SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

                (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year
                              Ended March 31, 2001
                                       OR
              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the Transition Period from to


                   Registrant, State or other Jurisdiction
 Commission        of Incorporation or Organization,          I.R.S. Employer
 File Number       Address and Telephone Number               Identification No.
------------       ----------------------------------------   ------------------
 333-09033            SIUK plc                                 None
                      (Registered in England & Wales)
                      Avonbank
                      Feeder Road
                      Bristol
                      BS2 0TB, UK
                      (01144) 117 9332000




<PAGE>

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

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


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

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

       Aggregate market value of voting stock held by non-affiliates: $0

       A description of the registrant's common stock follows:


                     Description of                           Shares Outstanding
Registrant           Common Stock                                at May 31, 2001
----------           --------------                           ------------------
SIUK plc            Par Value(pound)1 Per Share                     902,128,735



<PAGE>



<TABLE>
<CAPTION>

                                Table of Contents
              PART I                                                                                                     PAGE
<S>           <C>                                                                                                         <C>
Item 1        Business
                  General..............................................................................................  I-1
                  Overview of the Electric Utility Industry in England and Wales.......................................  I-2
                  WPD's Distribution Business..........................................................................  I-3
                  WPD's Ancillary Business Activities..................................................................  I-5
                  Regulatory Environment...............................................................................  I-6
                  Employees............................................................................................  I-8
Item 2         Properties..............................................................................................  I-9
Item 3         Legal Proceedings.......................................................................................  I-9
Item 4         Submission of Matters to a Vote of Security Holders.....................................................  I-9

               PART II

Item 5         Market for Registrant's Common Equity...................................................................  II-1
Item 6         Selected Financial Data.................................................................................  II-1
Item 7         Management's Discussion and Analysis of Results of Operations and Financial Condition...................  II-2
Item 7A        Quantitative and Qualitative Disclosures about Market Risk..............................................  II-9
Item 8         Financial Statements and Supplementary Data.............................................................  II-11
Item 9         Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure..................................................................  II-31

               PART III

Item 10        Directors and Executive Officers of the Registrant......................................................  III-1
Item 11        Executive Compensation..................................................................................  III-2
Item 12        Security Ownership of Certain Beneficial Owners and Management..........................................  III-2
Item 13        Certain Relationships and Related Transactions..........................................................  III-3

               PART IV

Item 14        Exhibits, Financial Statement Schedules, and Reports
                  on Form 8-K..........................................................................................  IV-1
</TABLE>


           Cautionary Statement Regarding Forward-Looking Information

       The Company's 2001 Annual Report on Form 10-K includes forward-looking in
addition to historical  information.  These statements involve known and unknown
risks and relate to future  events,  the  Company's  future  performance  or its
projected  business  results.  In some cases,  you can identify  forward-looking
statements  by   terminology   such  as  "may",   "will",   "should",   "plans",
"anticipates",  "believes", "estimates",  "predicts", "potential", or "continue"
or the negative of these terms or other comparable terminology.  Forward-looking
statements are only statements of intent, belief or expectations.  Actual events
or results may differ materially from any forward-looking  statement as a result
of various factors.  These factors include:  legislative and regulatory  issues;
potential business strategies,  including acquisitions or dispositions of assets
or  businesses or internal  restructuring  that may be pursued by the Company or
its  subsidiaries;  the  potential  introduction  of  the  Euro;  changes  in or
application of environmental and other laws and regulations to which the Company
and its subsidiaries are subject;  political,  legal and economic conditions and
developments in which the Company and its subsidiaries operate; financial market
conditions and the results of financing efforts; changes in commodity prices and
interest rates; weather and other natural phenomena; the performance of projects
undertaken  by the  Company or its  subsidiaries  and the  success of efforts to
invest in and develop new opportunities; and other factors. Although the Company
believes that the expectations  reflected in the forward-looking  statements are
reasonable,  it cannot  guarantee  future results,  events,  levels of activity,
performance or achievements.

                                        i

<PAGE>

                              SELECTED DEFINITIONS

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

"Accentacross" means Accentacross Limited, formerly a Director of the Company.

"Authorized Area" means a REC's designated service area as determined by its PES
license.

"Calendar Year" means a year ended December 31.

"Company" means SIUK plc, formerly Southern Investments UK plc.

"Distribution  Price Control Formula" ("DPCF") is determined by the PES license.
It means a formula of P+RPI-Xd  where P reflects  the previous  maximum  average
price per unit of electricity distributed, RPI reflects the percentage change in
the Retail Price Index between the previous year and the current year and the Xd
factor is established by the Regulator following review.

"Electricity Act" means the Electricity Act 1989.

"EMFs" means electromagnetic fields.

"End Users" means consumers of electricity connected to a distribution network.

"Fiscal Year" means a year ended March 31.

"Holdings" means WPD Holdings Limited, the direct parent company of the Company.

"Holdings  UK" means WPD  Holdings UK, an  unlimited  liability  company and the
direct parent company of Holdings.

"Mighteager" means Mighteager Limited, formerly a Director of the Company.

"Mirant" means Mirant Corporation, formerly Southern Energy, Inc.

"NETA"  means  New  Electricity   Trading   Arrangements   being  the  wholesale
electricity market, previously the "Pool".

"NGC" means the National  Grid Company  which owns and operates the high voltage
transmission  system in  England  and Wales.  This  network  connects  the power
stations to regional and local distribution systems.

"OFGEM" means the Office of Gas and Electricity  Markets,  the body appointed by
the Government of the UK to regulate the gas and  electricity  industry in Great
Britain.

"PES" means public electricity supplier licensed by the Regulator.

"Pool" means the wholesale  trading market for electricity in England and Wales,
now replaced by "NETA".

"PPL" means PPL Corporation, a public stock corporation,  and ultimate parent of
PPLG and the registered utility Pennsylvania Power and Light.

"PPLG" means PPLG UK, a direct shareholder in Holdings UK and an indirect wholly
owned subsidiary of PPL Corporation.

"Price Cap" means a maximum price per unit of  electricity  supplied for various
tariffs as established by the Regulator.

                                       ii
<PAGE>

"REC" means one of the 12 regional  electricity  companies  in England and Wales
licensed to distribute, supply, and, to a limited extent, generate electricity.

"Regulator"  means The Director  General of Gas and Electricity  Supply in Great
Britain, and head of "OFGEM".

"SEC" means the Securities and Exchange Commission.

"SFAS" means US Statement of Financial Accounting Standard.

"UK" means the United Kingdom.

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

"US" means the United States of America.

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

"WPD" means South Western Electricity plc trading as Western Power Distribution,
a subsidiary of the Company.

                                       iii
<PAGE>



                                     PART I

Item 1.       BUSINESS

       Solely for the convenience of the reader, certain pounds sterling amounts
have been  translated  into US dollars at the Noon Buying Rate on March 31, 2001
of $1.4190 = (pound)1.00; see Note 1 in the "Notes to the Consolidated Financial
Statements".

General

       SIUK plc ("the  Company"),  formerly  Southern  Investments  UK plc,  was
incorporated  as a public limited company under the laws of England and Wales in
June 1995 as a vehicle for the acquisition of South Western Electricity plc, one
of the 12 RECs in England  and Wales  licensed to  distribute,  supply and, to a
limited  extent,  generate  electricity.  In September  1995, the Company gained
effective  control of South Western  Electricity plc, and subsequently  replaced
South Western  Electricity  plc's board of directors and certain senior managers
with officers and employees of Southern Company, then the ultimate parent of the
Company,   and  its  subsidiaries.   The  Company's  main  investment  and  only
significant asset is the entire share capital of South Western  Electricity plc,
which is headquartered in Bristol, England.

       The Company is a wholly owned  subsidiary of Holdings,  which in turn has
been wholly owned by Holdings UK since June 1998.  From  September  1995 to July
1996,  Holdings was an indirect  wholly  owned  subsidiary  of Mirant  (formerly
Southern Energy,  Inc), then a wholly owned subsidiary of Southern  Company.  In
July 1996,  Mirant sold a 25% economic  interest in Holdings to a subsidiary  of
PPL. In June 1998,  Mirant sold an additional 26% economic  interest in Holdings
to PPL, and on the same day both parties agreed to exchange  their  interests in
Holdings  for  interests in Holdings UK which  carried the same  rights.  Mirant
retained management control.  Effective December 1, 2000, in connection with the
acquisition of Hyder plc,  Mirant and PPL modified their ownership of the voting
rights  in  Holdings  UK to 50% each so that  both  parties  now  share  equally
operational and management control.  Mirant's and PPL's economic interest in the
Holdings UK group remained unchanged at 49% and 51%, respectively.

       On October 2, 2000,  Mirant closed an initial public offering of 19.7% of
its common stock. At March 31, 2001,  Southern  Company held the remaining 80.3%
of  Mirant's  stock.  On April 2, 2001,  Southern  Company  finalized a complete
spin-off of Mirant by distributing the remaining shares of Mirant's common stock
to holders of Southern  Company's  common  stock.  On March 13, 2001, as part of
Mirant's  separation  from Southern  Company,  the Company changed its name from
Southern Investments UK plc to SIUK plc.

       In September  1999,  South Western  Electricity plc completed the sale of
its   electricity   supply  business  (known  as  "SWEB")  and  certain  related
activities,  together  with the  name  `SWEB',  to  London  Electricity  plc for
(pound)160  million and the assumption by the purchaser of certain  liabilities.
South  Western   Electricity  plc  now  trades  under  the  name  Western  Power
Distribution ("WPD").  WPD's main business is the distribution of electricity to
approximately  1.4 million end users in its Authorized  Area in the southwest of
England.

       WPD's Authorized Area covers  approximately  5,560 square miles extending
from Bristol and Bath in the northeast,  188 miles southwest along the peninsula
to Land's  End and 28 miles  beyond to the Isles of  Scilly,  and has a resident
population  of  approximately  3.1  million.  The  southwest  of England,  which
constitutes  the  greatest  part of the  Authorized  Area,  has  benefited  from
economic  growth (as measured by Gross  Domestic  Product)  which on average has
exceeded  the UK rate during the 1990's and over the longer  term.  The area has
also benefited from an average  unemployment  rate during  calendar year 2000 of
approximately  2.5% which was below the UK average of 3.7%  according  to a 2001
study  by  Cambridge  Econometrics.  The  largest  cities  and  towns  in  WPD's
Authorized  Area are Bath,  Bristol,  Exeter,  Plymouth  and  Taunton.  Business
activity is generally  concentrated  in the population  centers around  Bristol,
Bath  and  Plymouth.  The  Bristol  and  Bath  area is  served  by the M4 and M5
motorways,  a rail network  including a link between  Bristol and London,  and a
commercial port at Avonmouth.

       The Company and WPD have  undertaken to make WPD a more focused  company,
concentrating  on  the  main  electricity  business  of  distribution.   Several
businesses not related to distribution  have been sold since WPD was acquired by
Mirant, and the remaining ancillary  businesses have been redirected to focus on
support for the main distribution business.

                                       I-1
<PAGE>



Overview of the Electric Utility Industry in England and Wales

       In 1990, the electric  utility  industry in Great Britain was privatized,
and South  Western  Electricity  plc was created along with the other 11 RECs in
England and Wales. In connection with the privatization,  distribution assets in
England and Wales, previously owned indirectly by Her Majesty's Government, were
allocated among the RECs,  licensing  requirements were established for the RECs
and price controls were implemented in the areas of distribution and supply.  In
England  and  Wales,  generation  assets  were  allocated  to  two  fossil-fired
generators,  National  Power  and  PowerGen,  and a nuclear  generator,  Nuclear
Electric.  National Power (now Innogy) and PowerGen became private  companies in
1992,  while Nuclear  Electric was privatized as part of British Energy in 1996.
At that time the older nuclear  stations were  transferred  to Magnox  Electric,
which has subsequently become part of BNFL (British Nuclear Fuels). The national
network of high voltage  transmission assets in England and Wales were allocated
to the newly created National Grid Company ("NGC").  Initially,  NGC was jointly
owned by the RECs but was floated on the stock market as an independent  company
in December 1995.

       The  electric  utility  industry in England and Wales is divided into the
following functions:

Generation.  Generators  sell  electricity  to suppliers  through the  wholesale
electricity market, NETA (New Electricity Trading  Arrangements).  Any generator
can gain access to the high voltage transmission system,  subject to meeting the
specific technical requirements for connection. NETA was introduced on March 27,
2001,  and replaces "the Pool",  established at the time of  privatization,  for
bulk  trading  of  electricity  in  England  and Wales  between  generators  and
suppliers.  NETA reflects the basic principle that electricity  should be traded
in free  market  conditions  using free  market  mechanisms  based on  commodity
trading.

Transmission.  The high voltage 275kV and 400kV electricity  transmission system
transfers  electricity from generating stations to distribution  systems at grid
supply  points.  Large  customers  can  choose to connect  directly  to the high
voltage transmission system.

Distribution.  The  distribution  network  transfers power from the high voltage
transmission system to end users' premises.  Distribution is a capital intensive
activity.  Each distribution  business is an effective  regional monopoly and is
subject to  regulatory  control  on the prices it can charge and the  quality of
supply  it  must  provide.  Distributors  must  provide  open  access  to  their
distribution network on a non-discriminatory  basis to facilitate competition in
supply.  Distribution must be operated as a separate business from supply. Until
competition in metering  becomes more  effective,  distribution  businesses will
retain  license  obligations to provide  services  relating to the provision and
maintenance of meters in their Authorized Areas, where the supplying company has
not elected to make its own arrangements.

Supply.  Suppliers purchase electricity in bulk through the wholesale market and
sell that  electricity to customers.  Supply  businesses  also provide  customer
service functions such as billing and account  handling.  Any company holding an
electricity  supply  license  can sell  electricity.  The supply  business  is a
trading activity rather than capital intensive  activity,  and a high proportion
of its turnover goes towards purchasing  electricity and paying distribution and
transmission use of system charges.  The supply market was opened to competition
in three phases,  culminating in May 1999 when all customers  became eligible to
choose their supplier.  In the past,  metering services,  meter reading and data
services  were all  provided  by the local REC.  Metering  services  include the
provision,  installation  and  maintenance  of a meter in a customer's  premise.
Meter  reading and data services  include the  collection of meter reading data,
aggregation and processing of this data.  Since April 2000,  suppliers have been
free to contract with any accredited party directly for these services.

       Since  privatization,  regulatory  pressures,  and growing competition in
supply and generation have produced significant shifts in electricity companies'
focus.  They have followed a variety of strategies,  from  concentrating  on the
monopoly  business  of  distribution  or the  competitive  supply  business,  to
pursuing a more vertically-integrated approach and striving to become integrated
energy companies. The entry of new independent power producers and divestment of
plant by National  Power and Powergen has changed the  generation  market from a
highly  concentrated  market with a few generators to a market with many diverse
generating companies.

                                       I-2
<PAGE>

       Electricity  companies  are  separating  their  supply  and  distribution
businesses to meet regulatory  requirements  and to gain more  flexibility in an
increasingly competitive market. Some companies,  including WPD, have sold their
high  volume  low return  supply  businesses  and are  striving  to evolve  into
distribution   service  and  support   companies,   while  other  companies  are
concentrating  on expanding  the supply  business.  Consolidation  in the supply
market has led to a number of supply  businesses  drawing  together under single
ownership,  increasing  the market share of the new owner.  The rational  behind
these mergers and  acquisitions is the assumed synergy to be obtained from joint
operation.

       Public electricity suppliers faced with increasingly stringent supply and
distribution  price  controls  and  modest  growth in  electricity  demand  have
diversified  to secure  income from new  business  activities,  ranging from gas
supply and telecommunications to financial services.

WPD's Distribution Business

       WPD's distribution business is the ownership, management and operation of
the  electricity   distribution   network  within  WPD's  Authorized  Area.  The
distribution   network   consists  of  overhead   lines,   cables,   switchgear,
transformers,  control  systems and meters to enable the transfer of electricity
from the transmission system to end-users'  premises.  Virtually all electricity
supplied  to  consumers  in WPD's  Authorized  Area is  transported  through its
distribution network, thus providing WPD with distribution volume that is stable
from year to year. As a holder of a PES license,  WPD is subject to a regulatory
framework that incentivises it to operate in a more  cost-efficient  manner. The
current price control commenced in April 2001.

       WPD's  distribution  business has grown in both its end-user  base and in
the number of units distributed,  primarily  reflecting  population and economic
growth in the South  West of  England.  At 31 March 2001 WPD had  experienced  a
5-year  compound  annual  growth  rate of 1.07% in end  users  and 2.1% in units
distributed.

Strategy

       Since being  acquired by the  Company,  WPD has  reviewed and refined its
distribution  strategy  and has  established  key  goals of cost  reduction  and
improved levels of customer service and network performance.

       Staff  reductions  have  played  a  key  role  in  cost  savings.   Since
acquisition, WPD has implemented a plan of voluntary and other staff reductions,
mainly in the distribution business. Part of these reductions were made possible
due to new work  practices  which WPD developed  with the  cooperation  of WPD's
unions. Team restructuring in the engineering  division and the establishment of
multi-skilled  independent  field teams has also  contributed  to improved  cost
efficiency.  In  addition,  management  restructuring  has  produced  a  flatter
organizational structure by reducing management levels from seven to three.

       Operational  efficiency  remained a prime focus for the  management  team
during the year and a number of initiatives  were  introduced to ensure that the
Company continues to deliver "more for less":

o      The separation of the supply business from the distribution  business was
       completed resulting in complete physical and managerial separation.  This
       reduced property, computer system, call center and other overhead costs;

o      A review of the organizational structure resulting in reducing the number
       of  operational  areas  from 10 to 7 and the  incorporation  of the major
       projects activity into the engineering teams;

o      New and improved working techniques continually improve the efficiency of
       the workforce;

o      Introduction of a new,  computerized,  metering asset and work management
       system maximized the performance of the metering business.
                                       I-3
<PAGE>

       Monitoring the  satisfaction  of end users  connected to the network with
the quality of supply provided is a key element of WPD's  strategy.  WPD aims to
meet or  exceed  all the  performance  criteria  established  by the  Regulator.
Network performance is measured by three key criteria:

o       Availability            the minutes each end user is without supply;

o       Security                the  number  of supply interruptions per 100 end
                                users;

o      Quality of Service       the number of end users whose supply is restored
                                within  one  hour  of  an  interruption,  a more
                                challenging standard than the  regulatory target
                                of three hours.

