<PAGE>

                                                                     EXHIBIT 4.5






                  SCOTTISHPOWER ENERGY RETAIL LIMITED CONFORMED
                                 SUPPLY LICENCE




--------------------------------------------------------------------------------
         1.   This conformed electricity supply licence has been produced by
              Shepherd & Wedderburn from materials supplied by ScottishPower. It
              is intended for use by ScottishPower personnel as a convenient
              reference tool, but is not a substitute for the definitive texts
              from which it has been produced.

         2.   The conformed licence is intended to consolidate (a) the
              provisions of annexe 5 to the licensing scheme made by the
              Secretary of State on 28 September 2001 in relation to Scottish
              Power UK plc and Manweb plc (the "scheme") and (b) the standard
              conditions for supply licences determined by the Secretary of
              State on 27 September 2001 as brought into effect in relation to
              ScottishPower Energy Retail Limited by the scheme.

         3.   Those standard conditions which, in accordance with Part II of the
              licence, are not in effect have been included in this document for
              completeness, but are shown in italics.

         4.   The consolidated standard conditions set out in this document
              record, using strike-through and/or underline, the effects of any
              amendments which have been made to the standard conditions in
              accordance with Part III of the licence.
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                    [LETTERHEAD OF SHEPHERD & WEDDERBURN WS]

<PAGE>

                                    CONTENTS


<TABLE>
<S>                                                                      <C>
                                   PRELIMINARY
                                   -----------

PART I.  TERMS OF THE LICENCE                                              5
PART II.  THE STANDARD CONDITIONS                                          7
PART III.  AMENDED STANDARD CONDITIONS                                     9

                        CONSOLIDATED STANDARD CONDITIONS
                        --------------------------------

SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS                       10
2.   Application of Section C (Domestic Supply Obligations)               34
3.   Application of Section D (Supply Services Obligations)               37
4.   Payments by the Licensee to the Authority                            40
SECTION B. GENERAL
5.   Compliance with Grid Codes                                           42
6.   Compliance with Distribution Codes                                   43
7.   Duty to Offer Terms for Meter Provision                              44
7A.  Not Used                                                             46
8.   Settlement Agreement for Scotland                                    47
8A.  Compliance with Trading Code in Scotland                             48
8B.  Generation Security Standard                                         49
9.   Compliance with CUSC                                                 55
10.  Balancing and Settlement Code and NETA Implementation                58
11.  Change Co-ordination for NETA                                        62
12.  Pooling and Settlement Agreement Run-off                             63
12A. Prohibition of Discrimination in Selling Electricity                 64
12B. Prohibition of Cross-Subsidies                                       65
13.  Change Co-ordination for the Utilities Act 2000                      66
</TABLE>

                                       1

<PAGE>

<TABLE>
<S>                                                                               <C>
14.  Security Arrangements                                                        68
15.  Security and Safety of Supplies                                              69
16.  Procedures for the Detection and Prevention of Theft or Abstraction
     of Electricity, Damage and Meter Interference                                71
17.  Reading and Inspection of Meters                                             73
18.  Licensee's Apparatus on Customer's Side of Meter                             74
19.  Provision of Information to the Authority                                    75
20.  The Master Registration Agreement                                            76
21.  Publication of Information to Customers                                      77
22.  Domestic Premises                                                            78
22A. Restriction or Revocation: Securing Continuity of Supply                     80
23.  Payments Received in Relation to Standards of Performance                    82
24.  Code of Practice on Procedures with Respect to Site Access                   83
25.  Efficient Use of Electricity                                                 84
26.  Record of and Report on Performance                                          86
27.  Preparation, Review of and Compliance with Customer Service Codes            88
28.  Deemed Contracts                                                             90
29.  Supplier of Last Resort                                                      93
29A. Supplier of Last Resort Supply Payments                                      97
29B. Provision for Termination upon a Direction                                  100
30.  Not used                                                                    101
SECTION C. DOMESTIC SUPPLY OBLIGATIONS
31.  Interpretation of Section C                                                 102
32.  Duty to Supply Domestic Customers                                           104
33.  Last Resort Supply: Security for Payments                                   106
34.  Not used                                                                    109
35.  Code of Practice on Payment of Bills and Guidance for Dealing
     with Customers in Difficulty                                                110
36.  Code of Practice on the Use of Prepayment Meters                            112
37.  Provision of Services for Persons who are of Pensionable Age
     or Disabled or Chronically Sick                                             114
38.  Provision of Services for Persons who are Blind or Deaf                     116
</TABLE>

