Exhibit
4.13

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United Utilities Electricity plc

SCHEDULE

|SPECIAL
              CONDITION A1  Definitions andinterpretation
|------------------------------------------------------------------
|                                                                  
|1.                                                                
|                                                                  
|2.                                                                
|                                                                  
|3.                                                                
|                                                                  
|4.                                                                

| |  |                              |        |                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                              
| |  | ---------------------------- | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | allowed
    demand revenue | means:
| |  |                              |        |                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                              
| |  |                              | (a)    | in
        the relevant year commencing 1 April 2005 and every subsequent relevant
        year, the revenue calculated in accordance with the formula set out in
        paragraph 3 of special condition B1 (Restriction of distribution charges:
    demand use of system charges); and
| |  |                              |        |                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                              
| |  |                              | (b)    | in
    any relevant year preceding 1 April 2005, the revenue calculated by multiplying:                                                                                                                                                                                                   
| |  |                              |        |                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                              
| |  |                              |        | (i)                                                                                                                                                                                                                                                                                        | the
        maximum average charge per unit distributed (arising from the application
        of the formula set out in paragraph 1 of special condition B (Restriction
        of distribution charges), or in Scotland special condition C, of this
    licence in the form in which it was in force at 31 March 2005); and
| |  |                              |        |                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                              
| |  |                              |        | (ii)                                                                                                                                                                                                                                                                                       | the
        regulated quantity distributed (calculated in accordance with special
        condition A (Definitions and interpretation), or in Scotland special
    condition B, of this licence in the form in which it                                                                                                      

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United Utilities Electricity plc

| |  |                                            | was in
      force at 31 March 2005).                                                                                                                                                                                                                                                                                             
| |  | ------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | allowed
      meter operationrevenue     | means
      the revenue calculated in accordance with the formula set out inparagraph
      9 of special condition F1 (Restriction of basic metering charges).                                                                                                                                                                    
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | allowed
      network generationrevenue  | (a)                                                                                                                                                                                                                                                                                                                               
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  |                                            | (b)                                                                                                                                                                                                                                                                                                                               
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | allowed
      pass-through items         | means
        the items referred to in special condition B2 (Restriction of distribution
      charges: allowed pass-through items).                                                                                                                                                                                              
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | average
      specified rate             | means
        the average of the daily base rates of Barclays Bank plc current from
        time to time during the period in respect of which the calculation in
      question falls to be made.                                                                                                                                
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | base
      demand revenue                | means
        the revenue calculated in accordance with the formula set out in paragraph
        4 of special condition B1 (Restriction of distribution charges: demand
      use of system charges).                                                                                                                             
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | basic
      meter asset provisioncharges | means
      the charges levied by the licensee for basic meter asset provision inaccordance
      with paragraph 1 of standard condition 36C (Basis of Charges for Basic
      Metering Services and Data Services: Requirements for Transparency).                                                                               
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | basic
      meter operation revenue      | means
        the revenue (measured on an accruals basis) derived by the licensee from
        charges levied in respect of basic meter operation services in accordance
        with paragraph 1 of standard condition 36C (Basis of Charges for Basic
      Metering Services and Data Services: Requirements for Transparency).
| |  |                                            |                                                                                                                                                                                                                                                                                                                                   
| |  | business
      rates                     | means:                                                                                                                                                                                                                                                                                                                            
| |  |                                            | (a)                                                                                                                                                                                                                                                                                                                               

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United Utilities Electricity plc

| |  |                                                        |                                                                                                                                                                                                                                                                                                              | hereditaments
        on the Central Rating Lists (England and Wales) compiled under section
    52 of the Local Government Finance Act 1988; and                                                                                                                                                     
| |  | ------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  |                                                        | (b)                                                                                                                                                                                                                                                                                                          | in
        Scotland, the rates payable by the licensee in respect of any land and
        heritages on the Valuation Rolls compiled under the Local Government
        Scotland Act 1975, the Local Government etc (Scotland) Act 1994, or any
    legislation amending or replacing those enactments.
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | charge
    restriction conditions                    | means
        special conditions A2 to F1 inclusive as from time to time modified or
    replaced in accordance with the provisions of the Act.                                                                                                                                                             
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | combined
    allowed distributionnetwork
    revenue | means
        the total amount of allowed demand revenue and allowed network generation
    revenue.                                                                                                                                                                                                        
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | combined
    distribution networkrevenue             | means
    the total amount of regulated demand revenue and network generation revenue.                                                                                                                                                                                                                      
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | demand
    customer                                  | means,
        in relation to any energised or de-energised exit point on the licensees
        distribution system for which there is a valid metering point administration
        number, the person who is taking, or is deemed to be taking, a supply
    of electricity through that exit point.     
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | demand
    use of system charges                     | means
        charges levied by the licensee in accordance with paragraph 2 of standard
    condition 4A (Charges for Use of System) in respect of demand customers.                                                                                                                                        
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | DG                                                   | for
        the purposes of special condition D2 only (Calculation of charge restriction
        adjustments arising from the incentive schemes for distributed generation
        and registered power zones), and whether on its own or as part of another
    defined term, means distributed generation.
| |  |                                                        |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                       
| |  | directly
    connected                               | in
        relation to any premises, means so connected to the licensees distribution
        system that the final connection to the premises is from that system
    (and indirectly connected means other than directly connected).                                                                   

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United Utilities Electricity
  plc

| |  | distribution
    charges       | means
        charges levied by the licensee in respect of the provision of distribution
    services.                                                                                                                                                                                                                                                          
| |  | -------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  | distributed
    generation     | means
        an installation comprising any plant or apparatus for the production
        of electricity which is directly connected to the licensees distribution
        system or is connected to that system through one or more independent
        or private networks (other than through an onshore transmission system)
    directly connected to it.
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  | distribution
    losses        | means
        the amount, in units, being the difference between the units entering
    the licensees distribution system and the units distributed.                                                                                                                                                                                                           
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  | distribution
    services      | means
        all services provided by the licensee as part of its distribution business
    other than excluded services.                                                                                                                                                                                                                                      
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  | distribution
    unit category | means
    (as the case may be) HV units or LV1 units or LV2 units or LV3 units.                                                                                                                                                                                                                                                                                 
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  | EHV
    premises               | means:                                                                                                                                                                                                                                                                                                                                                          
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                  | (a)                                                                                                                                                                                                                                                                                                                                                             
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                  | (b)                                                                                                                                                                                                                                                                                                                                                             

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United Utilities Electricity
plc

| |  | EHV
    units                       | means
    units distributed by the licensee which are transported to EHV premises.                                                                                                                                                           
| |  | ------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                       |                                                                                                                                                                                                                                              
| |  | entry
    point                     | means
        a point at which units, whether metered or unmetered, enter the licensees
    distribution system.                                                                                                                            
| |  |                                       |                                                                                                                                                                                                                                              
| |  | excluded
    services               | means
        those services provided by the licensee as part of its distribution business
        which, in accordance with special condition A2 (Scope of the charge restriction
    conditions), fall to be treated as excluded services. 
| |  |                                       |                                                                                                                                                                                                                                              
| |  | exit point                          | means
        a point at which units, whether metered or unmetered, leave the licensees
        distribution system (and, for the avoidance of doubt, includes a point
    of connection to the licensees distribution system).            
| |  |                                       |                                                                                                                                                                                                                                              
| |  | generation
    use of systemcharges | means
        charges levied by the licensee in accordance with paragraph 2 of standard
    condition 4A (Charges for Use of System) in respect of distributed generation.                                                                   
| |  |                                       |                                                                                                                                                                                                                                              
| |  | HV
    units                        | means
        units (other than EHV units) distributed by the licensee which are delivered
        to exit points on the licensees distribution system at a voltage
    of 1000 volts or greater.                                           
| |  |                                       |                                                                                                                                                                                                                                              
| |  | incentive
    payment               | means
        an adjustment to allowed revenues, whether allowed demand revenue or
        allowed network generation revenue, representing the penalty or reward
    in respect of the licensees performance against the incentive schemes.
| |  |                                       |                                                                                                                                                                                                                                              
| |  | incentive
    schemes               | means
        the arrangements set out in special conditions C1, C2, C3 and D2 for
        adjusting allowed demand revenue and allowed network generation revenue
    in respect of the licensees performance under those schemes.         
| |  |                                       |                                                                                                                                                                                                                                              
| |  | LV units                            | means units distributed by the licensee
        to exit points on the licensees distribution system at a voltage
    of less than 1000 volts.                                                                                               
| |  |                                       |                                                                                                                                                                                                                                              
| |  | LV1
    units                       | means
    LV units which are distributed by the licensee outside off-peak periods:                                                                                                                                                           
| |  |                                       |                                                                                                                                                                                                                                              
| |  |                                       | (a)                                                                                                                                                                                                                                          

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United Utilities Electricity plc

| |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | premises (other than
      domestic premises); and                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ---------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |                                    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | in respect of which,
        the appropriate demand use of system charges apply different rates in
        off-peak periods as opposed to other times of day (and, for the avoidance
        of doubt, such charges include all those specified as falling within
        the LV1 category in the statements provided by the licensee in accordance
        with paragraphs 7 and 8 of special condition E1 (Restriction of distribution
      charges: supplementary restrictions)).
| |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | LV2 units                        | means LV units which are distributed by the
        licensee  during off-peak periods to domestic premises or small premises
        (other than
      domestic premises) where the appropriate demand use of system charges are
         restricted to apply to specified off-peak periods (and, for the avoidance

      of doubt, such charges include all those items specified as falling within
         the LV2 category in the statements provided by the licensee in accordance

      with paragraphs 7 and 8 of special condition E1 (Restriction of distribution
         charges: supplementary restrictions)).
| |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | LV3 units                        | means LV units other than LV1 and LV2 units,
      for the avoidance of doubt including units distributed under the use of
      system charges specified as falling within the LV3 category in the statements
      provided by the licensee in accordance with paragraphs 7 and 8 of special
      condition E1 (Restriction of distribution charges: supplementary restrictions).                                                                                                                                                                                                                                        
| |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | metered                          | means,
        in relation to any quantity of electricity distributed, as measured by
      a meter installed for such purpose.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | network generation
      revenue | means
      the revenue (measured on an accruals basis) derived by the licensee from
      generation use of system charges made for the provision of distribution
      services to owners or operators of distributed generation in the relevant
      year, after deduction of:                                                                                                                                                                                                                                                                                                                                          

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United Utilities Electricity plc

| |  |                                   | (a)                                                                                                                                                                             | an amount equal to
        such part of the total amount payable in that relevant year to the transmission
        licensee (measured on an accruals basis) in respect of transmission connection
        point charges, transmission use of system charges and remote transmission
        asset rentals, and which has been recovered from distribution system
        users in that relevant year by the licensee in its generation use of
        system charges, as falls to be attributed to those users in that relevant
      year;                                
| |  | --------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                   | (b)                                                                                                                                                                             | an amount equal to
        such part of the total amount payable in that relevant year to another
        authorised distributor (measured on an accruals basis) in respect of
        charges for the transportation of units from that person's network, and
        which would otherwise be included in network generation revenue by reason
        of being recovered from distribution system users in that relevant year
        by the licensee in its generation use of system charges, as falls to
      be attributed to those users in that relevant year; and
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                   | (c)                                                                                                                                                                             | value added tax (if
      any) and any other taxes based directly on the amounts so derived,                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                   | and,
        for the avoidance of doubt, network unavailability rebates or payments
        shall be treated as a cost and not a reduction in network generation
      revenue.
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | price control
      review date | means
        the date from which modifications to the charge restriction conditions
      have effect:                                                                        
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                   | (a)                                                                                                                                                                             | whether before or
      after the date upon which the modifications are made;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                   | (b)                                                                                                                                                                             | whether or not the
      same modifications are made in respect of each licensee; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |                                   |                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                   | (c)                                                                                                                                                                             | where such modifications
        have been proposed by the Authority following a review by the Authority
      of the charge restriction conditions (or that                                                                                                                                                                                                                                                                                                                                                                                                               

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United Utilities Electricity plc

| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | part or parts to
        which the modifications relate) in relation to all distribution services
      providers.                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | -------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | quality of
      service rigs  | for the
        purposes of special condition C2 only (Calculation of charge restriction
        adjustments arising from performance in respect of quality of service),
        means the regulatory instructions and guidance in force under standard
    condition 49 (Quality of Service Incentive Scheme and Associated Information).                                                                                                                                                                                                      
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | registered
      power zone    | means
        an area which comprises a collection of contiguously connected distribution
        system assets having one or more terminal points together describing
        in full the boundary of that area with the licensees distribution
        system and which has been registered by the Authority as a registered
        power zone in accordance with special condition D2 (Calculation of charge
        restriction adjustments arising from the incentive schemes for distributed
    generation and registered power zones).
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | regulated demand
      revenue | means
        the revenue (measured on an accruals basis) derived by the licensee from
        demand use of system charges made for the provision of distribution services
    to demand customers in the relevant year, after deduction of:                                                                                                                                                                                                                                                                                                   
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                  | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | an amount equal to
        such part of the total amount payable in that relevant year to the transmission
        licensee (measured on an accruals basis) in respect of transmission connection
        point charges, transmission use of system charges and remote transmission
        asset rentals, and which has been recovered from distribution system
        users in that relevant year by the licensee in its demand use of system
      charges, as falls to be attributed to those users in that relevant year;
| |  |                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |                                  | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | an amount equal to
        such part of the total amount payable in that relevant year to another
        authorised distributor (measured on an accruals basis) in respect of
      charges in respect of units transported from                                                                                                                                                                                                                                                                                              