       In the fiscal year 2001 the average time an end user  was without  supply
was 59.5 minutes. This represents a 55% improvement on the performance in fiscal
year 1995. This was achieved despite severe flooding in October and lightning in
late December. On average, WPD's end users experience less than one interruption
per year and excellent progress has also been made in end user restoration.  The
initiative known as "target 60", which is unique in the industry, aims to ensure
that as many end-users as possible have their supply  restored  within the first
60 minutes of an  interruption.  For  fiscal  year 2001 WPD  achieved a one-hour
restoration  rate of 73%. The  three-hour  rate of 91.4% exceeded our regulatory
target of 85%.

       A continued  focus on customer  service  ensured  that WPD  retained  its
position at No. 1 for the fewest complaints to the Regulator. There were a total
of 13 complaints  during the year,  demonstrating  a continued  reduction from a
peak of 127 in fiscal year 1996.

       To ensure that we get it right  "first  time,  every time" and as part of
our strategy to improve our  response to  customers we have  introduced a simple
customer-friendly  call  center  service to provide  customers  with  up-to-date
information in a shorter response time.

       A number of new  systems  are also under  development  to assist with the
introduction  of the Information and Incentives  Project  ("IIP"),  a regulatory
project  due  to  be  introduced  in  2002.  This  is  designed  to  incentivise
distribution  companies  by linking a  proportion  of their  income to  customer
service.

End Users

       A high  proportion  of WPD's  distribution  end  users are  domestic  and
smaller  businesses.  WPD's fastest growing  category of end user is commercial,
e.g.  retail.  Commercial  activity in WPD's  Authorized  Area is mostly service
based  and  includes   financial   and  business   services,   electronics   and
technology-related  businesses.  WPD also distributes electricity to a number of
larger industrial  concerns in its Authorized Area. The principal  activities of
WPD's largest end users include china clay extraction,  ship repair,  fertilizer
production,  aerospace,  defense  engineering,  cement and paper  manufacturing.
WPD's 20 largest end users accounted for 10% of total electricity distributed by
WPD in fiscal year 2001 in terms of units  distributed,  with no single end user
exceeding 2.6% of total electricity distributed.

       The  following  table  sets  out  details  of  WPD's  end  users,   units
distributed and distribution revenues.
<TABLE>
<CAPTION>

                              Distribution Business
------------------------------------------------------------------------------------------------------------------------
                                       Distribution End Users              Electricity Units Distributed    Revenues(4)
                                   ------------------------------        ---------------------------------  -----------
                                                  % of    5 year           Volume      % of     5 year         % of
                                   Number(1)      Total   CAGR(2)          Twh(3)      Total    CAGR(2)        Total
<S>                                  <C>           <C>      <C>             <C>         <C>      <C>            <C>
                                   --------       -----   -------          ------      -----    -------        -----
Non half hourly metered.......      1,353,800     99.8     1.07%             9.2        61      1.8%             78
Half hourly metered...........          3,092      0.2     2.37              5.8        39      2.6              22
                                   ----------    -----                       ---       ---                     ----
       Total                        1,356,892    100.0     1.07             15.0       100      2.1             100
                                    =========    =====                      ====       ===                      ===
</TABLE>
--------------
(1)   At March 31, 2001.
(2)   Represents  the compound  annual  growth rate ("CAGR") for the period from
      April 1, 1996 through March 31, 2001.
(3)   In terawatt hours for fiscal year 2001.
(4)   For fiscal year 2001.

                                       I-4
<PAGE>

Distribution Facilities

       Electricity is transported across NGC's  transmission  system at 400kV or
275kV to eleven grid supply  points  connected  to WPD's  distribution  network,
where  it  is  transformed  to  132kV  and  enters  WPD's  distribution  system.
Substantially  all  electricity  which  enters WPD's system is received at these
eleven grid supply points.

       At March 31, 2001,  WPD's  electricity  distribution  network  (excluding
service connections to end users) included overhead lines and underground cables
at the  operating  voltage  levels and  approximate  lengths as indicated in the
table below:

<TABLE>
<CAPTION>
                                                                                  Overhead lines        Underground cables
Operating voltage:                                                                (Circuit miles)         (Circuit miles)
<S>                                                                                    <C>                     <C>
                                                                                  ---------------         ---------------
132kV........................................................................            1,120                      66
33kV.........................................................................            1,766                     640
11kV.........................................................................           10,831                   4,004
480 or 415/240V..............................................................            4,842                   7,349
                                                                                       -------                 -------
     Total...................................................................           18,559                  12,059
                                                                                        ======                  ======
</TABLE>


       In  addition  to the  circuits  referred  to  above,  WPD's  distribution
facilities also include approximately:

<TABLE>
<CAPTION>
                                                                                                        Aggregate Capacity
                                                                                                            (mega Volt-
                                                                                        Number               Amperes)
<S>                                                                                       <C>                  <C>
                                                                                    --------------      --------------------
Transformers:
132kV/lower voltages.........................................................               89                5,595
33kV/11kV or 6.6kV...........................................................              538                7,685
11kV or 6.6kV/lower voltages (including 39,862 pole mounted transformers)               51,508                6,946

Substations:
132kV/33kV...................................................................               47
33kV/11kV or 6.6kV...........................................................              310
11kV or 6.6kV/415V or 240V...................................................           12,419
</TABLE>

       Substantially  all  substations  are owned in  freehold,  and most of the
balance are held on leases which will not expire within 10 years.

       Operation  and  control  of WPD's  distribution  system  is  continuously
monitored and coordinated  from a control center located in Exeter.  Electricity
is received by end users at various voltages depending upon their  requirements.
At March 31, 2001,  WPD's  distribution  system was connected to 1.4 million end
users.

WPD's Ancillary Business Activities

       WPD  also  has  ancillary  business  activities  that  support  its  main
electricity  distribution business.  These include electricity generation,  real
estate and telecommunications. WPD owns generating assets with 11 MW of capacity
used to  back up the  distribution  network.  In  addition,  WPD  owns  minority
interests in windfarms and a 7.69% interest in Teesside Power Limited,  owner of
a 1,925 MW natural  gas-fired,  combined  cycle plant.  WPD markets and develops
real estate no longer used in the  distribution  business.  It is  developing an
income stream from the rental of fiber optic cables primarily  attached to WPD's
overhead  distribution  network  and  during  the  past  year  has  invested  in
additional  fiber  routes.  Reference  is made to  Note 7 in the  "Notes  to the
Consolidated  Financial  Statements" of the Company in Item 8 herein for segment
and related information.


                                       I-5
<PAGE>



Regulatory Environment

Utility Regulation

       The principal  legislation  governing  the  structure of the  electricity
industry in Great Britain is the Electricity Act 1989 (the  "Electricity  Act").
The Electricity Act provided for a Public  Electricity  Supply ("PES")  license,
which  covered  both supply and  distribution.  The  distribution  business  was
regulated through  conditions in the PES license.  The Utilities Act, enacted in
July 2000,  amends the Electricity  Act, and includes the necessary  legislation
for  separation  of  electricity  distribution  and supply.  This is intended to
facilitate  further  restructuring  of the  electricity  industry and ensure the
continued  development of competition in electricity  supply.  The Utilities Act
includes the requirement for the separate licensing of electricity  distribution
and supply,  and the full legal separation of license holding entities.  The new
licenses  will  replace the current PES licenses and are expected to take effect
in July 2001.

       From September 1999, WPD had appointed London Electricity as its agent to
run the part of the supply business  falling under its current license on agency
terms, thereby achieving the same economic effect as an outright transfer. WPD's
electricity  supply license will now be transferred to London  Electricity under
the transfer  schemes of the  Utilities  Act.  WPD's  distribution  business has
achieved  complete  physical,  system and  management  separation  from the SWEB
supply business.

       The  Utilities Act  fundamentally  changes the  industry's  structure and
regulatory  framework  and  provides  stronger  protection  for  consumers.   It
encourages  further  market  development  by  integrating  gas  and  electricity
regulation,  separating the licensing of electricity supply and distribution and
providing  the  necessary  powers  to  underpin  the  new  electricity   trading
arrangements ("NETA"). It aims to secure a fair balance between the interests of
consumers and shareholders.

       The provisions in the Utilities Act include the replacement of individual
gas and  electricity  regulators  with a regulatory  authority  supported by the
Office of Gas and Electricity  Markets. The principal objective of the authority
is to protect the interests of  consumers,  wherever  appropriate,  by promoting
effective competition.

       The authority  will receive new powers to impose  monetary  penalties for
past and ongoing  breaches of license  conditions,  standards of performance and
specific statutory requirements.  The fines are limited to 10% of the licensee's
turnover for three years.

       The  consumer  related  provisions  of  the  Act  include  requiring  the
authority,  in performing its functions, to have regard to the special interests
and needs of disabled,  consumers of  pensionable  age,  the  chronically  sick,
consumers  in rural  areas  and for the  first  time  low-income  consumers.  In
addition a new  independent  gas and electricity  consumers'  council,  launched
under the name energywatch,  has been  established.  The new body will provide a
clear point of access for enquiries and unresolved complaints,  ensure consumers
are well informed and  confident  about prices and the standards of service they
can expect, and provide information and advice on consumer issues to regulators,
Government, Parliament, the media and others.

       Each  regional  electricity   company's  ("REC")  distribution   business
constitutes  an  effective  regional  monopoly  and is subject to control on the
prices it can charge and the quality of supply it must provide.  The  operations
of WPD are regulated under its PES license pursuant to which income generated by
the  distribution  business is subject to a price cap regulatory  framework that
provides economic incentives to minimize operating, capital and financing costs.
Under the PES license,  WPD  provides  distribution  services to  virtually  all
electricity  consumers in its Authorized Area and must offer electricity  supply
services to all these customers also.

       The charges made for the use of the distribution network are regulated on
the basis of the RPI minus X formula.  RPI is a measure of inflation  and equals
the  percentage  change in the U.K.  RPI between the six month period of July to
December in the previous  year.  The X factor is  established  by the  Regulator
following review and represents an efficiency  factor.  This formula  determines
the maximum  average  price per unit of  electricity  distributed  (in pence per
kilowatt hour) that a REC is entitled to charge.  This price, when multiplied by
the  expected  number  of  units  to be  distributed,  determines  the  expected
distribution  revenues of the REC for the relevant year. The Regulator currently
sets the Distribution Price Control Formula for 5-year periods.
                                       I-6
<PAGE>

       The current  Distribution  Price Control Formula  permits RECs,  within a
review  period,  to  partially  retain  additional  revenues  due  to  increased
distributions  of units and to retain  pound-for-pound  increases  in  operating
profit due to efficient operations and the reduction of expenses.  The Regulator
may reduce this increase in operating  profit through a one-off price  reduction
in the first year of the new pricing  regime,  if he determines that it is not a
function of  efficiency  savings,  or, if genuine  efficiency  savings have been
made, and he determines that customers should benefit through lower prices.

       Distribution  businesses  must  also  meet  the  Guaranteed  and  Overall
Standards  of  Performance,  which  are  set  by  the  Regulator  to  ensure  an
appropriate  level of quality of supply. If a company fails to provide the level
of service specified, it must make a fixed payment to the end user affected.

       In December  1999,  the  Regulator  published  final price  proposals for
distribution  price control for the 12 RECs in England and Wales. For WPD, these
proposals  represented a 20% reduction to  distribution  prices  effective April
2000,  followed  by a  reduction  in real terms of 3% each year from April 2001.
This price control is scheduled to operate until March 2005.

       In response,  the Company has  implemented a plan to maximize  efficiency
and  customer  service as a focused  distribution  company.  In order to achieve
these  objectives,  WPD has reduced  staffing levels by  approximately  10%. The
reductions  primarily  affected  administrative  and corporate  functions,  with
minimal impact on field staff,  ensuring customer service was not affected.  WPD
is currently evaluating further opportunities to reduce ongoing operating costs.
The  combination  of  WPD's  distribution  business  with  that of  South  Wales
Electricity  plc, now owned by Holdings  UK, is expected to deliver  significant
savings  on  WPD's  overhead  costs,  particularly  in  respect  of  information
technology  where the  incremental  cost of a second  distribution  business  is
relatively low. Other savings are expected in purchase efficiency.

       Improvements  in quality of supply  form an  important  part of the final
proposals.  Revised targets for system performance, in terms of the security and
availability of supply, were proposed with new targets for reductions in minutes
lost and interruptions.

       As part of the  price  control  review,  the  Regulator  recognized  that
further analysis was required to address some of the weaknesses  associated with
the existing  framework of price  regulation.  This  included a commitment to an
ongoing  program of work,  known as the Information  and Incentives  Project.  A
major  objective of this project is to strengthen  the  financial  incentives on
distribution  businesses  with  regards  to the  quality  of  service  that they
deliver.  Although the  Guaranteed and Overall  Standards of Performance  impose
penalty  payments  for  not  meeting  specific  targets,  there  is no  explicit
mechanism whereby regional  electricity  companies are financially  rewarded for
improved  quality of supply.  The final  proposals  indicated that the Regulator
intends to  introduce  additional  incentive  mechanisms  relating to quality of
supply from April 2002. The financial impact of any additional  mechanisms would
be limited to +/-2% of price control  revenue  during the price  control  period
from April 2002 until the end of March 2005.

UK Environmental Regulation

       WPD's  businesses are subject to numerous  regulatory  requirements  with
respect to environmental  matters.  The Electricity Act obliges the Secretary of
State for Trade and  Industry and the  Director  General of Gas and  Electricity
Supply  to  take  into  account  the  effect  of   electricity   generation  and
transmission  activities upon the physical  environment in the exercise of their
functions regarding electricity supply. The Electricity Act requires WPD to have
regard for the desirability of preserving natural beauty and the conservation of
natural  and  man-made  features  of  particular  interest  when they  formulate
proposals for  development in connection with certain of their  activities.  The
Electricity  Act also  requires  license  holders  to take  reasonable  steps to
mitigate the effects of such proposals on the natural beauty of the countryside,
including flora, fauna, features,  sites, buildings or objects. WPD endeavors to
mitigate the effects their  proposals have on natural and man-made  features and
are  required  to carry out an  environmental  assessment  when  they  carry out
certain developments in connection with their licensed activities.

       The Environmental Protection Act 1990 (the "EPA") and the Water Resources
Act 1991 (the  "WRA") as  amended  by the  Environment  Act 1995,  form the main
environmental  legislation  that  creates  a  statutory  regime  concerning  the
clean-up of  contaminated  land in the U.K. The EPA also  introduced a system of
regulatory controls over certain prescribed  industrial  processes.  This regime
has been replaced by a new system of control under the Pollution  Prevention and
Control  Act 1999 (and  associated  regulations)  (the  "PPC").  The PPC  system
follows many of the  principles in the earlier regime  although,  in a number of
areas, the consents issued under PPC (to operate a regulated  installation)  may
contain more onerous obligations than was previously the case under the EPA.

       The EPA contains a number of provisions relating to the control of waste,
waste  management,  air pollution,  and  contaminated  land. It imposes  certain
obligations  and duties in  relation  to the  handling  and  disposal  of waste.
Failure to comply with such duties is a criminal  offence under the EPA. The EPA
also  contains  certain  pollution  related  offences  and  provides  powers  to
regulatory authorities to enforce these requirements.
                                       I-7
<PAGE>

       The EPA (as supported by statutory  guidance)  contains  provisions under
which the regulatory  authorities may require the clean-up of contaminated  land
(as defined under this regime).  Liability to clean-up  contamination  may arise
under these  provisions  for the person who caused or  knowingly  permitted  the
contamination or, in certain circumstances,  the owner or occupier (for the time
being) of the contaminated land in question.

       The WRA also contains  provisions that enable the  Environment  Agency to
require a polluter (in these  circumstances a causer or knowing permitter of the
pollution) to clean up the  contamination and remediate the damage caused by it.
The WRA also enables the Environment  Agency to carry out certain clean-up works
and recover the costs of so doing from the person liable.

       Civil  liability  may also be  incurred  as a result of the  presence  of
contamination  (primarily in circumstances  where contaminants  migrate into the
environment at third party land and/or that impact upon human beings,  flora and
fauna).

       Possible adverse health effects of electromagnetic  frequencies  ("EMFs")
from various sources,  including  transmission and distribution lines, have been
the  subject  of a number of  domestic  and  international  studies  and  public
discussion.  The U.K. government's advisors on radiological  protection matters,
the National Radiological Protection Board, has published guidelines on limiting
exposure to EMFs.  WPD  believes  that they fully  comply with these  standards.
There is, however,  the possibility that the future  introduction and passage of
legislation  and change of  regulatory  standards  and  guidance  would  require
measures to mitigate  EMFs,  with  resulting  increases in capital and operating
costs.

       WPD may also have obligations to protect the health and safety of workers
and the  general  public in  respect  of EMFs  under  separate  legislation  and
regulations,  such as the Health and Safety at Work, etc. Act 1974. In addition,
the potential  exists for civil  liability  with respect to lawsuits  brought by
plaintiffs claiming damages for adverse health effects caused by EMFs.

       WPD believes that they have taken and continue to take measures to comply
with the applicable laws and governmental  regulations for the protection of the
environment.  There are no material legal or administrative  proceedings pending
against WPD with respect to any environmental matter.


Employees

       At March 31, 2001, WPD had 1,678 employees  (1,658 full time  equivalent)
and the Company had no employees.  Of WPD's  employees,  96% are  represented by
labor  unions.  All WPD  employees  who are not party to a  personal  employment
contract  are subject to one of two  collective  bargaining  agreements.  One is
called The  Electricity  Business  Agreement,  which covered 1,505  employees at
March 31,  2001  (1,488 full time  equivalent);  it may be amended by  agreement
between  WPD and the unions and is  terminable  with 12 months  notice by either
side.  The other is called the Meter Reading  Services  Handbook of  Agreements,
which covered 95 employees at March 31, 2001 (95 full time  equivalent);  it may
be amended by agreement  between WPD and the unions and is terminable by written
notice  (with no  period  specified)  by  either  side.  WPD  believes  that its
relations with its employees are  favorable.  Legal  proceedings  concerning the
Electricity Supply Pension Scheme involving a company other than WPD were taken.
These  proceedings  may  affect  WPD  in  the  future.   See  "Item  3  -  Legal
Proceedings".
                                       I-8
<PAGE>

Item 2.       PROPERTIES

       WPD has both network and non-network land and buildings.