                                        2

<PAGE>

<TABLE>
<S>                                                                                  <C>
39.  Complaint Handling Procedure                                                    117
40.  Information Given to Domestic Customers                                         118
41.  Terms for Supply of Electricity Incompatible with Licence Conditions            119
42.  Domestic Supply Contracts                                                       120
43.  Contractual Terms - Methods of Payment                                          122
44.  Notification of Terms                                                           124
45.  Security Deposits                                                               127
46.  Termination of Contracts on Notice                                              129
47.  Termination of Contracts in Specified Circumstances                             131
48.  Marketing of Electricity to Domestic Customers                                  134
49.  Assignment of Outstanding Charges                                               140
50.  Modification of Provisions under Standard Conditions 46 (Termination
     of Contracts on Notice) and 49 (Assignment of Outstanding Charges)              142
SECTION D.  SUPPLY SERVICES OBLIGATIONS                                              144
51.  Interpretation of Section D                                                     144
52.  Regulatory Accounts                                                             146
52A. Change of Financial Year                                                        152
53.  Basis of Charges for Top-up and Standby, Exempt Supply Services
     and Prepayment Meter Services: Requirements for Transparency                    154
53A. Non-discrimination in the Provision of Top-up or Standby, Exempt
     Supply Services and Prepayment Meter Services                                   157
53B. Requirement to Offer Terms for Top-up and Standby, Exempt Supply
     Services and Prepayment Meter Services                                          158
53C. Functions of the Authority                                                      162
54.  Duration of Standard Condition 53B (Requirement to Offer Terms for
     Top-up and Standby, Exempt Supply Services and Prepayment Meter Services)       164

                            SPECIAL CONDITIONS AND SCHEDULES
                            --------------------------------

PART IV.  SPECIAL CONDITIONS                                                         166
A:   Interpretation and Application                                                  166
B:   Definitions                                                                     169
</TABLE>

                                        3

<PAGE>

<TABLE>
<S>                                                                                     <C>
C:     Restraints on Supply Charges in England and Wales                                172
D:     Information to be provided to the Authority in connection with the
       charge restriction conditions                                                    195
E:     Allowances in respect of Security Costs                                          197
F:     Duration of Charge Restriction Conditions                                        200
Schedule A: Supplementary Provisions Of The Charge Restriction                          202
G:     Definitions                                                                      205
H:     Restraints on Supply Charges in Scotland                                         207
I:     Information to be provided to the Authority in connection with
       the Charge Restriction Conditions                                                229
J:     Allowances in respect of Security Costs                                          231
K:     Duration of Charge Restriction Conditions                                        235
Schedule B: Supplementary Provisions of the Charge Restriction Conditions               237
Part A. Principles for Attribution                                                      237
Part B. Excluded services                                                               239
L:     Restriction on self-supply                                                       240
SCHEDULE 1 - SPECIFIED AREA                                                             242
SCHEDULE 2 - REVOCATION                                                                 243
SCHEDULE 3A - MANWEB SUPPLY SERVICES AREA                                               246
SCHEDULE 3B - SCOTTISH POWER SUPPLY SERVICES AREA                                       247

                                 CONSENTS AND DIRECTIONS
                                 -----------------------

(01.10.01)    Direction issued under Standard Condition 33 of this licence              249
</TABLE>

                                       4

<PAGE>

                                   PRELIMINARY

                          PART I. TERMS OF THE LICENCE

1.       This licence, treated as granted under section 6(1)(d) of the
         Electricity Act 1989 ("the Act"), authorises Scottish Power Energy
         Retail Limited (a company registered in Scotland under number SC190287
         ("the licensee") whose registered office is situated at 1 Atlantic
         Quay, Robertson Street, Glasgow G2 8SP, to supply electricity to
         premises in the area specified in Schedule 1 during the period
         specified in paragraph 3 below, subject to -

         (a)   the standard conditions of electricity supply licences
               referred to in Part II below which shall have effect in the
               licence subject to such amendments (if any) as are set out in
               Part III below (together "the conditions");

         (b)   the special conditions, if any, set out in Part IV below ("the
               Special Conditions");

         (c)   such Schedules hereto, if any, as may be referenced in the
               conditions, the Special Conditions or the terms of the licence.

2.       This licence is subject to transfer, modification  r amendment in
         accordance with the provisions of the Act, the Special Conditions or
         the conditions.

3.       This licence, unless revoked in accordance with the terms of Schedule
         2, shall continue until determined by not less than 25 years' notice in
         writing given by the Authority to the licensee.

4.       The provisions of section 109(1) of the Electricity Act 1989 (Service
         of documents) shall have effect as if set out herein and as if for the
         words "this Act" there were substituted the words "this licence".

5.       Without prejudice to sections 11 and 23(1) of the Interpretation Act
         1978, Parts I to IV inclusive of, and the Schedules to, this licence
         shall be interpreted and construed in like manner as an Act of
         Parliament passed after the commencement of the Interpretation Act
         1978.