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United Utilities Electricity plc

| |  |                                          |                                                                                                                                                                                                                | that person's network,
        and which would otherwise be included in regulated demand revenue by
        reason of being recovered from distribution system users in that relevant
        year by the licensee in its demand use of system charges, as falls to
      be attributed to those users in that relevant year; and                                                      
| |  | ---------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  |                                          | (c)                                                                                                                                                                                                            | value added tax (if
      any) and any other taxes based directly on the amounts so derived.                                                                                                                                                                                                                                                                                           
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | relevant year                          | means
      a financial year commencing on or after 1 April 1990.                                                                                                                                             
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | relevant year
      t                  | means
        that relevant year for the purposes of which any calculation falls to
      be made under the charge restriction conditions.                                                                    
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | relevant year
      t-1                | means
        the relevant year immediately preceding relevant year t and similar expressions
      shall be construed accordingly.                                                                           
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | remote transmission
      asset rental | means
        any rent or other periodic payment payable by the licensee to a transmission
        licensee in respect of remote transmission assets forming part of the
      licensees distribution system.
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Retail Price
      Index               | means
        the general index of retail prices published by the Office for National
      Statistics each month in respect of all items or:                                                                 
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  |                                          | (a)                                                                                                                                                                                                            | if the index in respect
        of any month relevant for the purposes of the charge restriction conditions
        has not been published on or before the last day of February, such price
        index as the Authority may, after consultation with all holders of a
        licence in which the charge restriction conditions have effect, determine
      to be appropriate; or
| |  |                                          |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                        
| |  |                                          | (b)                                                                                                                                                                                                            | if there is a material
        change in the basis of the index, such index as the Authority may, after
        consultation with all holders of a licence in which the charge restriction
      conditions have effect, determine to be appropriate.                                                                                                                                  

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United Utilities Electricity plc

| |  | RPZ                                       | for the
        purposes of special condition D2 only (Calculation of charge restriction
        adjustments arising from the incentive schemes for distributed generation
        and registered power zones), and whether on its own or as part of another
    defined term, means registered power zone.           
| |  | ------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | small premises                            | means
        premises at which a supply of electricity is taken through a non-half-hourly
    meter, whether for domestic or non-domestic purposes.                                                                                                                                                                  
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | transmission
    licensee                 | means
        the holder of a licence granted or treated as granted under section 6(1)(b)
    of the Act.                                                                                                                                                                                                             
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | transmission
    connection point charges | means
        charges which are levied by a transmission licensee as connection charges
        by direct reference to the number or nature of the connections between
        the licensees distribution system and the transmission system of
    that transmission licensee and which are payable by the licensee.
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | transmission
    use of system charges    | means
        charges which are levied by a transmission licensee as use of system
        charges by direct reference to the export of electricity from the licensees
        distribution system to the transmission system of that transmission licensee
    and which are payable by the licensee.               
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | unit                                      | means
    a kilowatt hour.                                                                                                                                                                                                                                                                                            
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | units distributed                         | means
        the aggregate quantity of units distributed by the licensee through its
        distribution system in relevant year t as measured on leaving that system,
    whether metered or unmetered.                                                                                                            
| |  |                                             |                                                                                                                                                                                                                                                                                                                       
| |  | unmetered                                 | in relation
        to any quantity of electricity entering or leaving the licensees
        distribution system that is not measured by metering equipment, refers
    to the quantity estimated as so doing.                                                                                                       
| |  |                                             |                                                                                                                                                                                                                                                                                                                       

|5. | Any reference
    in these special conditions to:
|-- | -------------------------------------------------
|   |                                                  
|   | (a)                                              
|   |                                                  
|   | (b)                                              
|   |                                                  
|   | (c)                                              

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United Utilities Electricity plc

|   | (d)                                                                                                                                                                                                                                                 | a provision
    of the standard conditions of electricity generation licences; or                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                              
|   | (e)                                                                                                                                                                                                                                                 | a provision
    of the standard conditions of electricity transmission licences,                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                    
|   | shall,
      if these 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 or the standard conditions in question as modified.
|   |                                                                                                                                                                                                                                                    
|6. | Except
    where the context otherwise requires:                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                              
|   | (a)                                                                                                                                                                                                                                                 | any reference
       in a special condition to a numbered paragraph or appendix (in each case
       with or without a letter) or to an annex identified by a letter is a reference
       to the paragraph, appendix or annex bearing that number or (as the case
       may be) that letter in the special condition in which the reference occurs;
    and
|   |                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                              
|   | (b)                                                                                                                                                                                                                                                 | any reference
       in a special condition to a paragraph is a reference to a paragraph of
       that special condition and any reference to a sub-paragraph is a reference
    to a sub-paragraph of that paragraph.                                                                                                                                      

---



United Utilities Electricity plc

SPECIAL CONDITION
        A2  Scope of the charge
  restriction conditions

|1. | The
      purpose of this condition is to set out the basis on which services provided
    by the licensee may be treated as excluded services.                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                       
|2. | Excluded
      services are those services provided by the licensee as part of its distribution
      business in respect of which such charges as are or may be levied may be
      treated as falling outside the scope of the charge restrictions otherwise
    imposed by or under this licence.                  
|   |                                                                                                                                                                                                                                                                                                                       
|3. | Subject
      to paragraph 4, the services which by virtue of this condition are excluded
      services for the purposes of the charge restriction conditions are those
    set out in Appendix 1 below (which is part of this condition).                                                                           
|   |                                                                                                                                                                                                                                                                                                                       
|4. | No
      service provided by the licensee, within its distribution services area,
      as part of its distribution business may be treated as an excluded service
      insofar as it consists of the provision
of services remunerated:                                                                             
|   |                                                                                                                                                                                                                                                                                                                       
|   | (a)                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                       
|   | (b)                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                       
|   | (c)                                                                                                                                                                                                                                                                                                                   
|5. | Where
      the Authority, following consultation with the licensee and having particular
      regard to paragraph 4 and the matters set out in Appendix 1, is satisfied
      that any service treated by the licensee as an excluded service should
    not be so treated, it may issue a direction to that effect.
|   |                                                                                                                                                                                                                                                                                                                       
|6. | Where
      a direction is issued under paragraph 5, the service or services specified
      in the direction shall cease to be treated as excluded services by the
      licensee from the date of issue of the direction or such other date as
    may be specified therein.                                        

---



United Utilities Electricity plc

Appendix 1: Excluded services

|ES1. | The
    service consisting of the distribution of units:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|ES2. | The
      service consisting of the carrying out of works for the provision, installation,
      operation, repair or maintenance of electric lines or other electrical
      plant, but only insofar as such service is not remunerated through use
      of system charges or under charges made for the provision of basic metering
      and data services in accordance with paragraph 1 of standard condition
      36C (Basis of Charges for Basic Metering Services and Data Services: Requirements
      for Transparency) or under charges made for the provision within its distribution
      services area of metering point administration services in accordance with
      paragraph 2 of standard condition 14A (Basis of Charges for Metering Point
    Administration Services: Requirements for Transparency).
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|ES3. | The
      service consisting of the provision of any revenue protection services
    pursuant to the terms of an agreement for use of system.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|ES4. | The
      service consisting of the provision of any statement or report pursuant
    to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|ES5. | The
      service consisting of the relocation of electric lines or electrical plant
      (including the carrying out of any works associated therewith) pursuant
      to any statutory obligation (other than under section 9(1) or section 16
    of the Act) imposed on the licensee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|ES6. | The
      service consisting of the moving of any electric lines, electrical plant
      or meters forming part of the licensees distribution system to accommodate
      the extension, redesign or redevelopment of any premises on which the same
    are located or to which they are connected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

---



United Utilities Electricity
      plc

|ES7.  | The
      service consisting of the provision of electric lines and electrical plant
      insofar as the same are required:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|ES8.  | The
      service consisting of the transportation of reactive energy to premises
      with a power factor of less than 0.95, but only insofar as the charges
      for such services reflect the costs imposed on the licensee and are levied
      on the basis of the metered value of kVAr or kVArh transported to such
    premises.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|ES9.  | Any
      other service in relation to use of the licensees distribution system
      insofar as it consists of the provision of a service (including electric
      lines or electrical plant) which is for the specific benefit of any third
      party who requests it and which is not made available by the licensee as
      a normal part of its distribution business within its distribution services
      area remunerated by use of system charges, or under charges made for the
      provision of basic metering and data services in accordance with paragraph
      1 of standard condition 36C (Basis of Charges for Basic Metering Services
      and Data Services: Requirements for Transparency), or under any other charge
      in respect of the excluded services set out in paragraphs ES1 to ES8 and
    paragraph ES10.
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|ES10. | Any
      provision of a basic metering service (as set out at paragraph 3(b) of
      standard condition 36 (Requirement to Offer Terms for the Provision of
      Basic Metering Services)) insofar as it consists of a service (including
      any premium in respect of a service provided outside a contractual core
      time or timeband) that is not incorporated within the calculation of allowed
      meter operation revenue for the purposes of paragraph 9 of special condition
      F1 (Restriction of basic metering charges), or any provision of a metering
      service other than a basic metering service which is not remunerated by
      use of system charges or under any other charge in respect of an excluded
    service set out in paragraphs ES1 to ES9.                                                         

---



United Utilities Electricity
      plc

SPECIAL CONDITION
  A3  Arrangements for the recovery of uncertain costs

|1. | The
      purposes of this condition are to enable the licensee to propose, and to
      provide for the Authority to determine, such adjustments to the charge
      restriction conditions as are necessary to enable the licensee to recover
      the efficient costs incurred within the categories of costs described in
      paragraph 2 pursuant to the licensees compliance with obligations
      or requirements arising under any of the enactments (the relevant
    enactments) specified in that paragraph.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | The
    relevant enactments are:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | For
      the purposes of paragraph 2(a), any ESQCR costs incurred by the licensee
      in complying with any obligations imposed by the relevant enactment to
      which that paragraph refers that had previously been an obligation of the
      licensee under the Electricity Supply Regulations 1988 (including, in particular,
      costs incurred under regulation 18 for the purposes of averting immediate
      danger to the public) are to be disregarded for the purposes of paragraph
    4.                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | Subject
      to the provisions of paragraphs 6 and 7, where the licensee reasonably
      believes that its efficiently incurred costs in any one or more relevant
      years of complying with obligations or requirements arising under any of
      the relevant enactments are, or are likely to be, a material amount, the
      licensee may, by notice to the Authority, propose a relevant adjustment
    to the charge restriction conditions.                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | A
      relevant adjustment under paragraph 4 is one which, in the opinion of the
      licensee, would, if made, have the effect of enabling the licensee to recover
      the efficient costs incurred or likely to be incurred in relation to the
    obligations or requirements referred to in that paragraph.                                                                                                                                                                                                           

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|6.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|7.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|8.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|9.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|10.                                   
|                                      
|11.                                   
|                                      

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|12.                                   
|                                      
|                                      
|                                      
|                                      
|                                      
|13.                                   
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      

---



|United Utilities Electricity plc                                                        
|----------------------------------------------------------------------------------------
|                                                                                        
|SPECIAL
              CONDITION A4  Duration of the charge restriction
      conditions
|                                                                                        
|1.                                                                                      
|                                                                                        
|2.                                                                                      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|3.                                                                                      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|4.                                                                                      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|5.                                                                                      
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        

---



|United Utilities Electricity plc
|--------------------------------
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|6.                              
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|7.                              
|                                
|8.                              

---



|United
      Utilities Electricity plc                                                                    
|----------------------------------------------------------------------------------------------------------
|                                                                                                          
|SPECIAL
            CONDITION B1  Restriction of distribution charges: demand use
      of system charges
|                                                                                                          
|1.                                                                                                        
|                                                                                                          
|Restriction
      on setting demand use of system charges                                                 
|                                                                                                          
|2.                                                                                                        
|                                                                                                          
|Formula
      for allowed demand revenue (AD)                                                             
|                                                                                                          
|3.                                                                                                        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|Formula
      for base demand revenue (BRt)                                                               
|                                                                                                          
|4.                                                                                                        
|                                                                                                          
|                                                                                                          

---



United Utilities Electricity plc

| | where:  |                                                                                                                                                                                                                                                                                                              
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                                                              
| | PU      | means the amount
        set against that term in the part of Annex A that applies to the licensee,
        and represents the revenue allowance determined by the Authority in relation
        to the distribution of electricity to LV and HV premises at the time
    that the allowance was established.
| |         |                                                                                                                                                                                                                                                                                                              
| | PE      | means the amount
        set against that term in the part of Annex A that applies to the licensee,
        and represents the revenue allowance determined by the Authority in relation
        to the distribution of electricity to EHV premises at the time that the
    allowance was established.      
| |         |                                                                                                                                                                                                                                                                                                              
| | GRt     | is the growth term, and in the relevant year commencing
        1 April 2005 has the value of 1 and then in the relevant year commencing
        1 April 2006 and each subsequent relevant year is derived from the following
    formula:                                                                   
| |         |                                                                                                                                                                                                                                                                                                              
| |        
| | where : |                                                                                                                                                                                                                                                                                                              
| | :       | means the summation across all distribution unit categories
    i as described in the definition of the termP0i.                                                                                                                                                                                             
| |         |                                                                                                                                                                                                                                                                                                              
| | P0i     | means, in respect of each distribution unit category i set
        out against the licensees name in Annex B, the corresponding value
        of P0thatapplies in respect of that
    category.                                                                                                             
| |         |                                                                                                                                                                                                                                                                                                              
| | Dit     | means the total number of units distributed in the relevant
        year t to premises directly connected to the distribution system of the
        licensee within its distribution services area which fall within the
    relevant distribution unit category i.                                          
| |         |                                                                                                                                                                                                                                                                                                              
| | Ct      | means the number of energised or de-energised exit points
        on the licensees distribution system in the relevant year t, for
        which there is a valid metering point administration number, as calculated
    on 30 September of that year.                                                     
| |         |                                                                                                                                                                                                                                                                                                              
| | PIADt   | is the price index adjuster, which in the relevant year
        commencing 1 April 2005 has the value of 1 and in each subsequent relevant
    year is derived from the following formula:                                                                                                                   
| |         |                                                                                                                                                                                                                                                                                                              
| |        
| |        

---



United Utilities Electricity plc

|   | where:                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | RPIt                                                                                                                                                                                                           | means the percentage
        change (whether positive or negative) between the arithmetic average
        of the Retail Price Index numbers published or determined with respect
        to each of the six months July to December (inclusive) in the relevant
        year t-2 and the arithmetic average of the Retail Price Index numbers
        published or determined with respect to the same months in relevant year
    t-1.                                                                                                                          
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | X                                                                                                                                                                                                              | shall, in relation
        to the relevant year commencing 1 April 2006 and every subsequent relevant
        year, take the value of zero, except in respect of EDF Energy Networks
        (SPN) plc where, in the relevant year commencing 1 April 2006 and every
    subsequent relevant year, it shall take the value of -2.                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | MGt                                                                                                                                                                                                            | is the merger adjustment,
    and is derived from the following formula:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | MGt= MRt× PIAM t                                                                                                                                                                                              
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | where:                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | MRt                                                                                                                                                                                                            | means the amount
        set against that term for each relevant year in the part of Annex C that
    applies to the licensee.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | PIAMt                                                                                                                                                                                                          | in the year commencing
    1 April 2001 equals 1 and in all subsequentyears
    is derived from the following formula:                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Formula for
    the correction factor(KDt)                                                                                                                                                                    
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|5. | For
          the purpose of paragraph 3, KDt is derived, subject to paragraph
          4 ofspecial condition E1 (Charge restriction conditions:
    supplementary restrictions), from the following formula:
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | where:                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | RDt-1                                                                                                                                                                                                          | means the regulated
          demand revenue in the relevant year t-1, except in the relevant year
          commencing 1 April 2005 where RDt-1 shall
          be theamount of distribution revenue (as defined
          in special condition A (Definitions and interpretation), or in Scotland
          special condition B, of this licence in the form in which it was in
          force at 31 March 2005 and, for the avoidance of doubt, excluding EHV
          revenues) recovered by the licensee in the relevant year commencing
    1 April 2004.
|   |                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---



