensee.

9.   As soon as is reasonably  practicable  following  each annual report of the
     compliance officer, the licensee shall produce a report:

     (a)  as to its  compliance  during  the  relevant  year  with the  relevant
          duties; and

     (b)  as to its  implementation  of the  practices,  procedures  and systems
          adopted in accordance with the statement referred to at paragraph 1.

10.  The report produced in accordance with paragraph 9 shall in particular:

     (a)  detail the  activities of the  compliance  officer during the relevant
          year;

     (b)  refer to such other matters as are or may be  appropriate  in relation
          to the implementation of the practices, procedures and systems adopted
          in accordance with the statement referred to at paragraph 1; and

     (c)  set out the details of any investigations  conducted by the compliance
          officer, including:

          (i)  the number,  type and source of the complaints or representations
               on which such investigations were based;

          (ii) the outcome of such investigations; and

          (iii)any  remedial  action  taken  by  the  licensee   following  such
               investigations.

11.  The licensee shall submit to the Authority a copy of the report produced in
     accordance with paragraph 9, and shall give or send a copy of the report to
     any person who requests such a copy.

                                     -130-
<PAGE>

12.  In this condition:


     "relevant duties"

                    means  the  obligations  set out at  standard  condition  39
                    (Restriction on Use of Certain  Information and Independence
                    of the  Distribution  Business) and the terms and conditions
                    of any direction  issued pursuant to paragraph 7 of standard
                    condition 39.

                                     -131-
<PAGE>

CONDITION 41. PROHIBITION OF CROSS-SUBSIDIES
--------------------------------------------

1.   The licensee  shall procure that the  distribution  business shall not give
     any cross-subsidy to, or receive any cross-subsidy from, any other business
     of the licensee or of an affiliate or related undertaking of the licensee.

                                     -132-

<PAGE>


CONDITION 42. REGULATORY ACCOUNTS
---------------------------------

1.   The  following  paragraphs  of this  condition  apply  for the  purpose  of
     ensuring  that the  licensee  (and any  affiliate  or related  undertaking)
     maintains  accounting and reporting  arrangements  which enable  regulatory
     accounts to be prepared  for the  consolidated  distribution  business  and
     showing the financial affairs of the consolidated distribution business.

2.   Unless the  Authority  otherwise  consents  (such  consent  may be given in
     relation to some or all of the  obligations  in this  condition  and may be
     given subject to such conditions as the Authority  considers  appropriate),
     the licensee shall:

     (a)  keep  or  cause  to be kept  for the  period  referred  to in  section
          222(5)(b) of the Companies  Act 1985 and in the manner  referred to in
          that section such  accounting  records in respect of the  consolidated
          distribution   business   so  that  the   revenues,   costs,   assets,
          liabilities,  reserves and provisions  of, or reasonably  attributable
          to, the consolidated distribution business are separately identifiable
          in the  accounting  records  of the  licensee  (and any  affiliate  or
          related undertaking) from those of any other business of the licensee;

     (b)  prepare on a consistent basis from such accounting  records in respect
          of:

          (i)  each financial year,  accounting  statements  comprising a profit
               and loss  account,  a  statement  of total  recognised  gains and
               losses, a balance sheet, and a cash flow statement, together with
               notes  thereto,   and  showing   separately  in  respect  of  the
               consolidated  distribution business and in appropriate detail the
               amounts  of any  revenue,  cost,  asset,  liability,  reserve  or
               provision which has been either:

               (aa) charged  from  or to  any  other  business  together  with a
                    description of the basis of that charge; or

                                     -133-
<PAGE>

               (bb) determined  by  apportionment  or  allocation   between  the
                    consolidated  distribution  business and any other  business
                    together   with  a   description   of  the   basis   of  the
                    apportionment or allocation; and

          (ii) the first six months of each  financial  year, an interim  profit
               and loss account; and

          (iii)each financial year, sufficient accounting information in respect
               of  the   consolidated   distribution   business   to  allow  the
               preparation of consolidated accounting statements of the licensee
               or, where applicable,  the ultimate controller.  Such information
               shall  include a profit and loss  account,  a statement  of total
               recognised  gains and losses,  a balance  sheet,  and a cash flow
               statement together with notes thereto;

     (c)  procure,   in  respect  of  the  accounting   statements  prepared  in
          accordance  with this condition in respect of each  financial  year, a
          report by the auditors and addressed to the Authority  stating whether
          in their  opinion  those  statements  have been  properly  prepared in
          accordance  with this  condition  and give a true and fair view of the
          revenues, costs, assets,  liabilities,  reserves and provisions of, or
          reasonably attributable to, the consolidated  distribution business to
          which the statements relate; and

     (d)  deliver  to  the  Authority  a  copy  of the  account  referred  to in
          sub-paragraph   (b)(ii),   the   auditors'   report   referred  to  in
          sub-paragraph   (c),  the   accounting   statements   referred  to  in
          sub-paragraph  (b)(i) and the  accounting  information  referred to in
          sub-paragraph (b)(iii), as soon as reasonably practicable,  and in any
          event not later than three months after the end of the period to which
          it relates in the case of the  account  referred  to in  sub-paragraph
          (b)(ii) and six months  after the end of the  financial  year to which
          they relate in the case of the accounting statements, auditors' report
          and  accounting  information  referred  to in  sub-paragraphs  (b)(i),
          (b)(iii) and (c).

                                     -134-
<PAGE>


3.   Unless the Authority so specifies in directions  issued for the purposes of
     this  condition,  or with  the  Authority's  prior  written  approval,  the
     licensee shall not in relation to the accounting statements in respect of a
     financial  year change the bases of charge or  apportionment  or allocation
     referred to in  sub-paragraph  2(b)(i) from those applied in respect of the
     previous financial year.

4.   Where,  in relation to the accounting  statements in respect of a financial
     year,  the licensee has changed  such bases of charge or  apportionment  or
     allocation from those adopted for the immediately preceding financial year,
     the licensee shall,  if so directed in directions  issued by the Authority,
     in addition to preparing accounting  statements on those bases which it has
     adopted,  prepare such accounting  statements on the bases which applied in
     respect of the immediately preceding financial year.

5.   Accounting  statements  and  information  in  respect of a  financial  year
     prepared  under  sub-paragraph  2(b)(i)  and  (b)(iii)  shall,  so  far  as
     reasonably  practicable  and unless  otherwise  approved  by the  Authority
     having regard to the purposes of this condition:

     (a)  have the same  content  and format as the  statutory  accounts  of the
          licensee  prepared under section 226 and, where  appropriate,  section
          227 of the  Companies  Act 1985  and  conform  to the best  commercial
          accounting  practices  including  all  relevant  accounting  standards
          issued or adopted  by the  Accounting  Standards  Board  currently  in
          force;

     (b)  state the accounting policies adopted; and

     (c)  with the  exception  of the part of such  statements  and  information
          which shows separately the amounts  charged,  apportioned or allocated
          and  describes  the  bases of charge or  apportionment  or  allocation
          respectively,   be  published  with  the  statutory  accounts  of  the
          licensee.

6.   Unless  the   accounting   statements   and   information   prepared  under
     sub-paragraph  2(b)(i) and  (b)(iii) are prepared on the current cost basis
     as provided by the alternative

                                     -135-
<PAGE>


     accounting  rules,  the  licensee  shall,  unless  otherwise  agreed by the
     Authority,  in addition to preparing those accounting statements under that
     paragraph,  prepare accounting statements for the consolidated distribution
     business   covering  the  same  period,   which  shall  comprise  and  show
     separately:

     (a)  a profit and loss account,  a statement of total  recognised gains and
          losses,  a balance  sheet,  and a cash flow  statement,  together with
          notes thereto, which shall:

          (i)  include in respect of current cost assets  amounts  determined on
               the current cost basis as provided by the alternative  accounting
               rules; and

          (ii) show or disclose the  information  and other matters  required by
               the  alternative  accounting  rules to be shown or  disclosed  in
               accounts where the amounts  included in respect of assets covered
               by any items shown in those accounts have been  determined on any
               basis  mentioned  in  paragraph  31 of  section  C of  Part II of
               Schedule 4 to the Companies Act 1985;

     (b)  in respect of the  consolidated  distribution  business  the  adjusted
          amount of any such  provision  for  depreciation  as is referred to in
          paragraph 32(2) of section C of Part II of Schedule 4 to the Companies
          Act 1985 and the items  shown in the  profit  and loss  account of the
          consolidated  distribution  business for the relevant period which are
          affected by the  determination of amounts on the current cost basis as
          provided by the alternative accounting rules, including the profit (or
          loss) before taxation; and

     (c)  such other current cost  information as is referred to in the handbook
          as the Authority may reasonably require;

     and shall deliver the same,  together with an auditors'  report prepared in
     relation  to the  current  cost  basis  accounting  statements  in the form
     referred to in  sub-paragraph  2(c), to the Authority within the time limit
     referred to in  sub-paragraph  2(d),  and shall (with the  exception of the
     part of such statements and information which shows separately the

                                     -136-

<PAGE>

     amounts charged, apportioned or allocated and describes the bases of charge
     or  apportionment  or  allocation  respectively)  publish the same with the
     statutory accounts of the licensee.

7.   References  in this  condition to costs or  liabilities  of, or  reasonably
     attributable to, the consolidated  distribution business shall be construed
     as  excluding  taxation  and  capital   liabilities  which  do  not  relate
     principally  to  the  consolidated   distribution  business,  and  interest
     thereon;  and  references to any profit and loss account shall be construed
     accordingly.

8.   Without  prejudice to paragraph 5 of the terms of this licence,  references
     in this  condition to sections of the Companies Act 1985 are  references to
     those  provisions  as amended,  substituted  or  inserted  by the  relevant
     provisions  of the  Companies  Act  1989  and  if  such  provisions  of the
     Companies  Act 1989  are not in force at the date of grant of this  licence
     shall be construed as if such provisions were in force at such date.

9.   For the purposes of paragraph 6:

      "alternative accounting rules"

                    means the rules set out in section C of Part II of  Schedule
                    4 to the Companies Act 1985.

     "current cost assets"

                    means assets of any description mentioned in paragraph 31 of
                    section  C of Part II of  Schedule  4 to the  Companies  Act
                    1985.

     "the handbook"

                    means  the  handbook  issued  by  the  Accounting  Standards
                    Committee of the Consultative

                                     -137-
<PAGE>

                    Committee  of  Accounting   Bodies  (CCAB  Limited)  or  any
                    successor  body  entitled  "Accounting  for the  effects  of
                    changing  prices: a handbook" in its current edition for the
                    time being or in the event that no such handbook shall be in
                    issue  such  guidance  or  publication  as may be  issued in
                    replacement or substitution therefor.