                                       5

<PAGE>

6.       References in this licence to a provision of any enactment, where after
         the date of this licence -

         (a)  the enactment has been replaced or supplemented by another
              enactment, and

         (b)  such enactment incorporates a corresponding provision in relation
              to fundamentally the same subject matter,

         shall be construed, so far as the context permits, as including a
         reference to the corresponding provision of that other enactment.

7.       Pursuant to paragraph 5 of standard condition 3 (Application of Section
         D (Supply Services Obligations)) of the Electricity Supply Licence "the
         Manweb supply services area" is the area specified in Schedule 3A
         hereto and the "ScottishPower supply services area" is the area
         specified in Schedule 3B hereto.

         Pursuant to a licensing scheme made by the Secretary of State under
         Part II of Schedule 7 to the Utilities Act 2000 on 28/th/ September
         2001 this licence was made and is treated as granted under section
         6(l)(d) of the Electricity Act 1989.

                                       6

<PAGE>

                        PART II. THE STANDARD CONDITIONS

Standard conditions in effect in this licence
---------------------------------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Section A                      Section B                   Section C                   Section D
------------------------------------------------------------------------------------------------------------------
<S>                             <C>                         <C>                         <C>
Standard condition 1           Standard condition 5        Standard condition 31       Standard condition 51
------------------------------------------------------------------------------------------------------------------
Standard condition 2           Standard condition 6        Standard condition 32       Standard condition 52
------------------------------------------------------------------------------------------------------------------
Standard condition 3           Standard condition 7        Standard condition 33       Standard condition 52A
------------------------------------------------------------------------------------------------------------------
Standard condition 4           Standard condition 8        Standard condition 35       Standard condition 53
------------------------------------------------------------------------------------------------------------------
                               Standard condition 8A       Standard condition 36       Standard condition 53A
------------------------------------------------------------------------------------------------------------------
                               Standard condition 8B       Standard condition 37       Standard condition 53B
------------------------------------------------------------------------------------------------------------------
                               Standard condition 9        Standard condition 38       Standard condition 53C
------------------------------------------------------------------------------------------------------------------
                               Standard condition 10       Standard condition 39       Standard condition 54
------------------------------------------------------------------------------------------------------------------
                               Standard condition 11       Standard condition 40
------------------------------------------------------------------------------------------------------------------
                               Standard condition 12       Standard condition 41
------------------------------------------------------------------------------------------------------------------
                               Standard condition 12A      Standard condition 42
------------------------------------------------------------------------------------------------------------------
                               Standard condition 12B      Standard condition 43
------------------------------------------------------------------------------------------------------------------
                               Standard condition 13       Standard condition 44
------------------------------------------------------------------------------------------------------------------
                               Standard condition 14       Standard condition 45
------------------------------------------------------------------------------------------------------------------
                               Standard condition 15       Standard condition 46
------------------------------------------------------------------------------------------------------------------
                               Standard condition 16       Standard condition 47
------------------------------------------------------------------------------------------------------------------
                               Standard condition 17       Standard condition 48
------------------------------------------------------------------------------------------------------------------
                               Standard condition 18       Standard condition 49
------------------------------------------------------------------------------------------------------------------
                               Standard condition 19       Standard condition 50
------------------------------------------------------------------------------------------------------------------
                               Standard condition 20
------------------------------------------------------------------------------------------------------------------
                               Standard condition 21
------------------------------------------------------------------------------------------------------------------
                               Standard condition 22
------------------------------------------------------------------------------------------------------------------
                               Standard condition 22A
------------------------------------------------------------------------------------------------------------------
                               Standard condition 23
------------------------------------------------------------------------------------------------------------------
                               Standard condition 24
------------------------------------------------------------------------------------------------------------------
                               Standard condition 25
------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7

<PAGE>

<TABLE>
--------------------------------------------------------------------------------------------------------
Section A                Section B                  Section C                 Section D
--------------------------------------------------------------------------------------------------------
<S>                      <C>
                         Standard condition 26
--------------------------------------------------------------------------------------------------------
                         Standard condition 27
--------------------------------------------------------------------------------------------------------
                         Standard condition 28
--------------------------------------------------------------------------------------------------------
                         Standard condition 29
--------------------------------------------------------------------------------------------------------
                         Standard condition 29A
--------------------------------------------------------------------------------------------------------
                         Standard condition 29B
--------------------------------------------------------------------------------------------------------
</TABLE>

Note:A copy of the current standard conditions of electricity supply licences
can be inspected at the principal office of the Authority. The above list is
correct at the date of this licence but may be changed by subsequent amendments
or modifications to the licence. The authoritative up-to-date version of this
licence is available for public inspection at the principal office of the
Authority.

                                       8

<PAGE>

                      PART III. AMENDED STANDARD CONDITIONS

1.       Standard condition 12B (Prohibition of Cross-Subsidies) shall be
         amended by the addition of the following text as a new paragraph 2 of
         that condition:

         "2.      Nothing which the licensee is obliged to do or not to do
                  pursuant to this licence or any other document which grants a
                  licence to the licensee under the Act shall be regarded as a
                  cross-subsidy for the purposes of this condition."