United Utilities Electricity
plc

| | ADt-1 | means allowed
          demand revenue in the relevant year t-1, except in the relevant year
          commencing 1 April 2005 where AD t-1 shall be
          derived from
    the following formula:
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                       
| |       | ADt-1 = M dt-1×
    Dt -1                                                                                                                                                                             
| |       |                                                                                                                                                                                                       
| |       | where:                                                                                                                                                                                                
| |       |                                                                                                                                                                                                       
| |       | Mdt-1                                                                                                                                                                                                 
| |       |                                                                                                                                                                                                       
| |       | Dt-1                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                       
| | It    | means the average specified rate (as defined under those
        words in special condition A1 (Definitions and interpretation)) in the
    relevant year t.                                          
| |       |                                                                                                                                                                                                       
| | PRt   | means the rate of interest that is applicable
        in accordance with paragraph 2 of special condition E1 (Charge restriction
    conditions: supplementary restrictions).                         
| |       |                                                                                                                                                                                                       

---



United Utilities Electricity plc

Annex A:   Values for PU and PE by licensee

| |                                                          |         |  |         | 
| | -------------------------------------------------------- | ------- |  | ------- | 
| | Licensee                                                 | PU (£m) |  | PE (£m) | 
| |                                                          |         |  |         | 
| | Central Networks
      West plc                          | 255.7   |  | 2.8     | 
| |                                                          |         |  |         | 
| | Central Networks
      East plc                          | 257.7   |  | 3.5     | 
| |                                                          |         |  |         | 
| | United Utilities
      Electricity plc                   | 235.4   |  | 4.1     | 
| |                                                          |         |  |         | 
| | Northern Electric
      Distribution Limited             | 158.2   |  | 7.2     | 
| |                                                          |         |  |         | 
| | Yorkshire Electricity
      Distribution plc             | 213.9   |  | 3.8     | 
| |                                                          |         |  |         | 
| | Western Power Distribution
      (South West) plc        | 188.5   |  | 1.7     | 
| |                                                          |         |  |         | 
| | Western Power Distribution
      (South Wales) plc       | 148.5   |  | 6.8     | 
| |                                                          |         |  |         | 
| | EDF Energy Networks
      (LPN) plc                      | 236.9   |  | 4.1     | 
| |                                                          |         |  |         | 
| | EDF Energy Networks
      (SPN) plc                      | 167.9   |  | 7.2     | 
| |                                                          |         |  |         | 
| | EDF Energy Networks
      (EPN) plc                      | 304.7   |  | 6.0     | 
| |                                                          |         |  |         | 
| | SP Distribution Limited                                  | 313.7   |  | 0.6     | 
| |                                                          |         |  |         | 
| | SP Manweb plc                                            | 179.3   |  | 7.6     | 
| |                                                          |         |  |         | 
| | Scottish Hydro-Electric
      Power Distribution Limited | 179.2   |  | 1.8     | 
| |                                                          |         |  |         | 
| | Southern Electric
      Power Distribution plc           | 353.9   |  | 6.8     | 
| |                                                          |         |  |         | 

---



United Utilities Electricity plc

Annex B:   Values for P0 weights by licensee

Central Networks West plc

|Unit
      categoryi | P0    
|-------------------- | ------
|                     |       
|LV1                  | 1.0397
|                     |       
|LV2                  | 0.1220
|                     |       
|LV3                  | 0.9286
|                     |       
|HV                   | 0.2503

Central Networks East plc

|Unit
      category i | P0    
|--------------------- | ------
|                      |       
|LV1                   | 0.7512
|                      |       
|LV2                   | 0.1680
|                      |       
|LV3                   | 0.5537
|                      |       
|HV                    | 0.1960

United Utilities Electricity plc

|Unit category
      i | P0    
|--------------------- | ------
|                      |       
|LV1                   | 1.8789
|                      |       
|LV2                   | 0.2104
|                      |       
|LV3                   | 1.4180
|                      |       
|HV                    | 0.6297

Northern Electric Distribution Limited

|Unit category
      i | P0    
|--------------------- | ------
|                      |       
|LV1                   | 1.0512
|                      |       
|LV2                   | 0.1100
|                      |       
|LV3                   | 0.8205
|                      |       
|HV                    | 0.1580

Yorkshire Electricity Distribution plc

|Unit category
      i | P0    
|--------------------- | ------
|                      |       
|LV1                   | 0.7700
|                      |       
|LV2                   | 0.1200
|                      |       
|LV3                   | 0.6025
|                      |       
|HV                    | 0.1750
|                      |       

---



United Utilities Electricity plc

Western Power Distribution (South West) plc

|Unit
    category i                                |  | P0     | 
|-------------------------------------------------- |  | ------ | 
|                                                   |  |        | 
|LV1                                                |  | 1.8800 | 
|                                                   |  |        | 
|LV2                                                |  | 0.4100 | 
|                                                   |  |        | 
|LV3                                                |  | 1.2734 | 
|                                                   |  |        | 
|HV                                                 |  | 0.2350 | 
|                                                   |  |        | 
|Western
      Power Distribution (South Wales) plc
|                                                   |  |        | 
|Unit
      category i                              |  | P0     | 
|                                                   |  |        | 
|LV1                                                |  | 1.8600 | 
|                                                   |  |        | 
|LV2                                                |  | 0.2700 | 
|                                                   |  |        | 
|LV3                                                |  | 1.3852 | 
|                                                   |  |        | 
|HV                                                 |  | 0.2415 | 
|                                                   |  |        | 
|EDF Energy Networks (LPN) plc                      | 
|                                                   |  |        | 
|Unit
      category i                              |  | P0     | 
|                                                   |  |        | 
|LV1                                                |  | 1.0970 | 
|                                                   |  |        | 
|LV2                                                |  | 0.1360 | 
|                                                   |  |        | 
|LV3                                                |  | 0.6988 | 
|                                                   |  |        | 
|HV                                                 |  | 0.2580 | 
|                                                   |  |        | 
|EDF Energy Networks (SPN) plc                      |  |        | 
|                                                   |  |        | 
|Unit
      category i                              |  | P0     | 
|                                                   |  |        | 
|LV1                                                |  | 0.7456 | 
|                                                   |  |        | 
|LV2                                                |  | 0.0929 | 
|                                                   |  |        | 
|LV3                                                |  | 0.5076 | 
|                                                   |  |        | 
|HV                                                 |  | 0.2376 | 
|                                                   |  |        | 
|EDF Energy Networks (EPN) plc                      | 
|                                                   |  |        | 
|Unit
      categoryi                               |  | P0     | 
|                                                   |  |        | 
|LV1                                                |  | 1.0252 | 
|                                                   |  |        | 
|LV2                                                |  | 0.3010 | 
|                                                   |  |        | 
|LV3                                                |  | 0.9072 | 
|                                                   |  |        | 
|HV                                                 |  | 0.2503 | 
|                                                   |  |        | 
|SP Distribution Limited                           
|                                                   |  |        | 
|Unit
      category i                              |  | P0     | 
|                                                   |  |        | 
|LV1                                                |  | 2.7442 | 
|                                                   |  |        | 
|LV2                                                |  | 0.6794 | 
|                                                   |  |        | 
|LV3                                                |  | 1.8388 | 
|                                                   |  |        | 
|HV                                                 |  | 0.7426 | 
|                                                   |  |        | 



---



SP Manweb plc

|Unit
      category i                                    |  | P0     | 
|-------------------------------------------------------- |  | ------ | 
|                                                         |  |        | 
|LV1                                                      |  | 1.8699 | 
|                                                         |  |        | 
|LV2                                                      |  | 0.6016 | 
|                                                         |  |        | 
|LV3                                                      |  | 1.4532 | 
|                                                         |  |        | 
|HV                                                       |  | 0.6020 | 
|                                                         |  |        | 
|Scottish Hydro-Electric Power Distribution
      Limited
|                                                         |  |        | 
|Unit
      category i                                    |  | P0     | 
|                                                         |  |        | 
|LV1                                                      |  | 1.8824 | 
|                                                         |  |        | 
|LV2                                                      |  | 0.8819 | 
|                                                         |  |        | 
|LV3                                                      |  | 1.9542 | 
|                                                         |  |        | 
|HV                                                       |  | 0.4900 | 
|                                                         |  |        | 
|Southern Electric Power Distribution
      plc           | 
|                                                         |  |        | 
|Unit
      category i                                    |  | P0     | 
|                                                         |  |        | 
|LV1                                                      |  | 1.2118 | 
|                                                         |  |        | 
|LV2                                                      |  | 0.1806 | 
|                                                         |  |        | 
|LV3                                                      |  | 1.0334 | 
|                                                         |  |        | 
|HV                                                       |  | 0.2842 | 
|                                                         |  |        | 



---



Annex C: Valued for MR by licensee

|Central Networks
      West plc |      
|------------------------------- | -----
|                                |      
|MRt (£m)                        |      
|                                |      
|1 April
      2005              | 3.124
|1 April 2006                    | 3.124
|1 April 2007                    | 3.124
|1 April 2008                    | 3.124
|1 April 2009                    | 0.000
|                                |      
|thereafter zero                 |      

|                                |      
|------------------------------- | -----
|Central Networks
      East plc |      
|                                |      
|MRt (£m)                        |      
|                                |      
|1 April
      2005              | 3.276
|1 April 2006                    | 3.276
|1 April 2007                    | 3.276
|1 April 2008                    | 3.276
|1 April 2009                    | 0.000
|                                |      
|thereafter zero                 |      

|                                       |     
|-------------------------------------- | ----
|United Utilities
      Electricity plc |     
|                                       |     
|MRt (£m)                               |     
|                                       |     
|1 April
      2005                     | 0.00
|1 April 2006                           | 0.00
|1 April 2007                           | 0.00
|1 April 2008                           | 0.00
|1 April 2009                           | 0.00
|                                       |     
|thereafter zero                        |     

|                                             |     
|-------------------------------------------- | ----
|Northern Electric
      Distribution Limited |     
|                                             |     
|MRt (£m)                                     |     
|                                             |     
|1 April
      2005                           | 0.00
|1 April 2006                                 | 0.00
|1 April 2007                                 | 0.00
|1 April 2008                                 | 0.00
|1 April 2009                                 | 0.00
|                                             |     
|thereafter zero                              |     



---



United Utilities Electricity plc

Yorkshire Electricity Distribution plc

|MRt (£m)           |     
|------------------ | ----
|                   |     
|1 April
      2005 | 0.00
|1 April 2006       | 0.00
|1 April 2007       | 0.00
|1 April 2008       | 0.00
|1 April 2009       | 0.00
|                   |     
|thereafter zero    |     
|                   |     

|                                                 |     
|------------------------------------------------ | ----
|Western
      PowerDistribution (South West) plc |     
|                                                 |     
|MRt (£m)                                         |     
|                                                 |     
|1 April
      2005                               | 0.00
|1 April 2006                                     | 0.00
|1 April 2007                                     | 0.00
|1 April 2008                                     | 0.00
|1 April 2009                                     | 0.00
|                                                 |     
|                                                 |     
|thereafter zero                                  |     
|                                                 |     

|                                                   |     
|-------------------------------------------------- | ----
|Western
      Power Distribution (South Wales) plc |     
|                                                   |     
|MRt (£m)                                           |     
|                                                   |     
|1 April
      2005                                 | 0.00
|1 April 2006                                       | 0.00
|1 April 2007                                       | 0.00
|1 April 2008                                       | 0.00
|1 April 2009                                       | 0.00
|                                                   |     
|thereafter zero                                    |     
|                                                   |     

|                                                |      
|----------------------------------------------- | -----
|EDF Energy
            Networks (LPN)
      plc |      
|                                                |      
|MRt (£m)                                        |      
|                                                |      
|1 April
      2005                              | 1.920
|1 April 2006                                    | 1.920
|1 April 2007                                    | 1.920
|1 April 2008                                    | 0.000
|1 April 2009                                    | 0.000
|                                                |      
|thereafter zero                                 |      

---



United Utilities Electricity plc

EDF Energy Networks (SPN) plc

|MRt (£m)           |      
|------------------ | -----
|                   |      
|1 April
      2005 | 1.703
|1 April 2006       | 1.703
|1 April 2007       | 1.703
|1 April 2008       | 0.000
|1 April 2009       | 0.000
|                   |      
|thereafter zero    |      
|                   |      

|                                          |      
|----------------------------------------- | -----
|EDF Energy
      Networks (EPN)
      plc |      
|                                          |      
|MRt (£m)                                  |      
|                                          |      
|1 April
      2005                        | 2.777
|1 April 2006                              | 2.777
|1 April 2007                              | 2.777
|1 April 2008                              | 0.000
|1 April 2009                              | 0.000
|                                          |      
|thereafter zero                           |      

|                              |     
|----------------------------- | ----
|                              |     
|SP Distribution
      Limited |     
|                              |     
|MRt (£m)                      |     
|                              |     
|1 April
      2005            | 0.00
|1 April 2006                  | 0.00
|1 April 2007                  | 0.00
|1 April 2008                  | 0.00
|1 April 2009                  | 0.00
|                              |     
|thereafter zero               |     
|                              |     

|SP Manweb plc      |     
|------------------ | ----
|                   |     
|MRt (£m)           |     
|                   |     
|1 April
      2005 | 0.00
|1 April 2006       | 0.00
|1 April 2007       | 0.00
|1 April 2008       | 0.00
|1 April 2009       | 0.00
|                   |     
|thereafter zero    |     