10.    For the purposes of this condition:

          "consolidated distribution business"

                    means the consolidation, for regulatory accounting purposes,
                    of  the   businesses   referred  to  in  the  definition  of
                    "distribution  business" as defined in standard  condition 1
                    (Definitions and Interpretation).

          "regulatory accounts"

                    means the  accounts  required to be prepared by the licensee
                    pursuant to this condition.

                                     -138-

<PAGE>


CONDITION 42A. CHANGE OF FINANCIAL YEAR
---------------------------------------

1.   The definition of "financial year" in standard condition 1 (Definitions and
     Interpretation)  shall,  for the purpose only of the statutory  accounts of
     the  licensee,  cease to apply to the  licensee  from the date the licensee
     sends a notice to the Authority for that purpose.

2.   Such notice:


     (a)  shall  specify  the  date  from  which,  for  the  purpose  set out at
          paragraph  1,  the  current  and  subsequent  financial  years  of the
          licensee shall run; and

     (b)  shall  continue  in effect  until  revoked by the  licensee  issuing a
          further notice.

3.   While the  notice  continues  in effect  the  licensee  shall  procure  the
     preparation  of and shall deliver to the Authority  audited group  accounts
     for its group of companies for each financial year.


4.   Audited group accounts produced in accordance with paragraph 3:


     (a)  shall comprise  consolidated group accounts in respect of the group of
          companies;

     (b)  shall,  save insofar as is necessary to reflect a different  financial
          year, have the same form and content as the statutory  accounts of the
          licensee;

     (c)  shall be  accompanied by a report by the auditors and addressed to the
          Authority  stating whether in their opinion the audited group accounts
          have been properly prepared in accordance with this condition and give
          a true and

                                     -139-
<PAGE>

          fair view of the state of affairs of the group of companies and of its
          profits or  losses,  total  recognised  gains or losses and cash flows
          during the financial year;


     (d)  may, with the prior written consent of the Authority,  omit or provide
          in a different form, specified in the consent, such information as may
          be specified in the consent; and


     (e)  shall clearly disclose any differences between the accounting policies
          underlying the  preparation of the statutory  accounts of the licensee
          and the accounting  policies underlying the preparation of the audited
          group accounts.

5.   The licensee  may, for the purpose only of its statutory  accounts,  change
     its  financial  year  from  that  previously  notified  by  sending  to the
     Authority a new notice  pursuant to paragraph  1. Where the licensee  sends
     the  Authority  a new notice  the  previous  notice  shall be  revoked,  as
     provided by  sub-paragraph  2(b).  The licensee's  financial  year-end will
     change  with  effect from the date  specified  in the new  notice.  The new
     notice shall specify the licensee's new financial year-end.


6.   No provisions of this  condition  shall apply to the financial  year of the
     licensee   as  defined   in   standard   condition   1   (Definitions   and
     Interpretation)  for the purpose of accounts  produced in  compliance  with
     standard  condition  42  (Regulatory  Accounts).   No  provisions  of  this
     condition shall affect the licensee's  obligations in respect of payment of
     licence  fees under  standard  condition 3 (Payments by the Licensee to the
     Authority).

                                     -140-
<PAGE>

CONDITION 43. RESTRICTION ON ACTIVITY AND FINANCIAL RING FENCING
----------------------------------------------------------------

1.   Save as provided by paragraphs 3 and 4, the licensee  shall not conduct any
     business or carry on any activity other than the distribution business.

2.   The licensee  shall not without the prior written  consent of the Authority
     hold or acquire shares or other investments of any kind except:

     (a)  shares or other  investments  in a body corporate the sole activity of
          which is to carry on business for a permitted purpose; or

     (b)  shares or other  investments in a body corporate which is a subsidiary
          of the  licensee  and  incorporated  by it solely  for the  purpose of
          raising finance for the distribution business; or

     (c)  investments   acquired  in  the  usual  and  ordinary  course  of  the
          licensee's  treasury  management  operations,  subject to the licensee
          maintaining  in force,  in relation to those  operations,  a system of
          internal  controls  which  complies  with  best  corporate  governance
          practice  as  required  (or in the  absence  of any  such  requirement
          recommended)  from time to time for  listed  companies  in the  United
          Kingdom.

3.   Subject to the  provisions of paragraph 2 nothing in this  condition  shall
     prevent:

     (a)  any  affiliate  in which the  licensee  does not hold  shares or other
          investments from conducting any business or carrying on any activity;

     (b)  the licensee from holding shares as, or performing the  supervisory or
          management  functions of, an investor in respect of any body corporate
          in which it holds an interest  consistent  with the provisions of this
          licence;

     (c)  the licensee from performing the  supervisory or management  functions
          of a holding company in respect of any subsidiary; or

                                     -141-
<PAGE>

     (d)  the licensee from carrying on any business or conducting  any activity
          to which the Authority has given its consent in writing;

4.   Nothing in this  condition  shall  prevent the  licensee or an affiliate or
     related  undertaking  of the licensee in which the licensee holds shares or
     other investments (a `relevant  associate')  conducting de-minimis business
     as defined in this paragraph so long as the  limitations  specified in this
     paragraph are complied with.

     (a)  For the purpose of this  paragraph "  de-minimis  business"  means any
          business  or  activity  carried  on  by  the  licensee  or a  relevant
          associate or relevant associates other than:

          (i)  the distribution business; and

          (ii) any other business  activity to which the Authority has given its
               consent in writing in accordance with paragraph 3(d).

     (b)  The licensee or a relevant associate may carry on de-minimis  business
          provided  that the  relevant  associate  carries on no other  business
          except activities of the distribution business and business activities
          authorised by the Authority  under  paragraph 3(d), and neither of the
          following limitations is exceeded, namely:

          (i)  the aggregate turnover of all the de-minimis  business carried on
               by the licensee and all its relevant  associates  does not in any
               period of twelve months  commencing on 1 April of any year exceed
               2 1/2% of the aggregate turnover of the distribution  business as
               shown by the most recent  audited  accounting  statements  of the
               licensee  produced under  paragraphs  2(b)(i) and (c) of standard
               condition 42 (Regulatory Accounts); and

          (ii) the aggregate amount (determined in accordance with sub-paragraph
               (d) below) of all  investments  made by the  licensee and all its
               relevant  associates in their  de-minimis  business or de-minimis
               businesses  does not at any time  after the date  this  condition
               takes  effect in this

                                     -142-
<PAGE>

               licence exceed 2 1/2% of the sum of share capital in issue, share
               premium and consolidated reserves of the licensee as shown by its
               most recent audited  historical  cost financial  statements  then
               available.

     (c)  For the purpose of sub-paragraph  (b) of this paragraph,  "investment"
          means  any form of  financial  support  or  assistance  given by or on
          behalf of the  licensee  or a relevant  associate  for the  de-minimis
          business whether on a temporary or permanent basis including  (without
          limiting the  generality of the  foregoing)  any commitment to provide
          any such support or assistance in the future.

     (d)  At any relevant time, the amount of an investment shall be the sum of:

          (i)  the value at which such  investment  was  included in the audited
               historical  cost  balance  sheet of the  licensee  or a  relevant
               associate  as at its  latest  accounting  reference  date to have
               occurred  prior to the date this  condition  takes effect in this
               licence (or, where the investment was not so included, zero);

          (ii) the  aggregate  gross  amount of all  expenditure  (whether  of a
               capital or revenue nature) howsoever  incurred by the licensee or
               a  relevant  associate  in  respect  of  such  investment  in all
               completed  accounting  reference  periods  since such  accounting
               reference date; and

          (iii)all commitments  and  liabilities  (whether actual or contingent)
               of  the  licensee  or  a  relevant  associate  relating  to  such
               investment  outstanding at the end of the most recently completed
               accounting reference period.

                                     -143-
<PAGE>

CONDITION 44.  AVAILABILITY OF RESOURCES
----------------------------------------

1.   The licensee  shall at all times act in a manner  calculated to secure that
     it has available to it all such resources,  including (without  limitation)
     management and financial resources,  personnel,  fixed and moveable assets,
     rights,  licences,  consents and facilities on such terms and with all such
     rights as shall ensure that it is at all times able:

     (a)  to properly and efficiently to carry on the distribution business; and

     (b)  to comply in all respects with its obligations  under this licence and
          such obligations  under the Act as apply to the distribution  business
          including,  without  limitation,  its duty to develop and  maintain an
          efficient,   co-ordinated   and   economical   system  of  electricity
          distribution.

2.   The licensee  shall submit a certificate  to the  Authority,  approved by a
     resolution  of the  board of  directors  of the  licensee  and  signed by a
     director of the  licensee  pursuant to that  resolution.  Such  certificate
     shall be submitted in June of each year. Each  certificate  shall be in one
     of the following forms:

     (a)  "After  making  enquiries,  the  directors  of  the  licensee  have  a
          reasonable  expectation  that the licensee will have  available to it,
          after taking into account in particular  (but without  limitation) any
          dividend or other  distribution  which might reasonably be expected to
          be declared or paid,  sufficient  financial  resources  and  financial
          facilities  to  enable  the  licensee  to  carry  on the  distribution
          business for a period of 12 months from the date of this certificate."

     (b)  "After  making  enquiries,  the  directors  of  the  licensee  have  a
          reasonable  expectation,  subject  to  what is said  below,  that  the
          licensee  will have  available  to it,  after  taking into  account in
          particular (but without limitation) any dividend or other distribution
          which might reasonably be expected to be declared or paid,  sufficient
          financial resources and financial facilities to enable the licensee to
          carry on the distribution  business for a period of 12 months from the
          date of this
                                     -144-
<PAGE>

          certificate.  However,  they  would  like  to  draw  attention  to the
          following  factors which may cast doubt on the ability of the licensee
          to carry on the distribution business."

     (c)  "In the opinion of the  directors of the  licensee,  the licensee will
          not have available to it sufficient  financial resources and financial
          facilities  to  enable  the  licensee  to  carry  on the  distribution
          business for a period of 12 months from the date of this certificate."

3.   The  licensee  shall  submit  to the  Authority  with  that  certificate  a
     statement of the main  factors  which the  directors  of the licensee  have
     taken into account in giving that certificate.

4.   The licensee  shall  inform the  Authority  in writing  immediately  if the
     directors of the licensee  become  aware of any  circumstance  which causes
     them no longer to have the  reasonable  expectation  expressed  in the then
     most recent certificate given under paragraph 2.

5.   The  licensee  shall use its best  endeavours  to obtain  and submit to the
     Authority  with  each  certificate  provided  for in  paragraph  2 a report
     prepared by its auditors and addressed to the Authority  stating whether or
     not the auditors are aware of any inconsistencies between, on the one hand,
     that  certificate  and the  statement  submitted  with it and, on the other
     hand, any information which they obtained during their audit work.