                                       9

<PAGE>

                        CONSOLIDATED STANDARD CONDITIONS

SECTION A.  INTERPRETATION, APPLICATION AND PAYMENTS

Condition 1.  Definitions and Interpretation

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

     the "Act"                         means the Electricity Act 1989.

     "affiliate"                       in relation to any person means any
                                       holding company of such person, any
                                       subsidiary of such person or any
                                       subsidiary of a holding company of such
                                       person, in each case within the meaning
                                       of sections 736, 736A and 736B of the
                                       Companies Act 1985.

     "alternative accounting rules"    for the purposes of standard condition
                                       52 (Regulatory Accounts) only, has the
                                       meaning given in that condition.

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

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

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

                                       10

<PAGE>

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

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

     "bilateral agreement"                  for the purposes of standard
                                            condition 9 (Compliance with CUSC)
                                            only, has the meaning given in that
                                            condition.

     "bill"                                 includes an invoice, account,
                                            statement or any other instrument of
                                            the like character.

     "BSC"                                  means the code referred to in
                                            standard condition 10 (Balancing and
                                            Settlement Code and NETA
                                            Implementation) as from time to time
                                            modified.

     "BSC Framework Agreement"              for the purposes of standard
                                            condition 10 (Balancing and
                                            Settlement Code and NETA
                                            Implementation) only, has the
                                            meaning given in

                                       11

<PAGE>

                                              that condition.

     "charges for the supply of electricity"  includes, in relation to the
                                              licensee and a particular
                                              customer, charges made by the
                                              licensee in respect of the
                                              provision to that customer of an
                                              electricity meter and cognate
                                              expressions shall be construed
                                              accordingly;

     "construction agreement"                 for the purposes of  standard
                                              condition 9 (Compliance with CUSC)
                                              only, has the meaning given in
                                              that condition.

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

     "contract"                               does not include a deemed contract
                                              but does include a contract which
                                              by virtue of paragraph 23 of
                                              Schedule 7 to the Utilities Act
                                              2000 is deemed to have been made
                                              and "contractual" shall be
                                              construed accordingly.

     "core industry documents"                for the purposes of standard
                                              condition 9 (Compliance with CUSC)
                                              only, has the meaning given in
                                              that condition; and for the
                                              purposes of standard conditions 10
                                              (Balancing and Settlement Code and
                                              NETA Implementation) and 11
                                              (Change Co-ordination for NETA)
                                              only, has the meaning given in
                                              standard condition 10.

     "current cost assets"                    for the purposes of standard
                                              condition 52 (Regulatory Accounts)
                                              only, has the meaning given in
                                              that condition.

                                       12

<PAGE>

     "CUSC"                                 for the purposes of standard
                                            condition 9 (Compliance with CUSC)
                                            only, has the meaning given in that
                                            condition.

     "CUSC Framework Agreement"             for the purposes of standard
                                            condition 9 (Compliance with CUSC)
                                            only, has the meaning given in that
                                            condition.

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

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

     "data processing"                      means services comprising any or all
                                            of the following:
                                            the processing, validation, and
                                            estimation of meter reading data,
                                            and the creation, processing and
                                            validation of data in respect of the
                                            consumption of electricity at
                                            premises which receive an unmetered
                                            supply, and the delivery of such
                                            data to any person for the purpose
                                            of data

                                       13

<PAGE>

                                             aggregation.

     "data retrieval"                        means services comprising any or
                                             all of the following:
                                             the retrieval and verification of
                                             meter reading data from electricity
                                             meters and the delivery of such
                                             data to any person for the purpose
                                             of data processing.

     "data services"                         means any one or more of the
                                             services of data retrieval, data
                                             processing and data aggregation.

     "date of the domestic supply contract"  or the purposes of Section C only,
                                             has the meaning given in standard
                                             condition 31 (Interpretation of
                                             Section C).

     "deemed contract"                       means a contract which by virtue of
                                             paragraph 3 of Schedule 6 to the
                                             Act is deemed to have been made but
                                             does not include a contract which
                                             by virtue of paragraph 23 of
                                             Schedule 7 to the Utilities Act
                                             2000 is deemed to have been made.

     "deemed contract scheme"                means the scheme made by the
                                             licensee under paragraph 3 of
                                             Schedule 6 to the Act.

     "deposit"                               for the purposes of Section C only,
                                             has the meaning given in standard
                                             condition 31 (Interpretation of
                                             Section C).

     "the disapplication date"               has the meaning given in standard
                                             condition 54 (Duration of Standard
                                             Condition 53B (Requirement to Offer
                                             Terms for Top-up and Standby,
                                             Exempt Supply Services and

                                       14

<PAGE>

                                             Prepayment Meter Services)).