---



United Utilities Electricity plc

Scottish Hydro-Electric Power Distribution Limited

|                                               |  | MRt(£m)         |  |      | 
|---------------------------------------------- |  | --------------- |  | ---- | 
|                                               |  | 1 April 2005    |  | 0.00 | 
|                                               |  | 1 April 2006    |  | 0.00 | 
|                                               |  | 1 April 2007    |  | 0.00 | 
|                                               |  | 1 April 2008    |  | 0.00 | 
|                                               |  | 1 April 2009    |  | 0.00 | 
|                                               |  |                 |  |      | 
|                                               |  |                 |  |      | 
|                                               |  | thereafter zero |  |      | 
|                                               |  |                 |  |      | 
|                                               |  |                 |  |      | 
|Southern
      Electric Power Distribution plc | 
|                                               |  |                 |  |      | 
|                                               |  |                 |  |      | 
|                                               |  | MRt(£m)         |  |      | 
|                                               |  | 1 April 2005    |  | 0.00 | 
|                                               |  | 1 April 2006    |  | 0.00 | 
|                                               |  | 1 April 2007    |  | 0.00 | 
|                                               |  | 1 April 2008    |  | 0.00 | 
|                                               |  | 1 April 2009    |  | 0.00 | 
|                                               |  |                 |  |      | 
|                                               |  | thereafter zero |  |      | 

---



United Utilities Electricity plc

SPECIAL CONDITION B2  Restriction of distribution
    charges: allowed pass-through items

|1. | The purpose
        of this condition is to provide for adjustments to the charge restriction
        conditions to reflect certain costs that can be passed through to demand
    customers of the licensee through allowed demand revenue.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                             
|   | Formula for
    allowed pass-through items(PTt)                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                             
|2. | For
          the purposes of paragraph 3 of special condition B1 (Restriction of distribution
          charges: demand use of system charges), PTtis
          derived from thefollowing formula:                                         
|   |                                                                                                                                                                                                                                             
|   | PTt=LFt+RBt–HBt+MPTt+UNCt                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                             
|   | where:                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                             
|   | LFt                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                             
|   | RBt                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                             
|   | HBt                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                             
|   | MPTt                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                             
|   | UNCt                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                             
|   | Formula for
    the licence fee adjustment (LFt)                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                             
|3. | For the
          purposes of paragraph 2, LFt is an amount calculated
    in accordancewith the following formula:                                                                                                                         
|   |                                                                                                                                                                                                                                             
|   | LFt= LPt– LAt                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                             
|   | where:                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                             
|   | LPt                                                                                                                                                                                                                                         

---



United Utilities Electricity plc

| |     | year
        t, in accordance with its obligations set out in standard condition 3
    (Payments by Licensee to the Authority).
| | --- | -------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                
| | LAt | is
        the amount of the licence fee payments allowance, and is derived from
    the following formula:                    
| |     |                                                                                                                                
| |     | LAt= PF xPIABt                                                                                                                 
| |     |                                                                                                                                
| |     | where:                                                                                                                         
| |     |                                                                                                                                
| |     | PF                                                                                                                             
| |     |                                                                                                                                
| |     | PIABt                                                                                                                          
| |     |                                                                                                                                

|   |                                                                                                                 |                                                                                 | where
          RPItis determined in accordance
          with paragraph 4 of special condition B1
          (Restriction of distribution charges: demand use of system charges).                        
|-- | --------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   | Formula for
    the business rates adjustment (RBt)                                                            
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|4. | For
          the purposes of paragraph 2, RBtis
          calculated in accordance with the following formula:
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   | RBt= RPt– RAt                                                                                                  
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   | where:                                                                                                         
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   | RPt                                                                                                             | is the
    amount payable by the licensee in respect of business rates.        
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   | RAt                                                                                                             | is the
    business rates allowance, and is derived from the following formula:
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   |                                                                                                                 | RAt= RVtx PIABt                                                                
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   |                                                                                                                 | where:                                                                         
|   |                                                                                                                 |                                                                                 |                                                                                                                                                                                                          
|   |                                                                                                                 | RVt                                                                             | is the business
        rates allowance in 2002/03 prices, and is represented by the amount set
        against that term for each relevant year in the part of Annex B that
    applies to the licensee.

---



United Utilities Electricity
      plc

|   |                                                                                                            | PIABt                                                                                                                                                                                                                                                                                                                                                                                                | shall
        in the relevant year commencing 1 April 2002 take the value of 1 and
        in each subsequent relevant year shall be derived from the formula set
    out in paragraph 3.                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   | Formula for other
    pass-through items (MPTt)                                                           
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|5. | For the purposes
          of paragraph 2, MPTtis calculated
    in accordance with the following formula:
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   | MPTt= MPCt+ MPAt                                                                                          
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   | where:                                                                                                    
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   | MPCt                                                                                                       | is the amount
          payable by the licensee in respect of costs incurred by the licensee
          in the relevant year t for items which the licensee considers should
          be treated as miscellaneous pass-through items not reflected
          in the term MPAt and which have
          been directed by the Authority to be so treated following consultation
    with the licensee.
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   | MPAt                                                                                                       | is the
        amount of allowed pass-through relating to settlement run-off costs and
    Shetland balancing costs, and is derived from the following formula:                                                                                                                                                                                                                                     
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            | MPAt=SRSt+SAt                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            | where:                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            | SRSt                                                                                                                                                                                                                                                                                                                                                                                                 | means
        the allowance for settlement run-off costs in relation to the transition
        to BETTA and in the relevant year commencing 1 April 2005 shall be calculated
        in accordance with the following formula, and in each subsequent relevant
    year thereafter shall take the value of zero:
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      | SRSt= (1998
    costs+ SOC) ×PIASt                                                                                                                                                                                                                                                                              
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      | where:                                                                                                                                                                                                                                                                                                          
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      | 1998 costs                                                                                                                                                                                                                                                                                                      
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                 

---



United Utilities Electricity plc

| |  |     | SOC                                                                                                                                                                                                                                                                            | means the ongoing
        operating expenditure associated with settlement run-off costs in respect
        of the Settlement Agreement for Scotland, and in the relevant year commencing
        1 April 2005 shall be the amount set against the licensees name
    in Part 1 of Annex C.
| |  | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |     |                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                             
| |  |     | PIASt                                                                                                                                                                                                                                                                          | is the price index
        adjustment, and in the relevant year commencing 1 April 2004 shall take
        the value of 1 and in each subsequent relevant year shall be derived
    from the following formula:                                                                             
| |  |     |                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                             
| |  |     |                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                             
| |  |     |                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                             
| |  | SAt | means
        the allowance for Shetland balancing costs, and is the amount derived
        under the formula for that term set out in Part 2 of Annex C with respect
        to Scottish Hydro Electric Power Distribution Limited, and for every
    other licensee is zero.

---



United Utilities Electricity plc

|Annex A: Values for PF by licensee |                                                          |        
|---------------------------------- | -------------------------------------------------------- | -------
|                                   |                                                          |        
|                                   |                                                          |        
|                                   | Licensee                                                 | PF (£m)
|                                   |                                                          |        
|                                   | Central Networks
      West plc                          | 1.1    
|                                   |                                                          |        
|                                   | Central Networks
      East plc                          | 1.1    
|                                   |                                                          |        
|                                   | United Utilities
      Electricity plc                   | 1.1    
|                                   |                                                          |        
|                                   | Northern Electric
      Distribution Limited             | 0.7    
|                                   |                                                          |        
|                                   | Yorkshire Eelectricity
      Distribution plc            | 1.0    
|                                   |                                                          |        
|                                   | Western Power Distribution
      (South West) plc        | 0.7    
|                                   |                                                          |        
|                                   | Western Power
      Distribution (South Wales) plc       | 0.5    
|                                   |                                                          |        
|                                   | EDF Energy Networks
      (LPN) plc                      | 1.0    
|                                   |                                                          |        
|                                   | EDF Energy Networks
    (SPN) plc                        | 1.0    
|                                   |                                                          |        
|                                   | EDF Energy Networks
    (EPN) plc                        | 1.6    
|                                   |                                                          |        
|                                   | SP Distribution Limited                                  | 0.9    
|                                   |                                                          |        
|                                   | SP Manweb plc                                            | 0.7    
|                                   |                                                          |        
|                                   | Scottish Hydro-Electric
      Power Distribution Limited | 0.3    
|                                   |                                                          |        
|                                   | Southern Electric
      Power Distribution plc           | 1.3    
|                                   |                                                          |        

---



United Utilities Electricity plc

Annex B: Values forRVtby licensee

|Central Networks West plc                    |     
|-------------------------------------------- | ----
|                                             |     
|RVt(£m)                                      |     
|                                             |     
|1 April
      2005                           | 22.2
|1 April 2006                                 | 21.1
|1 April 2007                                 | 20.5
|1 April 2008                                 | 20.5
|1 April 2009                                 | 20.5
|                                             |     
|thereafter20.5                               |     
|                                             |     
|Central
      Networks East plc              |     
|                                             |     
|RVt(£m)                                      |     
|                                             |     
|1 April 2005                                 | 21.8
|1 April 2006                                 | 25.6
|1 April 2007                                 | 27.4
|1 April 2008                                 | 27.4
|1 April 2009                                 | 27.4
|                                             |     
|thereafter27.4                               |     
|                                             |     
|United
      Utilities Electricity plc       |     
|                                             |     
|RVt(£m)                                      |     
|                                             |     
|1 April 2005                                 | 18.3
|1 April 2006                                 | 17.4
|1 April 2007                                 | 17.3
|1 April 2008                                 | 17.3
|1 April 2009                                 | 17.3
|                                             |     
|thereafter17.3                               |     
|                                             |     
|Northern
      Electric Distribution Limited |     
|                                             |     
|RVt(£m)                                      |     
|                                             |     
|1 April 2005                                 | 11.9
|1 April 2006                                 | 13.7
|1 April 2007                                 | 13.7
|1 April 2008                                 | 13.7
|1 April 2009                                 | 13.7
|                                             |     
|thereafter13.7                               |     

---



United Utilities Electricity plc

Yorkshire Electricity Distribution plc

|RVt(£m)                                            |      | 
|-------------------------------------------------- | ---- | 
|                                                   |      | 
|1 April
      2005                                 | 20.5 | 
|1 April 2006                                       | 19.5 | 
|1 April 2007                                       | 18.5 | 
|1 April 2008                                       | 18.4 | 
|1 April 2009                                       | 18.4 | 
|                                                   |      | 
|thereafter18.4                                     |     
|                                                   |      | 
|Western
      Power Distribution (South West) plc 
|                                                   |      | 
|RVt(£m)                                            |      | 
|                                                   |      | 
|1 April 2005                                       | 14.4 | 
|1 April 2006                                       | 16.9 | 
|1 April 2007                                       | 18.2 | 
|1 April 2008                                       | 18.2 | 
|1 April 2009                                       | 18.2 | 
|                                                   |      | 
|thereafter18.2                                     |     
|                                                   |      | 
|Western
      Power Distribution (South Wales) plc
|                                                   |      | 
|RVt(£m)                                            |      | 
|                                                   |      | 
|1 April 2005                                       | 10.9 | 
|1 April 2006                                       | 12.8 | 
|1 April 2007                                       | 13.9 | 
|1 April 2008                                       | 13.9 | 
|1 April 2009                                       | 13.9 | 
|                                                   |      | 
|thereafter13.9                                     |     
|                                                   |      | 
|EDF
      Energy Networks(LPN) plc                 |     
|                                                   |      | 
|RVt(£m)                                            |      | 
|                                                   |      | 
|1 April 2005                                       | 18.1 | 
|1 April 2006                                       | 21.2 | 
|1 April 2007                                       | 23.3 | 
|1 April 2008                                       | 23.3 | 
|1 April 2009                                       | 23.3 | 
|                                                   |      | 
|thereafter23.3                                     |     

---



United Utilities Electricity plc

|EDF
      Energy Networks (SPN) plc |     
|----------------------------------- | ----
|                                    |     
|RVt(£m)                             |     
|                                    |     
|1 April
      2005                  | 14.2
|1 April 2006                        | 13.4
|1 April 2007                        | 12.8
|1 April 2008                        | 10.9
|1 April 2009                        | 7.0 
|                                    |     
|thereafter7.0                       |     
|                                    |     
|EDF
      Energy Networks (EPN) plc |     
|                                    |     
|RVt(£m)                             |     
|                                    |     
|1 April 2005                        | 24.5
|1 April 2006                        | 25.9
|1 April 2007                        | 25.9
|1 April 2008                        | 25.9
|1 April 2009                        | 25.9
|                                    |     
|thereafter25.9                      |     
|                                    |     
|SP
      Distribution Limited       |     
|                                    |     
|RVt(£m)                             |     
|                                    |     
|1 April 2005                        | 28.4
|1 April 2006                        | 33.4
|1 April 2007                        | 33.4
|1 April 2008                        | 33.4
|1 April 2009                        | 33.4
|                                    |     
|thereafter33.4                      |     
|                                    |     
|SP Manweb plc                       |     
|                                    |     
|RVt(£m)                             |     
|                                    |     
|1 April 2005                        | 14.3
|1 April 2006                        | 13.5
|1 April 2007                        | 12.9
|1 April 2008                        | 11.7
|1 April 2009                        | 11.7
|                                    |     
|thereafter11.7                      |     

---



United Utilities Electricity plc

|Scottish
      Hydro-Electric Power Distribution Limited |     
|-------------------------------------------------------- | ----
|                                                         |     
|RVt(£m)                                                  |     
|                                                         |     
|1 April 2005                                             | 9.5 
|1 April 2006                                             | 11.2
|1 April 2007                                             | 13.2
|1 April 2008                                             | 14.7
|1 April 2009                                             | 14.7
|                                                         |     
|thereafter14.7                                           |     
|                                                         |     
|Southern
      Electric Power Distribution plc           |     
|                                                         |     
|RVt(£m)                                                  |     
|                                                         |     
|1 April
      2005                                       | 30.2
|1 April 2006                                             | 35.5
|1 April 2007                                             | 38.0
|1 April 2008                                             | 38.0
|1 April 2009                                             | 38.0
|                                                         |     
|thereafter38.0                                           |     