6.   The  directors of the  licensee  shall not declare or recommend a dividend,
     nor shall the  licensee  make any other  form of  distribution  within  the
     meaning of  section  263 of the  Companies  Act 1985,  unless  prior to the
     declaration,  recommendation or making of the distribution (as the case may
     be) the licensee shall have issued to the Authority a certificate complying
     with the following requirements of this paragraph.

     (a)  The certificate shall be in the following form:

                                     -145-
<PAGE>


          "After making enquiries, the directors of the licensee are satisfied:

          (i)  that the licensee is in compliance in all material  respects with
               all obligations imposed on it by standard condition 24 (Provision
               of  Information  to  the   Authority),   standard   condition  43
               (Restriction  on Activity and Financial  Ring-fencing),  standard
               condition 44 (Availability of Resources),  standard  condition 45
               (Undertaking  from Ultimate  Controller),  standard  condition 46
               (Credit  Rating)  and  paragraph  1 of  standard  condition  47 (
               Indebtedness) of the licence; and

          (ii) that the making of a distribution  of [ ] on [ ] will not, either
               alone or when taken together with other circumstances  reasonably
               foreseeable at the date of this  certificate,  cause the licensee
               to be in breach to a material extent of any of these  obligations
               in the future.

     (b)  The  certificate  shall be signed by a director  of the  licensee  and
          approved by a  resolution  of the board of  directors  of the licensee
          passed not more than 14 days before the date on which the declaration,
          recommendation or payment will be made.

     (c)  Where the certificate has been issued in respect of the declaration or
          recommendation  of  a  dividend,   the  licensee  shall  be  under  no
          obligation  to issue a further  certificate  prior to  payment of that
          dividend  provided  such  payment  is made  within  six months of that
          certificate.

                                     -146-
<PAGE>

CONDITION 45.  UNDERTAKING FROM ULTIMATE CONTROLLER
---------------------------------------------------

1.   The  licensee  shall  procure  from each  company or other person which the
     licensee  knows  or  reasonably  should  know is at any  time  an  ultimate
     controller of the licensee a legally  enforceable  undertaking in favour of
     the licensee in the form  specified  by the  Authority  that that  ultimate
     controller  ("the  covenantor")  will  refrain  from any  action,  and will
     procure that any person (including,  without limitation,  a corporate body)
     which is a subsidiary of, or is controlled  by, the covenantor  (other than
     the licensee  and its  subsidiaries)  will  refrain from any action,  which
     would then be likely to cause the licensee to breach any of its obligations
     under the Act or this licence.  Such undertaking shall be obtained within 7
     days of the  company  or other  person in  question  becoming  an  ultimate
     controller  and shall remain in force for as long as the  licensee  remains
     the  holder  of  this  licence  and  the  covenantor  remains  an  ultimate
     controller of the licensee.

2.     The licensee shall:

(a)  deliver  to  the  Authority  evidence   (including  a  copy  of  each  such
     undertaking)  that the licensee has complied with its obligation to procure
     undertakings pursuant to paragraph 1;

(b)  inform  the  Authority  immediately  in  writing  if the  directors  of the
     licensee  become aware that any such  undertaking  has ceased to be legally
     enforceable or that its terms have been breached; and

(c)  comply  with  any  direction   from  the  Authority  to  enforce  any  such
     undertaking;

     and shall not,  save with the  consent in writing of the  Authority,  enter
     (directly  or  indirectly)  into  any  agreement  or  arrangement  with any
     ultimate  controller of the licensee or of any of the  subsidiaries  of any
     such corporate  ultimate  controller  (other than the  subsidiaries  of the
     licensee) at a time when,

                                     -147-
<PAGE>

     (i)  an undertaking  complying with paragraph 1 is not in place in relation
          to that ultimate controller; or

     (ii) there is an unremedied breach of such undertaking; or

     (iii) the licensee is in breach of the terms of any direction issued by the
           Authority under paragraph 2 of this condition.

                                     -148-

<PAGE>

CONDITION 46.  CREDIT RATING OF LICENSEE
----------------------------------------

1.   The  licensee  shall  use all  reasonable  endeavours  to  ensure  that the
     licensee maintains at all times an investment grade issuer credit rating.

2.   In this condition:

      "investment grade issuer credit rating" means:

     (a)  an issuer  rating of not less than BBB- by  Standard & Poor's  Ratings
          Group or any of its  subsidiaries  or a  corporate  rating of not less
          than  Baa3  by  Moody's  Investors   Service,   Inc.  or  any  of  its
          subsidiaries  or such higher rating as shall be specified by either of
          them from time to time as the lowest  investment  grade credit rating,
          or

     (b)  an  equivalent  rating from any other  reputable  credit rating agency
          which,  in the  opinion of the  Authority,  notified in writing to the
          licensee, has comparable standing in the United Kingdom and the United
          States of America.

                                     -149-

<PAGE>

CONDITION 47. INDEBTEDNESS
--------------------------

1.   In addition to the  requirements  of standard  condition  29  (Disposal  of
     Relevant Assets),  the licensee shall not without the prior written consent
     of the Authority  (following the disclosure by the licensee of all material
     facts):

     (a)  create or continue or permit to remain in effect any mortgage, charge,
          pledge,  lien or other form of  security  or  encumbrance  whatsoever,
          undertake  any  indebtedness  to any other  person  or enter  into any
          guarantee or any obligation otherwise than:

          (i)  on an arm's length basis;

          (ii) on normal commercial terms;

          (iii) for a permitted purpose; and

          (iv) (if the transaction is within the ambit of standard  condition 29
               (Disposal of Relevant Assets)) in accordance with that condition;

     (b)  transfer,  lease,  license  or lend any sum or sums,  asset,  right or
          benefit  to any  affiliate  or  related  undertaking  of the  licensee
          otherwise than by way of:

               (i)  a  dividend  or  other  distribution  out  of  distributable
                    reserves;

               (ii) repayment of capital;

               (iii)payment  properly  due for any  goods,  services  or  assets
                    provided on an arm's length  basis and on normal  commercial
                    terms;

               (iv) a  transfer,  lease,  licence  or loan  of any sum or  sums,
                    asset,  right or benefit on an arm's length basis, on normal
                    commercial  terms and made in  compliance  with the  payment
                    condition;

               (v)  repayment of or payment of interest on a loan not prohibited
                    by sub-paragraph (a);

                                     -150-
<PAGE>

               (vi) payments  for  group  corporation  tax  relief  or  for  the
                    surrender of Advance  Corporation  Tax calculated on a basis
                    not exceeding the value of the benefit received ; or

               (vii)an acquisition of shares or other  investments in conformity
                    with paragraph 2 of standard  condition 43  (Restriction  on
                    Activity and Financial Ring Fencing) made on an arm's length
                    basis and on normal commercial terms;

     (c)  enter  into  an  agreement  or  incur  a  commitment  incorporating  a
          cross-default obligation; or

     (d)  continue  or permit to remain in effect any  agreement  or  commitment
          incorporating a cross-default  obligation  subsisting at the date this
          condition  takes  effect in this  licence,  save that the licensee may
          permit  any  cross-default  obligation  in  existence  at that date to
          remain in effect for a period not  exceeding  twelve  months from that
          date,  provided that the cross-default  obligation is solely referable
          to an  instrument  relating  to  the  provision  of a  loan  or  other
          financial facilities granted prior to that date and the terms on which
          those  facilities  have been made available as subsisting on that date
          are not varied or otherwise made more onerous.

     (e)  the provisions of  sub-paragraphs  (c) and (d) of this paragraph shall
          not prevent the licensee  from giving any  guarantee  permitted by and
          compliant with the requirements of sub-paragraph (a).

     (f)  The payment condition referred to in sub-paragraph (b)(iv) is that the
          consideration due in respect of the transaction in question is paid in
          full when the transaction is entered into unless either:

          (i)  the  counter-party  to the  transaction  has and maintains  until
               payment is made in full an investment grade issuer credit rating,
               or

          (ii) the obligations of the counter-party to the transaction are fully
               and unconditionally guaranteed throughout the period during which
               any part
                                     -151-
<PAGE>

               of the consideration remains outstanding by a guarantor which has
               and maintains an investment grade issuer credit rating.

2.   In this condition:

     "cross-default obligation"

                    means a term of any  agreement  or  arrangement  whereby the
                    licensee's  liability  to pay or repay any debt or other sum
                    arises or is  increased  or  accelerated  or is  capable  of
                    arising,  increasing  or  of  acceleration  by  reason  of a
                    default (howsoever such default may be described or defined)
                    by any person other than the licensee, unless:

               (i)  that  liability can arise only as the result of a default by
                    a subsidiary of the licensee,

               (ii) the licensee  holds a majority of the voting  rights in that
                    subsidiary and has the right to appoint or remove a majority
                    of its board of directors, and

               (iii)that  subsidiary  carries  on  business  only for a  purpose
                    within paragraph (a) of the definition of permitted purpose.

     "indebtedness"

                    means  all  liabilities  now  or  hereafter  due,  owing  or
                    incurred,  whether actual or  contingent,  whether solely or
                    jointly  with any other  person and whether as  principal or

                                     -152-

<PAGE>
                    surety,  together with any interest accruing thereon and all
                    costs,   charges,   penalties   and  expenses   incurred  in
                    connection therewith.

                                     -153-


<PAGE>

CONDITION 48.  LAST RESORT SUPPLY: PAYMENT CLAIMS
-------------------------------------------------

1.   This  condition  sets out the  circumstances  in which the  licensee  shall
     increase its use of system charges in order to compensate  any  electricity
     supplier (a  "claimant")  which  claims for losses that it has  incurred in
     complying with a last resort supply direction.

2.   The following  provisions apply where the licensee receives from a claimant
     a valid claim for a last resort supply payment.

3.   Where the  licensee  receives a valid claim it shall,  during the  relevant
     year, make a consequential increase to its use of system charges in respect
     of that year which relate to the distribution of electricity to premises to
     such an extent as it reasonably  estimates to be appropriate to secure that
     such consequential increase in its revenue equals the specified amount.

3.   The licensee shall, during, or as soon as practicable after the end of, the
     relevant year, pay to the claimant, by quarterly or monthly instalments (as
     specified  in the  claim),  the amount of that  consequential  increase  in
     revenue  mentioned in paragraph 3 to the extent that it does not exceed the
     specified amount.

4.   If the  amount  paid to the  claimant  under  paragraph  4 is less than the
     specified amount, the licensee shall in the following year -

     (a)  pay to the claimant (in accordance  with any  directions  given by the
          Authority) the shortfall  together with 12 months'  interest  thereon;
          and

     (b)  increase the charges which relate to the  distribution  of electricity
          to premises during the year following the relevant year to such extent
          as it  reasonably  estimates  to be  appropriate  to  secure  that the
          consequential

                                     -154-
<PAGE>

          increase in its revenue equals the amount of that  shortfall  together
          with 12 months' interest thereon.