Network Land and Buildings

       At March 31, 2001 WPD had freehold and leasehold interests in over 12,000
network properties,  comprising  principally substation sites. The recorded cost
of total  network  land and  buildings at March 31, 2001 was  (pound)84  million
($119 million).

Non-Network Land and Buildings

       At March 31, 2001 WPD had freehold and leasehold interests in non-network
properties comprising chiefly offices, former retail outlets, depots, warehouses
and  workshops  and  included  the  freehold of its former  principal  executive
offices in Bristol. The recorded cost of total non-network land and buildings at
March 31, 2001 was (pound)33 million ($47 million).

       The number of properties in each category is:
                                                  Freehold or
                                                 Long Leasehold       Leasehold
                                                 --------------       ---------
Depots.........................................        18                 1
Offices........................................         4                 -
Surplus property (largely unused retail sites).        33                 10

       WPD markets and develops  property no longer used in the main electricity
distribution business.

       Reference  is made to Item 1  "Business  - WPD's  Distribution  Business"
herein for a discussion of other properties and other assets of WPD.

Item 3.       LEGAL PROCEEDINGS

       Reference  is  made  to the  "Management's  Discussion  and  Analysis  of
Financial   Condition  and  Results  of   Operations  -  Litigation   and  Other
Contingencies" section herein.


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

       None.

                                       I-9
<PAGE>


                                     PART II

Item 5.       MARKET FOR REGISTRANT'S COMMON EQUITY

       There is no established  public  trading market for the Company's  common
stock, all of which is owned indirectly by Mirant and PPL.

Item 6.       SELECTED FINANCIAL DATA

       The  following  table  presents  the  Company's   selected   consolidated
financial  information.  The information set forth below should be read together
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's historical  consolidated  financial statements and
the notes. The consolidated  income statement data for the years ended March 31,
2001,  2000, 1999, 1998 and 1997 and selected balance sheet data as of March 31,
2001,  2000,  1999,  1998 and  1997  are  derived  from  the  Company's  audited
consolidated  financial  statements,  which  were  audited  by Arthur  Andersen,
independent public accountants.  The historical financial information may not be
indicative of the Company's future performance.

<TABLE>
<CAPTION>
                                  (In Millions)

                                           Fiscal             Fiscal      Fiscal       Fiscal        Fiscal
                                            Year               Year        Year         Year          Year
                                            2001               2000        1999         1998          1997
                                     ---------------------     --------- --------    -----------  -----------
<S>                                     <C>           <C>        <C>          <C>         <C>          <C>
Operating Revenues from
   continuing operations........ (pound)234       $   332  (pound)275  (pound)261   (pound)245   (pound)257
Net Income (Loss) from
   continuing operations (1)....         85           121          82          76          (27)          50
Total Assets....................      2,341         3,322       2,057       2,139        1,728        1,721
Long-term Debt (2 & 3)..........        234           332         301         301          301          301
Preferred Securities (2 & 4) ...         58            82          50          50           50           50
Common Dividend Declared........         27            38         188          70           34           37
</TABLE>

-------------



(1)   The Net Loss in fiscal year 1998 is stated after a one-off  windfall  levy
      charge of (pound)90 million.  The results for 1999 and 1998 have benefited
      from a  decrease  in UK income  tax  rates  which  served  to  reduce  the
      Company's  provision  for  deferred  income  taxes  with  a  corresponding
      reduction in income tax expense of (pound)11 million and (pound)22 million
      respectively.

(2)   In accordance with SFAS 133 ("Accounting  for Derivatives  Instruments and
      Hedging  Activities"),  at March  31,  2001,  hedged US  denominated  debt
      (including  preferred  securities)  has been exchanged into the functional
      currency of UK pounds  sterling at the spot  exchange rate rather than the
      swapped exchange rate.

(3)   $168 million of the Company's  $500 million Senior Notes in the US are due
      for  redemption in November  2001.  These are now disclosed  under current
      portion of long-term debt in the consolidated balance sheet.

(4)   Company Obligated  Mandatorily  Redeemable  Preferred  Securities  of SIUK
      Capital Trust I Holding Company Junior  Subordinated Debentures.  See Note
      12 in the "Notes to the Consolidated Financial Statements".

                                      II-1
<PAGE>


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

       The  following   discussion  should  be  read  in  conjunction  with  the
consolidated  financial  statements  and the  notes  thereto.  The  consolidated
financial  statements discussed in this Section are presented in accordance with
US GAAP.  Solely for the  convenience  of the reader,  certain  pounds  sterling
amounts  have been  translated  into US dollars at the Noon Buying Rate on March
31, 2001 of $1.4190 = (pound)1.00;  see Note 1 in the "Notes to the Consolidated
Financial Statements".


EFFECTS OF CERTAIN ORGANIZATIONAL CHANGES

       The Company is a wholly owned subsidiary of WPD Holdings  Limited,  which
in turn has been wholly owned by WPD  Holdings UK since June 1998.  WPD Holdings
UK is indirectly  owned by Mirant  Corporation  ("Mirant"),  and PPL Corporation
("PPL").

       On October 31, 2000, WPD Limited, a company owned jointly by subsidiaries
of Mirant and PPL,  finalized its acquisition of Hyder plc ("Hyder") for a total
purchase  price for the  ordinary  shares of Hyder of  approximately  (pound)565
million. Associated with this acquisition, Mirant and PPL agreed to modify their
ownership  of the  voting  rights  in WPD  Holdings  UK to 50%  each,  effective
December 1, 2000, so that both parties equally share  operational and management
control.  Mirant's  and PPL's  economic  interest  in the WPD  Holdings UK group
remained unchanged at 49% and 51%, respectively.

       During the second quarter of fiscal year 2001, WPD made short-term  loans
totaling  (pound)85 million to WPD Limited.  This represents part of the funding
for WPD  Limited's  purchase  of Hyder  shares.  In  addition,  WPD  Limited has
replaced Hyder's board of directors with employees of WPD, Mirant, and PPL.

       At the time of acquisition,  Hyder was the parent of a group of companies
whose principal  operating  activities included the provision of regulated water
and wastewater  services for  substantially  the whole of Wales and  electricity
distribution  in South  Wales  (South  Wales  Electricity  plc).  It also  owned
subsidiaries   that  operated  in  the  managed   services  and   infrastructure
businesses, virtually all of which have since been sold.

       On  March  16,  2001,  ownership  of  South  Wales  Electricity  plc  was
transferred  from WPD Limited to WPD Holdings UK. At the same time, other assets
were transferred from WPD Limited to WPD Holdings UK together with the effective
transfer of debt.

       In September  1999,  WPD  completed  the sale of its  electricity  supply
business  (known as `SWEB') and certain  related  activities,  together with the
name `SWEB', to London Electricity plc for (pound)160 million and the assumption
by the purchaser of certain liabilities.  The Company recorded an after tax gain
on the sale of  (pound)125  million in fiscal  year 2000.  In fiscal  year 2001,
issues  relating to working capital and pension spin off value were resolved and
a further (pound)7 million after tax gain was recorded.
                                      II-2
<PAGE>

FACTORS AFFECTING DISTRIBUTION REVENUES

       The  amount  of  revenues  produced  by  the  distribution   business  is
determined by the unit price of the electricity distributed (which is controlled
by the Distribution  Price Control Formula) and the number of electricity  units
distributed.

       The charges made for the use of the distribution network are regulated on
the basis of the RPI minus X formula.  RPI is a measure of inflation  and equals
the  percentage  change in the U.K.  RPI between the six month period of July to
December in the previous  year.  The X factor is  established  by the  Regulator
following review and represents an efficiency  factor.  This formula  determines
the maximum  average  price per unit of  electricity  distributed  (in pence per
kilowatt hour) that a REC is entitled to charge.  This price, when multiplied by
the  expected  number  of  units  to be  distributed,  determines  the  expected
distribution  revenues of the REC for the relevant year. The Regulator currently
sets the Distribution Price Control Formula for 5-year periods.

       The current  Distribution  Price Control Formula  permits RECs,  within a
review  period,  to  partially  retain  additional  revenues  due  to  increased
distributions  of units and to retain  pound-for-pound  increases  in  operating
profit due to efficient operations and the reduction of expenses.  The Regulator
may reduce this increase in operating  profit through a one-off price  reduction
in the first year of the new pricing regime,  if he or she determines that it is
not a function of efficiency  savings,  or, if genuine  efficiency  savings have
been made, and he or she determines that customers  should benefit through lower
prices.

       In December 1999, the Regulator  published  final price proposals for the
most recent  distribution  price  control  for the 12 RECs in Britain.  For WPD,
these  proposals  represented a one-off price  reduction of 20% effective  April
2000,  followed  by a  reduction  in real terms of 3% each year from April 2001.
This price control is scheduled to operate until March 2005.

       The number of units distributed  depends on the demand of WPD's customers
for  electricity.  That demand varies based in part upon weather  conditions and
economic activity.

       For  further  discussion  on the  regulatory  environment  affecting  the
electricity industry, see "Item 1 Business - Regulatory Environment".

RESULTS OF OPERATIONS

Year Ended March 31, 2001 as Compared to Year Ended March 31, 2000

Operating  Revenues.  Operating revenues decreased by (pound)41 million (15%) to
(pound)234  million in fiscal year 2001 from  (pound)275  million in fiscal year
2000.  The following  factors were  primarily  responsible  for the decreases in
operating revenues:

o      Revenues from the distribution  business  decreased by (pound)30  million
       (12%) to (pound)217  million in fiscal year 2001 from (pound)247  million
       in fiscal  year  2000.  The  decrease  resulted  primarily  from  reduced
       distribution  tariffs  effective  April 1, 2000 as determined in the most
       recent distribution price control review. The movements are summarized as
       follows:

                                                        Operating Revenues from
                                                       Electricity Distribution
                                                       (Decrease) Increase from
                                                             Fiscal Year 2000
                                                            to Fiscal Year 2001
                                                    ---------------------------
                                                   ((pound) millions, except %)

       Application of Distribution Price Control Formula...             (39)
       Other revenue attributable to distribution business.               9
                                                                     -------
       Total distribution revenues.........................             (30)
                                                                     -------
       Percentage change...................................              12%

o      Revenues from ancillary  businesses  (net of  eliminations)  decreased by
       (pound)11  million  (39%) to  (pound)17  million in fiscal year 2001 from
       (pound)28  million for fiscal year 2000. The decrease was principally due
       to lower activity in the energy purchasing business following the sale of
       the electricity supply business effective September 1999.
                                      II-3
<PAGE>

Operating  Expenses.  Operating  expenses were (pound)90  million in fiscal year
2001,  a decrease of  (pound)33  million,  or 27%,  from  fiscal year 2000.  The
following  factors were  primarily  responsible  for the  decreases in operating
expenses:

o      Depreciation  and  amortization  expense was (pound)48  million in fiscal
       year 2001, a decrease of (pound)8 million, or 14%, from fiscal year 2000.
       The  decrease  was due to the write  down of certain  short life  network
       assets in fiscal year 2000. This was largely a consequence of the sale of
       the electricity  supply business,  which resulted in certain assets being
       replaced sooner than anticipated.

o      In April 2000,  metering  services,  meter reading and data  services for
       the domestic and  small  business  market  were  opened  to  competition.
       Metering services include the provision,  installation and maintenance of
       a meter in a customer's premise. Meter reading and data services  include
       the collection  of meter  reading,  aggregation  and  processing  of this
       data.  New license conditions  were  introduced  obligating  distribution
       companies  to  offer  terms  separately  for  metering  provision,  meter
       operation,  data collection and aggregation services to all  suppliers in
       the domestic market and  small  business,  and to publish a statement  of
       charges for these  activities.  An estimate  of the  undiscounted  future
       cash flows based on WPD's statement of charges for metering services, was
       compared to the carrying  value of the assets and it was determined  that
       the assets were impaired.  As a result the Company  recorded a write-down
       of(pound)22 million, in the third quarter of fiscal year 2000, to reflect
       the amount  by  which  the  carrying  value of meters exceeded their fair
       value.  The  fair value  was  determined by  discounting  the future cash
       flows.

o      Incremental  expenses incurred as a direct consequence of the disposal of
       the  electricity  supply  business were  (pound)3  million in fiscal year
       2000. These relate to the establishment of a new computer environment and
       data migration.

Other  Income (Expense).  Other expense was(pound)9 million in fiscal year 2001,
a decrease  of(pound)18  million from fiscal year 2000. The change was primarily
due to:

o      Interest income from affiliated companies was (pound)26 million in fiscal
       year 2001,  an  increase of (pound)6  million,  or 30%,  from fiscal year
       2000.  This  increase  is due to  interest  receivable  on the  (pound)85
       million loan to WPD Limited to finance part of the purchase price paid by
       WPD Limited for Hyder plc shares.

o      Interest expense  increased by (pound)4 million (7%) to (pound)60 million
       in fiscal  year 2001 from  (pound)56  million in fiscal  year 2000.  This
       increase is largely due to additional  borrowings required to finance the
       (pound)85 million loan made to WPD Limited.  The weighted average balance
       of debt outstanding  during fiscal year 2001 was (pound)738  million at a
       weighted average interest rate of 7.7% compared to (pound)689  million at
       7.7% during fiscal year 2000.

o      Investment income decreased by (pound)2 million (29%) to (pound)5 million
       in fiscal  year 2001 from  (pound)7  million  in fiscal  year  2000.  The
       movement is mainly due to timing of dividends received from an investment
       in generating plant.

o      During fiscal year 1996, WPD sold its shares of The National Grid Holding
       plc ("NGH") into the market,  following the listing of the NGH  shares on
       the London Stock Exchange.  Prior to the sale,  part of the  shareholding
       was transferred  to three, previously dormant, wholly owned subsidiaries.
       These companies sold the shares of NGH in open market transactions during
       December  1995 and January 1996  generating a taxable gain,  resulting in
       an income tax liability of(pound) 24 million. The  companies  received  a
       capital contribution from WPD to fund the tax obligation. In October 1996
       the companies were sold to a third party for a nominal  price.  The  sale
       contract  provided  for the  payment of  contingent  consideration  based
       on the third  party's ability to utilize its own existing  capital losses
       to offset the realized  gains on the NGH sale. The agreement provided for
       (pound)16 million to be paid to  WPD  upon  finalization  of the relevant
       tax returns for the period in  question.  The last tax return was  agreed
       by  the  Inland Revenue in  February  2001 and  the  deferred  contingent
       consideration received April 6, 2001.

                                      II-4
<PAGE>

(Provision)  Benefit  for income  taxes.  The  provision  for  income  taxes was
(pound)27 million in fiscal year 2001, an increase of (pound)4 million,  or 17%,
from fiscal year 2000.  The increase  was  primarily  due to higher  income from
continuing operations before income taxes.

Net Income. The Company's consolidated net income from continuing operations was
(pound)85  million in fiscal year 2001,  an  increase of (pound)3  million or 4%
from fiscal year 2000. This excludes the income from the Company's  discontinued
operations  (WPD's  electricity  supply  business) of (pound)4 million in fiscal
year 2000,  and the gain on  disposal  of the  electricity  supply  business  of
(pound)7 million in fiscal year 2001 and (pound)125 million in fiscal year 2000.
The increase is attributable to the Company's business segments as follows:

       Distribution
       Operating income from distribution was (pound)112  million in fiscal year
       2001, an increase of (pound)5  million,  or 5% from fiscal year 2000. The
       increase  was  primarily  due to the write down of meters in fiscal  year
       2000 and other cost reductions, partly offset by a reduction in revenues.

       Ancillary businesses
       Operating income from ancillary businesses was (pound)9 million in fiscal
       year 2001, a decrease of (pound)16 million, or 64% from fiscal year 2000.
       The decrease was due to lower activity in the energy purchasing  business
       following the sale of the electricity supply business effective September
       1999.


Year Ended March 31, 2000 as Compared to Year Ended March 31, 1999

Operating  Revenues.  Operating  revenues increased by (pound)14 million (5%) to
(pound)275  million in fiscal year 2000 from  (pound)261  million in fiscal year
1999.  The following  factors were  primarily  responsible  for the increases in
operating revenues:

o      Revenues from the distribution  business were (pound)247 million for both
       fiscal  years  2000 and 1999.  Although  no  overall  change,  there were
       offsetting movements as a result of the following factors:

                                                         Operating Revenues from
                                                        Electricity Distribution
                                                        (Decrease) Increase from
                                                               Fiscal Year 1999
                                                             to Fiscal Year 2000
                                                        ------------------------
                                                    ((pound) millions, except %)

       Application of Distribution Price Control Formula...          (1)
       Sales growth........................................           2
       Other revenue attributable to distribution business.          (1)
                                                                  ------
       Total distribution revenues.........................           -
                                                                 ------
       Percentage change...................................          -%

o      Revenues from ancillary  businesses  (net of  eliminations)  increased by
       (pound)14  million  (100%) to (pound)28  million in fiscal year 2000 from
       (pound)14 million for fiscal year 1999.  Revenues in 1999 were reduced by
       a (pound)9  million revision to the unbilled  revenue  receivable  during
       fiscal  year  1999,  due to  uncertainty  over the  recoverability  of an
       element  of  the  balance  with  the  introduction  of  competition  into
       electricity supply.  Revenues for a number of activities,  primarily real
       estate, increased in 2000.

Operating  Expenses.  Operating  expenses were (pound)123 million in fiscal year
2000,  the same as in fiscal year 1999.  The  following  factors were  primarily
responsible for the underlying movements in operating expenses.

o      Maintenance expense  was(pound)35 million in fiscal year 2000, a decrease
       of(pound)2 million, or 5%, from fiscal year 2000.  Maintenance costs have
       not moved significantly year on year.
                                      II-5
<PAGE>

o      Depreciation  and  amortization  expense was (pound)56  million in fiscal
       year 2000,  an  increase of (pound)5  million,  or 10%,  from fiscal year
       1999. The increase was due to the impairment of assets in the latter half
       of fiscal year 2000.

o      Selling,  general  and  administrative  expense was  (pound)7  million in
       fiscal year 2000, a decrease of (pound)28  million,  or 80%,  from fiscal
       year 1999. The decrease resulted from finalization of certain liabilities
       in fiscal year 2000.

o      As discussed  above, in April 2000, the Company  recorded a write-down of
       (pound)22  million,  in the third quarter of fiscal year 2000, to reflect
       the  amount by which the  carrying  value of meters  exceeded  their fair
       value.

o      Incremental  expenses incurred as a direct consequence of the disposal of
       the  electricity  supply  business were  (pound)3  million in fiscal year
       2000. These relate to the establishment of a new computer environment and
       data migration.