     "Distribution Code"                     means in relation to any licensed
                                             distributor the distribution code
                                             required to be prepared by such
                                             distributor and approved by the
                                             Authority as from time to time
                                             revised with the approval of the
                                             Authority.

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

    "distribution services area"             means an area determined by the
                                             Authority in a direction issued to
                                             a licensed distributor under
                                             standard condition 2 (Application
                                             of Section C (Distribution Services
                                             Obligations)) of its distribution
                                             licence.

     "distribution system"                   means the system consisting (wholly
                                             or mainly) of electric lines owned
                                             or operated by an authorised
                                             distributor and used for the
                                             distribution of electricity from
                                             grid supply points or generation
                                             sets or other entry points (and
                                             bulk supply points in Scotland) to
                                             the points of delivery to customers
                                             or authorised electricity operators
                                             or any transmission company within
                                             Great Britain in its capacity as
                                             operator of a transmission system
                                             and includes any remote
                                             transmission assets (owned by a
                                             transmission licensee within
                                             England and Wales) operated by such
                                             distributor and any electrical
                                             plant, meters and metering
                                             equipment owned or operated by such
                                             distributor in connection with the
                                             distribution of electricity,

                                       15

<PAGE>

                                        but shall not include any part of a
                                        transmission system.

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

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

     "domestic supply contract"         has the meaning given in standard
                                        condition 42 (Domestic Supply
                                        Contracts).

     "Domestic Supply Direction"        has the meaning given in standard
                                        condition 2 (Application of Section C
                                        (Domestic Supply Obligations)).

     "effective time"                   for the purposes of Section B only, has
                                        the meaning given in standard condition
                                        12 (Pooling and Settlement Agreement
                                        Run-off).

     "electricity supplier"             means any person authorised to supply
                                        electricity.

     "estimated costs"                  for the purposes of standard condition 4
                                        (Payments by the Licensee to the
                                        Authority) only, has the meaning given
                                        in that condition.

     "exempt supplier"                  for the purposes of Section D only, has
                                        the meaning given in standard condition
                                        51 (Interpretation of Section D).

                                       16

<PAGE>

     "exempt supply services"           for the purposes of Section D only, has
                                        the meaning given in standard condition
                                        51 (Interpretation of Section D).

     "financial year"                   means, subject to standard condition 52A
                                        (Change of Financial Year) (where
                                        applicable), a period of 12 months
                                        beginning on 1st April of each year and
                                        ending on 31st March of the following
                                        calendar year.

     "fixed term period"                for the purposes of Section C only, has
                                        the meaning given in standard condition
                                        31 (Interpretation of Section C).

     "Fuel Security Code"               for the purposes of Section B only, has
                                        the meaning given in standard condition
                                        14 (Security Arrangements).

     "generation security standard"     for the purposes of standard condition
                                        8B (Generation Security Standard) only,
                                        has the meaning given in that condition.

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

     "goods or services"                includes electric lines and electric
                                        plant, and goods or services designed or
                                        calculated to promote the efficient use
                                        of electricity, but excludes meters,
                                        meter maintenance and prepayment
                                        systems, data retrieval, data

                                       17

<PAGE>

                                        processing and data aggregation.

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

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

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

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

     "in-area supply business"          for the purposes of standard condition
                                        52 (Regulatory Accounts) only, has the
                                        meaning given in that condition.

     "industry framework document"      for the purposes of standard condition
                                        13 (Change Co-ordination for the
                                        Utilities Act 2000) only, has the
                                        meaning given in that condition.

     "information"                      includes any documents, accounts,
                                        estimates, returns, records or reports
                                        and data in written, verbal or
                                        electronic form and information in any
                                        form or medium whatsoever (whether or
                                        not

                                       18

<PAGE>

                                        prepared specifically at the request of
                                        the Authority or the Consumer Council)
                                        of any description specified by the
                                        Authority.

     "interconnection"                  means:

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

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

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

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

                                       19

<PAGE>

                                          time maintained, repaired or renewed;
                                          and

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

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

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

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

     "the last resort supply direction"   has the meaning given in standard
                                          condition 29 (Supplier of Last
                                          Resort).

     "licensed distributor"               means any holder of a distribution
                                          licence.

     "licensed supplier"                  means any holder of a supply licence.

                                       20

<PAGE>

     "marketing activities"               for the purposes of standard condition
                                          48 (Marketing of Electricity to
                                          Domestic Customers) only, has the
                                          meaning given in that condition.

     "Master Registration Agreement"      means the agreement of that title
                                          referred to and comprising such
                                          matters as are set out in standard
                                          condition 37 (The Metering Point
                                          Administration Service and the Master
                                          Registration Agreement) of a
                                          distribution licence.