5.   If the  amount of the  consequential  increase  mentioned  in  paragraph  3
     exceeds the specified amount, the licensee shall, during the year following
     the relevant year, decrease the charges which relate to the distribution of
     electricity  to premises to the extent that it  reasonably  estimates to be
     necessary in order to reduce its use of system  revenue for that year by an
     amount equal to the excess together with 12 months' interest thereon.

6.   Any  question  whether any estimate for the purposes of paragraph 3, 5 or 6
     is a reasonable one shall be determined by the Authority.

7.   The  licensee  shall not enter  into any use of  system  agreement  with an
     electricity  supplier which does not permit  variation of its use of system
     charges in pursuance of this condition.

8.   The provisions of this condition shall have effect notwithstanding that the
     licensee has not  provided the notice  required by paragraph 13 of standard
     condition 4 (Basis of Charges for Use of System and  Connection  to System:
     Requirements for Transparency).

9.   In  calculating  the licensee's use of system revenue during any period for
     the  purposes  of a price  control  condition  any  increase or decrease in
     revenue attributable to the licensee's compliance with this condition shall
     be treated as if it had not occurred.

11.  The licensee shall  prepare,  in respect of each year in which it increases
     or  decreases  charges in  pursuance  of  paragraph  3, 5 or 6, a statement
     showing -

                                     -155-
<PAGE>


     (a)  the aggregate  amount of its revenue derived from increases in charges
          in pursuance of paragraph 3;

     (b)  the aggregate  amount of its revenue derived from increases in charges
          in pursuance of paragraph 5;

     (c)  the  aggregate  amount of the decrease in its revenue  resulting  from
          decreases in charges in pursuance of paragraph 6; and

     (d)  in the case of each last resort supply payment, the aggregate payments
          to the  claimant  made in  respect of the year in  question  (whenever
          those payments were made).

12.  The licensee shall give the  statements  referred to in paragraph 11 to the
     Authority  within  the first 4 months of the year  following  that to which
     they relate.

13.  On giving the statement mentioned in paragraph 11(d) to the Authority,  the
     licensee shall publish it in such manner as, in the  reasonable  opinion of
     the licensee, will secure adequate publicity for it.

14.  Where the licensee  receives more than one claim for a last resort payment,
     this condition (other than  sub-paragraphs  11(a), (b) and (c)) shall apply
     separately as respects  each separate  claim but in so far as it results in
     changes  to  the  licensee's  use of  system  charges  it  shall  have  the
     cumulative effect of such separate applications.

15.  (a) For the purposes of this condition -

          "last resort supply  direction" and "last resort supply payment" have,
          respectively  the  meanings  given to them in standard  conditions  29
          (Supplier  of Last  Resort)

                                     -156-
<PAGE>

          and 29A  (Supplier  of Last Resort  Supply  Payments)  of the standard
          conditions of the electricity supply licence;

          "price  control  condition"  means any  condition of the licence which
          places a monetary limitation on the use of system charges which may be
          levied or the use of system  revenue  which  may be  recovered  by the
          licensee during a given period;

          "relevant year" means, in relation to any valid claim -

     (a)  where the claim was  received by the  licensee at least 60 days before
          the beginning of a year, that year; or

     (b)  where the claim was received by the licensee  less than 60 days before
          the beginning of a year, the next year;

     "specified  amount"  means the amount  specified on a valid claim  together
     with interest calculated in accordance with sub-paragraph (b);

     "valid claim" means a claim for which a claimant has been give a consent by
     the Authority  pursuant to standard  condition 29A (Supplier of Last Resort
     Supply  Payments)  of the standard  conditions  of the  electricity  supply
     licence; and "year" means a period of 12 months beginning with 1st April.

     (b)  The interest  referred to in sub-paragraph  (a) is simple interest for
          the  period  commencing  with the date on which  the  valid  claim was
          received  by the  licensee  and ending  with the date which is 61 days
          before the start of the relevant year,  except where that period is of
          30 days or less, in which case no interest shall be payable.

                                     -157-

<PAGE>

CONDITION 49.  INCENTIVE SCHEME AND ASSOCIATED INFORMATION
----------------------------------------------------------


1.   The  principal  purpose of this  condition is to secure the  collection  of
     information on a common basis, and to an appropriate degree of accuracy, by
     each distribution services provider so as:

     (a)  to facilitate the  establishment  and operation of an incentive scheme
          ("the  scheme") to improve the operation  and delivery of  appropriate
          outputs of the licensee; and

     (b)  to monitor any perverse  incentives  arising from the  collection  and
          publication of such  information  and from the operation of the scheme
          and the charge restriction conditions.

2.   The licensee shall establish appropriate systems,  processes and procedures
     to measure and record  specified  information  from the dates  specified in
     paragraph 4 and in accordance  with  Regulatory  Instructions  and Guidance
     (including any associated information specified therein).

3.   For the purposes of this condition:

     "charge  restriction  conditions" shall have the same meaning as in special
     condition A (Definitions) for licensed distributors in England and Wales or
     special condition B for licensed distributors in Scotland;

     "charging  review  date"  means the date from  which  modifications  to the
     charge  restriction   conditions  relating  to  all  distribution  services
     providers have effect:

     (a)  whether  before  or after the date upon  which the  modifications  are
          made;

                                     -158-
<PAGE>

     (b)  whether  or not the same  modifications  are made in  respect  of each
          distribution services provider; and

     (c)  where such modifications have been proposed by the Authority following
          a review by the  Authority of the charge  restriction  conditions  (or
          that  part to which  the  modifications  relate)  in  relation  to all
          distribution services providers;

     "Regulatory  Instructions and Guidance" means any instructions and guidance
     issued by the Authority for the purposes of this condition as modified from
     time to time by notice under paragraph 9 and may include:

     (a)  instructions  and  guidance  as  to  the  establishment  of  different
          systems, processes, procedures and manners for providing and recording
          information and of standards for different classes of information;

     (b)  a  timetable  for  the  development  of  the  systems,  processes  and
          procedures  required to achieve the appropriate  standards of accuracy
          and reliability with which specified information shall be recorded;

     (c)  the  meaning  of  words  and  phrases   used  in  defining   specified
          information;

     (d)  requirements   for  the  recording  of  information   associated  with
          specified  information  which are  reasonably  necessary  to enable an
          examiner to  determine  the  accuracy  and  reliability  of  specified
          information;

     (e)  requirements as to the form and manner in which specified  information
          shall be provided to the Authority;

                                     -159-
<PAGE>

     (f)  requirements as to the manner in which specified  information shall be
          recorded  and as to the  standards of accuracy  and  reliability  with
          which it shall be recorded; and

     (g)  a  statement  as to  whether  and to  what  extent  each  category  of
          specified information is required for the purposes of the scheme;

         "specified information" means:

          (a)  the number of interruptions in the supply of electricity  through
               the licensee's  distribution system which occur in each period of
               12 months  commencing on 1 April in each calendar year and have a
               duration of -

               (i)  less  than  three  minutes,  together  (in  respect  of each
                    interruption)  with the number of customers whose supply was
                    interrupted  and the  cause of that  interruption;  and

               (ii) three  minutes  or  more,   together  (in  respect  of  each
                    interruption)  with -

                    (aa) the number of customers whose supply of electricity was
                         interrupted and the duration of the interruption;

                    (bb) the source, voltage level and HV circuit; and

                    (cc) the aggregate number of re-interruptions;

          (b)  in  relation  to  telephone  calls  made to the  enquiry  service
               operated  under  paragraph 1 of standard  condition 6 (Safety and
               Security of Supplies Enquiry Service) -

               (i)  the speed of response for answering each call; and

               (ii) in the case of each call answered by a human operator -

                    (aa) the telephone number of the caller;

                                     -160-
<PAGE>


                    (bb) the time of the call; and

                    (cc) if known, the name of the caller and whether the caller
                         is or is not a domestic customer;


          (c)  (i)the   aggregate  number  and  cause  of  faults  occurring  in
               specified classes or types of electrical plant or electric lines:

               (ii) a statement setting out the asset management strategy of the
                    licensee in respect of the licensee's  distribution  system;
                    and

               (iii)a  statement  of the reasons  for any  material  increase or
                    decrease  in the number and cause of faults  referred  to in
                    sub-paragraph  (i) having regard to equivalent  data held in
                    respect of previous years; and

          (d)  such other  information  as may from time to time be specified by
               the  Authority,  by notice to the  licensee  in  accordance  with
               paragraph 9.

4.   The licensee shall collect specified information in respect of:

     (a)  the  matters  specified  in  sub-paragraphs  (a),  (b)  and (c) of the
          definition of specified  information  from and including 1 April 2001;
          and

     (b)  any matter specified under  sub-paragraph  (d) of that definition from
          the date specified in a notice given in accordance with paragraph 9.

5.   The licensee shall provide to the Authority:

     (a)  the information referred to in sub-paragraph (b)(ii) of the definition
          of  specified  information  for each week  within 4 days of the end of
          that week;

                                     -161-
<PAGE>

     (b)  the information  referred to in  sub-paragraphs  (a),(b)(i) and (c) of
          that  definition  on or  before  31 May  2002  and 30  April  in  each
          succeeding  year (or such  later date as the  Authority  may by notice
          specify)  in  respect  of the  period  of 12  months  expiring  on the
          preceding 31 March; and

     (c)  the information referred to in sub-paragraph (d) of that definition in
          respect of such period and by such date as shall be  specified  in the
          relevant notice given under that sub-paragraph.

6.   The licensee  shall permit a person or persons  nominated by the  Authority
     (in each  case  "an  examiner")  to  examine  the  systems,  processes  and
     procedures  referred to in paragraph 2 and their  operation,  the specified
     information  and the extent to which each  complies,  and is in accordance,
     with Regulatory Instructions and Guidance.

7.   The licensee shall (and shall procure, insofar as it is able to do so, that
     any  affiliate  of the  licensee,  any  person  by  whom  it  procures  the
     performance of the obligation in paragraph 2 and any auditor of such person
     or of the licensee shall) co-operate fully with an examiner so as to enable
     him to carry out,  complete and report to the Authority on any  examination
     carried out in accordance with paragraph 6.