---



United Utilities Electricity plc

Annex C: Values in relation toMPAt

Part 1

| |                                                        |                |  |              | 
| | ------------------------------------------------------ | -------------- |  | ------------ | 
| | Licensee                                               | 1998
    costs |  | SOC
    (£m) | 
| |                                                        | (£m)           |  |              | 
| |                                                        |                |  |              | 
| | Central
    Networks West plc                          | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | Central
    Networks East plc                          | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | United
    Utilities Electricity plc                   | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | Northern
    Electric Distribution Limited             | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | Yorkshire
    Electricity Distribution plc             | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | Western
    Power Distribution (South West) plc        | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | Western
    Power Distribution (South Wales) plc       | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | EDF Energy
    Networks (LPN) plc                      | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | EDF Energy
    Networks (SPN) plc                      | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | EDF Energy
    Networks (EPN) plc                      | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | SP Distribution
    Limited                            | 2.76           |  | 0.345        | 
| |                                                        |                |  |              | 
| | SP Manweb
    plc                                      | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 
| | Scottish
    Hydro-Electric Power Distribution Limited | 1.24           |  | 0.155        | 
| |                                                        |                |  |              | 
| | Southern
    Electric Power Distribution plc           | 0.00           |  | 0.000        | 
| |                                                        |                |  |              | 

---



United Utilities Electricity plc

Part 2

|1. | This
        Part 2 of Annex C applies solely to Scottish Hydro-Electric Power Distribution
        Limited.
|-- | ------------------------------------------------------------------------------------------------------------
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   | where:                                                                                                      
|   |                                                                                                             
|   | TPCt                                                                                                        
|   |                                                                                                             
|   | LPSFt                                                                                                       
|   |                                                                                                             
|   | LPSCt                                                                                                       
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   | EPt                                                                                                         
|   |                                                                                                             
|   | SHt                                                                                                         
|   |                                                                                                             
|   | SHBt                                                                                                        
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             
|   |                                                                                                             

---



United Utilities Electricity
      plc

SPECIAL CONDITION
        B3  Restriction of distribution charges: total incentive revenue
adjustment

|1. | The purpose
        of this condition is to establish the total amount of incentive payment
        that adjusts allowed demand revenue to reflect the performance of the
    licensee with respect to the following incentive schemes:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                        
|   | (a)                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                        
|   | (b)                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                        
|   | (c)                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                        
|   | Formula
    for incentive revenue (IPt)                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                        

|2. | For the purposes
          of paragraph 3 of special condition B1 (Restriction of distribution
    charges: demand use of system charges),IPt is
    derived inaccordance with the following
    formula:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                          

| |       
| | ------
| |       
| | where:
| |       
| | ILt   
| |       
| | IQt   
| |       
| | IFIt  

---



United Utilities Electricity plc

SPECIAL CONDITION C1  Calculation of charge restriction
  adjustments arising from the distribution losses incentive scheme

|1. | The purpose
        of this condition is to establish the amount of incentive that adjusts
        allowed demand revenue so as to reflect the performance of the licensee
    under the scheme set out below in respect of distribution losses.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                 
|   | Formula
    for the losses incentive adjustment (ILt)                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                 

|2. | For the purposes
          of paragraph 2 of special condition B3 (Restriction of distribution
          charges: total incentive revenue adjustment), ILtis
          calculated
inaccordance with the following formula:
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   | where:                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                           
|   | LR                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                           
|   | PLR                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                           
|   | PIALt                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   | Lt                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                           
|   | ALt                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                           

---



United Utilities Electricity
      plc

|   |                                                                                                                                                     | ALP                                                                                                                                                                                                                              | is the
        allowed loss percentage and shall, unless the Authority has directed
        otherwise in accordance with paragraph 7, take the value set against
    the licensees name in Annex A.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                     |                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
|   |                                                                                                                                                     | AUDt                                                                                                                                                                                                                             | means,
        in respect of the relevant year t, the adjusted units distributed as
    defined in paragraph 5.                                                                                     
|   |                                                                                                                                                     |                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
|   | PVLt                                                                                                                                                | means
        the number of units distributed recorded by the licensee, in respect
        of the relevant year t, that were physically delivered before 1 April
    2005, and where the adjustment may be positive or negative.
|   |                                                                                                                                                     |                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
|   | RPIt                                                                                                                                                | is determined
        in accordance with paragraph 4 of special condition B1 (Restriction of
    distribution charges: demand use of system charges).                                                                           
|   |                                                                                                                                                     |                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
|   | Basis of calculation
    of adjusted distribution losses (Lt)                                                                                      
|   |                                                                                                                                                     |                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
|3. | Adjusted
        distribution losses shall be deemed to be the difference between adjusted
    system entry volumes and adjusted units distributed.
|   |                                                                                                                                                     |                                                                                                                                                                                                                                  |                                                                                                                                                                                                     
|4. | Adjusted
    system entry volumes shall be equal to the sum of:                                                                                    

| |     |                                                                                                                                                                                                                                                                                                                                                           
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | all units metered
    on entering the licensees distribution system;                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                           
| | (b) | all units deemed
        to be entering the licensees distribution system by entry points
    that are unmetered; and                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                           
| | (c) | an amount (in
    units) representing the excess adverse effect on losses(DGAt)
    of units entering the system at entry points (other than entry points
    which are connected to an onshore transmission network) where the loss adjustment
    factor applied for settlement purposes is less than 0.997, as calculated
    by the following formula:
| |     |                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                           

|   |                                                   | where: |                                                                                                                                     | 
|-- | ------------------------------------------------- | ------ | ----------------------------------------------------------------------------------------------------------------------------------- | 
|   |                                                   |        |                                                                                                                                     | 
|   |                                                   |       
|   |                                                   |        |                                                                                                                                     | 
|   |                                                   | DGVit  | is the
        total number of units, in respect of the relevant year t, entering the
    distribution system at entry point i; and
|   |                                                   |        |                                                                                                                                     | 
|   |                                                   | LAGit  | is the
        value, in the relevant year t, of the loss adjustment factor applicable
    to entry point i.                       
|   |                                                   |        |                                                                                                                                     | 
|5. | Adjusted
    units distributed shall be equal to:
|   |                                                   |        |                                                                                                                                     | 

| | (a) | the sum
    of:
| | --- | ---------------
| |     |                
| |     | (i)            

---



United Utilities Electricity
plc

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (ii)           | all units deemed
        to be leaving the licensees distribution system at exit points
    that are unmetered;                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | but excluding:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (i)            | the units, whether
        metered or unmetered, recorded as distributed by the licensee and that
    were physically delivered before 1 April 2005, and                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (ii)           | in respect of Scottish
        Hydro-Electric Power Distribution Limited, also those units deemed to
        be leaving the licensees distribution system at shared unmetered
    exit points.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|6. | Subject
        to paragraph 7, the value of ALP set against the licensees name
    in Annex A shall apply so long as this condition continues in force.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|7. | The Authority,
        having due regard to the purpose of this condition, and being satisfied,
        following consultation with the licensee, that there has been a material
        change (whether an improvement or a deterioration) in the quality of
        the information used to derive the adjusted system entry volumes or adjusted
        units distributed, may, with the licensees consent (which shall
        not be unreasonably withheld), direct the licensee to change the value
        of ALP, to which paragraph 6 refers, to a different value specified by
    the Authority.           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|8. | A change
        to the value of ALP in accordance with paragraph 7 may be directed by
        the Authority at any time during the year but shall not take effect before
        the beginning of the relevant year commencing immediately after the date
    of the direction.                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                
|9. | The licensee
        shall, unless otherwise agreed by the Authority, calculate each component
        of adjusted distribution losses for the relevant year t on the same basis
        as that used within the calculation of adjusted distribution losses in
        respect of the relevant year commencing 1 April 2002, pursuant to paragraph
        7 of special condition D (Information to be provided to the Authority
        in connection with the charge restriction conditions), or in Scotland
        special condition E, of this licence in the form in which it was in force
    on 31 March 2005.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                |                                                                                                                                                                                                

---



United Utilities Electricity plc

Annex A: Value for ALP by licensee

| | Licensee                                                   | ALP  | 
| | ---------------------------------------------------------- | ---- | 
| |                                                            |      | 
| | Central Networks West
    plc                              | 4.96 | 
| |                                                            |      | 
| | Central Networks East
    plc                              | 5.69 | 
| |                                                            |      | 
| | United Utilities Electricity
    plc                       | 5.68 | 
| |                                                            |      | 
| | Northern Electric
    Distribution Limited                 | 5.20 | 
| |                                                            |      | 
| | Yorkshire Electricity
    Distribution plc                 | 5.90 | 
| |                                                            |      | 
| | Western Power Distribution
    (South West) plc            | 6.96 | 
| |                                                            |      | 
| | Western Power Distribution
    (South Wales) plc           | 4.94 | 
| |                                                            |      | 
| | EDF Energy Networks
    (LPN) plc                          | 6.54 | 
| |                                                            |      | 
| | EDF Energy Networks
    (SPN) plc                          | 6.54 | 
| |                                                            |      | 
| | EDF Energy Networks
    (EPN) plc                          | 6.32 | 
| |                                                            |      | 
| | SP Distribution Limited                                    | 6.45 | 
| |                                                            |      | 
| | SP Manweb plc                                              | 7.52 | 
| |                                                            |      | 
| | Scottish Hydro-Electric
         Power DistributionLimited | 8.73 | 
| |                                                            |      | 
| | Southern Electric
    Power Distribution plc               | 6.74 | 
| |                                                            |      | 

---



United Utilities Electricity
plc

SPECIAL CONDITION C2  Calculation
      of charge restriction adjustments arising from performance in respect of
    quality of service

|1. | The
    purposes of this condition are to establish:                                                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | (a)                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | (b)                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | (c)                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                      
|2. | For
        the purposes of paragraph 2 of special condition B3 (Restriction of distribution
        charges: total incentive revenue adjustment) in the relevant year commencing
        on 1 April 2005,IQt is the amount derived from the
    followingformula:                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | where:                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | Qt-2
        and Qt-3 shall each take the value of the respective term set against
        thelicensees
    name in Annex E.                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | Qt-1,
      za and zb are the adjustments to revenue to reflect the licensees
      performance in the relevant year commencing 1 April 2004 and shall be calculated
      from the application of the provisions of special condition G (Incentive
      scheme: calculation of charge restriction adjustment) in place for that
    relevant year.
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | Yis
  an additional reward for outperformance where the licensee has failed to meet
  one of its interruption targets for the relevant year commencing 1 April 2004.                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | If,
      for the relevant year commencing 1 April 2004, CIIS is less than or equal
      to TAt and CMLISt is less than or equal to TBt, then
    Y shall be equal to zero.                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                      
|   | If,
      for the relevant year commencing 1 April 2004, either CIISt is more than
      TAt or CMLISt is more than TBt, then Y shall be the
    amount derived from the following formula:                                                                                                                                                          

---



United Utilities Electricity
      plc

|   |                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | where
        each of the terms and other items in the formula shall be calculated
        from the application of the provisions of special condition G (Incentive
        scheme: calculation of charge restriction adjustment) of this licence
    in the form in which it was in force for that year.
|   |                                                                                                                                                                                                                                                                                                          
|   | qft                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                          
|   | qgt                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                          
|   | It                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                          
|3. | For the purposes
          of paragraph 2 of special condition B3 (Restriction of distribution
          charges: total incentive revenue adjustment) in the relevant year commencing
          on 1 April 2006,IQt shall be the amount derived
    from thefollowing
    formula:                       
|   |                                                                                                                                                                                                                                                                                                          
|   | IQt =
    qft + qgt                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                          
|   | In the relevant
          year commencing on 1 April 2007 and in each subsequent relevant year
          t,IQt shall be the amount derived from the following
    formula:                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          
|   | where:                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                          
|   | It                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                          
|4. | For the
        purposes of paragraphs 3 and 5, and subject to paragraphs 11, 12 and
    13:                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                          
|   | qat                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                          

---



United Utilities Electricity plc

| |        | CIISt                                                            | means the
    performance in respect of the number of customersinterrupted
    in relevant year t and is derived from the formula:                                                                                                                              
| | ------ | ---------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | CIISt
      = CIAt + (ax CIBt) + (b xCICt)
      + CIDt +CxCIEt)
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| | where:
| | a      | takes the value of 0.5 and b and c are zero.                    
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | CIAt                                                             | is the number of customers interrupted per year arising fromunplanned
          incidents on the licensees distribution system in the relevant
          year t and is derived from the formula in Appendix 2 of the quality
    of service rigs.              
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | CIBt                                                             | is the number
          of customers interrupted per year arising from pre-arranged
          incidents on the licensees distribution system in the relevant
          year t and is derived from the formula in Appendix 2 of the quality
    of service rigs.
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | CICt                                                             | is the number
          of customers interrupted per year arising fromincidents
          on the systems of the transmission company in the relevant year t and
          is derived from the formula in Appendix 2 of the quality of service
    rigs.         
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | CIDt                                                             | is the number
          of customers interrupted per year arising fromincidents
          on the systems of distributed generators in the relevant year t and
          is derived from the formula in Appendix 2 of the quality of service
    rigs.           
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | CIEt                                                             | is the number
          of customers interrupted per year arising from incidents
          on any other connected systems in the relevant year t and is derived
    from the formula in Appendix 2 of the quality of service rigs.                              
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | PIAt                                                             | means the
    price index adjuster in relevant year t and is derivedfrom
    the following formula:                                                                                                                                                             
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        |                                                                 
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        |                                                                  | where, for the
          relevant year commencing 1 April 2002,PIAt =1
          and RPIt is as determined in accordance withparagraph
          4 of special condition B1 (Restriction of distribution charges: demand
    use of system charges).             
| |        |                                                                  |                                                                                                                                                                                                                                                                 
| |        | IRAt                                                             | means the
    incentive rate for the number of customersinterrupted
    specified for the relevant year t in the table in Annex A, expressed in £ million
    in 2002/03 prices.                                                                                

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|                                      
|                                      
|                                      
|                                      
|5.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|6.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|7.                                    