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

     "modification"                       has the meaning given in standard
                                          condition 8B (Generation Security
                                          Standard).

     "multi-site contract"                for the purposes of standard condition
                                          22 (Domestic Premises) only, has the
                                          meaning given in that condition.

     "new termination date"               for the purposes of standard condition
                                          48 (Marketing of Electricity to
                                          Domestic Customers) only, has the
                                          meaning given in that condition.

     "non-domestic customer"              means a customer who is not a domestic
                                          customer.

                                       21

<PAGE>

     "non-half-hourly meter"      means any electricity meter other than one
                                  which is configured to record the quantity of
                                  electricity (calculated in kWh) supplied to
                                  premises during each half-hour period of
                                  supply.

     "the other supplier"         has the meaning given in standard condition 29
                                  (Supplier of Last Resort).

     "out-of-area supply
     business"                    for the purposes of standard condition 52
                                  (Regulatory Accounts) only, has the meaning
                                  given in that condition.

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

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

     "Pooling and Settlement
     Agreement"                   means the agreement of that title approved by
                                  the Secretary of State as from time to time
                                  amended.

     "prepayment meter services"  has the meaning given in standard condition
                                  53B (Requirement to Offer Terms for Top-up and
                                  Standby, Exempt Supply Services and Prepayment
                                  Meter Services).

                                       22

<PAGE>

     "previous supplier"          for the purposes of standard condition 49
                                  (Assignment of Outstanding Charges) only, has
                                  the meaning given in that condition.

     "principal terms"            means, in respect of any form of contract or
                                  deemed contract, those terms which relate to:

                                  (a)   charges for the supply of electricity;

                                  (b)   any requirement to pay charges for the
                                        supply of electricity by prepayment
                                        through a prepayment meter;

                                  (c)   any requirement for a security deposit;

                                  (d)   the duration of the contract or deemed
                                        contract; and

                                  (e)   the rights to terminate the contract
                                        (including any obligation to pay a
                                        termination fee), or the circumstances
                                        in which a deemed contract will expire;

                                  and such other terms as may reasonably be
                                  considered significantly to affect the
                                  evaluation by the customer of the contract to
                                  supply electricity to the customer.

     "Priority Service Register"  for the purposes of standard condition 37
                                  (Provision of Services for Persons who are of
                                  Pensionable Age or Disabled or Chronically
                                  Sick) only, has the meaning given in that
                                  condition.

     "qualifying customer"        for the purposes of standard condition 8B

                                       23

<PAGE>

                                  (Generation Security Standard) only, has the
                                  meaning given in that condition.

     "regulatory accounts"        for the purposes of standard condition 52
                                  (Regulatory Accounts) only, has the meaning
                                  given in that condition.

     "related undertaking"        in relation to any person means any
                                  undertaking in which such person has a
                                  participating interest.

     "relevant constraints"       for the purposes of standard condition 8B
                                  (Generation Security Standard) only, has the
                                  meaning given in that condition.

     "relevant customer"          for the purposes of Section B only, has the
                                  meaning given in standard condition 23
                                  (Payments Received in Relation to Standards of
                                  Performance).

     "relevant customers with
     payment difficulties"        for the purposes of standard condition 35
                                  (Code of Practice on Payment of Bills and
                                  Guidance for Dealing with Customers in
                                  Difficulty) only, has the meaning given in
                                  that condition.

     "relevant distributor"       means, in relation to any premises, the
                                  authorised distributor to whose distribution
                                  system those premises are connected.

     "relevant licensed
     distributor"                 means any licensed distributor which has been
                                  issued with a direction under standard
                                  condition

                                       24

<PAGE>

                                  2 (Application of Section C (Distribution
                                  Services Obligations)) of its distribution
                                  licence designating a distribution services
                                  area to the licensed distributor.

     "relevant metering
     equipment"                   for the purposes of standard condition 7 (Duty
                                  to Offer Terms for Meter Provision) only, has
                                  the meaning given in that condition.

     "relevant parties"           for the purposes of standard condition 50
                                  (Modification of Provisions under Standard
                                  Conditions 46 and 49) only, has the meaning
                                  given in that condition.

     "relevant payment"           for the purposes of standard condition 23
                                  (Payments Received in Relation to Standards of
                                  Performance) only, has the meaning given in
                                  that condition.

     "relevant premises"          for the purposes of Section C only, has the
                                  meaning given in standard condition 31
                                  (Interpretation of Section C).

     "relevant proportion"        for the purposes of standard condition 4
                                  (Payments by the Licensee to the Authority)
                                  only, has the meaning given in that condition.

     "relevant provisions"        for the purposes of Section D only, has the
                                  meaning given in standard condition 50
                                  (Modification of Provisions under Conditions
                                  46 and 49).