Other Income (Expense).  Other expense was(pound)27 million in fiscal year 2000,
a decrease  of(pound)9  million from fiscal year 1999.  The change was primarily
due to:

o      In December 1998 a more efficient  capital  structure for Holdings UK and
       the  Company  was put in  place.  At that  time,  Holdings  UK  became  a
       co-obligor  of the Company's  existing  long-term  debt and  subordinated
       debentures - reference is made to Note 12 to the  Consolidated  Financial
       Statements  herein.  This  arrangement  has  benefited  net  interest  by
       (pound)20 million in fiscal year 2000 and (pound)6 million in fiscal year
       1999 as  reported  by the  Company  but has no impact at the  Holdings UK
       group level.

o      Interest expense  increased by (pound)1 million (2%) to (pound)56 million
       in fiscal  year 2000 from  (pound)55  million in fiscal  year 1999.  This
       increase  is largely  due to interest  payable on group  taxation  relief
       payable  from WPD to  Holdings.  The  weighted  average  balance  of debt
       outstanding  during fiscal year 2000 was (pound)689 million at a weighted
       average  interest  rate of 7.7%  compared to  (pound)686  million at 7.9%
       during fiscal year 1999.

o      Investment income increased by (pound)2 million (40%) to (pound)7 million
       in fiscal  year 2000 from  (pound)5  million  in fiscal  year  1999.  The
       movement is mainly due to timing of dividends received from an investment
       in generating plant.

o      Fiscal year 1999  benefited  from a (pound) 7 million gain on the sale of
       non-core assets.

(Provision)  Benefit for income taxes.  The provision for customary income taxes
was (pound)23 million in fiscal year 2000, an increase of (pound)2  million,  or
10%,  from fiscal  year 1999.  Earnings  in fiscal  year 1999  benefited  from a
decrease in the UK  corporation  tax rate which reduced the Company's  provision
for deferred income taxes by (pound)11 million.

Net Income. The Company's consolidated net income from continuing operations was
(pound)82  million in fiscal year 2000,  an  increase of (pound)6  million or 8%
from fiscal year 2000. This excludes the income from the Company's  discontinued
operations  (WPD's  electricity  supply  business) of (pound)4 million in fiscal
year 2000 and (pound)11 million in fiscal year 1999, and the gain on disposal of
the electricity  supply business of (pound)125  million in fiscal year 2000. The
increase is attributable to the Company's business segments as follows:

                                      II-6
<PAGE>

       Distribution
       Operating income from distribution was (pound)107  million in fiscal year
       2000, a decrease of (pound)4  million,  or 4% from fiscal year 1999.  The
       decrease was due to the write down of meters in fiscal year 2000.

       Ancillary businesses
       Operating  income from  ancillary  businesses  was  (pound)25  million in
       fiscal year 2000, an increase of (pound)13  million,  or 108% from fiscal
       year 1999.  The increase was  primarily due to a revision to the unbilled
       revenue  receivable  during fiscal year 1999, due to uncertainty over the
       recoverability  of an element of the  balance  with the  introduction  of
       competition into electricity supply.


LIQUIDITY AND CAPITAL RESOURCES

       Historically,  the Company has obtained cash from  operations,  borrowing
under  credit  facilities,  issuances  of  commercial  paper and  senior  notes,
borrowings, and capital contributions from Mirant and PPL. These funds have been
used  to  finance   operations,   service  debt  obligations,   finance  capital
expenditures and meet other cash and liquidity needs.

Operating Activities

       Cash  provided by operating  activities  totaled  (pound)107  million for
fiscal  year 2001 as  compared to  (pound)124  million  for fiscal year 2000,  a
decrease of 14%. This decrease is primarily due to lower revenues as a result of
the latest distribution price review effective April 1, 2000.

Investing Activities

       Cash used for investing  activities totaled (pound)155 million for fiscal
year 2001 as compared  to cash  provided  of  (pound)98  million for fiscal year
2000.  During fiscal year 2001 WPD incurred  expenditure of (pound)73 million on
property, plant, and equipment,  largely in respect of the distribution network.
This compared with (pound)67  million during fiscal year 2000. During the second
quarter of fiscal  year 2001,  WPD loaned  (pound)85  million to WPD  Limited to
finance  part of the  purchase  price paid by WPD  Limited for Hyder plc shares.
During fiscal year 2000 WPD received proceeds of (pound)160  million on the sale
of its electricity supply business to London Electricity plc.

Financing Activities

       Cash provided from financing  activities  totaled  (pound)47  million for
fiscal year 2001 as compared to cash used of (pound)245  million for fiscal year
2000. In fiscal year 2001, a loan of (pound)85 million to WPD Limited was funded
through an increase to  short-term  borrowing.  In fiscal year 2000,  (pound)140
million of the proceeds  from the sale of the supply  business  were paid to the
Company's parent as a dividend.

       The Company  expects its cash and  financing  needs over the next several
years to be met through a  combination  of cash flows from  operations  and debt
financings.

       As of March 31,  2001,  sources of  liquidity  included a $520 million US
commercial paper program,  $503 million of which is supported by a swingline and
revolving  credit facility  provided by a syndicate of banks.  In addition,  the
Company had  (pound)100  million  committed and (pound)110  million  uncommitted
lines of credit with banks. The Company's existing  facilities and cash position
are expected to provide  sufficient  liquidity  for working  capital and capital
expenditures  through fiscal year 2002. As of March 31, 2001 the Company and WPD
had drawn $445 million under the swingline  and  revolving  credit  facility and
(pound)80 million under committed lines of credit with banks. Additionally,  the
Company held (pound)1 million in unrestricted cash.

       Demand  for  electricity  in  Great  Britain,  in  general,  and in WPD's
Authorized  Area, in  particular,  is seasonal,  with demand being higher in the
winter  months and lower in the summer  months.  WPD balances the effect of this
and other cyclical  influences on its working  capital needs with drawings under
its available credit facilities.
                                      II-7
<PAGE>

       The  Company  holds the  entire  share  capital  of WPD.  The  Company is
primarily  dependent  upon  dividends  from WPD for its cash  flow.  WPD can pay
dividends  to  the  Company  under  English  law  to  the  extent  that  it  has
distributable  reserves,  subject  to  the  retention  of  sufficient  financial
resources  to conduct its  distribution  business as required by its  regulatory
license. The Company believes that currently sufficient  distributable  reserves
will continue to exist at WPD to allow for  reasonable  and necessary  dividends
from WPD, through operations, to be distributed to the Company. In the U.K., the
Accounting  Standards  Board  has  recently  issued a new  accounting  standard,
Financial  Reporting Standard ("FRS") 19 "Deferred Tax" ("FRS 19"),  relating to
the  accounting  treatment of deferred  income tax.  FRS 19,  which  replaces an
earlier  standard  (SSAP 15), is mandatory for  accounting  periods ending on or
after January 23, 2002 (though earlier adoption is encouraged), and will require
full provision to be made for deferred tax assets and liabilities  (SSAP 15 only
required a partial  provision  basis);  discounting of deferred tax  liabilities
will  be  permitted  but  is not  mandatory.  WPD  will  take  advantage  of the
discounting  option,  but  adoption of FRS 19 will  significantly  reduce  WPD's
distributable  reserves.  The  directors  of  Distribution  companies  must also
certify to the Regulator that it is reasonably  foreseeable that the declaration
of a  dividend  will not  breach any  license  conditions.  WPD has no reason to
believe  that a breach of its license  would occur from  declaring a  reasonable
dividend.

       In December 1998 a more efficient  capital  structure for Holdings UK and
the Company was put in place.  At that time,  Holdings UK became a co-obligor of
the Company's existing long-term debt and subordinated debentures - reference is
made to Note 12 in the "Notes to the Consolidated Financial Statements".


LITIGATION AND OTHER CONTINGENCIES

Pension Issue. The Electricity  Supply Pension Scheme ("ESPS")  provides pension
and  other  related  defined  benefits,  based  on  final  pensionable  pay,  to
substantially  all employees  throughout the electricity  supply industry in the
U.K. The  majority of WPD's  employees  are ESPS  members.  WPD faces  potential
regulatory  issues  related to the use of pension  surplus  which was  primarily
utilized to offset the cost of providing early pensions to terminated employees.
An independent  pension  arbitrator  has issued a ruling  directing that another
industry  employer  should refund such amounts with  interest to the ESPS.  This
ruling  was  appealed  to the House of Lords  who,  in April  2001,  upheld  the
employer's  appeal.  It is  understood  that the  complainants  are  considering
whether to appeal to a European Court. The Company cannot provide assurance that
WPD will not be required to refund to the ESPS any  amounts  previously  used to
fund early  retirement  costs,  which  management  estimates to be approximately
(pound)24  million.  Under SFAS 87  "Employers'  Accounting  for  Pensions," the
Company does not anticipate any immediate impact to its net income should such a
payment be required.


NEW ACCOUNTING PRONOUNCEMENTS

       Effective January 1, 2001, the Company adopted SFAS No. 133,  "Accounting
for Derivative Instruments and Hedging Activities", which establishes accounting
and reporting standards for derivative  instruments and hedging activities.  The
statement  requires  that  certain  derivative  instruments  be  recorded in the
balance sheet as either assets or liabilities  measured at fair value,  and that
changes in the fair value be recognized  currently in earnings,  unless specific
hedge  accounting  criteria are met. If the  derivative  is designated as a fair
value hedge,  the changes in the fair value of the  derivative and of the hedged
item  attributable to the hedged risk are recognized  currently in earnings.  If
the derivative is designated as a cash flow hedge, the changes in the fair value
of the derivative are recorded in other  comprehensive  income ("OCI"),  and the
gains and losses related to these  derivatives are recognized in earnings in the
same period as the  settlement  of the  underlying  hedged  transaction.  If the
derivative  is  designated as a net  investment  hedge,  the changes in the fair
value of the derivative are also recorded in OCI. Any  ineffectiveness  relating
to these hedges is recognized currently in earnings.  The assets and liabilities
related to derivative instruments for which hedge accounting criteria is met are
reflected as derivative  hedging  instruments in the  accompanying  consolidated
balance sheet at March 31, 2001.

       The adoption of SFAS No. 133 resulted in a cumulative after-tax reduction
to OCI of (pound)13 million, and is attributable to deferred losses on cash flow
hedges.  During the year  ending  December  31,  2001,  the  Company  expects to
reclassify  (pound)3 million of the (pound)13  million,  after-tax loss from OCI
into  earnings.  Reference  is made to  Notes  1, 2 and 9 in the  "Notes  to the
Consolidated  Financial  Statements" of the Company in Item 8 herein for further
information on the adoption of SFAS No.133.







                                      II-8


<PAGE>


Cautionary Statement Regarding Forward-Looking Information

       The Company's 2001 Annual Report on Form 10-K includes forward-looking in
addition to historical  information.  These statements involve known and unknown
risks and relate to future  events,  the  Company's  future  performance  or its
projected  business  results.  In some cases,  you can identify  forward-looking
statements  by   terminology   such  as  "may",   "will",   "should",   "plans",
"anticipates",  "believes", "estimates",  "predicts", "potential", or "continue"
or the negative of these terms or other comparable terminology.  Forward-looking
statements are only statements of intent, belief or expectations.  Actual events
or results may differ materially from any forward-looking  statement as a result
of various factors.  These factors include:  legislative and regulatory  issues;
potential business strategies,  including acquisitions or dispositions of assets
or  businesses or internal  restructuring  that may be pursued by the Company or
its  subsidiaries;  the  potential  introduction  of  the  Euro;  changes  in or
application of environmental and other laws and regulations to which the Company
and its subsidiaries are subject;  political,  legal and economic conditions and
developments in which the Company and its subsidiaries operate; financial market
conditions and the results of financing efforts; changes in commodity prices and
interest rates; weather and other natural phenomena; the performance of projects
undertaken  by the  Company or its  subsidiaries  and the  success of efforts to
invest in and develop new opportunities; and other factors. Although the Company
believes that the expectations  reflected in the forward-looking  statements are
reasonable,  it cannot  guarantee  future results,  events,  levels of activity,
performance or achievements.


Item 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

       The  Company is exposed to market  risks,  including  changes in interest
rates,  and currency  exchange rates.  To manage the volatility  attributable to
these exposures,  the Company has entered into various derivative  transactions,
the sole purpose of which is to hedge exposure in these areas.

       The  Company   utilizes   interest  rate  swaps  to  hedge  certain  debt
obligations. These swaps are designated as hedges of specific debt issuances and
currently  qualify  for  hedge  accounting.   Consequently,  the  interest  rate
differential  associated with the swap is reflected as an adjustment to interest
expense over the life of the instruments.  If the Company  sustained a 100 basis
point change in interest rates for all variable rate debt in all currencies, the
change would affect net income by  approximately  (pound)1.4  million,  based on
variable  rate debt and  derivatives,  cash  balances  and other  interest  rate
sensitive instruments outstanding at March 31, 2001.

       Currency  swaps  are also  utilized  by the  Company  to hedge US  dollar
denominated debt. These swaps offset the dollar cash flows,  thereby effectively
converting the debt to sterling.  A change in foreign  exchange rates would have
no impact on net income.

       For all  derivative  financial  instruments,  the  Company  is exposed to
losses in the event of  nonperformance  by  counterparties  to these  derivative
financial  instruments.  The Company has  established  controls to determine and
monitor the  creditworthiness  of  counterparties  to mitigate  its  exposure to
counterparty credit risk.

       Excluding swap  agreements  between the Company and Holdings UK, at March
31, 2001, the Company and WPD have sterling interest rate swaps expiring between
2001 and 2012, with notional amounts totaling (pound)600 million, and have cross
currency swaps expiring  between 2001 and 2007, with notional  amounts  totaling
(pound)350 million.

Additional Factors that Could Affect Future Performance

       In  addition  to the  discussion  of  certain  risks in the  Management's
Discussion and Analysis of Results of Operations and Financial Condition and the
notes to the consolidated financial statements,  other factors that could affect
the Company's future performance  (business,  financial  condition or results of
operations) are set forth below.

                                   II-9
<PAGE>

Risks Related to the Company's Business

       Effect of Government Regulation

       The   Company's   operations   are  subject  to  extensive   governmental
regulation.  To comply with these legal requirements,  which include laws, rules
and regulations  relating to competition,  health and safety,  and environmental
and anti-pollution concerns, among other matters, may require the expenditure of
considerable   sums.   The   standards   imposed  by  such   environmental   and
anti-pollution  regulations  may also increase with time and impose more onerous
obligations  and  liabilities  on the  Company  in the  future.  In  particular,
government regulation imposes certain performance standards.  The performance of
WPD's  network is related to a number of  performance  criteria,  including  (i)
availability  (the  number of  minutes  each end user is without  supply),  (ii)
security (the  frequency of supply  interruption),  and (iii) quality of service
(e.g.,  restoration  of  supply  within  a  certain  time  after  interruption).
Compliance with these criteria  requires the  expenditures of considerable  sums
and the implementation of various  initiatives.  The Company may also be exposed
to compliance risks from existing and future facilities.

       To conduct its business,  the Company must obtain licenses,  permits, and
approvals for its facilities. The Company cannot assure you that it will be able
to obtain and comply with all necessary licenses,  permits, and approvals. If it
cannot comply with all applicable regulations,  the Company's business,  results
of operations, and financial condition could be adversely affected.

       In  addition,  government  regulation  relating to pricing,  competition,
deregulation,  and other matters has the capacity to greatly  affect the success
and profitability of the Company's operations.

       Price Regulation of Distribution

       The operations of WPD are regulated under its Public  Electricity  Supply
license  (a  "PES  license"),   pursuant  to  which  income   generated  by  the
distribution  business  is  subject  to a price cap  regulatory  framework  that
provides  economic  incentives  to increase  efficiency  and reduce  costs while
maintaining an appropriate quality of supply and enabling the company to finance
new investments and provide a return to investors.

       In December 1999, the U.K. electricity industry Regulator published final
price proposals for distribution  price control for the 12 regional  electricity
distribution  businesses  in England and Wales,  including  WPD. For WPD,  those
proposals  represented a 20% reduction to distribution prices effective April 1,
2000,  followed by  reductions in real terms of 3% each year from April 1, 2001.
This price control is scheduled to operate until March 31, 2005.

       There can be no  assurance  that these price  reductions,  and  potential
further  reductions  following  additional  reviews  in  the  future,  will  not
adversely affect the Company's profitability and the value of its securities.

       Changes in Technology May Significantly Impact the Company's Business  by
       Making Its Distribution Network Less Competitive

       The Company's  business is presently  focused on distributing  power from
central power plants. Research and development activities are, however,  ongoing
to seek improvements in alternative electricity generation methods, most notably
fuel cells,  microturbines,  windmills,  and  photovoltaic  (solar) cells. It is
possible  that  advances  will  reduce  the  cost  of  alternative   methods  of
electricity production (perhaps in combination with tax or regulatory incentives
favoring such alternative methods of electricity  production) to a level that is
equal to or below that of most central station electric production. If this were
to happen,  WPD's  distribution  network might need to be reconfigured,  and the
value of WPD's distribution network may be significantly impaired.

       The Company's Facilities May Not Operate as Planned,  Which May  Lead  to
       Poor Financial Performance

     The  Company's  operations  involve many risks,  including the breakdown or
failure  of  distribution  equipment  or other  equipment  or  processes,  labor
disputes, fuel interruption, adverse impact from the plant of connected parties,
and operating  performance below expected levels.  In addition,  weather-related
incidents  and  other  natural   disasters  can  disrupt  both   generation  and
transmission  delivery systems.  Operation of WPD's  distribution  network below
expected  efficiency  levels may result in lost revenues or increased  expenses,
including higher maintenance costs and penalties.