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|8.                                    
|                                      
|                                      

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|                                      
|                                      
|9.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|10.                                   
|                                      
|                                      
|                                      
|                                      

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|11.                                   
|                                      
|12.                                   
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|13.                                   
|                                      
|                                      

---



United Utilities Electricity
  plc

|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | the
        licensee has notified the Authority of such event within 14 days of the
        date upon which the licensee considers that such effect has ceased or
      within 14 days of the end of the relevant year (whichever is the earlier);           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 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 meets the exceptionality requirements
      defined in Annex C,                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                              
|    | the
      Authority may, having regard to whether the licensee has met the criteria
      for mitigating actions set out in Annex D, by notice to the licensee direct
      that, for the purpose of calculatingCIIStor CMLISt,
      or both, all or part of the impact of the event which
      is in excess of the relevant threshold in successive three-month periods
      from the start of the event until its effect has ceased shall be excluded
    from the relevant years performance of the licensee.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|14. | A
        direction under paragraph 11, 12 or 13 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                                                                                                                                                                                        
|    | (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
          has considered any such representations or objections and given reasons
    for its decision.                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|15. | A
        notice under paragraph 11 of standard condition 49 (Quality of Service
        Incentive Scheme and Associated Information) in relation to Appendix
        2 of the quality of service rigs may not specify a date for the purposes
        of paragraph 11(a) of that condition which is other than a price control
        review date unless all distribution services providers have agreed that
      date.                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|16. | In
      this condition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                              
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | any
        reference to a numbered regulation is a reference to the regulation bearing
        that number in the Electricity (Standards of Performance) Regulations
      2005.                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                              
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 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 means Y), and max (X,Y) means
      Y if X-Y is negative (and otherwise means X).
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                              
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | words
      and expressions defined for any purposes of:                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | (i)                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | (ii)                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | shall
      have the same meaning when used in this condition.                                                                                                                                                                                               

---



United Utilities Electricity
  plc

| | (d) | words
        and expressions defined in the quality of service rigs which are used
      in this condition shall have the same meaning as in that document.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                             

Annex A: Targets
  and incentive rates for interruptions: United Utilities Electricity plc

|Relevant year                        | 1
      April |  | 1
      April |  | 1
      April |  | 1
      April |  | 1
      April | 
|------------------------------------ | ------------- |  | ------------- |  | ------------- |  | ------------- |  | ------------- | 
|commencing:                          | 2005          |  | 2006          |  | 2007          |  | 2008          |  | 2009          | 
|                                     |               |  |               |  |               |  |               |  |               | 
|TAt                                  | 57.2          |  | 57.1          |  | 57.1          |  | 57.1          |  | 57.1          | 
|                                     |               |  |               |  |               |  |               |  |               | 
|IRAt(£ million
      2002/03 prices) | 0.18          |  | 0.18          |  | 0.18          |  | 0.19          |  | 0.19          | 
|                                     |               |  |               |  |               |  |               |  |               | 
|TBt                                  | 59.8          |  | 58.1          |  | 56.4          |  | 54.7          |  | 53.0          | 
|                                     |               |  |               |  |               |  |               |  |               | 
|IRBt(£ million
      2002/03 prices) | 0.22          |  | 0.23          |  | 0.23          |  | 0.24          |  | 0.25          | 
|                                     |               |  |               |  |               |  |               |  |               | 

---



United Utilities Electricity plc

Annex B: Exceptionality requirement for severe weather
  events

The relevant requirement for a severe weather event to be treated as exceptional for the purposes of paragraph 12 is that the number of incidents caused by the event at distribution higher voltage in any 24-hour period is equal to or greater than the severe weather exceptionality threshold:

where, for the purposes of this condition:

|(a) | the
        severe weather exceptionality threshold is equal to the number of incidents
      set against the name of the licensee in the table below;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                       
|(b) | distribution
        higher voltage means nominal voltages of more than 1000 volts up
      to and including 132 kilovolts; and                     
|    |                                                                                                                                                       
|(c) | incidents are
      as defined in the quality of service rigs.                                                                                      



|Licensee                                           | Severe
      weather
|-------------------------------------------------- | --------------------
|                                                   | exceptionality      
|                                                   | threshold           
|                                                   |                     
|Central Networks
      West plc                    | 63                  
|                                                   |                     
|Central Networks
      East plc                    | 58                  
|                                                   |                     
|United Utilities
      Electricity plc             | 47                  
|                                                   |                     
|Northern Electric
      Distribution Limited       | 36                  
|                                                   |                     
|Yorkshire Electricity
      Distribution plc       | 35                  
|                                                   |                     
|Western Power Distribution
      (South West) plc  | 54                  
|                                                   |                     
|Western Power Distribution
      (South Wales) plc | 46                  
|                                                   |                     
|EDF Energy Networks
      (LPN) plc                | 10                  
|                                                   |                     
|EDF Energy Networks
      (SPN) plc                | 46                  
|                                                   |                     
|EDF Energy Networks
      (EPN) plc                | 72                  
|                                                   |                     
|SP Distribution Limited                            | 79                  
|                                                   |                     
|SP Manweb plc                                      | 61                  
|                                                   |                     
|Scottish Hydro-Electric
      Power Distribution   | 61                  
|                                                   |                     
|Southern Electric
      Power Distribution plc     | 62                  

---



United Utilities Electricity
  plc

Annex C: Exceptionality
  requirements for other events

|For
        the purposes of paragraph 13, the exceptionality requirements for an
      event not falling within paragraph 12 are:                                            
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                             
|(a)                                                                                                                                                                          
|                                                                                                                                                                             
|(b)                                                                                                                                                                          
|                                                                                                                                                                             
|where,
      in paragraph (b), the relevant threshold amounts for CIIStand CMLISt
      respectively are those
      set against the name of the licensee in the table below.
|                                                                                                                                                                             

|                                                   | CI        |  | CML       | 
|-------------------------------------------------- | --------- |  | --------- | 
|Licensee                                           | threshold |  | threshold | 
|                                                   | amount    |  | amount    | 
|                                                   |           |  |           | 
|Central Networks
      West plc                    | 1.1       |  | 0.9       | 
|                                                   |           |  |           | 
|Central Networks
      East plc                    | 1.0       |  | 0.8       | 
|                                                   |           |  |           | 
|United Utilities
      Electricity plc             | 1.1       |  | 0.9       | 
|                                                   |           |  |           | 
|Northern Electric
      Distribution Limited       | 1.6       |  | 1.3       | 
|                                                   |           |  |           | 
|Yorkshire Electricity
      Distribution plc       | 1.2       |  | 0.9       | 
|                                                   |           |  |           | 
|Western Power Distribution
      (South West) plc  | 1.7       |  | 1.4       | 
|                                                   |           |  |           | 
|Western Power Distribution
      (South Wales) plc | 2.3       |  | 1.9       | 
|                                                   |           |  |           | 
|EDF Energy Networks
      (LPN) plc                | 1.1       |  | 0.9       | 
|                                                   |           |  |           | 
|EDF Energy Networks
      (SPN) plc                | 1.2       |  | 0.9       | 
|                                                   |           |  |           | 
|EDF Energy Networks
      (EPN) plc                | 0.7       |  | 0.6       | 
|                                                   |           |  |           | 
|SP Distribution Limited                            | 1.3       |  | 1.0       | 
|                                                   |           |  |           | 
|SP Manweb plc                                      | 1.7       |  | 1.4       | 
|                                                   |           |  |           | 
|Scottish Hydro-Electric
      Power Distribution   | 3.7       |  | 2.9       | 
|                                                   |           |  |           | 
|Southern Electric
      Power Distribution plc     | 0.9       |  | 0.7       | 
|                                                   |           |  |           | 

---



United Utilities Electricity plc

Annex D: Criteria for mitigating actions

For the purposes of paragraph 13, the criteria for mitigating actions are:

|(a) | that
        the licensees actions (or lack of actions) were not contributory
      factors to the occurrence of the event; and
|--- | --------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                 
|(b) | that
      the licensee took all appropriate steps within its power:                                                            
|    |                                                                                                                                 
|    | (i)                                                                                                                             
|    |                                                                                                                                 
|    | (ii)                                                                                                                            

Annex E: Values
  for Q by licensee

For the purpose of calculating
    IQt for the relevant year commencing 1 April 2005,the
    values of Qt-2 and Qt-3 for each licensee are as set
  out in the table below.

|Licensee                                           | Qt-3      |  | Qt-2     
|-------------------------------------------------- | --------- |  | ---------
|                                                   |           |  |          
|Central Networks West
      plc                    | –£42,523  |  | £54,025  
|                                                   |           |  |          
|Central Networks East
      plc                    | £78,531   |  | –£249,159
|                                                   |           |  |          
|United Utilities Electricity
      plc             | –£530,583 |  | £34,910  
|                                                   |           |  |          
|Northern Electric
      Distribution Limited       | £128,076  |  | £138,097 
|                                                   |           |  |          
|Yorkshire Electricity
      Distribution plc       | £102,352  |  | £96,044  
|                                                   |           |  |          
|Western Power Distribution
      (South West) plc  | £113,704  |  | £142,162 
|                                                   |           |  |          
|Western Power Distribution
      (South Wales) plc | £48,633   |  | £91,263  
|                                                   |           |  |          
|EDF Energy Networks
      (LPN) plc                | –£225,240 |  | –£282,750
|                                                   |           |  |          
|EDF Energy Networks
      (SPN) plc                | –£16,002  |  | –£55,071 
|                                                   |           |  |          
|EDF Energy Networks
      (EPN) plc                | –£148,927 |  | –£221,721
|                                                   |           |  |          
|SP Distribution Limited                            | £49,620   |  | £72,480  
|                                                   |           |  |          
|SP Manweb plc                                      | £29,875   |  | –£381,372
|                                                   |           |  |          
|Scottish Hydro-Electric
      Power Distribution   | £157,222  |  | £197,028 
|                                                   |           |  |          
|Southern Electric
      Power Distribution plc     | £171,883  |  | £202,806 
|                                                   |           |  |          

---



|United
      Utilities Electricity plc                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                           
|SPECIAL
            CONDITION C3  Calculation of charge restriction adjustments
      arising from the innovation funding incentive scheme
|                                                                                                                                           
|1.                                                                                                                                         
|                                                                                                                                           
|2.                                                                                                                                         
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           
|                                                                                                                                           

| | Relevant
        year1 | 2005/06 |  | 2006/07 |  | 2007/08 |  | 2008/09 |  | 2009/10 | 
| | ---------------------- | ------- |  | ------- |  | ------- |  | ------- |  | ------- | 
| |                        |         |  |         |  |         |  |         |  |         | 
| | ptrit                  | 0.9     |  | 0.85    |  | 0.8     |  | 0.75    |  | 0.7     | 

| |                                                                       |                                                                                                                                                                                    
| | --------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | KIFIt                                                                 | is the IFI carry-forward
        in relation to the incentive scheme as set out in the IFI annual report
      for relevant year t-1, and is calculated from the following formula:
| |                                                                       |                                                                                                                                                                                    
| |                                                                      
| |                                                                       |                                                                                                                                                                                    
| | where,
      for the year commencing 1 April 2005,KIFItshall be zero.

---



|United
      Utilities Electricity plc
|--------------------------------------
|                                      
|3.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|4.                                    
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      
|                                      

---



|United
      Utilities Electricity plc                                                                  
|--------------------------------------------------------------------------------------------------------
|                                                                                                        
|SPECIAL
      CONDITION D1  Restriction of distribution charges:
      generation use of system charges
|                                                                                                        
|1.                                                                                                      
|                                                                                                        
|Formula
      for allowed network generation revenue(AGt)                                               
|                                                                                                        
|2.                                                                                                      
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|Formula
      for the correction factor (KGt)                                                           
|                                                                                                        
|3.                                                                                                      
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        

---



|United Utilities Electricity plc
|--------------------------------
|                                
|                                
|                                
|                                
|                                
|                                

---



|United Utilities Electricity
      plc                                                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                           
|SPECIAL
            CONDITION D2  Calculation of charge restriction adjustments
            arising from the incentive schemes for distributed generation and
      registered power zones
|                                                                                                                                                                                           
|1.                                                                                                                                                                                         
|                                                                                                                                                                                           
|2.                                                                                                                                                                                         
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|3.                                                                                                                                                                                         
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|                                                                                                                                                                                           
|4.                                                                                                                                                                                         

---



United Utilities Electricity plc

|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | where:                                                                                                                                                                                                                                                        |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | PIAGt                                                                                                                                                                                                                                                         | is
      the price index adjuster relating to DG, and is as set out in paragraph
      6.                                                                                                        
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | r                                                                                                                                                                                                                                                             | is
        the allowed pre-tax cost of capital, expressed in real terms, which,
      for the purposes of this condition, shall take the value of 6.9%.                                          
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | y                                                                                                                                                                                                                                                             | is
      the value oftfor the relevant
      year commencing 1 April 2005.                                                                                                                       
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | P                                                                                                                                                                                                                                                             | means
        the number of complete relevant years over which use of system capex
        is remunerated, which for the purposes of this condition takes the value
      of 15.                 
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | gpj                                                                                                                                                                                                                                                           | means
      the amount of total use of system capex that is subject to the pass-through
      arrangement of the incentive scheme in the relevant yearjand is derived from the following formula:
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               | where:                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               | ptrg                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               | gpsj                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               | gpcj                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | gtj                                                                                                                                                                                                                                                           | is the
        amount of capex that is excluded from this calculation to reflect the
        transfer of capex from the DG incentive scheme in accordance with paragraph
      8.                
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|5. | For
      the purposes of paragraph 2, GOtis the adjustment to allowed network generation
      revenue in respect of the operational and maintenance costs of total capex
      for DG for relevant year t,
      and is derived from the following formula:
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  
|   | where:                                                                                                                                                                                                                                                        |                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                               |                                                                                                                                                                                                  

---



United Utilities Electricity
  plc

|   | PIAGt                                                                                                                                                                                                                                                                                                                                                                                                                  | is the price index
      adjuster relating to DG, and is as set out in paragraph 6.                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | gct                                                                                                                                                                                                                                                                                                                                                                                                                    | is as defined in
      paragraph 3.                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | gor                                                                                                                                                                                                                                                                                                                                                                                                                    | is the allowed operational
        and maintenance rate for all relevant DG, and has a value of £1000
      per MW of incentivised DG capacity.                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|6. | For
      the purposes of this condition,PIAGtis the price index adjuster in relevant yeartas derived from the following formula:                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        | Where:                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        | for the relevant
      year commencing 1 April 2005,PIAGt=1.                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        | RPItis as defined as in paragraph
      4 of special condition B1 (Restriction of distribution
      charges: demand use of system charges).                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|7. | For the
        purposes of this condition, the incentive rate for the scheme, git,
        shall take the value set out in paragraph 3 for each and every relevant
        year up to and including the relevant year commencing 1 April 2024 insofar
        as it is applied to incentivised DG capacity relevant to the licensees
      distribution system during the period from 1 April 2005 to 31 March 2010.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8. | For
      the purpose of determininggtj
      in paragraph 4, the licensee, with the consent of the
      Authority, may exclude capex in respect of those assets for which capex
      has been initially treated as use of system capex for DG but in respect
      of which:                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                    | the incentivised
        DG capacity utilising those assets has fallen because the owner or operator
        of a relevant DG, or any agent thereof, has terminated its agreements
        for generator use of system (or such parts of any other use of system
        agreements as may apply) and connection to an authorised distributors
        distribution system, or has otherwise reduced the capacity required;
      and
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                    | those assets have
        a value that has not been fully depreciated through generation use of
        system charges for 15 complete relevant years in accordance with paragraph
      4.                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|9. | For
      the purposes of paragraph 2 of special condition D1 (Restriction of distribution
      charges: generation use of system charges),RPZt(the incentive revenue for registered power zones
      in the relevant year t) is derived from the formula:                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | where:                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                       