                                       25

<PAGE>

     "relevant purchaser"         for the purposes of standard condition 8B
                                  (Generation Security Standard) only, has the
                                  meaning given in that condition.

     "relevant year"              for the purposes of standard condition 4
                                  (Payments by the Licensee to the Authority)
                                  only, has the meaning given in that condition.

     "remote transmission assets" means any electric lines, electrical plant or
                                  meters in England and Wales owned by a
                                  transmission company ("the owner transmission
                                  company") which

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

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

     "representative"             for the purposes of Section C only, has the
                                  meaning given in standard condition 48
                                  (Marketing of Electricity to Domestic
                                  Customers).

     "request"                    for the purposes of Section C only, has the

                                       26

<PAGE>

                                  meaning given in standard condition 32 (Duty
                                  to Supply Domestic Customers).

     "run-off"                    for the purposes of standard condition 12
                                  (Pooling and Settlement Agreement Run-off)
                                  only, has the meaning given in that condition.

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

     "security arrangements"      for the purposes of standard condition 33
                                  (Last Resort Supply: Security for Payments)
                                  only, has the meaning given in that condition.

     "separate business"          means each of the in-area supply and
                                  out-of-area supply businesses taken separately
                                  from one another and from any other business
                                  of the licensee, but so that where all or any
                                  part of such business is carried on by an
                                  affiliate or related undertaking of the
                                  licensee such part of the business as is
                                  carried on by that affiliate or related
                                  undertaking shall be consolidated with any
                                  other such business of the licensee (and of
                                  any other affiliate or related undertaking) so
                                  as to form a single separate business.

     "Settlement Agreement for
     Scotland"                    for the purposes of Section B only, has the
                                  meaning given in standard condition 8
                                  (Settlement Agreement for Scotland).

     "standby"                    for the purposes of Section D only, has the
                                  meaning given in standard condition 51

                                       27

<PAGE>

                                        (Interpretation of Section D).

         "statutory accounts"           means the accounts that the licensee
                                        prepares under the Companies Act 1985.

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

         "supply business"              means the business of the licensee
                                        supplying electricity as authorised.

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

         "supply services area"         has the meaning given at paragraph 5(b)
                                        of standard condition 3 (Application of
                                        Section D (Supply Services
                                        Obligations)).

         "Supply Services Direction"    for the purposes of standard condition 3
                                        (Application of Section D (Supply
                                        Services Obligations)) only, has the
                                        meaning given in that condition.

         "termination date"             for the purposes of standard condition
                                        48 (Marketing of Electricity to Domestic
                                        Customers) only, has the meaning given
                                        in that condition.

         "termination fee"              for the purposes of Section C only, has
                                        the meaning given in standard condition
                                        31

                                       28

<PAGE>

                                        (Interpretation of Section C).

         "top-up"                       for the purposes of Section D only, has
                                        the meaning given in standard condition
                                        51 (Interpretation of Section D).

         "Trading Code"                 for the purposes of Section B only, has
                                        the meaning given in standard condition
                                        8A (Compliance with Trading Code in
                                        Scotland).

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

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

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

                                       29

<PAGE>

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

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

         "use of system agreement"      for the purposes of Section B only, has
                                        the meaning given in standard condition
                                        23 (Payments Received in Relation to
                                        Standards of Performance).

         "valid notice of termination"  for the purposes of Section C only, has
                                        the meaning given in standard condition
                                        31 (Interpretation of Section C).

         "value of lost load"           for the purposes of standard condition
                                        8B (Generation Security Standard) only,
                                        has the meaning given in that condition.

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

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

4.   These standard conditions shall have effect as if, in relation to a licence
     holder who is a natural person, for the words "it", "its" and "which" there
     were substituted the words

                                       30

<PAGE>

     "he", "him", "his", "who" and "whom", and cognate expressions shall be
     construed accordingly.

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

6.   Any reference in these standard conditions to -

     (a)  a provision thereof;

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

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

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

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

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

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

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

                                       31

<PAGE>

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

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

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

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

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

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

          (ii) as not having effect in the licence until such time as the
               standard condition in which the definition is used has effect
               within the licence in pursuance of standard condition 2
               (Application of Section C (Domestic Supply Obligations)) or
               standard condition 3 (Application of Section D (Supply Services
               Obligations));

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

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

                                       32

<PAGE>

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

                                       33

<PAGE>

Condition 2.   Application of Section C (Domestic Supply Obligations)

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

     (a)  the licensee may supply or offer to supply electricity to domestic
          premises;

     (b)  paragraphs 4 to 10 shall cease to be suspended and shall have effect
          in the licensee's licence; and

     (c)  the licensee shall be obliged to comply with the requirements of
          Section C of this licence,

          from the date the said scheme takes effect.