8.   The  licensee's  obligation  under  paragraph  7 to  co-operate  or procure
     co-operation with an examiner shall include, without limitation and insofar
     as  necessary  or  expedient  for such  purpose,  in each case  subject  to
     reasonable prior notice to the licensee:

     (a)  providing  access to  management,  employees,  agents  or  independent
          contractors of the licensee  sufficient to enable the examiner to make
          any enquiries and to discuss any matters which he reasonably considers
          to be relevant to the carrying out of the examination;

                                     -162-
<PAGE>

     (b)  giving to the  examiner  access at  reasonable  hours to any  premises
          occupied  by the  licensee  or any  other  person  in  performing  the
          obligations set out in this condition; and

     (c)  allowing the examiner at reasonable hours:

          (i)  to  inspect  and make  copies  of, and take  extracts  from,  any
               documents  and records of the licensee  maintained in relation to
               specified information (other than information which is subject to
               legal privilege);

          (ii) to  carry  out  inspections,  measurements  and  tests  on  or in
               relation  to  any  systems  maintained  and  operated  for  or in
               relation to the requirements of this condition; and

          (iii)to take onto such  premises  or onto or into any assets  used for
               the purpose of the licensee such other persons and such equipment
               as may be necessary or expedient  for the purpose of carrying out
               the examination.

9.   A  notice  published  by the  Authority  which  adds to the  categories  of
     specified  information  or  which  modifies  Regulatory   Instructions  and
     Guidance  (in each  case,  an  "amendment")  shall  have  effect  where the
     Authority has:

     (a)  given prior notice to all distribution services providers:

          (i)  stating  that it proposes to make the  amendment  and setting out
               its  effect,  the date it is  proposed  it should take effect and
               (where  relevant)  whether the  additional  category of specified
               information is required for the purposes of the scheme;

          (ii) stating the reasons why it proposes to make the amendment; and

                                     -163-
<PAGE>

          (iii)specifying the time (not being less than 28 days from the date of
               publication  of  the  notice)  within  which  representations  or
               objections  with respect to the proposed  amendment  may be made;
               and

     (b)  considered any  representations  or objections which are duly made and
          not withdrawn.

10.  A notice  under  paragraph  9 may not,  where the  amendment  relates  to a
     requirement  in  Regulatory   Instructions  and  Guidance  to  provide  any
     specified information to a greater level of accuracy or the introduction of
     an additional category of specified  information which is or is intended to
     be required for the purposes of the scheme,  specify a date for the purpose
     of paragraph  9(a)(i)  other than a charging  review date nor be given less
     than 12  months  prior  to  that  date  unless  all  distribution  services
     providers have agreed an alternative date or period of notice.

11.  The reasons  for  proposing  an  amendment  which  relates to any change in
     Regulatory  Instructions  and  Guidance  (other  than that  referred  to in
     paragraph 10) in respect of specified  information  which is or is intended
     to be required for the purposes of the scheme may have regard in particular
     to the desirability of:

     (i)  removing or reducing  inconsistencies  between  distribution  services
          providers  in the  application  of  the  Regulatory  Instructions  and
          Guidance or its interpretation;

     (ii) improving the presentation or style of the Regulatory Instructions and
          Guidance or of the form and manner in which the specified  information
          is to be  provided;

     (iii)summarising the terms of reference and instructions  from time to time
          given to an examiner; or

                                     -164-
<PAGE>

     (iv) setting out any of the matters referred to in paragraphs (a) to (f) of
          the definition of Regulatory  Instructions  and Guidance in respect of
          any additional category of specified information

     so as more effectively to achieve the purposes of this condition.

________________________________________________________________________________

Department of Trade and Industry

September 2001

                                     -165-
<PAGE>
MODIFICATION TO THE ELECTRICITY DISTRIBUTION LICENCE ISSUED TO LICENCE HOLDERS
HAVING A DISTRIBUTION SERVICES AREA SITUATED IN ENGLAND AND WALES.

                                 SCHEDULE PART 1

1.   Paragraph 1 of special  condition B (Restriction of  distribution  charges)
     shall be amended to read as follows:

          Without  prejudice  to Special  Condition E  (Allowance  in respect of
          security  costs),  the  licensee  shall in setting its charges for the
          provision of  distribution  services use its best endeavours to ensure
          that in any  relevant  year the  average  charge per unit  distributed
          shall not  exceed the  maximum  average  charge  per unit  distributed
          calculated in accordance with the following formula:

                    Mdt = Pdt + PNdt + LFdt - PMdt - Kdt

2.   In special condition B (Restriction of distribution charges), the following
     new paragraph 7 shall be inserted after paragraph 6:

         Formula for LFdt as used in Paragraph 1
         ---------------------------------------

          7.   For the  purposes  of  paragraph  1, for the tenth and  preceding
               relevant  years  LFdt  shall  be  zero,  and for  any  subsequent
               relevant year LFdt is derived from the following formula:

                            LPdt - LAdt
                    LFdt =  -----------
                                Dt

         where:

         LPdt      means an amount equal to the payments made by the licensee,
                   in the relevant year t, in accordance with its obligations
                   set out in Standard Licence Condition 3 or in respect of the
                   eleventh relevant year attributed to the distribution
                   business of the predecessor company of the licence holder in
                   respect of payments made to the Director General of
                   Electricity Supply under the licence condition entitled
                   "Payment of fees" in the public electricity supply licence
                   referred to in paragraph 6.

         LAdt      is derived from the following formula:

                   LAdt = PFt x PIFt

                                      -1-
<PAGE>

         PFt       means, in respect of each relevant year, the amount given in
                   the table appearing under that term in the part of Annex C to
                   this Condition that applies to the licensee.


         PIFt      is derived from the following formula:


                                RPIt
                    PIFt = (1 + ----) PIFt-1
                                100

                   where for the ninth relevant year PIFt-1 equals 1.

3.   The attached table entitled `Annex C to special condition B (Restriction of
     distribution charges)' shall be inserted after Annex B to special condition
     B (Restriction of distribution charges).

4.   In paragraph 9 of special  condition D  (Information  to be provided to the
     Authority  in  connection  with the  charge  restriction  conditions),  the
     following new sub-paragraph (h) shall be inserted after sub-paragraph (g):

     (h) the  value  of the term  LFdt  together  with the  value of each of its
     component  parts,  as  detailed  in  paragraph  7 of  special  condition  B
     (Restriction of distribution charges)

                                      -2-
<PAGE>


ANNEX C TO SPECIAL CONDITION B (RESTRICTION OF DISTRIBUTION CHARGES)


EPN DISTRIBUTION LIMITED (FORMERLY EASTERN ELECTRICITY LIMITED)
---------------------------------------------------------------

PFt

2000/01              (pound)0.731 millions
2001/02              (pound)0.731 millions

subsequent relevant years(pound)0.731 millions

EAST MIDLANDS ELECTRICITY DISTRIBUTION PLC
------------------------------------------

PFt

2000/01              (pound)0.532 millions
2001/02              (pound)0.517 millions

subsequent relevant years(pound)0.517 millions

LONDON POWER NETWORKS PLC
-------------------------

PFt

2000/01              (pound)0.461 millions
2001/02              (pound)0.451 millions

subsequent relevant years(pound)0.451 millions

SP MANWEB PLC
-------------

PFt

2000/01              (pound)0.423 millions
2001/02              (pound)0.414 millions

subsequent relevant years(pound)0.414 millions

GPU POWER NETWORKS (UK) PLC
---------------------------

PFt

2000/01              (pound)0.511 millions
2001/02              (pound)0.492 millions

subsequent relevant years(pound)0.492 millions

                                      -3-

<PAGE>


NORTHERN ELECTRIC DISTRIBUTION LIMITED
--------------------------------------

PFt

2000/01              (pound)0.317 millions
2001/02              (pound)0.306 millions

subsequent relevant years(pound)0.306 millions

UNITED UTILITIES ELECTRICITY PLC (FORMERLY NORWEB PLC)
------------------------------------------------------

PFt

2000/01              (pound)0.458 millions
2001/02              (pound)0.438 millions

subsequent relevant years(pound)0.438 millions

SEEBOARD POWER NETWORKS PLC
---------------------------

PFt

2000/01              (pound)0.423 millions
2001/02              (pound)0.417 millions

subsequent relevant years(pound)0.417 millions

SOUTHERN ELECTRIC POWER DISTRIBUTION PLC
----------------------------------------

PFt

2000/01              (pound)0.649 millions
2001/02              (pound)0.649 millions

subsequent relevant years(pound)0.649 millions

WESTERN POWER DISTRIBUTION (SOUTH WALES) PLC
--------------------------------------------

PFt

2000/01              (pound)0.252 millions
2001/02              (pound)0.247 millions

subsequent relevant years(pound)0.247 millions

                                      -4-

<PAGE>


WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC

PFt

2000/01              (pound)0.288 millions
2001/02              (pound)0.279 millions

subsequent relevant years(pound)0.279 millions

YORKSHIRE ELECTRICITY DISTRIBUTION PLC

PFt

2000/01              (pound)0.474 millions
2001/02              (pound)0.458 millions

subsequent relevant years(pound)0.458 millions

                                      -5-
<PAGE>

MODIFICATION TO THE ELECTRICITY DISTRIBUTION LICENCE ISSUED TO LICENCE
HOLDERS HAVING A DISTRIBUTION SERVICES AREA SITUATED IN ENGLAND AND WALES.

                                 SCHEDULE PART 2

1.  Delete  paragraph  6 of Special  Condition B  (Restriction  of  Distribution
    Charges) and replace with:

     6.   For the purpose of paragraph 1, Kdt shall mean the  correction  factor
          per unit (whether of a positive or negative value) derived, subject to
          paragraph  3 of  Special  Condition  C  (Restriction  of  distribution
          charges:  adjustments),  from the following formula: provided that the
          value of Kdt for the eleventh  relevant year shall be the value of Kdt
          arising for that year from the  application of the formula  applicable
          under Licence Condition 3A of the Public Electricity Supply licence of
          the  predecessor  company in the form of that condition in force on 31
          March  2000,  but  adjusted by adding the amount of TAdt for the tenth
          relevant year, calculated by the application of the formula applicable
          under Licence Condition 3A of that Public  Electricity  Supply licence
          as then in force:

                           Rdt-1 - (Dt-1 x Mdt-1) - RAdt-1    Idt
                    Kdt =  -------------------------------(1+ ---)
                                       Dt                     100
         where:


          Rdt-1     means the distribution revenue in relevant year t-1.


          Dt-1      means the regulated quantity distributed in relevant
                    year t-1.


          Mdt-1     means maximum average charge per unit distributed in
                    relevant year t-1.


          Idt       means that interest rate in relevant year t which is equal
                    to, where Kdt (taking no account of Idt for this purpose)
                    has a positive value, the average specified rate plus 4, or
                    where Kdt (taking no account of Idt for this purpose) has a
                    negative value, the average specified rate.

          RAdt-1    in the eleventh relevant year has the value of 0 and in each
                    subsequent relevant year is derived from the following
                    formula:

                    RAdt-1 = DAdt - 1 x PBdt-1

                                      -1-
<PAGE>


                    where:

                    DAdt    means an amount given in the table appearing under
                            that term in the part of Annex D to this Condition
                            that applies to the licensee.