---



United Utilities Electricity
  plc

|    | PIAGt                                     | is the price index
      adjuster relating to DG, and is as set out in paragraph 6.                                                                                                                                                                                                              
|--- | ----------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                           |                                                                                                                                                                                                                                                                                                  
|    | RPZM                                      | means the annual
      cap on RPZ revenue and takes the value of £500,000.                                                                                                                                                                                                                       
|    |                                           |                                                                                                                                                                                                                                                                                                  
|    | giz                                       | means the incremental
        incentive rate for connecting a relevant DG within that area registered
        by the Authority as a registered power zone, and shall take a value of £3000
      per MW of RPZ DG capacity.                                                                      
|    |                                           |                                                                                                                                                                                                                                                                                                  
|    | gczt                                      | is the amount of
        RPZ DG capacity, expressed in MW, connected to the licensees distribution
        system in the relevant year t, as at 31 March of that year, within that
        area registered by the Authority as a registered power zone for the purposes
      of this condition.
|    |                                           |                                                                                                                                                                                                                                                                                                  
|10. | For the
      purposes of this condition:
|    |                                           |                                                                                                                                                                                                                                                                                                  

| | capex                         | means
        costs directly incurred by the licensee in relation to the installation
        or reinforcement of electrical lines or electrical plant forming part
      of the licensee’s distribution system.                                                                                                  
| | ------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                 |                                                                                                                                                                                                                                                                                                                   
| | incentivised
      DGcapacity | in relation
        to any relevant year, means thehighest
        active electrical power that could begenerated
        (or the relevant incremental change inthis
        amount in cases involving the expansion ofexisting
        distributed generation) by a relevant DGfor
      that year, according to:
| |                                 |                                                                                                                                                                                                                                                                                                                   
| |                                 | (a)                                                                                                                                                                                                                                                                                                               
| |                                 |                                                                                                                                                                                                                                                                                                                   
| |                                 | (b)                                                                                                                                                                                                                                                                                                               
| |                                 |                                                                                                                                                                                                                                                                                                                   
| |                                 |                                                                                                                                                                                                                                                                                                                   
| |                                 |                                                                                                                                                                                                                                                                                                                   
| | relevant DG                   |                                                                                                                                                                                                                                                                                                                   
| |                                 |                                                                                                                                                                                                                                                                                                                   
| | RPZ DG capacity               |                                                                                                                                                                                                                                                                                                                   
| |                                 |                                                                                                                                                                                                                                                                                                                   

---



United Utilities Electricity plc

| |                                                                                                                                                                                                                                                                                                                                                                                         | registered
      power zone;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | shared connectioncapex
      for DG                                                                                                                                                                                                                                                                                                                                                   | means
        that part of the total capex for DG that isto
        be recovered from generation connectioncharges
        payable to the licensee, but exclusive ofall
        costs relating to sole-use assets and, whereappropriate,
        exclusive also of the incrementalcosts
        in excess of the high-cost projectthreshold
        (as set out in the licensees connectioncharging
        methodology statement in place on orafter
      1 April 2005);                                                                                                                        
| |                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | total capex
      for DG                                                                                                                                                                                                                                                                                                                                                              | means
        the sum of all costs directly incurred bythe
        licensee in relation to the installation orreinforcement
        of electrical lines or electricalplant
        necessary for the connection of relevant DGor
        any proposed or expected relevant DG forsubsequent
        relevant years and, for the avoidanceof
        doubt, includes the increase in the presentvalue
        of costs resulting from the advancement intime,
        to within the relevant year, of thereinforcement
        of assets so as to facilitate theconnection
      of the relevant DG;
| |                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | total incentivised
      DGcapacity                                                                                                                                                                                                                                                                                                                                                   | means
        the sum, for all relevant DG for thelicensees
        distribution system, of the incentivisedDG
      capacity; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | use of system
        capexfor
      DG                                                                                                                                                                                                                                                                                                                                               | means
        that amount of total capex for DG that isnot
        remunerated through connection chargespayable
      to the licensee,                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | in each
        case above, all as more fully set out in the regulatory instructions
        and guidance for the time being in force under standard condition 51
        (Incentive Schemes and Associated Information for Distributed Generation,
        Innovation Funding and Registered Power Zones) in relation to the incentive
      schemes established under that condition.

---



United Utilities Electricity
  plc

SPECIAL CONDITION
        E1  Charge restriction conditions: supplementary restrictions

|1. | The
        purpose of this condition is to set out the supplementary restrictions
      on distribution charges levied by the licensee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Restrictions
      on over- and under-recoveries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | For
      the purposes of paragraph 5 of special condition B1 (Restriction of distribution
      charges: demand use of system charges) and paragraph 3 of special condition
      D1 (Restriction of distribution charges: generation use of system charges),
      the interest rate adjustmentPRt
      shall be determined as follows:                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Restrictions
      on demand charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | If,
        in respect of any relevant year, regulated demand revenue exceeds allowed
        demand revenue by more than 4 per cent, the licensee shall provide an
        explanation to the Authority and in the next following relevant year
        shall not, unless and insofar as the Authority consents, increase demand
      use of system charges.                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4. | If,
           in respect of each of two successive relevant years, regulated demand
          revenue
      is less than 90 per cent of allowed demand revenue, the Authority, after
           consultation with the licensee, may direct that, in calculatingKDt
      for thepurposes of paragraph 5 of special condition
       B1 (Restriction of distribution charges: demand use of system charges)
      in
      respect of the next following relevant year, there shall be substituted
       for the amount represented byRDt-1
      inthe formula at that paragraph such amount as the
       Authority may specify, being an amount not less than
      RDt-1 and not more than
       0.9 × (ADt-1).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Restrictions
      on generation charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | If,
        in respect of any relevant year, network generation revenue exceeds allowed
        network generation revenue by more than 10 per cent, the licensee shall
        provide an explanation to the Authority and in the next following relevant
        year shall not, unless and insofar as the Authority consents, increase
      generation use of system charges.                                                                                                                                                                                                                                                                                                                                    

---



United Utilities Electricity
      plc

|6. | If, in
       respect of each of two successive relevant years, network generation revenue
       is less than 75 per cent of allowed network generation revenue, the licensee
       shall provide an explanation to the Authority and in the next following
       relevant year shall not, unless the Authority consents, increase generation
    use of system charges by more than 20 per cent.                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Distribution
    unit categories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|7. | Not less
       than three months after the start of the relevant year commencing 1 April
       2005, the licensee shall give the Authority a statement specifying separately
       those use of system charges in respect of which the licensee intends to
       treat the units distributed as falling within the definition of each of
    LV1 units and LV2 units and LV3 units respectively.                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|8. | If the
       licensee introduces a category of use of system charges not identified
       in the statement provided to the Authority in accordance with paragraph
       7, the licensee shall provide a statement to the Authority specifying
       the distribution unit categories that units distributed, in respect of
       those use of system charges introduced by the licensee, are to be treated
    as falling within.                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|9. | Where
       the Authority is satisfied that a use of system charge or charges in respect
       of which the licensee has treated the units as falling within one of the
       distribution unit categories i should not be so treated, the Authority
       shall after consultation with the licensee issue a direction specifying
       the category into which the units should fall and shall specify the date
       from which they should be so treated, being a date not earlier than 1
    April 2005.

---



United Utilities Electricity
      plc

SPECIAL CONDITION
      F1  Restriction of basic metering charges

|1.                                      | The purposes
       of this condition are to establish the restrictions on charges for basic
       meter asset provision and basic meter operation services provided by the
       licensee and to set out the obligations of the licensee in respect of
    those restrictions.                   
|--------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                        |                                                                                                                                                                                                                                                                                                     
|Part
    A: Basic meter asset provision
|                                        |                                                                                                                                                                                                                                                                                                     
|2.                                      | The licensee
       shall, in setting charges for basic meter asset provision in accordance
       with standard condition 36 (Requirement to Offer Terms for the Provision
       of Basic Metering Services), ensure that those charges do not exceed the
    limits imposed by paragraphs 3 to 7.
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | Restraints
    on charges for single-phase single-rate credit meters                                                                                                                                                                                                                                
|                                        |                                                                                                                                                                                                                                                                                                     
|3.                                      | The licensee
       shall, in setting charges for the provision of a single-phase single-rate
       credit meter, ensure that the total charge is at no time greater than
    the value derived from the following formula:                                                                        
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | SRCMt=£1.12× PITt                                                                                                                                                                                                                                                                                   
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | where:                                                                                                                                                                                                                                                                                              
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | SRCMt                                                                                                                                                                                                                                                                                               
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | PITt                                                                                                                                                                                                                                                                                                
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | Restraints
    on charges for single-rate token prepayment meters                                                                                                                                                                                                                                   
|                                        |                                                                                                                                                                                                                                                                                                     
|4.                                      | The licensee
       shall, in setting charges for the provision of a single-rate token pre-payment
       meter, ensure that the total charge is at no time greater than the value
    derived from the following formula:                                                                          
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | where:                                                                                                                                                                                                                                                                                              
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | TPPMt                                                                                                                                                                                                                                                                                               
|                                        |                                                                                                                                                                                                                                                                                                     
|                                        | TPPMAV                                                                                                                                                                                                                                                                                              

---



United Utilities Electricity plc

|   | LTt                                                                                                                                                                                                                       | is the
        current expected life of a single-rate token prepayment meter, as calculated
    using the following formula:                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                           | LTt=
    9.72 –LRTPPMt                                                                                                                        
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                           | where:                                                                                                                                        
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                           | LRTPPMt                                                                                                                                       
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | LTWt                                                                                                                                                                                                                      | shall
    take the value of rounded down to the nearest integer.                                                                              
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | PITt                                                                                                                                                                                                                      | shall
    be the value determined in accordance with paragraph 11.                                                                            
|   |                                                                                                                                                                                                                          
|   | Restraints
    on charges for single-rate key prepayment meters                                                                                                                                                          
|   |                                                                                                                                                                                                                          
|5. | The licensee
        shall, in setting charges for the provision of a single-rate key prepayment
        meter, ensure that the total charge is at no time greater than the value
    derived from the following formula:
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                          
|   | where:                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | KPPMt                                                                                                                                                                                                                     | is the
        maximum amount that the licensee may charge for the provision of a single-rate
    key prepayment meter in the relevant year t.
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | KPPMAV                                                                                                                                                                                                                    | means
        the modern equivalent asset value of a single-rate key prepayment meter
    and shall take the value of £60.31.                 
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | LKt                                                                                                                                                                                                                       | is the
        current expected life of a single-rate key prepayment meter, as calculated
    in accordance with the following formula:       
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                           | LKt=
    9.34 – LRKPPMt                                                                                                                       
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                           | where:                                                                                                                                        
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   |                                                                                                                                                                                                                           | LRKPPMt                                                                                                                                       
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | LKWt                                                                                                                                                                                                                      | shall
          take the value of LKtrounded
    down to the nearest integer.                                                                 
|   |                                                                                                                                                                                                                           |                                                                                                                                               
|   | PITt                                                                                                                                                                                                                      | shall
    be the value determined in accordance with paragraph 11.                                                                            



---



United Utilities Electricity
      plc

|   | Restraints
          on charges
for single-rate smartcard prepayment meters                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|6. | The
       licensee shall, in setting charges for the provision of a single-rate
       smartcard prepayment meter, ensure that the total charge is at no time
    greater than the value derived from the following formula:                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | where:                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | SPPMt                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | SPPMAV                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | LSt                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | LSWt                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | PITt                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   | Restraints
          on charges for all other types of meter provided under standard condition
          36 (Requirement to Offer Terms for the Provision of Basic Metering
     Services)                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|7. | The
       licensee shall, in setting charges for the provision of types of meter
       under standard condition 36 (Requirement to Offer Terms for the Provision
       of Basic Metering Services) other than those covered by paragraphs 3 to
       6, ensure that the total charge for such provision is at no time greater
    than the value derived from the following formula:
|   |                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                         

---



United Utilities Electricity
      plc

|                                           | where:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | MAPPC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | MEAPi                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | ELAi                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | PITt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|8.                                         | The following
        types of meter shall (without limitation and subject to the right of
        the licensee to sub-divide any such type in order to facilitate cost-reflective
        charging) constitute those which are covered by the provisions of paragraph
    7:                                                                                                                                                                                                                                                            
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Part
    B: Basic meter operation services
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|9.                                         | The licensee
        shall, in setting its charges for the services of basic meter operation
        provided in accordance with standard condition 36 (Requirement to Offer
        Terms for the Provision of Basic Metering Services), take all appropriate
        steps within its power to ensure that basic meter operation revenue in
        the relevant year t does not exceed the amount represented by the term
        MOPt being allowed meter operation revenue) calculated in
    accordance with the following formula:
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | MOPt= MOPRt
    – RMAt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | where:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           | MOPRt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---