                                      II-10
<PAGE>

Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                            SIUK plc and Subsidiaries

                 Index to the Consolidated Financial Statements



                                                                      Page
     Management's Report..............................................II-12
     Report of Independent Public Accountants.........................II-13
     Consolidated Statements of Income................................II-14
     Consolidated Statements of Changes in Stockholder's Equity.......II-15
     Consolidated Statements of Cash Flows............................II-16
     Consolidated Balance Sheets......................................II-17
     Notes to the Consolidated Financial Statements...................II-19







                                     II-11
<PAGE>


                            SIUK plc AND SUBSIDIARIES

                               MANAGEMENT'S REPORT
                               2001 Annual Report

       The management of the Company has prepared,  and is responsible  for, the
consolidated  financial  statements  and  related  information  included in this
report. These statements were prepared in accordance with accounting  principles
generally  accepted in the United States  appropriate in the  circumstances  and
necessarily  include  amounts that are based on the best estimates and judgments
of management. Financial information throughout this annual report is consistent
with the financial statements.

       The Company maintains a system of internal accounting controls to provide
reasonable  assurance  that  assets are  safeguarded  and that books and records
reflect only authorized  transactions of the Company.  Limitations  exist in any
system of internal  controls,  however,  based on a recognition that the cost of
the system  should not exceed its benefits.  The Company  believes its system of
internal accounting controls maintains an appropriate cost/benefit relationship.

       The Company's system of internal  accounting  controls is evaluated on an
ongoing basis by the Company's  internal audit staff. The Company's  independent
public accountants also consider certain elements of the internal control system
in order to determine their auditing procedures for the purpose of expressing an
opinion on the financial statements.

       Management  believes that its policies and procedures  provide reasonable
assurance  that the  Company's  operations  are  conducted  according  to a high
standard of business ethics.

       In management's  opinion,  the consolidated  financial statements present
fairly, in all material respects, the financial position, results of operations,
and cash flows of the Company and its subsidiaries in conformity with accounting
principles generally accepted in the United States.








Barney S. Rush                                    D. Charl S. Oosthuizen
Chairman and Chief Executive Officer              Chief Financial and Accounting
                                                  Officer


June 22, 2001







                                     II-12
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Board of Directors of SIUK plc:


       We have audited the accompanying  consolidated balance sheets of SIUK plc
(the  "Company"  being  a  company   incorporated  in  England  and  Wales)  and
SUBSIDIARIES  as of  March  31,  2001 and  2000,  and the  related  consolidated
statements of income, changes in stockholder`s equity and cash flows for each of
the three years in the period ended March 31, 2001.  These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

       In our  opinion,  the  financial  statements  referred  to above  present
fairly, in all material  respects,  the consolidated  financial position of SIUK
plc and subsidiaries as of March 31, 2001 and 2000 and the consolidated  results
of its operations,  changes in  stockholder's  equity and cash flows for each of
the  three  years in the  period  ended  March  31,  2001,  in  conformity  with
accounting principles generally accepted in the United States.






ARTHUR ANDERSEN
Bristol, England


June 22, 2001

                                     II-13
<PAGE>


                            SIUK plc AND SUBSIDIARIES
               FOR THE YEARS ENDED MARCH 31, 2001, 2000, AND 1999

                        CONSOLIDATED STATEMENTS OF INCOME

                                  (In Millions)
<TABLE>
<CAPTION>

                                                                                   2001                2000          1999
                                                                                      (Note 1)
                                                                     -----------  --------------  ----------   -----------
<S>                                                                           <C>       <C>           <C>           <C>
OPERATING REVENUES                                                    (pound) 234     $   332  (pound) 275    (pound) 261
COST OF SALES                                                                  23          33           20             16
                                                                     -----------  --------------  ----------   -----------
GROSS MARGIN                                                                  211         299          255            245

OPERATING EXPENSES:
    Maintenance                                                                34          48           35             37
    Depreciation and amortization                                              48          68           56             51
    Selling, general and administrative                                         8          11            7             35
    Write down of meters (Note 3)                                               -           -           22              -
    Incremental expenses incurred as a direct consequence of
       the disposal of the supply business (Note 15)
                                                                                -           -            3              -
                                                                           -------    ---------     ---------    -----------
            Total operating expenses                                           90         127          123            123

OPERATING INCOME FROM CONTINUING OPERATIONS                                   121         172          132            122
                                                                           -------    ---------      --------    -----------
OTHER INCOME (EXPENSE):
    Interest income                                                             4           6            2              1
    Interest income from affiliated companies                                  26          37           20              6
    Interest expense                                                          (60)        (85)         (56)           (55)
    Investment income                                                           5           7            7              5
    Gain on recognition of deferred contingent consideration
       (Note 4)                                                                16          22            -              -
    Gain on sale of assets                                                      -           -            -              7
                                                                            -------    --------       --------    -----------
            Total other expense                                                (9)        (13)         (27)           (36)
                                                                            -------    --------      ---------     ----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES                         112         159          105             86

(PROVISION) BENEFIT FOR INCOME TAXES:
    Customary                                                                 (27)        (38)         (23)           (21)
    Effect of change in tax rates (Note 8)                                      -           -            -             11
                                                                             ------     -------       --------      ----------
NET INCOME FROM CONTINUING OPERATIONS                                          85         121           82             76

DISCONTINUED OPERATIONS:
     Income from  operations of electricity  supply  business,  less
        applicable income taxes of (pound)- ($-), (pound)2 and (pound)5         -           -            4             11
     Gain on disposal of electricity supply business, less
        applicable income taxes of(pound)3 ($4) and(pound)49 (Note 15)          7          10          125              -
                                                                             -------    --------      ---------      ---------
NET INCOME                                                              (pound)92     $   131   (pound)211      (pound)87
                                                                            ========    ========      =========      =========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.
                                     II-14
<PAGE>

<TABLE>
<CAPTION>

                            SIUK plc AND SUBSIDIARIES
               FOR THE YEARS ENDED MARCH 31, 2001, 2000, AND 1999

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

                                  (In Millions)

                                           Number of                   Retained      Accumulated
                                            Ordinary     Common        Earnings/        Other          Comprehensive
                                             Shares       Stock        (Deficit)    Comprehensive      Income/(Loss)
                                                                                        Loss
                                         ------------- ------------- ------------ ------------------ -----------------
<S>                                          <C>            <C>            <C>            <C>              <C>

   Balance, March 31, 1998           (pound) 500        (pound)500    (pound)(163)  (pound)-

   Net income                                  -                -              87          -          (pound)87
                                                                                                      -----------------
   Comprehensive income                        -                -              -           -          (pound)87
                                                                                                      =================
   Dividends declared on common stock          -                -             (70)         -
   Issue of share capital                    402               402             -           -
                                         ------------   -----------  ------------  -----------------
Balance, March 31, 1999                      902               902           (146)         -

   Net income                                  -                -             211          -                211
                                                                                                       ----------------
   Comprehensive income                        -                -              -           -         (pound)211
                                                                                                       ================
   Dividends declared on common stock          -                -            (188)         -
                                         ------------   ------------  ------------  -----------------
Balance, March 31, 2000                      902               902           (123)         -

   Net income                                  -                -              92          -                   92
   Other comprehensive loss                    -                -              -           (16)               (16)
                                                                                                       -----------------
   Comprehensive income                        -                -              -           -            (pound)76
                                                                                                       =================
   Dividends declared on common stock          -                -             (27)         -
                                         ------------   ------------  ------------  -----------------
Balance, March 31, 2001               (pound)902       (pound) 902     (pound)(58)  (pound)(16)
                                         ============   ============  ============  =================
-------------

</TABLE>


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

                                     II-15
<PAGE>


                            SIUK plc AND SUBSIDIARIES
               FOR THE YEARS ENDED MARCH 31, 2001, 2000, AND 1999

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (In Millions)

<TABLE>
<CAPTION>
                                                                               2001              2000         1999
                                                                                   (Note 1)
                                                                    -----------  ----------   ---------   -----------

<S>                                                                        <C>         <C>        <C>         <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                        (pound) 92      $  131  (pound)211   (pound)87
                                                                     ----------  ----------  ----------  ----------
   Adjustments to reconcile net income to net cash provided
       from operating activities:
     Income from operations of discontinued electricity
              supply business                                                 -           -          (4)        (11)
     Gain on disposal of electricity supply business (Note                   (7)        (10)       (125)          -
              15)
     Depreciation and amortization                                           48          68          56          47
     Write down of meters (Note 3)                                            -           -          22           -
     Gain on recognition of deferred contingent consideration               (16)        (23)          -           -
     Deferred income taxes                                                   10          14           5           2
     Changes in assets and liabilities:
      Receivables, net                                                       10          14         (49)          6
      Prepaid pension cost                                                  (25)        (35)        (21)        (18)
      Accounts payable                                                        2           3          37         (14)
      Accrued income taxes                                                   (1)         (1)         (4)        (34)
      Other, net                                                             (6)         (9)         (4)          7
                                                                     ----------  ----------  ----------  ----------
        Total adjustments                                                    15          21         (87)        (15)
                                                                     ----------  ----------  ----------  ----------
        Net cash provided from operating activities                         107         152         124          72
                                                                     ----------  ----------  ----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                     (73)       (104)        (67)        (75)
   Loan to affiliated company                                               (85)       (121)          -           -
   Proceeds from sale of electricity supply business (Note                    -           -         160           -
       15)
   Proceeds from sales of assets                                              -           -           -          10
   Proceeds from sales of investments                                         3           4           5           2
                                                                     ----------  ----------  ----------  ----------
        Net cash (used for) provided from investing activities             (155)       (221)         98         (63)
                                                                     -----------  ----------  ----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Change in short term borrowings                                           75         106         (57)         37
   Issue of share capital                                                     -           -           -         402
   Loan to affiliated company                                                 -           -           -        (351)
   Repayment of long term debt                                               (1)         (1)          -           -
   Payment of premium in respect of loans to affiliated
       company and related hedges                                             -           -           -         (42)
   Payment of dividends                                                     (27)        (38)       (188)        (70)
                                                                     -----------  ----------  ----------  ----------
        Net cash provided from (used for) financing                          47          67        (245)        (24)
                 activities
                                                                     -----------  ----------  ----------  ----------
CASH PROVIDED BY DISCONTINUED OPERATIONS                                      -           -          20          15
                                                                     ----------  ----------  ----------  ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                    (1)         (2)         (3)          -

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
                                                                              2           3           5           5
                                                                     ----------  ----------  ----------  ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR                               (pound)1      $    1   (pound) 2   (pound) 5
                                                                     ==========  ==========  ==========  ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
   Cash paid during the year for:
    Interest (net of amount capitalized)                              (pound)58  (pound) 82   (pound)56   (pound)54
                                                                     ==========  ==========  ==========  ==========
    Income taxes:
       Customary                                                             17          24          25           2
       Windfall levy                                                          -           -           -          45
                                                                     ----------  ----------  ----------  ----------
       Total cash paid for income taxes                               (pound)17  (pound) 24   (pound)25   (pound)47
                                                                     ==========  ==========  ==========  ==========

</TABLE>


 The accompanying notes are an integral part of these consolidated statements.
                                     II-16
<PAGE>


                            SIUK plc AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                           AT MARCH 31, 2001 AND 2000


                                  (In Millions)
<TABLE>
<CAPTION>

                                 ASSETS                                                      2001                       2000
-----------------------------------------------------------------------------     ------------  -------------       -----------

                                                                                                    (Note 1)
<S>                                                                                     <C>              <C>               <C>

PROPERTY, PLANT, AND EQUIPMENT (Note 10)                                       (pound) 1,539       $   2,184      (pound) 1,467
    Less accumulated provision for depreciation                                          247             350                202
                                                                                  -------------  ---------------     -----------
                  Property, plant, and equipment, net                                  1,292           1,834              1,265
                                                                                   -------------  ---------------     -----------
NONCURRENT ASSETS:
   Investments (Note 13)                                                                  15              21                 16
   Prepaid pension cost (Note 5)                                                         170             241                145
   Goodwill, net of accumulated amortization of(pound)25 ($35) at March
       31, 2001 and(pound)20 at March 31, 2000 (Note 1)                                  158             224                163
   Loans to affiliated company (Note 12)                                                 410             582                351
   Derivative hedging instruments (Notes 1, 2 and 9)                                      56              80                  -
   Premium in respect of loans to affiliated company and related
       hedges, net of accumulated amortization of(pound)20 ($28) at
       March 31, 2001 and(pound)12 at March 31,2000 (Note 12)
                                                                                          22              31                 30
                                                                                  -------------  ---------------     -----------
                  Total noncurrent assets                                                831           1,179                705
                                                                                  -------------  ---------------     -----------
CURRENT ASSETS:
    Cash and cash equivalents                                                              1               1                  2
    Investments (Note 13)                                                                 10              14                 13
    Receivables:
       Customer accounts, less provision for uncollectables of(pound)5 ($7)
           at March 31, 2001 and(pound)2 at March 31, 2000                                43              61                 50
       Loan to affiliated company                                                         85             121                  -
       Other                                                                              20              28                 14
                                                                                  -------------  ---------------     -----------
                  Receivables, net                                                       148             210                 64
    Real estate for sale, materials and supplies                                           5               7                  2
    Accrued deferred contingent consideration (Note 4)                                    16              23                  -
    Derivative hedging instruments (Notes 1, 2 and 9)                                     25              36                  -
    Prepaid expenses                                                                      13              18                  6
                                                                                  -------------  ---------------     -----------
                  Total current assets                                                   218             309                 87
                                                                                  -------------  ---------------     -----------

 TOTAL ASSETS                                                                  (pound) 2,341       $   3,322       (pound)2,057
                                                                                  =============  ===============     ===========

The accompanying notes are  an  integral  part  of  these  consolidated  balance sheets.
</TABLE>









                                     II-17
<PAGE>

                            SIUK plc AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                           AT MARCH 31, 2001 AND 2000


                                  (In Millions)
<TABLE>
<CAPTION>

                  STOCKHOLDER'S EQUITY AND LIABILITIES                                        2001                       2000
-----------------------------------------------------------------------------     -------------  ---------------     -----------
<S>                                                                                      <C>            <C>              <C>

                                                                                                     (Note 1)
STOCKHOLDER'S EQUITY:
    Common stock, (pound)1 par value, 902,128,735 shares authorized,  issued and (pound) 902        $   1,280       (pound) 902
       outstanding at March 31, 2001, and March 31, 2000

    Accumulated other comprehensive loss (Note 2)                                        (16)             (23)                -
    Retained deficit                                                                     (58)             (82)             (123)
                                                                                  -------------  ---------------     -----------
              Total stockholder's equity                                                 828            1,175               779
                                                                                   -------------  ---------------     -----------

COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SIUK
    CAPITAL TRUST I HOLDING COMPANY JUNIOR SUBORDINATED DEBENTURES
    (Note 12)                                                                             58               82                50

COMMITMENTS AND CONTINGENT MATTERS (Notes 3,4,5,9 and 12)

NONCURRENT LIABILITIES:
    Long-term debt (Note 12)                                                             234              332               301
    Deferred income taxes (Note 8)                                                       419              595               417
    Derivative hedging instruments (Notes 1, 2 and 9)                                     75              106                 -
    Other                                                                                 10               14                16
                                                                                  -------------  ---------------     -----------
              Total noncurrent liabilities                                               738            1,047               734
                                                                                  -------------  ---------------     -----------

CURRENT LIABILITIES:
    Current portion of long-term debt (Note 12)                                          118              168                 -
    Notes payable to banks (Note 12)                                                     387              549               311
    Notes payable to affiliated company                                                   26               37                26
    Other notes payable                                                                    4                6                 5
    Accounts payable                                                                       6                9                 4
    Taxes accrued                                                                         46               65                44
    Accrued interest                                                                       9               13                 8
    Derivative hedging instruments (Notes 1, 2 and 9)                                     29               41                 -
    Other                                                                                 92              130                96
                                                                                  -------------  ---------------     -----------
              Total current liabilities                                                  717            1,018               494
                                                                                  -------------  ---------------     -----------

                                                                                  -------------  ---------------     -----------
TOTAL STOCKHOLDER'S EQUITY AND LIABILITIES                                    (pound)  2,341        $   3,322     (pound) 2,057
                                                                                  =============  ===============     ===========

The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>





                                     II-18
<PAGE>

                            SIUK plc AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

       SIUK plc ("the  Company"),  formerly  Southern  Investments  UK plc,  was
incorporated  as a public limited company under the laws of England and Wales in
June 1995 as a vehicle for the acquisition of South Western Electricity plc, one
of the 12 Regional Electricity  Companies ("RECs") in England and Wales licensed
to  distribute,  supply  and,  to a limited  extent,  generate  electricity.  In
September  1995,  the  Company  gained   effective   control  of  South  Western
Electricity plc, and subsequently replaced South Western Electricity plc's board
of directors and certain senior managers with officers and employees of Southern
Company,  then the ultimate  parent of the Company,  and its  subsidiaries.  The
Company's main investment and only significant asset is the entire share capital
of South Western Electricity plc, which is headquartered in Bristol, England.

       The  Company  is a  wholly  owned  subsidiary  of  WPD  Holdings  Limited
("Holdings"),  which in turn has been wholly owned by WPD Holdings UK ("Holdings
UK") since June 1998. From September 1995 to July 1996, Holdings was an indirect
wholly owned  subsidiary of Mirant  Corporation  ("Mirant"),  formerly  known as
Southern  Energy,  Inc.  In July 1996,  Mirant sold a 25%  economic  interest in
Holdings to a subsidiary of PPL Corporation  ("PPL").  In June 1998, Mirant sold
an additional 26% economic interest in Holdings to PPL, and on the same day both
parties agreed to exchange their interests in Holdings for interests in Holdings
UK which carried the same rights. Mirant retained management control.  Effective
December 1, 2000, in connection  with the  acquisition of Hyder plc,  Mirant and
PPL modified their  ownership of the voting rights in Holdings UK to 50% each so
that both parties share equally operational and management control. Mirant's and
PPL's economic  interest in the Holdings UK group remained  unchanged at 49% and
51%, respectively.