                    PBdt    means the amount given in the table appearing under
                            that term in the part of Annex D to this Condition
                            that applies to the licensee.

2.   The attached table entitled `Annex D to Special Condition B (Restriction of
     distribution charges)' shall be inserted after Annex C to Special Condition
     B (Restriction of distribution charges).

                                      -2-

<PAGE>


ANNEX D TO SPECIAL CONDITION B (RESTRICTION OF DISTRIBUTION CHARGES)

EPN DISTRIBUTION LIMITED (FORMERLY EASTERN ELECTRICITY LIMITED)
---------------------------------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.474 million

Thereafter        0

EAST MIDLANDS ELECTRICITY DISTRIBUTION PLC
------------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.987 million

Thereafter        0

LONDON POWER NETWORKS LIMITED
-----------------------------

DAdt

2000/01           0.9

Thereafter        0.0

PBdt

2000/01           (pound)0.123 million

Thereafter        0

                                      -3-

<PAGE>


SP MANWEB PLC
-------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.688 million

Thereafter        0

GPU POWER NETWORKS (UK) PLC
---------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)2.705 million

Thereafter        0

NORTHERN ELECTRIC DISTRIBUTION LIMITED
--------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)0.998 million

Thereafter        0

                                      -4-
<PAGE>


UNITED UTILITIES ELECTRICITY PLC (FORMERLY NORWEB PLC)
------------------------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.760 million

Thereafter        0

SEEBOARD POWER NETWORKS PLC
---------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.283 million

Thereafter        0

SOUTHERN ELECTRIC POWER DISTRIBUTION PLC
----------------------------------------

DAdt

2000/01           0.9

Thereafter        0.0

PBdt

2000/01           (pound)0.778 million

Thereafter        0

                                      -5-

<PAGE>


WESTERN POWER DISTRIBUTION (SOUTH WALES) PLC
--------------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.089 million

Thereafter        0

WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC
-------------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.474 million

Thereafter        0

YORKSHIRE ELECTRICITY DISTRIBUTION PLC
--------------------------------------

DAdt

2000/01           0.8

Thereafter        0.0

PBdt

2000/01           (pound)1.687 million

Thereafter        0

                                      -6-

<PAGE>


                                SCHEDULE - PART 3

SPECIAL LICENCE CONDITION MODIFICATION

In Special Condition B (Restriction of distribution  charges) in paragraph 1 for
the existing formula there shall be substituted:

Mdt = Pdt + PNdt +LFdt +Qdt + Zdt - PMdt  - Kdt

and after paragraph 2 there shall be inserted:

"2A For the purposes of paragraph 1:

      Qdt    in the relevant year commencing on 1 April 2005 is as defined in
             paragraph 2 of special licence condition G (Incentive scheme:
             calculation of charge restriction adjustment), and in each other
             relevant year is zero.


      Zdt    in the  relevant  year  commencing  on 1 April 2005 is as defined
             in paragraph 3 of special licence condition G, and in each other
             relevant year is zero."


NEW SPECIAL LICENCE CONDITION

CONDITION G: INCENTIVE SCHEME: CALCULATION OF CHARGE RESTRICTION ADJUSTMENT.

1.   The purpose of this condition is to establish the incentive scheme referred
     to in the  principal  condition  so as to provide  for  adjustments  to the
     charge restriction conditions to reflect the performance of the licensee in
     achieving targets for quality of supply and the reward scheme.

2.   For the purpose of the charge  restriction  conditions in the relevant year
     commencing on 1 April 2005,  Qdt is the amount  derived from the following
     formula:

               It               It     It-1            It     It-1    It-2
         [(1+ ---)Qt-1] + [(1+ ---)(1+ ----)Qt-2]+[(1+ ---)(1+ ---)(1+ ---)Qt-3]
              100              100     100             100     100     100
     Qdt=     ------------------------------------------------------------------
                                       Dt

        and in each other relevant year t is zero.

3.   For the purpose of the charge  restriction  conditions in the relevant year
     commencing  on 1 April 2005 Zdt is the amount  derived  from the  following
     formula:

                It
            (1+ ---)  (za + zb)
                100
     Zdt =  -------------------
                   Dt

        and in each other relevant year t is zero.

4.   For the purpose of paragraph 2, and subject to paragraphs 8 and 10, Qt
     is derived in relevant year t from the formula:

                                      -1-
<PAGE>

     Qt = qat + qbt + qct + qdt

5.   For the purpose of paragraphs 2 and 3:

       It       means  the  average  specified  rate  (as  defined  in
                paragraph  3  of  special  condition  A
                (Definitions and Interpretation) in relevant year t.

6.   For the purpose of paragraph 4, in relevant year t:

                                                       RLAt
     qat = max[(min((TAt - CIISt) PIAt x IRAt, 0)) -  ---- x BPCRt]
                                                      100

                                                      RLBt
     qbt = max[(min((TBt - CMLISt)PIAt x IRBt, 0)) - ---- x BPCRt]
                                                      100

     qct = 0

     In  relevant  year t, if DQTRt is greater  than or equal to LMQTRt and less
     than or equal to  UMQTRt,  qdt will take the value  zero for that  relevant
     year.

     In relevant  year t, if DQTRt is less than  LMQTRt,  qdt for that  relevant
     year shall be derived from the following formula:

     qdt = (DQTRt - MQTRt) QIRAt

     In relevant year t, if DQTRt is greater than UMQTRt,  qdt for that relevant
     year shall be derived from the following formula:

     qdt = (DQTRt - MQTRt) QIRBt

     provided  that if, in the relevant year  commencing 1 April 2004,  the
     sum of za, zb and qdt is greater than TRL x BPCRt
                                           ---
                                           100

     then the value for qdt be determined by the following formula for
     that year:

                      TRL
               qdt = (---  x BPCRt) - za - zb
                      100

        where:


        TAt         means the target for the number of  interruptions  for the
                    relevant year t specified in the table in Annex A or
                    determined under paragraph 7 or modified under paragraphs
                    7B, 7C or 7D;

        TBt         means the target for the duration of interruptions for the
                    relevant year t specified in the table in Annex A or
                    determined under paragraph 7 or modified under paragraphs
                    7B, 7C or 7D;

        IRAt        means the incentive rate for the number of interruptions
                    specified for the relevant year t in the table in Annex A
                    in  (pound) million in 2000/1 prices;

                                      -2-
<PAGE>

        IRBt        means  the  incentive  rate for the  duration  of
                    interruptions  specified  for the relevant year t in the
                    table in Annex A in (pound) million 2000/1 prices;

        RLAt        means the maximum percentage of base price control revenue
                    exposed to the number of interruptions specified for the
                    relevant year t in the table in Annex A;

        RLBt        means the maximum  percentage of base price control  revenue
                    exposed to the duration of interruptions specified for the
                    relevant year t in the table in Annex A;

        RLDt        means the maximum  percentage of base price control  revenue
                    exposed to the measure of quality of telephone response
                    specified for the relevant year t in the table in Annex A;

        TRL         (being the maximum  percentage of base price control
                    revenue used in the calculation of qdt in the relevant year
                    t commencing 1 April 2004) has the value of 2;

        PIAt        (being the price index  adjustor) in relevant  year t is
                    derived from the  following formula:

                                      RPIt
                          PIAt = (1 + ----)PIAt-1
                                      100

                    where, for the relevant year commencing 1 April 2000,
                    PIAt=1

        RPIt        is defined as in paragraph 3 of special condition B
                    (Restriction of distribution charges);

        BPCRt      (being base price control revenue) in relevant year t is
                   derived from the following formula:

                   BPCRt = PUM x GRt x PIDt

                   where  PUM,  GRt  and  PIDt  in  relevant  year t are  as
                   defined  in  special  condition  B (Restriction of
                   distribution charges)

        CIISt      in relevant year t is derived from the formula:

                   CIISt = CIAt + CIBt + (a x CICt) + CIDt + (b x CIEt)

                  where:

                  a and b are zero

                  CIAt, CIBt,CICt, CIDt and CIEt in relevant  year t are derived
                  from the formula for each of those terms set out in Appendix 2
                  to the Regulatory Instructions and Guidance.

        CMLISt    is derived from the formula:

                  CMLISt = CMLAt + CMLBt + (c x CMLCt) + CMLDt + (d x CLMEt)

                  where:

                  c and d each have the value 0.10

                                      -3-
<PAGE>

                  CMLAt, CMLBt, CMLCt, CMLDt and CMLEt in relevant year t are
                  derived  from the formula for each of those terms set out in
                  Appendix 2  to the Regulatory Instructions and Guidance

        DQTRt     (being  the  deemed  overall  performance  score for the
                  licensee  in the survey of quality of telephone  response,  as
                  referred to in the Regulatory  Instructions and Guidance)
                  in relevant year t  is derived from the formula:

                  DQTRt = AQTRt + (1.96) SEt

        AQTRt     is the actual overall  performance  score for the licensee in
                  relevant year t, based on all assessed attributes in the
                  survey of quality of telephone  response  provided to the
                  Authority  by the company  carrying  out that  survey,  as
                  notified by the  Authority  to the licensee

        SEt       is the standard error of the overall performance score for the
                  licensee in relevant year t in the survey of quality of
                  telephone  response as notified by the Authority to the
                  licensee

        LMQTRt    is the lower confidence limit of the unweighted mean actual
                  overall  performance  score in the survey of quality of
                  telephone  response of all  distribution  services  providers
                  for whom information is available in relevant year t and is
                  derived from the formula:

                  LMQTRt = MQTRt - (1.96)ISEt

        UMQTRt    is the upper confidence limit of the unweighted mean actual
                  overall performance score in the survey of quality of
                  telephone response of all distribution services providers for
                  whom information is available in relevant year t and is
                  derived from the formula:

                  UMQTRt = MQTRt + (1.96) ISEt

        ISEt      is the standard error of the unweighted  mean actual  overall
                  performance  score in the survey of quality of telephone
                  response of all distribution  services providers for whom
                  information is available in relevant year t, as notified
                  by the Authority to the licensee.

        MQTRt     is the  unweighted  mean actual overall  performance  score in
                  the survey of quality of  telephone  response  of all
                  distribution  services  providers  for whom  information  is
                  available in relevant year t as notified by the Authority to
                  the licensee.

        QIRAt     (being  the  incentive  rate  for  below  average  performance
                  for the quality of telephone response) in relevant year t is
                  derived from the formula:

                              RLDt x BPCRt
                  QIRAt =  ------------------
                           100(MQTRt - WDQTRt)

        WDQTRt    is  the lowest deemed overall  performance score in the survey
                  of quality of telephone response across all  distribution
                  services  providers for whom  information is available in
                  relevant year t as notified by the Authority to the licensee.