United Utilities Electricity plc

|    | RMAt                                                                                       |                                                                                                                                                                                     | is the adjustment
        to the revenue associated with basic meter operation and is derived from
      the formula given in paragraph 10.                                      
|--- | ------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|10. | For
        the purposes of paragraph 9, RMAt is derived from the following
      formula:
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    | RMAt = SCAt+ PCAt+
      CTCAt                                                            
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    | where:                                                                                     |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    | SCAt                                                                                       | is the revenue adjustment for changes in the level of single-phase metering
      chargeable activities and is calculated using the following formula:                             
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | SCAt =
      (FSCA – SPCAt)×(21.37 × PITt)                                                                                                                                         
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | where:                                                                                                                                                                              |                                                                                                                                                                                  
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | FSCA                                                                                                                                                                                | is the starting
        value for the single-phase metering chargeable activities and shall take
        the value of that term set against the licensees name in Annex
      A.
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | SPCAt                                                                                                                                                                               | is the number
      of single-phase metering chargeable activities undertaken
      in the relevant year t.                                                                      
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | PITt                                                                                                                                                                                | shall be the value determined in accordance with
      paragraph 11.                                                                                                             
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    | PCAt                                                                                       | is
        the revenue adjustment for changes in the level of poly-phase metering
        chargeable activities and is calculated in accordance with the following
        formula:
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | PCAt= (FPCA – PPCAt(×(34.91 ×
      PITt)                                                                                                                                          
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | where:                                                                                                                                                                              |                                                                                                                                                                                  
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | FPCA                                                                                                                                                                                | is the starting
        value for the poly-phase metering chargeable activities and shall take
        the value of that term set against the licensees name in Annex
        A.
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | PPCAt                                                                                                                                                                               | is the number
      of poly-phase metering chargeable activitiesundertaken
      in the relevant year t.                                                                         
|    |                                                                                            |                                                                                                                                                                                     |                                                                                                                                                                                  
|    |                                                                                            | PITt                                                                                                                                                                                | shall take the value
      determined in accordance with paragraph 11.                                                                                                           

---



United Utilities Electricity
  plc

|    | CTCAt                                                                                                                  | is
        the revenue adjustment for changes in the level of current transformer
        metering chargeable activities and is calculated using the following
      formula:
|--- | ---------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | CTCAt= (FCTA-CCAt)
      × (106.67×PITt)                                                                                                                                     
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | where:                                                                                                                                                                       
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | FCTA                                                                                                                                                                         
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | CCAt                                                                                                                                                                         
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | PITt                                                                                                                                                                         
|    |                                                                                                                        |                                                                                                                                                                              
|11. | For
        the purposes of paragraphs 3 to 10, the price index adjustment (PIT)
      shall be calculated as follows:
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                       
|    |                                                                                                                        | where:                                                                                                                                                                       
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | PITt                                                                                                                                                                         
|    |                                                                                                                        |                                                                                                                                                                              
|    |                                                                                                                        | RPIt                                                                                                                                                                         

Part C: Relief from
  onerous obligations

|12. | This
      paragraph applies where the licensee considers:
|--- | ----------------------------------------------------------
|    |                                                           
|    | (a)                                                       
|    |                                                           
|    | (b)                                                       

---



United Utilities Electricity
  plc

|                                   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | that
        the increase in those charges required by the licensee would, in the
        absence of a derogation from the requirements of paragraph 9 above in
        respect of allowed meter operation revenue, have the effect in any relevant
      year of putting the licensee in breach of this condition.
|---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|13.                                | Where
        paragraph 12 applies, the licensee may apply to the Authority for permission
        to increase the charges to be levied on the relevant supplier for the
        continuing provision of such of the basic meter operation services as
        are the subject of the licensees request, stating why such changes
        are considered to be required, setting out the nature of the change in
        respect of each of the services in question, and providing such other
      information to support its application as the Authority may require.
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|14.                                | The
        licensee may, with effect from the date of the application made in accordance
        with paragraph 13, levy the charges specified in that application in
      respect of the relevant supplier if:                                                                                                                                                                                                                                                                                                                                                         
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|                                   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | the
        Authority confirms that it consents to such charges with or without amendment
        and to such extent and on the basis of such terms and conditions as it
      may specify; or                                                                                                                     
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|                                   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | the
        Authority has not, within 90 days after its receipt of the application,
        issued a direction requiring the licensee not to exceed the allowed meter
      operation revenue calculated in accordance with paragraph 9.                                                                           
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|Part D: Excluded metering services
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|15.                                | For
        the avoidance of doubt, a premium on those charges for the following
        enhanced appointment services may fall to be chargeable under the provisions
      of special condition A2 (Scope of the charge restriction conditions):                                                                                                                                                                                                                                                                                                                         
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|                                   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | out
      of hours service appointments in time zone 2;                                                                                                                                                                                                                                                            
|                                   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | out
      of hours service appointments in time zone 3                                                                                                                                                                                                                                                             
|                                   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | two-hour
      time-banded appointments;                                                                                                                                                                                                                                                                           
|                                   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | same-day
      appointments; and                                                                                                                                                                                                                                                                                   
|                                   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | next-day
      appointments,                                                                                                                                                                                                                                                                                       
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|                                   | where
        time zone 2 covers any time on a working day from the end of contractual
      working hours until 11pm from Monday to Saturday and time zone 3 covers:                                                                                                                                                                                                                                                                                                                                                                                                     
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (i)
        any time on a working day from 11pm to the start of contractual working
      hours; and                                                                                                                                                                                                               
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (ii)
      all day on Sunday or any other non-working day.                                                                                                                                                                                                                                                         
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    
|16.                                | Those
        charges for the provision of services in relation to which paragraph
        15 applies shall be set at a level which will allow the licensee to recover
        no more than its reasonable costs and a reasonable rate of return in
      providing those services.                                                                                                                                                                                                                                                                                       
|                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                    

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United Utilities Electricity
  plc

Part E: Determination
  of the reduction in asset life

|17. | For
        the purposes of paragraphs 4 to 6, where the licensee considers that
      the expected asset life of:                                                                                                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | (a)                                                                                                                                                                                                                                                                                                                                                 
|    | (b)                                                                                                                                                                                                                                                                                                                                                 
|    | (c)                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | has,
        as the result of supplier action, fallen below the level assumed for
        the purposes of establishing the relevant charge restriction, the licensee
        may, by notice to the Authority, propose a relevant reduction in the
      asset life for the purposes of this condition.                                              
|    |                                                                                                                                                                                                                                                                                                                                                     
|18. | A
        relevant reduction under paragraph 17 is one which, in the opinion of
        the licensee, would, if made, have the effect of enabling the licensee
        to recover the efficient costs incurred or likely to be incurred in relation
      to basic meter asset provision.                                                           
|    |                                                                                                                                                                                                                                                                                                                                                     
|19. | A
      notice served by the licensee in accordance with paragraph 17 must:                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | (a)                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | (b)                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | (c)                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                     
|20. | Where
      the licensee serves a notice under paragraph 17, the Authority:                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | (a)                                                                                                                                                                                                                                                                                                                                                 
|    | (b)                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                     
|    | may,
        within 28 days of receiving such notice, determine the relevant reduction
        in the expected asset life for the purposes of this condition in such
      manner as it considers appropriate.                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                     
|21. | If
        the Authority has not determined the relevant reduction within 28 days
        of receiving a notice from the licensee under paragraph 17, and such
        a notice has not been withdrawn, the licensee may apply the relevant
        reduction with effect from the reduction date for all relevant purposes
      of this condition.
|    |                                                                                                                                                                                                                                                                                                                                                     
|22. | For
      the purposes of this condition:                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                     



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United Utilities Electricity
  plc

| |  | modern
        equivalent assetpurchase
      price      | in
        relation to any type of meter, means thepurchase
        price of a new meter of the samefunctionality
      as that type of meter.                                                                                                                                   
| |  | ---------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  | poly-phase
        meteringchargeable
      activities   | means,
        with the exception of single-phasemetering
        activities and current transformermetering
        chargeable activities, those activitiesperformed
        and charged for under contract asat
        1 June 2003 in relation to poly-phasemeter
      types.
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  | single-phase
        meteringchargeable
      activities | means,
        with the exception of poly-phasemetering
        chargeable activities and currenttransformer
      metering chargeable activities:                                                                                                                               
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            | (a)                                                                                                                                                                                                                                                                              
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            | (b)                                                                                                                                                                                                                                                                              
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  |                                                            | in
        each case regardless of the type of meteron
      which the work is, or is to be, performed.                                                                                                                                                                          
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  | single-phase
        single-ratecredit
      meter       | means
        an induction type (or electronic)alternating
        current single-phase two-wiresingle-rate
      credit meter.                                                                                                                                                  
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  | single-phase
        keyprepayment
      meter           | means
        a meter which uses an essentialelement
        (the key) for transferring informationfrom
        a point of sale for electricity credit to aunique
      prepayment meter or vice versa.                                                                          
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  | single-phase
        smartcardprepayment
      meter     | means
        a meter which uses an essentialelement
        (the smartcard) for transferringinformation
        from a point of sale for electricitycredit
      to a unique prepayment meter or viceversa.                                                                     
| |  |                                                            |                                                                                                                                                                                                                                                                                  
| |  | single-phase
        tokenprepayment
      meter         | means
        a meter which uses an essentialelement
        (the token) for transferringinformation
        from a point of sale for electricitycredit
      to a unique prepayment meter.                                                                                      
| |  |                                                            |                                                                                                                                                                                                                                                                                  



---



United Utilities Electricity plc

Annex A: Values for MRV, FSCA, FPCA, and FCTA by licensee

|                                                         |          |  |         |  |        |  |       | 
|-------------------------------------------------------- | -------- |  | ------- |  | ------ |  | ----- | 
|Licensee                                                 | MRV      |  | FSCA    |  | FPCA   |  | FCTA  | 
|                                                         | £million |  |         |  |        |  |       | 
|                                                         |          |  |         |  |        |  |       | 
|Central Networks
      West plc                          | 8.39     |  | 251,266 |  | 9,813  |  | 921   | 
|                                                         |          |  |         |  |        |  |       | 
|Central Networks
      East plc                          | 8.74     |  | 275,625 |  | 14,095 |  | 967   | 
|                                                         |          |  |         |  |        |  |       | 
|United Utilities
      Electricity plc                   | 6.20     |  | 191,806 |  | 7,491  |  | 703   | 
|                                                         |          |  |         |  |        |  |       | 
|Northern Electric
      Distribution Limited             | 7.52     |  | 273,618 |  | 3,418  |  | 1,111 | 
|                                                         |          |  |         |  |        |  |       | 
|Yorkshire Electricity
      Distribution plc             | 7.42     |  | 253,623 |  | 9,905  |  | 930   | 
|                                                         |          |  |         |  |        |  |       | 
|Western Power Distribution
      (South West) plc        | 6.06     |  | 211,362 |  | 6,883  |  | 674   | 
|                                                         |          |  |         |  |        |  |       | 
|Western Power Distribution
      (South Wales) plc       | 4.19     |  | 143,197 |  | 5,593  |  | 525   | 
|                                                         |          |  |         |  |        |  |       | 
|EDF Energy Networks
      (LPN) plc                      | 7.95     |  | 221,137 |  | 10,165 |  | 3,891 | 
|                                                         |          |  |         |  |        |  |       | 
|EDF Energy Networks
      (SPN) plc                      | 8.73     |  | 270,969 |  | 11,972 |  | 4,404 | 
|                                                         |          |  |         |  |        |  |       | 
|EDF Energy Networks
      (EPN) plc                      | 10.78    |  | 377,151 |  | 13,390 |  | 1,009 | 
|                                                         |          |  |         |  |        |  |       | 
|SP Distribution Limited                                  | 4.66     |  | 146,912 |  | 3,459  |  | 129   | 
|                                                         |          |  |         |  |        |  |       | 
|SP Manweb plc                                            | 3.66     |  | 108,320 |  | 3,906  |  | 1,574 | 
|                                                         |          |  |         |  |        |  |       | 
|Scottish Hydro-Electric
      Power Distribution Limited | 2.69     |  | 88,294  |  | 3,448  |  | 324   | 
|                                                         |          |  |         |  |        |  |       | 
|Southern Electric
      Power Distribution plc           | 9.09     |  | 310,974 |  | 12,145 |  | 1,140 | 
|                                                         |          |  |         |  |        |  |       | 

---



United Utilities Electricity plc

SPECIAL CONDITION G1  Restriction of distribution
      charges outside the distribution services area

|1. | The
        purpose of this condition is to establish the charge restrictions that
        apply to charges for demand use of system levied by the licensee in respect
      of its distribution business outside the distribution services area.                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | The
        licensee shall make available and continue to make available charges
        for the provision of use of system to any authorised supplier using the
      licensees network to supply domestic customers.                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|3. | The
        licensees demand use of system charges in respect of the distribution
        of electricity to domestic customers may vary according to the distribution
        services area of the licensed distributor within which domestic premises
      are connected to the licensees distribution system.                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|4. | The
        licensee shall set those charges so that, except with the prior written
        consent of the Authority, the standing charge, unit rate and any other
        component thereof shall not exceed its demand use of system charges to
      equivalent domestic customers.                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | For
        the purposes of this condition, the demand use of system charges to equivalent
        domestic customers are the charges for demand use of system levied by
        that licensed distributor which is subject to a distribution services
        direction specifying the distribution services area in which the domestic
      premises connected to the licensees system are located.
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | The
        Authority may specify, by direction, which of the charges for demand
        use of system levied by the licensed distributor with distribution services
        obligations for the distribution services area are relevant for the purposes
        of determining the demand use of system charges to equivalent domestic
      customers.                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|7. | These
        charging arrangements shall have effect within this licence until such
      time and in such circumstances as are described in paragraphs 8 to 13.                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|8. | This
        condition shall cease to have effect (in whole or in part, as the case
        may be) if the licensee delivers to the Authority a disapplication request
        made in accordance with paragraph 9, or notice is given to the Authority
      by the licensee in accordance with either paragraph 12 or paragraph 13.                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|9. | A
      disapplication request shall:                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                        
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                    

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United Utilities Electricity plc

|10. | The
      licensee may withdraw a disapplication request at any time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|11. | Save
        where the Authority consents otherwise, no disapplication following delivery
        of a disapplication request pursuant to paragraph 9 shall have effect
      until a date being the later of:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|12. | If
        the Authority has not made a reference to the Competition Commission
        under section 12 of the Act relating to the modification of this condition
        or the part or parts thereof specified in the disapplication request
        before the beginning of the period of 12 months which will end with the
        disapplication date and the licensee has not withdrawn the disapplication
        request, the licensee may deliver a written notice to the Authority terminating
        the application of this condition or the part or parts thereof specified
        in the disapplication request with effect from the disapplication date
        or such earlier date to which the Authority has given its consent under
      paragraph 11.                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|13. | If
        the Competition Commissions report on a reference made by the Authority
        relating to the modification of this condition or the part or parts thereof
        specified in the disapplication request does not include a conclusion
        that the cessation of such charge restrictions in this condition, in
        whole or in part, operates or may be expected to operate against the
        public interest, the licensee may within 30 days after the publication
        of the report by the Authority in accordance with section 13 of the Act
        deliver to the Authority notice terminating the application of this condition
        or the part or parts thereof specified in the disapplication request
      with effect from the disapplication date.



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