       In September  1999,  South Western  Electricity plc completed the sale of
its   electricity   supply  business  (known  as  "SWEB")  and  certain  related
activities,  together  with  the  name  SWEB,  to  London  Electricity  plc  for
(pound)160  million and the assumption by the purchaser of certain  liabilities.
South  Western   Electricity  plc  now  trades  under  the  name  Western  Power
Distribution ("WPD").

Basis of Presentation.  The financial statements of the Company are presented in
pounds sterling ((pound)) and in conformity with accounting principles generally
accepted in the United States ("US GAAP"). The accompanying financial statements
have not been prepared in accordance with the policies of Statement of Financial
Accounting  Standards  No. 71,  "Accounting  for the Effects of Certain Types of
Regulation"  ("SFAS No. 71"). This  pronouncement,  under which most US electric
utilities report financial statements,  applies to entities which are subject to
cost-based rate regulation.  By contrast, WPD is not subject to rate regulation,
but,  rather is subject to price cap  regulation and therefore the provisions of
SFAS No. 71 do not apply. Financial statements presented in accordance with SFAS
No. 71 contain  deferred items which have not yet been included in rates charged
to customers in compliance with the respective regulatory authorities, but which
would have been included in the income statement of enterprises in general under
US GAAP.  The  accompanying  financial  statements of the Company do not contain
such deferrals.

       The consolidated financial statements include the accounts of the Company
and its wholly owned and majority owned subsidiaries and have been prepared from
records  maintained by WPD in the United Kingdom.  All significant  intercompany
accounts and transactions have been eliminated in consolidation.  Investments in
companies in which the Company's  ownership  interests range from 20% to 50% and
the  Company  exercises  significant  influence  over  operating  and  financial
policies  are  accounted  for using the equity  method.  Other  investments  are
accounted for using the cost method (Note 13).

       Solely for the convenience of the reader, certain pounds sterling amounts
included in the financial statements have been translated into US dollars at the
exchange  rate of $1.4190 =  (pound)1.00,  the noon buying rate in New York City
for cable transfers in pounds sterling as certified for customs  purposes by the
Federal  Reserve Bank of New York on March 31, 2001. This  presentation  has not
been  translated in accordance with Statement of Financial  Accounting  Standard
No. 52, "Foreign Currency Translation".


                                     II-19
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

         The following table sets out the exchange rate for previous periods:

     Fiscal Year       Period end     Average (1)      High           Low
                                   ($ per(pound)1.00)
                      ------------ ------------------ ----------- -----------
        1997........     1.64           1.59            1.71           1.49

        1998........     1.68           1.65            1.69           1.61

        1999........     1.61           1.65            1.70           1.60

        2000........     1.59           1.61            1.65           1.58

        2001........     1.42           1.48            1.59           1.42


(1) The average of the Noon Buying  Rates in effect on the last  business day of
each month during the relevant period.

Accounting Change.  Effective January 1, 2001, the Company adopted SFAS No. 133,
"Accounting   for  Derivative   Instruments  and  Hedging   Activities",   which
establishes  accounting and reporting  standards for derivative  instruments and
hedging activities.  The statement requires that certain derivative  instruments
be recorded in the balance  sheet as either  assets or  liabilities  measured at
fair  value,  and that  changes in the fair  value be  recognized  currently  in
earnings,  unless specific hedge accounting  criteria are met. If the derivative
is  designated  as a fair  value  hedge,  the  changes  in the fair value of the
derivative and of the hedged item attributable to the hedged risk are recognized
currently in earnings. If the derivative is designated as a cash flow hedge, the
changes in the fair value of the derivative are recorded in other  comprehensive
income  ("OCI"),  and the gains and  losses  related  to these  derivatives  are
recognized in earnings in the same period as the  settlement  of the  underlying
hedged  transaction.  If the derivative is designated as a net investment hedge,
the changes in the fair value of the  derivative  are also  recorded in OCI. Any
ineffectiveness  relating to these hedges is  recognized  currently in earnings.
The assets and  liabilities  related to derivative  instruments  for which hedge
accounting  criteria is met are reflected as derivative  hedging  instruments in
the accompanying consolidated balance sheet at March 31, 2001.

       The adoption of SFAS No. 133 resulted in a cumulative after-tax reduction
to OCI of (pound)13 million, and is attributable to deferred losses on cash flow
hedges.  During the twelve month period  ending  December 31, 2001,  the Company
expects to reclassify (pound)3 million of the (pound)13 million,  after-tax loss
from OCI into earnings.

Use of Estimates.  The preparation of financial statements in conformity with US
GAAP requires  management  to make  estimates  and  assumptions  that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period.  Actual results could differ
from those estimates.

Revenue  Recognition.  WPD  records  revenue  net of value added tax ("VAT") and
accrues revenues for services provided but unbilled at the end of each reporting
period.

Cash and Cash Equivalents. The Company considers all short-term investments with
an original maturity of three months or less to be cash equivalents.

Long-Lived  Assets  and  Intangibles.  The  Company  records  goodwill  for  the
difference between the excess of the fair value of investments over the purchase
price. Goodwill is amortized on a straight-line basis over a period of 40 years.
Goodwill shown in the accompanying  consolidated financial statements relates to
the  acquisition  of  South  Western  Electricity  plc.  The  Company  evaluates
long-lived assets, including goodwill and identifiable intangibles,  when events
or changes in circumstances  indicate that the carrying value of such assets may
not be recoverable.  The  determination of whether an impairment has occurred is
based on an  estimate of  undiscounted  future  cash flows  attributable  to the
assets,  as compared to the carrying  value of the assets.  If an impairment has
occurred,  the amount of the  impairment  recognized is determined by estimating
the fair value of the assets and  recording a provision for loss if the carrying
value is greater than the fair value (Note 3).

                                     II-20



<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Property,  Plant, and Equipment.  Property, plant, and equipment are recorded at
fair  market  value as  adjusted  at the  acquisition  date in  accordance  with
Accounting   Principles   Board  Opinion  No.  16,   "Accounting   for  Business
Combinations"  ("APB No. 16"). Items  capitalized  subsequent to the acquisition
are recorded at original cost,  which  includes  materials,  labor,  appropriate
administrative  and general  costs,  and the  estimated  cost of debt funds used
during construction. The cost of maintenance,  repairs, and replacement of minor
items of property is charged to maintenance expense as incurred.

       Depreciation  of the recorded cost of depreciable  property,  plant,  and
equipment is provided  primarily by using composite  straight-line  rates, which
approximate  3.2% per year  (2.5%  per year  for  depreciable  utility  plant in
service).

       Upon the  retirement  or sale of assets,  the cost of such assets and the
related accumulated depreciation are removed from the balance sheet and the gain
or loss, if any, is credited or charged to income.

Information   Technology   Consultancy   and  Development   Costs.   Significant
information  technology ("IT") consultancy and development costs are capitalized
when they become technologically feasible and are amortized over their estimated
useful  economic  life  from the date of first  use.  Other IT  consultancy  and
development  costs  are  charged  to  income  in the  period  in which  they are
incurred.

Investments. The Company accounts for its current investments in accordance with
SFAS  No.  115,   "Accounting  for  Investments  for  Certain  Debt  and  Equity
Securities".  These investments represent investments in debt securities,  which
management classifies as  available-for-sale  securities in accordance with SFAS
No. 115. The Company's long-term  investments  consist of investments  accounted
for using the cost method (Note 13).

     The Company  recognizes  gains on the sale of fixed asset  investments once
the  receipt  of this  income is  certain.  In fiscal  year  2001,  the  Company
recognized a gain in respect of a sale in fiscal year 1997 (Note 4).

Income Taxes.  SFAS No. 109,  "Accounting for Income Taxes",  requires the asset
and  liability  approach for  financial  accounting  and  reporting for deferred
income taxes.  The Company uses the liability  method of accounting for deferred
income taxes and provides  deferred income taxes for all significant  income tax
temporary differences (Note 8).

Financial  Instruments.  Derivative  financial  instruments  are used to  manage
exposures to fluctuations in interest rates and foreign currency exchange rates.
Derivative  gains and losses  arising from cash flow hedges that are included in
OCI  are  reclassified  into  earnings  in the  same  period  as the  underlying
transaction.

                                     II-21
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


2. COMPREHENSIVE INCOME (LOSS)

       Comprehensive  income  includes  unrealized  gains and  losses on certain
derivatives  which qualify as cash flow hedges.  The following  table sets forth
the comprehensive income for the year ended March 31, 2001 (in millions):

   Net income........................      (pound) 92
   Other comprehensive loss......                 (16)
                                           -----------
   Comprehensive income..........          (pound) 76

       Accumulated  other  comprehensive  loss for the year ended March 31, 2001
consisted of the following (in millions):

   Balance, March 31, 2000............................................(pound) -

   Other comprehensive loss for the period:
     Transitional adjustment from adoption of SFAS No. 133............      (13)
     Change in fair value of derivative instruments, net of tax.......       (4)
     Reclassification to earnings, net of tax.........................        1
                                                                        --------
   Other comprehensive loss...........................................      (16)
                                                                        --------
   Balance, March 31, 2001...........................................(pound)(16)
                                                                        ========

       The adoption of SFAS No. 133 resulted in a cumulative after-tax reduction
to OCI of (pound)13 million, and is attributable to deferred losses on cash flow
hedges.

       The Company  estimates that (pound)3 million of net derivative  after-tax
losses included in OCI as of March 31, 2001 will be  reclassified  into earnings
or  otherwise  settled  within  the next  twelve  months as  certain  forecasted
transactions  relating to  interest  payments  become  realized,  and  principal
repayments of foreign currency denominated debt are made.

       The Company anticipates that SFAS No. 133 will increase the volatility of
other comprehensive income as derivative  instruments are valued based on market
indices.  Therefore,  as market indices change,  the change in fair value of the
derivatives will change. For additional  information on the adoption of SFAS No.
133, see Notes 1 and 9.


3. WRITE DOWN OF ASSETS

       In April 2000, metering services, meter reading and data services for the
domestic and small business market were opened to competition. Metering services
include the provision,  installation  and maintenance of a meter in a customer's
premise.  Meter  reading  and data  services  include  the  collection  of meter
reading,  aggregation  and processing of this data. New license  conditions were
introduced  obligating  distribution  companies  to offer terms  separately  for
metering provision, meter operation, data collection and aggregation services to
all suppliers in the domestic market,  and to publish a statement of charges for
these  activities.  An estimate of the  undiscounted  future cash flows based on
WPD's statement of charges for metering  services,  was compared to the carrying
value of the assets and it was determined  that the assets were  impaired.  As a
result the Company  recorded a  write-down  of (pound)22  million,  in the third
quarter of fiscal year 2000,  to reflect the amount by which the carrying  value
of  meters  exceeded  their  fair  value.  The  fair  value  was  determined  by
discounting the future cash flows.


                                     II-22
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


4. GAIN ON RECOGNITION OF DEFERRED CONTINGENT CONSIDERATION

       During fiscal year 1996, WPD sold its shares of The National Grid Holding
plc  ("NGH")  into the  market,  following  the listing of the NGH shares on the
London  Stock  Exchange.  Prior  to  the  sale,  part  of the  shareholding  was
transferred  to three,  previously  dormant,  wholly owned  subsidiaries.  These
companies  sold the shares of NGH in open market  transactions  during  December
1995 and January  1996  generating  a taxable  gain,  resulting in an income tax
liability of (pound)24 million.  The companies  received a capital  contribution
from WPD to fund the tax obligation.  In October 1996 the companies were sold to
a third party for a nominal price. The sale contract provided for the payment of
contingent  consideration  based on the third party's ability to utilize its own
existing  capital  losses  to offset  the  realized  gains on the NGH sale.  The
agreement  provided for (pound)16 million to be paid to WPD upon finalization of
the  relevant  tax returns for the period in  question.  The last tax return was
agreed by the  Inland  Revenue  in  February  2001 and the  deferred  contingent
consideration received April 6, 2001.


5. RETIREMENT BENEFITS

       WPD has two  pension  plans,  a defined  contribution  plan and a defined
benefit plan. The  measurement  date for plan assets and obligations is December
31 for each year.

Defined  Contribution  Plan. The defined  contribution  plan was  established in
fiscal  year 1994.  The  assets of the  defined  contribution  plan are held and
administered  by an  independent  trustee.  Contributions  to the plan by WPD on
behalf of its employees  were  (pound)0.2  million ($0.3 million) for the fiscal
year 2001,  (pound)0.2  million for the fiscal year 2000 and (pound)0.3  million
for the fiscal year 1999.

Defined Benefit Plan. WPD participates in the Electricity  Supply Pension Scheme
("ESPS"),  which provides pension and other related defined  benefits,  based on
final pensionable pay, to substantially all employees throughout the Electricity
Supply Industry in the United Kingdom ("UK").  Contributions  to the plan by WPD
on behalf of its employees were (pound)0.1 million ($0.1 million) for the fiscal
year 2001,  (pound)0.2 for the fiscal year 2000 and  (pound)0.3  million for the
fiscal year 1999.

Pensions  Contingency.  The Electricity  Supply Pension Scheme ("ESPS") provides
pension and other related defined  benefits,  based on final pensionable pay, to
substantially  all employees  throughout the electricity  supply industry in the
U.K..  The majority of WPD's  employees  are ESPS members.  WPD faces  potential
regulatory  issues  related to the use of pension  surplus  which was  primarily
utilized to offset the cost of providing early pensions to terminated employees.
An independent  pension  arbitrator  has issued a ruling  directing that another
industry  employer  should refund such amounts with  interest to the ESPS.  This
ruling  was  appealed  to the House of Lords  who,  in April  2001,  upheld  the
employer's  appeal.  It is  understood  that the  complainants  are  considering
whether to appeal to a European Court. The Company cannot provide assurance that
WPD will not be required to refund to the ESPS any  amounts  previously  used to
fund early  retirement  costs,  which  management  estimates to be approximately
(pound)24  million.  Under SFAS 87  "Employers'  Accounting  for  Pensions," the
Company does not anticipate any immediate impact to its net income should such a
payment be required.

                                     II-23
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


       Changes during the year in the projected benefit obligations and the fair
value of the plan assets were as follows (in millions):
<TABLE>
<CAPTION>

                                                                      March 31, 2001             March 31, 2000
                                                                  ------------  -----------      ------------------
<S>                                                                      <C>           <C>               <C>
Change in projected benefit obligation
 Benefit obligation at beginning of year....................      (pound) 580      $    823       (pound) 639
 Service cost                                                               6             9                 8
 Interest cost..............................................               36            51                36
 Amendments                                                                 -             -                26
 Actuarial loss/(gain)......................................               89           126               (56)
 Divestiture  ..............................................                -             -               (30)
 Benefits paid..............................................              (43)          (61)              (43)
                                                                  ------------  ------------      -----------------
 Benefit obligations at end of year.........................      (pound) 668      $    948       (pound) 580
                                                                  ------------  ------------      -----------------
Plan Assets
 Fair value of plan assets at beginning of year.............      (pound) 853      $  1,211       (pound) 786
 Actual return on plan assets...............................              (10)          (14)              144
 Divestiture  ..............................................                -             -               (36)
 Employee contributions.....................................                1             1                 2
 Benefits paid..............................................              (43)          (61)              (43)
                                                                  ------------  ------------      -----------------
 Fair value of plan assets at end of year...................      (pound) 801      $  1,137       (pound) 853
                                                                  ------------  ------------      -----------------
Reconciliation of funded status
 Funded status of plan......................................      (pound) 133      $    189       (pound) 273
 Unrecognized prior service cost............................               24            34                26
 Unrecognized net loss/(gain)...............................               13            18              (154)
                                                                  ------------  ------------      -----------------
 Prepaid pension cost in the Consolidated Balance Sheet.....      (pound) 170      $    241       (pound) 145
                                                                  ------------  ------------      -----------------
</TABLE>

       The components of the plan's net periodic income (excluding the impact of
the Supply sale) were as follows (in millions):

<TABLE>
<CAPTION>
                                              Fiscal Year        Fiscal Year     Fiscal Year
                                                 2001                2000           1999
                                          ----------  ---------- -----------  ------------
<S>                                           <C>         <C>         <C>             <C>
 Service cost...........................(pound) 6       $   9   (pound) 8       (pound) 7
 Interest cost...........................      36          51          36              39
 Expected return on plan assets..........     (68)        (97)        (60)            (60)
 Amortization of prior service cost......       2           3           1               -
                                          ----------  ---------- -----------  ------------
 Gross benefit credit....................     (24)        (34)        (15)            (14)
 Employee contributions..................      (1)         (1)         (2)             (4)
                                          ----------  ---------- -----------  ------------
 Net pension income......................     (25)        (35)        (17)            (18)
                                          ==========  ========== ===========  ============
</TABLE>
       The assumptions used in the actuarial calculations were as follows:

                                    Fiscal Year   Fiscal Year   Fiscal Year
                                       2001          2000           1999
                                    -----------   -----------   ------------
 Discount rate......................   5.75%         6.50%           5.75%
 Expected rate of return on assets..   8.75%         8.75%           8.75%
 Rate of pay increase...............   4.00%         4.00%           4.00%



                                     II-24
<PAGE>



                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


6. COMMITMENTS AND CONTINGENT MATTERS

Operating Leases

       WPD has  commitments  under  operating  leases  with  various  terms  and
expiration dates.  Expenses  associated with these commitments  totaled (pound)4
million ($6 million) for the fiscal year 2001,  (pound)6  million for the fiscal
year 2000,  and  (pound)6  million for the fiscal year 1999.  At March 31, 2001,
estimated minimum rental commitments for noncancelable  operating leases were as
follows (in millions):

      Fiscal year
       2002..................     (pound) 1
       2003..................             1
       2004..................             1
       2005..................             1
       2006..................             1
       2007 and thereafter...             3
                                 -----------
     Total minimum payment...    (pound)  8

Labor Subject to Collective Bargaining Agreements

       Substantially all of WPD's employees are subject to one of two collective
bargaining agreements. Such agreements are ongoing in nature, and WPD's employee
participation  level is consistent with that of the electric utility industry in
the UK.