        QIRBt    (being  the  incentive  rate  for  above  average  performance
                 for the quality of telephone response) in relevant year t is
                 derived from the formula:

                                      -4-
<PAGE>

                                     RLDt x BPCRt
                     QIRBt =      ------------------
                                  100(HDQTRt - MQTRt)

        HDQTrt   is the highest deemed overall  performance  score in the survey
                 of quality of telephone response  across all  distribution
                 services  providers for whom  information is available in
                 relevant year t as notified by the Authority to the licensee.

7.   Where the Authority determines, after making any direction under paragraphs
     8 or 10,  that  the  value  of  CIISt  or  CMLISt  in  respect  of the year
     commencing on 1 April 2001:

     (a)  is equal to or less than TAt or TBt, as appropriate, in respect of the
          relevant  year  commencing on 1 April 2004 in Annex A, then the target
          in respect of each of the years commencing on 1 April 2002 and 1 April
          2003 for the  purposes  of Annex A shall be  modified  so as to be the
          same as the target for the year commencing on 1 April 2004; or

     (b)  is greater than TAt or TBt, as appropriate, in respect of the relevant
          year commencing on 1 April 2004 in Annex A, then the target in respect
          of each of the relevant  years  commencing on 1 April 2002 and 1 April
          2003 for the  purposes  of Annex A shall be  modified  so as to be the
          same as the value so determined in respect of the year commencing on 1
          April 2001.

7A   If, having regard to the criteria and assumptions stated in the conclusions
     document,   specified   information,   and  other  information   (including
     information  provided  by the  licensee),  the  Authority  or the  licensee
     considers  that either of the targets  TAt or TBt  specified  in Annex A in
     respect of the relevant year  commencing  on 1 April 2004 is  inappropriate
     and gives  notice to the other of them not later  than 30  September  2002,
     specifying the target to which the notice  relates,  then the provisions of
     paragraphs  7B, 7C, 7D and 7E shall apply.  The  provisions of paragraph 7D
     shall also apply at the request of the licensee,  provided that the request
     is not made later that 30 September 2002.

7B   Where the  Authority  has given a notice  under  paragraph 7A it may, on or
     before 31 March  2003,  after  consulting  the  licensee,  by notice to the
     licensee  direct that the target TAt or TBt referred to in the notice under
     paragraph 7A shall be modified as specified in that direction.

7C   Where  the  licensee  has given  notice  under  paragraph  7A,  the  target
     specified in that notice shall cease to have effect on 1 April 2003 unless,
     prior to that date and after  consulting the licensee,  the  Authority,  in
     respect of the target TAt or TBt which was  referred to in the notice under
     paragraph 7A, directs the target TAt or TBt which shall have effect for the
     purpose of Annex A.

7D   Where the Authority  directs a modification  of a target under paragraph 7B
     or 7C or at the request of the licensee,  the Authority may,  having regard
     to the  actual  performance  of  the  licensee  during  the  relevant  year
     commencing on 1 April 2001, and after consulting the licensee,  direct that
     the targets TAt to TBt in respect of the relevant years commencing on
     1 April  2002 and 1 April  2003  shall be  modified  as  specified  in that
     direction.

7E   Where the Authority has issued a direction  under  paragraph 7B or 7C, the
     incentive rate IRAt or IRBt  appropriate  to the targets  specified in that
     direction shall be revised as follows:

     (i)  the  revised  value of IRAt  (the  incentive  rate for the  number  of
          interruptions)  for each  relevant year t shall be derived by dividing
          the initial value of IRAt for that year by      va
                                                    (1 +  ---) ,
                                                          100

          where va is the change, expressed as a percentage, between TAt for the
          year commencing 1 April 2004 as expressed initially in Annex A of this
          condition and as revised under paragraph 7B or 7C.

                                      -5-
<PAGE>

          (ii) the revised value of IRBt (the incentive rate for the duration of
          interruptions)  for each  relevant year t shall be derived by dividing
          the initial value of IRBt for that year by       vb
                                                     (1 +  ---) ,
                                                           100

          where vb is the change, expressed as a percentage, between TBt for the
          year commencing 1 April 2004 as expressed initially in Annex A of this
          condition and as revised under paragraph 7B or 7C,

          and the relevant values in Annex A shall be modified accordingly.

8.   Where the report of an examiner specifies that the level of accuracy of any
     specified information used for the purpose of any formula in this condition
     or  paragraph  7 is less  than the  level of  accuracy  specified  for such
     information in the Regulatory Instructions and Guidance, the Authority may,
     after consulting the licensee and having regard to all relevant information
     and  circumstances  and so as to mitigate any distortion  arising from that
     inaccuracy,  by notice to the licensee  direct the data which shall be used
     in  substitution  for that  information  for the purposes of that  relevant
     formula  or  paragraph.

9.   A notice  under  paragraph  9 of the  principal  condition  in  relation to
     Appendix 2 to the Regulatory  Instructions  and Guidance may only specify a
     date for the  purposes of  paragraph  9(a)(i)  which would be  permitted if
     paragraph  10 of that  condition  applied.

10.  Where:

     (a)  the licensee  considers that its  performance in respect of any matter
          used  for  the  purpose  of  paragraph  7 or for  calculating Qt, za
          or zb has been  materially and adversely  affected by an
          exceptional event;

     (b)  the licensee  has notified the  Authority of such event within 14 days
          of the date upon which the licensee  considers  such effect has ceased
          or, in respect of the relevant year commencing on 1 April 2001, within
          14 days of the end of that year;

     (c)  after the end of the relevant year in which that event  occurred,  the
          examiner  has  reported to the  Authority in respect of such event and
          its effect;

     (d)  the  licensee has provided  such further  information,  if any, as the
          Authority may require; and

     (e)  the Authority is satisfied that the event notified under sub-paragraph
          (b) is an exceptional event having regard to the criteria contained or
          referred to in the conclusions document,

     the Authority may, by notice to the licensee,  direct that, for the purpose
     of calculating Qt, za or zb or making a determination  under paragraph 7 in
     respect of the relevant year in which the event  occurred,  the constituent
     data  relevant  to that  event  shall  be  adjusted  as  specified  in that
     direction.

10A.      A direction  under  paragraphs  7B, 7C, 7D, 7E, 8 or 10 shall not have
          effect  unless,  before it is made,  the Authority has given notice to
          the licensee-

          (a) setting out the terms of the proposed direction;

          (b) stating the reasons why it proposes to issue the direction; and

                                    -6-
<PAGE>

          (c)  specifying  the period (not being less than 14 days from the date
          of the notice) within which the licensee may make  representations  or
          objections

          and the Authority has considered  such  representations  or objections
          and given reasons for its decision.

11.  For the purposes of paragraphs 3 and 6:

          za shall be equal to zero if CIISt is  greater  than TAt or  CMLISt is
          greater  than TBt.  in the  relevant  year  commencing  1 April  2004.
          Otherwise it shall be derived from the following formula:

                       (PICI   RLOPA                RLOPA
          za = min[(max ---- x ----- x BPCRt, 0)),  ----- x BPCRt]
                         15     100                  100

          zb shall be equal to zero if CIISt is  greater  than TAt or  CMLISt is
          greater  than TBt.  in the  relevant  year  commencing  1 April  2004.
          Otherwise it shall be derived from the following formula:

                         PICML   RLOPB                RLOPB
          zb = min[(max (----  x ----- x BPCRt, 0)),  ----- x BPCRt]
                          20      100                  100
          where:

          BPCRt     is as defined in paragraph 6 of this condition and is as
                    derived for the relevant year commencing 1 April 2004;

          PICI      (percentage improvement in the number of customers
                    interrupted) is derived from the formula:

                            BCI - CIISt
                    PICI = (-----------) 100
                                BCI

                    where BCI is TAt for the  relevant  year  commencing
                    1 April 2002 and  CMLISt  is  as  derived for the relevant
                    year commencing 1 April 2004.

       PICML      (percentage improvement in the duration of customer
                  interruptions) is derived from the formula:

                              BCML - CMLISt
                    PICML = ( -------------) 100
                                   BCML

                  where BCML  is TBt for the relevant year commencing 1 April
                  2002 and CMLISt is as derived for the relevant year commencing
                  1 April 2004; and

       RLOPA      means the maximum  percentage of base price control  revenue
                  exposed in the reward scheme for the number of  interruptions
                  specified for the relevant year commencing 1 April 2004 in the
                  table in Annex A;

       RLOPB      means the maximum  percentage of base price control  revenue
                  exposed in the reward scheme for the duration of
                  interruptions  specified  for the relevant  year  commencing
                  1 April 2004 in the table in Annex A;

12.  In this condition:

                                      -7-
<PAGE>

     (1)  "the  principal   condition"  means  standard  licence   condition  49
          (Incentive  Scheme and Associated  Information)  and words and phrases
          defined for the  purposes of the  principal  condition  shall have the
          same meaning in this condition;

     (2)  "the conclusions  document" means the document issued by the Authority
          entitled  "Information and Incentives  project Incentive Schemes Final
          Proposals December 2001 78/01";

     (3)  terms defined in the charge  restriction  conditions  and used in this
          condition  shall  have  the  meaning  given  to  them  in  the  charge
          restriction conditions; and

     (4)  where the terms "max" and "min" are used in any  formula,  for any two
          given  amounts  X and Y,  "min(X,Y)"  means X if X-Y is  negative  and
          otherwise Y and "max (X,Y)" means Y if X-Y is negative  and  otherwise
          X.


Annex A

RELEVANT YEAR
COMMENCING:               1 APRIL 2002      1 APRIL 2003      1 APRIL 2004
-------------             ------------      ------------      ------------

TAt                                                                75.4

IRAt  ((POUND)MILLION
 2000/01 PRICES)              0.05              0.09               0.09

RLAt                          0.25               0.5                0.5

RLOPA                                                               0.6

TBt                                                                56.4

IRBt  ((POUND)MILLION
  2000/01 PRICES)             0.07              0.18               0.18

RLBt                           0.5              1.25               1.25

RLOPB                                                               1.4

RLDt                           0.1             0.125              0.125


                                      -8-
<PAGE>
To: All holders of a distribution licence.

                MODIFICATIONS OF STANDARD CONDITIONS IN LICENCES
      TREATED AS GRANTED UNDER SECTION 6(1)(c) OF THE ELECTRICITY ACT 1989

Whereas -

(1)  Each of the companies to whom this  document is addressed  (each a "Licence
     Holder") has been granted a licence ("the  Licence")  under section 6(1)(c)
     of the Electricity Act 1989 ("the Act") to distribute  electricity  subject
     to the Conditions contained in its Licence;

(2)  In accordance  with section 11A(3) & (4) of the Act the Gas and Electricity
     Markets  Authority ("the  Authority")  gave notice that it proposed to make
     modifications  to  standard   conditions  39  and  40  of  the  Licence  by
     advertising the modifications in the London Gazette and the Financial Times
     and by requiring any objections or  representations to the modifications to
     be made to the Authority on or before 23 March 2002;

(3)  No such objections or representations have been made to the Authority;

(4)  In accordance  with section  11A(4) of the Act the Authority gave notice of
     its intention to make the  modifications  to the Secretary of State and has
     not received from her a direction not to make the modifications;

(5)  Each licence holder has given its consent to the  modifications  set out in
     the attached Schedule,

Now in  accordance  with the powers  contained in section  11A(1) of the Act and
with the consent of each  licence  holder,  the  Authority  hereby  modifies the
standard  licence  conditions  of the  Electricity  Distribution  Licence in the
manner specified in the attached Schedule with effect on and from 1 April 2002.


The Official Seal of the Gas and Electricity  Markets  Authority here affixed is
authenticated by the signature of





MAXINE FRERK
AUTHORISED ON BEHALF OF THE AUTHORITY
                                                                28 MARCH 2002

                                      -1-
<PAGE>

                                  THE SCHEDULE
                                  ------------

The existing  standard  licence  conditions 39 and 40 is omitted and replaced by
the following new standard licence conditions 39 and 40.

CONDITION 39. RESTRICTION ON USE OF CERTAIN INFORMATION AND INDEPENDENCE OF THE
DISTRIBUTION BUSINESS

1.   In this Condition and in Condition 40:

     `Confidential  information' means information relating to, or derived from,
     the distribution business which is not published or otherwise  legitimately
     in the public domain; and

     `Relevant  supplier or shipper'  means the holder of an  electricity or gas
     supply licence or a gas shipper's licence, which is an affiliate or related
     undertaking of the licensee.

2.   The Licensee  shall put in place and at all times  maintain  managerial and
     operational  systems  which  prevent any relevant  supplier or shipper from
     having  access to  confidential  information  except and to the extent that
     such information:

     a)   is made available on an equal basis to any gas or electricity supplier
          or gas shipper or

     b)   appertains  to a  customer  who at the time to which  the  information
          relates was a customer of the relevant supplier or

     c)   is of a type that has been  confirmed  by the  Authority in writing as
          corporate.

3.   The  Licensee  shall at all  times  manage  and  operate  the  Distribution
     Business in a way  calculated to ensure that it does not restrict,  prevent
     or distort  competition in the supply of electricity or gas or the shipping
     of gas or the generation of electricity.

                                      -2-
<PAGE>

4.   Unless  otherwise  directed by the  Authority,  the Licensee shall no later
     than 31 May  2002  have in  place  a  statement  (in  this  Condition  "the
     statement"),   approved  by  the   Authority,   describing  the  practices,
     procedures and systems which the licensee has adopted (or intends to adopt)
     to secure compliance with paragraphs 2 and 3.


5.   Where the Authority does not indicate  otherwise  within 60 days of receipt
     of the  statement,  the  statement  shall be deemed to be  approved  by the
     Authority.

6.   The statement shall in particular (but without  prejudice to the generality
     of paragraphs 2 and 3) set out how the Licensee shall:


          a)   maintain the full managerial and operational  independence of the
               Distribution Business from any relevant supplier or shipper ;

          b)   maintain the branding of the distribution  business so that it is
               fully independent from the branding used by any relevant supplier
               or shipper;

          c)   secure that any arrangements for the use of or access to:

               i)   premises  or parts of premises  occupied by persons  engaged
                    in, or in respect of, the  management  or  operation  of the
                    Distribution Business ;

               ii)  systems for the recording,  processing or storage of data to
                    which persons  engaged in, or in respect of, the  management
                    or operation of the Distribution Business also have access;


               iii) equipment,   facilities   or  property   employed   for  the
                    management or operation of the Distribution Business ; or

               iv)  the  services  of persons  who are  (whether or not as their
                    principal  occupation)  engaged  in, or in  respect  of, the
                    management or operation of the Distribution Business ;

                                      -3-
<PAGE>

                    by any relevant supplier or shipper or by any person engaged
                    in or in  respect  of the  activities  of  such  a  relevant
                    supplier  or shipper  shall be such as to prevent any breach
                    of the requirements of those paragraphs; and

          d)   manage the transfer of employees from the  Distribution  Business
               to any relevant supplier or shipper.

7.   The Licensee may, with the approval of the Authority,  revise the statement
     prepared in accordance with paragraph 4.

8.   The Licensee shall take all reasonable  measures to ensure  compliance with
     the terms of the statement as from time to time revised by the Licensee and
     approved by the Authority.

9.   The licensee  shall  publish a copy of the approved  statement  prepared in
     accordance  with  paragraph  4 ( or the latest  approved  revision)  on its
     company's  website  within  fifteen  working  days of its  approval  by the
     Authority.


                 CONDITION 40. APPOINTMENT OF COMPLIANCE OFFICER


1.   The Licensee shall ensure, following consultation with the Authority that a
     competent person (who shall be known as the "compliance  officer") shall be
     appointed for the purpose of  facilitating  compliance by the Licensee with
     standard  condition 39, and, insofar as they relate to  relationships  with
     relevant  suppliers and shippers,  standard condition 41 and Paragraph 1 of
     standard conditions 4A and 36A (together, "the relevant duties").

2.   The  Licensee  shall at all times  ensure  that the  compliance  officer is
     engaged  for the  performance  of such  duties  and  tasks as the  Licensee
     considers it  appropriate  to assign to him for the  purposes  specified at
     paragraph  1,  which  duties  and  tasks  shall  include  those  set out at
     paragraph 5.

                                      -4-
<PAGE>

3.   The Licensee shall procure that the compliance officer:

     (a)  is provided with such staff, premises, equipment, facilities and other
          resources; and

     (b)  has such access to the licensee's premises,  systems,  information and
          documentation

     as, in each case, he might reasonably  expect to require for the fulfilment
     of the duties and tasks assigned to him.

4.   The Licensee shall make  available to the compliance  officer a copy of any
     complaint or representation  received by it from any person in respect of a
     matter arising under or by virtue of those standard conditions and parts of
     standard conditions specified in paragraph 1.

5.   The duties and tasks assigned to the compliance officer shall include:

     (a)  providing  relevant  advice and  information  to the  Licensee for the
          purpose of facilitating its compliance with the relevant duties;

     (b)  monitoring the effectiveness of the practices,  procedures and systems
          adopted by the Licensee in accordance  with the statement  referred to
          at paragraph 4 of standard condition 39;

     (c)  advising  whether,  to the  extent  that  the  implementation  of such
          practices,  procedures and systems  requires the  co-operation  of any
          other  person,  they are  designed  so as  reasonably  to admit of the
          required co-operation;

                                      -5-
<PAGE>

     (d)  investigating any complaint or representation made available to him in
          accordance with paragraph 4;

     (e)  recommending  and  advising  upon the  remedial  action which any such
          investigation has demonstrated to be necessary or desirable;

     (f)  providing  relevant  advice and  information  to the  Licensee for the
          purpose of ensuring its effective implementation of:

          (i)  the practices,  procedures and systems adopted in accordance with
               the  statement  referred to at paragraph 4 of standard  condition
               39; and

          (ii) any remedial action  recommended in accordance with sub-paragraph
               (e); and

     (g)  reporting  annually to the  directors  of the Licensee - in respect of
          each year after this standard  condition  comes into force - as to his
          activities  during the period  covered by the  report,  including  the
          fulfilment  of the  other  duties  and  tasks  assigned  to him by the
          Licensee.


6.   As soon as is reasonably  practicable  following  each annual report of the
     compliance officer, the Licensee shall produce a report:

     (a)  as to its  compliance  during  the  relevant  year  with the  relevant
          duties; and

     (b)  as to its  implementation  of the  practices,  procedures  and systems
          adopted in accordance with the statement referred to at paragraph 4 of
          standard condition 39.

                                      -6-
<PAGE>

7.   The report produced in accordance with paragraph 6 shall in particular:

     (a)  detail the  activities of the  compliance  officer during the relevant
          year;

     (b)  refer to such other matters as are or may be  appropriate  in relation
          to the implementation of the practices, procedures and systems adopted
          in  accordance  with  the  statement  referred  to at  paragraph  4 of
          standard condition 39; and

     (c)  set out the details of any investigations  conducted by the compliance
          officer, including:

          (i)  the number,  type and source of the complaints or representations
               on which such investigations were based;

          (ii) the outcome of such investigations; and

          (iii)any  remedial  action  taken  by  the  Licensee   following  such
               investigations.

8.   The Licensee shall submit to the Authority a copy of the report produced in
     accordance with paragraph 6, and shall publish the report on its website.

                                      -7-
<PAGE>
                                     NOTICE
                        UNDER STANDARD CONDITION 2(6)(B)
          OF THE ELECTRICITY DISTRIBUTION LICENCE: STANDARD CONDITIONS

Whereas:

(1)  Yorkshire  Electricity  Distribution  plc  ("Yorkshire") is the holder of a
     distribution  licence ("the licence")  treated as granted by a scheme under
     paragraphs 13 and 17 of Schedule 7 to the Utilities Act 2000 which provides
     that Section C of the Standard Conditions should have effect.

(2)  Standard  Condition  39 in Part II  Section C of the  Distribution  Licence
     prohibits the  disclosure  of or  authorisation  of access to  confidential
     information save in limited specified circumstances.

(3)  Standard  Condition  40 in Part II  Section C of the  Distribution  Licence
     requires the licensee to appoint a competent  person (who shall be known as
     the "compliance officer") for the purpose of facilitating compliance by the
     licensee with the relevant duties.

(4)  Standard Condition 2(6)(b) in Part II Section A of the Distribution Licence
     provides that the Authority may, with the consent of the licensee,  provide
     for Section C (or parts thereof) to cease to have effect in the licence.

(5)  Yorkshire  have  requested the Authority to issue a notice  relieving  them
     from its above  mentioned  obligations  under  Condition 39 and 40 of their
     Distribution  Licences  on the  grounds  that they no longer  have a supply
     business.

(6)  In response to the requests the Authority is satisfied that,  having regard
     to the  purpose  of  Standard  Conditions  39  and 40 and to the  principal
     objective and its general  duties,  it is  appropriate to issue a notice in
     the manner hereinafter appearing.


THE AUTHORITY HEREBY GIVES NOTICE, IN ACCORDANCE WITH PARAGRAPHS (6)(B) AND 7 OF
STANDARD  CONDITION 2, THAT  STANDARD  CONDITIONS 39 AND 40 OF THE LICENCE SHALL
CEASE TO HAVE EFFECT FROM 1 APRIL 2002.



DATED   23 APRIL 2002