                                     II-25
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


7. SEGMENT AND RELATED INFORMATION

       The Company's  principal  business  segment is electricity  distribution,
which  involves the transfer of electricity  from the high voltage  transmission
system,  and  its  delivery,  across  lower  voltage  distribution  systems,  to
consumers.  Included in "Other" are ancillary business activities that generally
support  WPD's  distribution  business,  including  electricity  generation  for
standby purposes,  property and  telecommunications,  as well as corporate items
and assets not allocated to specific  segments.  Interest  expense and taxes are
wholly  allocated  to  "Other"  and are  disclosed  in the  Consolidated  Income
Statements.   With  the   exception  of  total   assets   employed  and  capital
expenditures, the values below exclude discontinued operations.
<TABLE>
<CAPTION>

                                                                     Business Segments

Fiscal Year                                   Distribution              Other             Eliminations         Consolidated
                                                                            (in millions)
<S>                                           <C>        <C>       <C>           <C>        <C>        <C>       <C>          <C>
                                          ---------  ----------  -------   ---------  ---------- ----------  --------- ----------
2001
Operating revenues                     (pound)217        $  308  (pound)23    $  33    (pound)(6)    $ (9)   (pound)234    $ 332
Depreciation and Amortization                  44            62          4        6            -        -            48       68
Operating income                              112           159          9       13            -        -           121      172
Total assets employed at year-end           1,627         2,309        714    1,013            -        -         2,341    3,322
Capital expenditures                           63            90         10       14            -        -            73      104

2000
Operating revenues                    (pound) 247               (pound) 46           (pound) (18)            (pound)275
Depreciation and Amortization                  52                        4                     -                     56
Operating income                              107                       25                     -                    132
Total assets employed at year-end           1,592                      465                     -                  2,057
Capital expenditures                           63                        4                     -                     67

1999
Operating revenues                    (pound) 247                (pound)49           (pound)(35)            (pound) 261
Depreciation and Amortization                  45                        6                    -                      51
Operating income                              111                       12                   (1)                    122
Total assets employed at year-end           1,599                      540                    -                   2,139
Capital expenditures                           70                        3                    -                      73

</TABLE>

8. INCOME TAXES

       Details of the income tax provision for fiscal years 2001,  2000 and 1999
are as follows (in millions):
<TABLE>
<CAPTION>

                                                                Fiscal Year      Fiscal Year      Fiscal Year
                                                                   2001              2000            1999
<S>                                                             <C>       <C>        <C>             <C>
                                                          ----------------------  ------------- --------------
Income Tax Provision:
Income tax from continuing operations:
  Current provision                                        (pound) 17     $ 24   (pound) 18       (pound) 8
  Deferred provision                                               10       14            5              13
                                                                  -----   ------       ------          -----
                                                                   27       38           23              21
  Effect of change in tax rates on deferred tax                     -        -            -             (11)
                                                                  -----   ------       ------          -----
Total provision from continuing operations                 (pound) 27     $ 38   (pound) 23       (pound)10
                                                                  =====   ======       ======          =====
Income tax from discontinued operations:
  Current provision                                         (pound) -      $ -    (pound) 2       (pound) 5
  Tax on disposal of discontinued operations                        3        4           49               -
                                                                  -----   ------       ------          -----
Total provision from discontinued operations                (pound) 3      $ 4    (pound)51       (pound) 5
                                                                  =====   ======       ======          =====
</TABLE>

                                     II-26
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


       The UK government's  1998 Finance Act included a reduction in the rate of
UK corporation tax from 31% to 30% effective April 1999. This decrease  resulted
in a reduction to WPD's deferred tax liability and a  corresponding  decrease to
deferred income tax provision of approximately  (pound)11 million, during fiscal
year 1999.

       The tax effects of temporary  differences between the carrying amounts of
assets and  liabilities  in the financial  statements  and their  respective tax
bases which give rise to deferred tax assets and  liabilities are as follows (in
millions):
       <TABLE>
<CAPTION>
                                                                                     March 31,          March 31,
                                                                                               2001               2000
                                                                                       ----------- --------   -------------
                   <S>                                                                      <C>       <C>             <C>
         Deferred tax liabilities:
           Property, plant, and equipment basis differences.............................(pound)338   $ 480      (pound) 333
           Pensions.....................................................................        51      72               43
           Accruals.....................................................................         -       -                2
           Heldover gain................................................................        40      57               39
                                                                                              -----   -----            -----
                   Total................................................................       429     609              417
         Deferred tax assets:
                    Accruals, including acquisition related items.......................        10      14               -
                                                                                              -----   -----            -----
         Net deferred tax liabilities                                                  (pound) 419   $ 595      (pound) 417
                                                                                              =====   =====            =====
</TABLE>

       A  reconciliation  of the  Company's UK statutory  income tax rate to the
effective  customary income tax rate for continuing  operations for fiscal years
2001, 2000 and 1999 is as follows:

<TABLE>
<CAPTION>

                                             Fiscal Year     Fiscal Year     Fiscal Year
                                                  2001            2000            1999
                                             -----------     -----------     -----------
<S>                                               <C>             <C>             <C>

UK statutory income tax rate                      30%             30%             31%
Nondeductible amortization of goodwill             1               1               1
Other permanent differences                       (7)             (9)             (7)
                                                 ------          ------         ------
Effective customary income tax rate               24%             22%             25%
                                                 ======          ======         ======

</TABLE>

9. FINANCIAL INSTRUMENTS

Derivative Hedging Instruments

       The Company uses derivative  instruments to manage exposures arising from
changes  in  interest  rates  and  foreign  currency  exchange.   The  Company's
objectives  for holding  derivatives  are to  minimize  the risks using the most
effective methods to eliminate or reduce the impacts of these exposures.

       Derivative  gains and  losses  arising  from cash  flow  hedges  that are
included  in OCI are  reclassified  into  earnings  in the  same  period  as the
settlement  of the  underlying  transaction.  From January 1, 2001,  the date of
adoption  of SFAS No.  133,  to March 31,  2001,  (pound)1  million  of  pre-tax
derivative  losses was  reclassified to other  income/expense.  The maximum term
over which the Company is hedging  exposures to the variability of cash flows is
through 2012.

                                     II-27
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


Interest Rate Hedging

       The Company's policy is to manage interest expense using a combination of
fixed- and  variable-rate  debt. To manage this mix in a cost-efficient  manner,
the Company  enters into interest rate swaps in which it agrees to exchange,  at
specified intervals,  the difference between fixed and variable interest amounts
calculated by reference to agreed-upon  notional principal amounts.  These swaps
are designated to hedge underlying debt obligations.  For qualifying hedges, the
changes in the fair value of gains and losses of the swaps are  deferred in OCI,
net of tax, and the  interest  rate  differential  is  reclassified  from OCI to
interest expense as an adjustment over the life of the swaps.

Foreign Currency Hedging

       The Company  utilizes  cross currency  swaps and other  derivatives  that
offset  the  effect of  exchange  rate  fluctuations  on US  dollar  denominated
instruments and fixes the interest rate exposure.  These derivatives  qualify as
cash flow hedges,  and gains and losses on the  derivatives are deferred in OCI,
net  of  tax,   until  the  forecasted   transaction   affects   earnings.   The
reclassification is then made from OCI to earnings to the same expense or income
category as the hedged transaction.

Credit Risk

       The  Company  is  exposed  to losses in the  event of  nonperformance  by
counterparties  to  its  derivative  financial  instruments.   The  Company  has
established   controls  to  determine  and  monitor  the   creditworthiness   of
counterparties  in order to mitigate  the  Company's  exposure  to  counterparty
credit risk. The Company is unaware of any counterparties that will fail to meet
their obligations.

Fair Values

       SFAS No. 107,  "Disclosures  About Fair Value of Financial  Instruments,"
requires the disclosure of the fair value of all financial instruments.

       The  carrying  or  notional  amounts  and fair  values  of the  Company's
financial instruments at March 31, 2001 and 2000 were as follows (in millions):

<TABLE>
<CAPTION>
                                                                     March 31, 2001                    March 31, 2000
                                                             Carrying Amount    Fair Value    Carrying Amount     Fair Value
                                                            ------------------------------    ------------------------------
<S>                                                              <C>                <C>              <C>            <C>
    Liabilities
       Long-term debt, including current portion              (pound) 352      (pound) 350     (pound) 301       (pound) 298
       Preferred securities                                  (pound)   58     (pound)   45    (pound)   50       (pound)  46
    Receivables
       Loans to affiliated company                            (pound) 410      (pound) 395     (pound) 351       (pound) 344

</TABLE>

       The fair values for long-term debt and preferred securities were based on
the closing market price.

       Prior to the  adoption  of SFAS No.  133,  the  carrying  value of hedged
foreign currency  denominated  instrument was translated using the exchange rate
of the related cross currency derivative.  The adoption of SFAS No. 133 requires
foreign  currency  denominated  instruments be carried at the current period end
spot rate,  and  derivatives  to be recorded in the balance sheet at fair value.
Reference is made to Note 1 for further  information on the adoption of SFAS No.
133.

       The change in the carrying value of long-term liabilities and receivables
above is due to the movement between the derivative  exchange rate used at March
31, 2000 and the spot rate used at March 31, 2001.
                                     II-28
<PAGE>

                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


10. PROPERTY, PLANT, AND EQUIPMENT

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

                                            March 31, 2001        March 31, 2000
                                        ----------------------  ----------------
 Distribution network................. (pound) 1,279   $ 1,815    (pound) 1,244
 Non-network land and buildings.......            30        43               34
 Other  ..............................            49        70               40
 Consumer contributions...............           (66)      (94)             (53)
                                               -------   ------          -------
 Property, plant, and equipment, net.. (pound) 1,292   $ 1,834    (pound) 1,265
                                               =======   ======          =======

11. CAPITAL BUDGET

       The Company's capital  expenditure for the fiscal year 2001 was (pound)73
million ($104 million);  for the fiscal years 2002 and 2003 capital expenditures
are estimated to be (pound)65  million and (pound)62 million  respectively.  The
capital  budget is subject to periodic  review and revision,  and actual capital
cost incurred may vary from the above statement because of numerous factors. The
factors   include:   changes  in  business   conditions;   revised  load  growth
projections;  change in regulatory requirements;  and increasing costs of labor,
equipment, and materials.


12. DEBT

       The Company has $500  million  Senior Notes in the US, of which some $168
million of the Senior  Notes are due for  redemption  in November  2001 and $332
million in 2006; the Senior Notes are at rates of 6.375% and 6.8%  respectively.
The Company entered into currency swap transactions that effectively convert the
US dollar obligations of the Senior Notes into pounds sterling obligations, with
a nominal value of (pound)300 million.

       SIUK Capital Trust I (the  "Trust"),  formerly  Southern  Investments  UK
Capital  Trust I,  issued $82  million  of its 8.23%  preferred  securities  and
invested the proceeds  thereof in 8.23%  subordinated  debentures  issued by the
Company,  which are  scheduled  to mature  on  February  1,  2027.  The  Company
guarantees the Trust's obligations under the preferred  securities.  The Company
has also entered into foreign currency swap contracts to hedge the currency risk
associated  with the interest  and  principal on the  preferred  securities,  by
swapping  the US dollar  liabilities  back to pounds  sterling for the period to
February  2007.  The  nominal  value of the  swapped  liabilities  is  (pound)50
million.  The Company owns all of the common securities of the Trust, all of the
assets of which are the aforementioned subordinated debentures of the Company in
the aggregate principal amount of $84.5 million.

       The Company considers that the mechanisms and obligations relating to the
preferred  securities,  taken  together,  constitute  a full  and  unconditional
guarantee by the Company of the Trust's payment  obligations with respect to the
preferred securities.

       In December 1998 a more efficient  capital  structure for Holdings UK and
the Company was put in place.  At that time,  Holdings UK became a co-obligor of
the Company's existing long-term debt and subordinated debentures. Sums totaling
(pound)402  million were  contributed to the Company for newly issued shares and
the  Company  made three US dollar  loans,  totaling  $584  million  ((pound)351
million)  to Holdings UK on the same terms as the  existing  long-term  debt and
subordinated  debentures.  At March 31, 2001,  the carrying value of these loans
was (pound)410  million (Note 9). In  consideration of entering into these loans
and their  related  currency and interest  rate swaps,  the Company made premium
payments   (independently   calculated  as  a  fair  arms-length  value  between
unconnected  parties) of $84 million ((pound)51  million) to Holdings UK. Of the
premium  payments,  (pound)42  million is being  amortized  over the life of the
respective loans and swaps, and (pound)9 million represented accrued interest.

                                     II-29
<PAGE>


                            SIUK plc AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS-(Continued)


       As of March 31,  2001,  sources of  liquidity  included a $520 million US
commercial paper program,  $503 million of which is supported by a swingline and
revolving  credit facility  provided by a syndicate of banks.  In addition,  the
Company had  (pound)100  million  committed and (pound)110  million  uncommitted
lines of credit with banks. The Company's existing  facilities and cash position
are expected to provide  sufficient  liquidity  for working  capital and capital
expenditures  through fiscal year 2002. As of March 31, 2001 the Company and WPD
had drawn $445 million under the swingline  and  revolving  credit  facility and
(pound)80 million under committed lines of credit with banks. Additionally,  the
Company held (pound)1 million in unrestricted cash.

       Excluding swap  agreements  between the Company and Holdings UK, at March
31, 2001, the Company and WPD have sterling interest rate swaps expiring between
2001 and 2012 with  notional  amounts  totaling  (pound)600  million,  and cross
currency swaps  expiring  between 2001 and 2007 with notional  amounts  totaling
(pound)350 million

13. INVESTMENTS

       The Company's long-term  investments  accounted for under the cost method
consist of its 7.69%  ownership  of Teesside  Power  Limited,  the fair value of
which is not readily determinable. The Company's (pound)10 million of short-term
investments  are classified as  available-for-sale  under SFAS No. 115, the fair
value of which approximated cost at March 31, 2001.

14. COMMON STOCKHOLDER'S EQUITY

       The  Company  holds the  entire  share  capital  of WPD.  The  Company is
primarily  dependent  upon  dividends  from WPD for its cash flow.  WPD can make
distribution of dividends to the Company under English law to the extent that it
has  distributable  reserves,  subject to the retention of sufficient  financial
resources  to conduct its  distribution  business as required by its  regulatory
license. The Company believes that currently sufficient  distributable  reserves
will continue to exist at WPD to allow for  reasonable  and necessary  dividends
from WPD, through operations, to be distributed to the Company. In the U.K., the
Accounting  Standards  Board  has  recently  issued a new  accounting  standard,
Financial  Reporting Standard ("FRS") 19 "Deferred Tax" ("FRS 19"),  relating to
the  accounting  treatment of deferred  income tax.  FRS 19,  which  replaces an
earlier  standard  (SSAP 15), is mandatory for  accounting  periods ending on or
after January 23, 2002 (though earlier adoption is encouraged), and will require
full provision to be made for deferred tax assets and liabilities  (SSAP 15 only
required a partial  provision  basis);  discounting of deferred tax  liabilities
will  be  permitted  but  is not  mandatory.  WPD  will  take  advantage  of the
discounting  option,  but  adoption of FRS 19 will  significantly  reduce  WPD's
distributable  reserves.  The  directors  of  Distribution  companies  must also
certify to the Regulator that it is reasonably  foreseeable that the declaration
of a  dividend  will not  breach any  license  conditions.  WPD has no reason to
believe  that a breach of its license  would occur from  declaring a  reasonable
dividend.

15. BUSINESS DEVELOPMENTS

       In September  1999,  WPD  completed  the sale of its  electricity  supply
business  (known as `SWEB') and certain  related  activities,  together with the
name `SWEB', to London Electricity plc for (pound)160 million and the assumption
by the purchaser of certain liabilities.  The Company recorded an after tax gain
on the sale of  (pound)125  million in fiscal  year 2000.  In fiscal  year 2001,
issues  relating to working capital and pension spin off value were resolved and
a further (pound)7 million after tax gain was recorded.

       In October 2000,  an affiliate  acquired  Hyder plc which owned  numerous
businesses  including that which owned and operated the  electricity  network in
South Wales.  In March 2001,  this business was  transferred to the ownership of
the Company's  ultimate  parent,  WPD Holdings UK. The management of the Company
and of WPD has become involved in the electricity  business in South Wales,  and
this business will share a number of WPD key systems.

16. SUBSEQUENT EVENTS

       On April 2,  2001,  Southern  Company  distributed  their  remaining  80%
interest in Mirant  Corporation,  an indirect parent of the Company, to Southern
Company's stockholders.

                                     II-30
<PAGE>



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

       None.




                                     II-31
<PAGE>




PART III

Item 10.      Directors and Executive Officers of the Registrant

                                                  MANAGEMENT

       The following  table sets forth certain  information  with respect to the
directors and executive officers of the Company as of March 31, 2001:
<TABLE>
<CAPTION>

       Name                                      Age           Position
------------                                    -------        -------------
<S>                                                <C>           <C>
Barney S. Rush...................................  48          Director, Chief Executive Officer
D. Charl S. Oosthuizen...........................  43          Director, Chief Financial and Accounting
                                                               Officer
Robert A. Symons.................................  48          Director
Maurice E. Fletcher..............................  51          Director
Richard F. Owen..................................  52          Director
Accentacross Limited.............................              Director
Mighteager Limited...............................              Director

</TABLE>

       Barney S. Rush - Chief  Executive  Officer of the Company  since  October
1999.  Mr.  Rush  currently   serves  as  Chief  Executive   Officer  of  Mirant
Corporation's  Europe Group, a position he has held since August 1999, and he is
also Senior Vice  President  of Mirant.  He  previously  served as  President of
Southern Energy Development-Europe.

       D. Charl S.  Oosthuizen - Chief  Financial and Accounting  Officer of the
Company  since June 1999 and also  Finance  Director of WPD since that date.  He
previously  served as General Manager,  Information  Resources at WPD from April
1999 to May 1999,  and as Assistant to the Chief  Executive at WPD from December
1997 to March 1999. He was Treasurer of WPD until November 1997.

       Robert A. Symons - Director of the Company  since  October  1997 and also
Distribution  Director of WPD from that date.  Effective  March 31, 2000, he was
appointed  Chief  Executive  Officer  of WPD.  He  previously  served as Network
Services Manager in Plymouth for WPD from December 1994 to September 1997.

       Maurice E. Fletcher - Director of the Company since October 1999 and also
a Director of WPD since that date. He previously  served as Officer  responsible
for Human Resources for WPD.

       Richard F. Owen - Director of the Company  since April 2000. He currently
serves as Vice  President of  Operations  and Business  Development  of Mirant's
European  businesses.  He previously  served as Vice President of Operations and
Business Development for the Caribbean region and South America.

     Accentacross Limited  ("Accentacross") - Director of the Company since July
1996.  Paul Champagne  represented  Accentacross at meetings of the Directors of
the Company  during the year.  Mr.  Champagne has  represented  Accentacross  at
meetings of the Directors of the Company since March 2000.  From May 1999 to the
present, Mr. Champagne has served as President of PPL Global.

     Mighteager  Limited  ("Mighteager")  - Director of the  Company  since July
1996. Dale M. Kleppinger  represented Mighteager at meetings of the Directors of
the Company  during the year.  Mr.  Kleppinger  has  represented  Mighteager  at
meetings of the  Directors of the Company  since March 2000.  From March 1999 to
March 2000,  Mr.  Kleppinger  served as Treasurer of WPD.  From April 2000,  Mr.
Kleppinger has served as Director of Treasury at PPL Corporation.

       Accentacross  and  Mighteager  were  elected  by PPLG to the board of the
Company  pursuant to a  Shareholders'  Agreement dated July 1, 1996 among Mirant
Investments  Europe  UK,  Inc.  ("Mirant-Europe"),  formerly  Southern  Electric
International-Europe  Inc.,  PPLG and  Holdings and  reaffirmed  under a revised
Shareholders' Agreement of June 18, 1998 (the "Shareholders' Agreement") between
Mirant-Europe,  PPLG and Holdings UK. The Shareholders'  Agreement provides that
holders of a majority of the A shares can appoint the  majority of  directors to
the board and that holders of a majority of the B shares can appoint a number of
directors  that is one less than the number of directors that the holders of the
A shares  have the  right to  appoint.  This  applies  not only to the  board of
directors  of Holdings UK but also  extends to the boards of Holdings and of the
Company as  wholly-owned  subsidiaries  of Holdings UK.  During the period under
review Holdings UK as holder of the B shares  exercised this right to the extent
of electing Accentacross and Mighteager to the board of the Company.  During the
year,  Accentacross and Mighteager were represented on the board of directors of
the Company by Messrs. Champagne and Kleppinger respectively.
                                     III-1
<PAGE>

       From December 1, 2000,  both parties were able to appoint an equal number
of directors to the Boards of Holdings UK, Holdings Limited,  and SIUK.  Changes
were made to the Board effective April 23, 2001, at which date  Accentacross and
Mighteager  resigned and Robert W Burke,  Paul Champagne,  and Rick Klingensmith
were appointed.

         Robert W. Burke - Vice President and Chief Counsel of PPL Global. Prior
to joining PPL Global in 1996, he served as corporate counsel for Edison Mission
Energy  Company,  where he was  involved in the  development  and  financing  of
generation  facilities  in the U.S. He was an associate  with Hunton & Williams,
where he represented independent power producers in regulatory and transactional
matters.  He earned a bachelor degree in history from  Providence  College and a
master's degree and law degree from the University of Virginia.

         Paul  Champagne  - From  May  1999 to the  present,  he has  served  as
President  of PPL  Global.  He joined PPL Global in 1995 as Vice  President  and
Senior  Development  Officer.  Prior to joining  PPL, he served for six years in
several business  development roles at Edison Mission Energy Company,  including
Midwest  Regional  Manager.  Earlier,  as research  engineer  with the  Research
Triangle  Institute  in North  Carolina,  he consulted  with the Electric  Power
Research Institute on technical and financial  feasibility analysis. He earned a
bachelor's degree in chemical engineering at the University of Illinois.

         Rick  L.  Klingensmith  -  Vice  President  -  Finance  of  PPL  Global
responsible  for all of PPL  Global's  financial  activities.  From  February to
August 2000, he was responsible for PPL Global's  portfolio of businesses in the
UK and Latin  America.  Prior to joining  PPL Global in  February  2000,  he was
manager of energy system assets and  acquisitions  at Air Products and Chemicals
Inc. and,  prior to that,  was an engineer in the power systems group of Stone &
Webster   Engineering  Corp.  He  earned  a  bachelor's  of  science  degree  in
engineering  science and mechanics  from  Pennsylvania  State  University  and a
master's  degree  in  business  administration  from the  Darden  School  of the
University of Virginia.


Item 11.      EXECUTIVE COMPENSATION

       Accentacross  and  Mighteager  did not  receive  compensation  for  their
services as Directors of the Company. Messrs.  Oosthuizen,  Symons, and Fletcher
have received, and will continue to receive, compensation in respect of services
performed as WPD Officers,  WPD being their primary employer and a subsidiary of
the Company.  They receive no cash or non-cash compensation as a result of these
arrangements  beyond that which they would otherwise  receive from WPD for their
services  performed  for WPD.  Mr.  Rush and Mr.  Owen have  received,  and will
continue to receive,  compensation  in respect of  services  performed  in their
capacity as an Officer of Mirant, their primary employer and an affiliate of the
Company.  Mr. Rush and Mr. Owen received no cash or non-cash  compensation  as a
result of these arrangements beyond that which they would otherwise receive from
Mirant for the services performed by them for Mirant.


Item 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Security  ownership of certain  beneficial  owners.  The  authorized  share
capital of the Company consists of 902,128,735 ordinary shares of (pound)1 each,
all of which have been issued fully paid and are held by Holdings. Holdings is a
wholly-owned  subsidiary of Holdings UK. The following  table sets forth,  as of
March 31, 2001, certain information  regarding  beneficial ownership of Holdings
UK common  stock held by each person  known by the  Company to own  beneficially
more than 10% of Holdings UK outstanding common stock.

                                     III-2
<PAGE>


<TABLE>
<CAPTION>

                            Name and Address                      Amount and Nature           Percent
                            of Beneficial                             of Beneficial                of
Title of Class              Owner                                         Ownership             Class
---------------           --------------------------------        ------------------          ------------
<S>                          <C>                                          <C>                    <C>

A Ordinary                  Mirant Corporation                       12,184,716 (1)              100%
                            1155 Perimeter Center West, Suite 100
                             Atlanta, Georgia 30338

B Ordinary                  PPL Corporation                          11,936,049 (2)              100%
                              2 North Ninth Street
                          Allentown, Pennsylvania 18101

C Ordinary                  PPL Corporation                             746,003 (2)              100%
                              2 North Ninth Street
                          Allentown, Pennsylvania 18101

D Ordinary                  PPL Corporation                           5,100,000 (2)              100%
                              2 North Ninth Street
                          Allentown, Pennsylvania 18101

E Ordinary                  Mirant Corporation                        4,900,000 (1)              100%
                            1155 Perimeter Center West, Suite 100
                             Atlanta, Georgia 30338
</TABLE>


(1) Such shares are owned by Mirant Investments  -Europe UK Limited, an indirect
wholly-owned subsidiary of Mirant Corporation. (2) Such shares are owned by PPLG
UK, an indirect wholly-owned subsidiary of PPL.


     The A  Ordinary  shares  and the B  Ordinary  shares  have the same  voting
rights,  while the C  Ordinary  shares  have no voting  rights.  The only  other
material  difference between them is the requirement for dividends  attributable
to the calendar  year ended  December  31, 1998  aggregating  up to  (pound)30.4
million  to be  allocated  61% to the  holder(s)  of the A shares and 39% to the
holders  of the B  shares  and the C  shares  collectively,  and  for  dividends
attributable  to the  calendar  year  ended  December  31,  1998  in  excess  of
(pound)30.4  million to be allocated  pro-rata to the shareholders in accordance
with their ownership of shares. The D Ordinary shares and E Ordinary shares were
issued in December 1999 to provide  certain rights and  restrictions  over the D
and E Ordinary  shares of  Holdings.  Except  with  respect to certain  specific
matters, holders of the D Ordinary shares and E Ordinary shares are not entitled
to vote at general meetings of Holdings UK.

Changes  in  control.  The  Company  knows  of no  arrangements  which  may at a
subsequent date result in any change in control.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with management and others.
              None.

Certain business relationships.
              See Item 11 herein.

Indebtedness of management.
              None.

Transactions with promoters.
              None.

                                     III-3
<PAGE>





                                     PART IV

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

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

         (1)    Financial Statements:

                The financial  statements and the related reports of independent
                public  accountants  filed as a part of this  annual  report are
                listed under Item 8 herein.


         (2)    Financial Statement Schedules:

                Report of  Independent  Public  Accountants  as to Schedules for
                SIUK plc and  Subsidiaries  is included herein on page S-1

                Financial  Statement  Schedules  for the  Company  are  included
                herein on page S-2.


         (3)    Exhibits:

                Exhibits are listed in the Exhibit Index on page E-1 and E-2.

     (b) Reports on Form 8-K:

         The  registrant  has not filed any  reports on Form 8-K during the last
         quarter of the fiscal year ended March 31, 2001.


                                      IV-1
<PAGE>


                                                  SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, the Registrant, SIUK plc, a public limited company incorporated and
existing under the laws of England and Wales,  has duly caused this report to be
signed on its behalf by the undersigned,  thereunto duly authorized, in the City
of Atlanta, State of Georgia, on the 22nd day of June, 2001.

                           SIUK plc


                           By:     Barney S. Rush
                                   Chairman and Chief
                                   Executive Officer


                           By: /s/ ELIZABETH B. CHANDLER
                                   Elizabeth B.Chandler
                                   Attorney-in-Fact

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following directors and officers of SIUK plc in the
capacities and on the date indicated:

              Signature                   Title                    Date

      BARNEY S. RUSH               Chairman and Chief
                                   Executive Officer


      D. CHARL S. OOSTHUIZEN       Chief Financial and
                                   Accounting Officer


      ROBERT A. SYMONS

      MAURICE E. FLETCHER

      RICHARD F. OWEN

      ROBERT W. BURKE

      PAUL CHAMPAGNE
                                      Directors
      RICK L. KLINGENSMITH


      /s/ ELIZABETH B. CHANDLER                                June 22, 2001
          Elizabeth B. Chandler
          Attorney-in-Fact

                                      IV-2

<PAGE>



             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE


To the Board of Directors of SIUK plc:

We have audited in accordance with generally  accepted auditing  standards,  the
financial  statements of SIUK plc AND  SUBSIDIARIES  included in this report and
have issued our report  thereon dated June 21, 2001.  Our audit was made for the
purposes  of forming an opinion  on the basic  financial  statements  taken as a
whole.  The  schedule  listed  in Item 14 (a) (2) is the  responsibility  of the
Company's  management  and is  presented  for  purposes  of  complying  with the
Securities  and  Exchange  Commission's  rules  and is  not  part  of the  basic
financial statements. The schedule has been subjected to the auditing procedures
applied in the audit of the basic  financial  statements  and,  in our  opinion,
fairly  states in all material  respects the  financial  data required to be set
forth therein in relation to the basic financial statements taken as a whole.




ARTHUR ANDERSEN

Bristol, England
June 22, 2001

                                      S-1
<PAGE>


          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

               FOR THE YEARS ENDED MARCH 31, 2001, 2000, AND 1999

                                  (In Millions)

<TABLE>
<CAPTION>
                                                                           Additions
                                                                  -------------------------------
                                                   Balance at       Charged        Charged to                      Balance
                                                    Beginning      (Credited)        Other                         at End of
                                                    of Period      to Income        Accounts      Deductions        Period
                                                      (pound)       (pound)          (pound)      (pound)           (pound)
                                                   -------------  --------------  ------------  -------------  --------------
<S>                                                   <C>               <C>             <C>          <C>               <C>

 Provision for Uncollectable Accounts


     Year-Ended March 31, 1999................             9              2              -              (1)             10

     Year-Ended March 31, 2000................            10             (6)             -              (2)              2

     Year-Ended March 31, 2001................             2              3              -               -               5

</TABLE>

-------------


                                      S-2

<PAGE>




                                 EXHIBIT INDEX


       The  following  exhibits  indicated by an asterisk  preceding the exhibit
number are filed  herewith.  The balance of the exhibits  have  heretofore  been
filed  with the  SEC,  respectively,  as the  exhibits  and in the file  numbers
indicated and are incorporated herein by reference.


     3.1 --   Memorandum of Association of the Company.  (Designated in Form S-1
              Registration No. 333-09033 as Exhibit 3.1.)

     3.2 --   Articles of Association of the  Company.  (Designated  in Form S-1
              Registration No. 333-09033 as Exhibit 3.2.)

     4.1 --   Trust Indenture  dated  as  of  November  21,  1996,  between  the
              Company and  Bankers  Trust  Company,  as  trustee. (Designated in
              Form  S-1 Registration No. 333-09033 as Exhibit 4.1.)

     4.2 --   First Supplemental Indenture dated as of November 21, 1996 between
              the Company and Bankers Trust Company, as  trustee. (Designated in
              Form S-4 Registration No. 333-26939 as Exhibit 4.2.)

     4.3 --   Deposit  Agreement  dated  as  of  November 21, 1996  between  the
              Company and  Bankers Trust  Company,  as   book-entry  depositary.
              (Designated in Form S-4 Registration No.333-26939 as Exhibit 4.3.)

     4.4 --   Subordinated Debenture Indenture  dated as  of January  29,  1997,
              among  the  Company,   Bankers  Trust  Company,  as  trustee,  and
              Bankers Trust  Luxembourg  S.A.,  as paying  agent  and   transfer
              agent. (Designated  in  Form  S-4  Registration  No. 333-26939  as
              Exhibit 4.1.)

     4.5 --   Certificate of Trust of Southern  Investments  UK Capital  Trust I
              (Designated in Form S-4 Registration No.333-26939 as Exhibit 4.3.)

     4.6 --   Amended and Restated Declaration  of Trust dated as of January 29,
              1997 of Southern Investments UK  Capital  Trust I.  (Designated in
              Form S-4 Registration No. 333-26939 as Exhibit 4.4.)

     4.7 --   Form of Exchange Guarantee of the Company relating to the Exchange
              Capital Securities.  (Designated  in  Form  S-4  Registration  No.
              333-26939 as Exhibit 4.6.)

     4.8 --   Capital Securities Guarantee  dated as of January  29, 1997 of the
              Company relating to the Original Capital  Securities.  (Designated
              in Form S-4 Registration No. 333-26939 as Exhibit 4.8.)

     4.9 --   Common Securities Guarantee  dated as of January  29,  1997 of the
              Company relating to  the  Common Securities. (Designated  in  Form
              S-4 Registration No. 333-26939 as Exhibit 4.9.)

     4.10 --  Deposit Agreement dated as of January 29, 1997 between the Company
              and Bankers Trust Company,  as book-entry depositary.  (Designated
              in Form S-4 Registration No. 333-26939 as Exhibit 4.10.)

     10.1 --  South Western Electricity  plc Public  Electricity  Supply License
              dated September 1999.

     10.2 --  Pooling and Settlement  Agreement (as amended and restated at July
              28, 1997) together with modifications dated September 19, 1997 and
              May  14, 1998  between  South   Western  Electricity  plc,  Energy
              Settlements and  Information  Services   (as  Settlement   System
              Administrator), Energy Pool Funds Administration  Limited (as Pool
              Funds Administrator), NGC (as Grid Operator and Ancillary Services
              Provider) and Other Parties. (Designated in Form 10-K for the year
              ended March 31, 1998 as Exhibit 10.3).

     10.3 --  Master Connection and Use of System  Agreement  dated  as of March
              30,  1990  among  NGC  and  its  users  (including  South  Western
              Electricity  plc).   (Designated  in  Form  S-1  Registration  No.
              333-09033 as Exhibit 10.4.)

     10.4  -- Form of  Supplemental  Agreement  between  NGC and  South  Western
              Electricity   plc.  (Designated  in  Form   S-1  Registration  No.
              333-09033 as Exhibit 10.5.)
                                      E-1
<PAGE>

    10.5   -- Variations   dated  April 1, 1998,  March 31, 1998 and  March  31,
              1998  to the Master  Connection and Use of System Agreement  dated
              as  of March 30, 1990 among NGC  and its  users  (including  South
              Western  Electricity plc)and to the Form of Supplemental Agreement
              between  NGC  and  South  Western  Electricity   plc.  (Designated
              in Form 10-K for the year ended March 31, 1998 as Exhibit 10.6).

    10.6  --  Master  Agreement dated as of October  25, 1995 among The National
              Grid Holding plc, NGC, South Western Electricity plc and the other
              RECs.(Designated in Form S-1 Registration No. 333-09033 as Exhibit
              10.6.)

     10.7 --  Memorandum of Understanding between NGG, South Western Electricity
              plc and each of the RECs, dated November 17, 1995.  (Designated in
              Form S-1 Registration No. 333-09033 as Exhibit 10.7.)

     10.8 --  Form of South Western Electricity plc Use of  Distribution  System
              Agreement.  (Designated in Form 10-K for the year ended  March 31,
              1998 as Exhibit 10.9).

     10.9 --  Form of Agreement for the Connection  of an Exit Point,  generally
              applicable to commercial customers.  (Designated in Form 10-K  for
              the year ended March 31, 1999 as Exhibit 10.10).

     10.10 -- Form of Agreement for the  Connection of an Exit Point,  generally
              applicable to residential customers.  (Designated in Form 10-K for
              the  year ended March 31, 1998 as Exhibit 10.11).

     10.11 -- Services  Agreement  dated as of January 1, 1996 between  Southern
              Electric  International,  Inc. (now Southern Energy, Inc.) and the
              Company.(Designated  in  Form S-1  Registration  No.  333-09033 as
              Exhibit 10.10.)

     10.12 -- Services  Agreement  dated as of January 1, 1996 between  Southern
              Electric International,  Inc.(now Southern Energy, Inc.) and South
              Western Electricity  plc.  (Designated  in Form  S-1  Registration
              No.  333-09033 as Exhibit 10.11.)

     10.13 -- Services  Agreement  dated  as of  January 1, 1996  between  South
              Western  Electricity  plc  and Holdings. (Designated in  Form  S-1
              Registration  No. 333-09033 as Exhibit 10.12.)

     10.14 -- Services Agreement dated as of January 1, 1996 between the Company
              and  South  Western  Electricity   plc. (Designated  in  Form  S-1
              Registration No. 333-09033 as Exhibit 10.13.)

*   21.1   -- Subsidiaries of Registrant.

*   24.1   -- Power of Attorney and Resolution.




                                      E-2