2.   Until -

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

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

     the licensee shall not supply or offer to supply electricity to any
     domestic premises; the standard conditions in Section C shall not have
     effect within this licence; and the licensee shall not be obliged to comply
     with any of the requirements of Section C of this licence.

3.   Except where paragraph 1 applies to the licensee, paragraphs 4 to 10 of
     this standard condition shall be suspended and shall have no effect in this
     licence until such time as the Authority issues to the licensee a notice in
     writing ending the suspension and providing for those paragraphs to have
     effect in this licence with effect from the date specified in the notice.

                                       34

<PAGE>

4.   The Authority may, following an application made by the licensee in
     accordance with paragraphs 5 to 7, issue a direction (a "Domestic Supply
     Direction"). Where the Authority has issued to the licensee a Domestic
     Supply Direction the standard conditions in Section C shall have effect
     within this licence from the date specified in the direction; and the
     licensee shall be obliged to comply with the requirements of Section C to
     the extent and subject to the terms specified in such direction.

5.   An application by the licensee for a Domestic Supply Direction shall be:

     (a)  made in writing, addressed to the Authority and delivered or sent by
          pre-paid post to the Authority at its principal office; and signed and
          dated by or on behalf of the applicant, stating, where signed on
          behalf of the applicant, the capacity of the signatory;

     (b)  in the form specified in Schedule 1 to the Application Regulations or
          a form to the like effect and shall contain the information specified
          in that schedule; and be accompanied by the information and documents
          specified in Schedule 2 to the Application Regulations;

     (c)  accompanied by the information and documents specified in paragraphs 1
          to 4 inclusive of Part IV of Schedule 3 to the Application
          Regulations; and

     (d)  accompanied by a fee equivalent to the fee specified in the
          Application Regulations for applications for extensions to electricity
          supply licence including authorisation to supply electricity to
          domestic premises.

6.   A notice of an application made by the licensee for a Domestic Supply
     Direction must be published by the licensee within 7 days of making such
     application:

     (a)  in the London Gazette and the Edinburgh Gazette; and

     (b)  in such newspapers as are calculated to ensure that the notice is
          circulated;

                                       35

<PAGE>

     (c)  where the application relates to premises of a specified description
          and is not limited to premises situated in a specified area,
          throughout Great Britain;

     (d)  where the application relates to a specified area, throughout that
          area; and

     (e)  where the application relates to particular premises, throughout the
          area or areas in which those premises are situated.

7.   The applicant shall deliver, or send by pre-paid post a copy of the London
     and Edinburgh Gazettes, and of each newspaper in which notice of the
     application is published in accordance with this regulation to the
     Authority at its principal office.

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

     (a)  vary the terms (as set out in the Domestic Supply Direction or
          elsewhere) under which Section C has effect in this licence; or

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

9.   The variation or cessation provided for in paragraph 8 shall take effect
     from the date specified in the variation or cessation notice given to the
     licensee by the Authority.

10.  With effect from the date of cessation referred to in paragraph 9,
     paragraphs 4 to 9 of this condition shall be suspended and shall cease to
     have effect in this licence, but the Authority may at any time thereafter
     give to the licensee a notice ending the suspension and providing for those
     paragraphs to have effect again in this licence with effect from the date
     specified in the notice.

                                       36

<PAGE>

Condition 3.   Application of Section D (Supply Services Obligations)

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

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

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

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

2.   Until -

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

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

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

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

                                       37

<PAGE>

     ending the suspension and providing for those paragraphs to have effect in
     the licensee's licence.

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

5.   A Supply Services Direction:

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

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

6.   Except for standard condition 53B (Requirement to Offer Terms for Top-Up
     and Standby, Exempt Supply Services and Prepayment Meter Services) (which
     is subject to the disapplication provisions set out in standard condition
     54 (Duration of Standard Condition 53B)), the Authority may, with the
     consent of the licensee:

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

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

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

8.   With effect from the date of cessation referred to in paragraph 7,
     paragraphs 4 to 7 of

                                       38

<PAGE>

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

                                       39

<PAGE>

Condition 4.  Payments by the Licensee to the Authority

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

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

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

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

          (aa)   any costs estimated by the Authority in the previous relevant
                 year under sub-paragraph 2(a); and

          (bb)   the actual costs of the Competition Commission (in connection
                 with that reference) for the relevant year prior to the
                 previous relevant year.

3.   The amounts determined in accordance with paragraph 2 shall be paid by the
     licensee to the Authority in one instalment being due for payment by 31
     October in each year, provided that if the Authority has not given notice
     of the amount of the instalment at least 30 days before the payment date
     stated above, the licensee shall pay the amount due within 30 days from the
     actual giving of notice by the Authority to the licensee (whenever notice
     is given).

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

                                       40

<PAGE>

5.   In this condition:

        "estimated         costs" means costs estimated by the Authority as
                           likely to be the costs incurred by the Competition
                           Commission, such estimate having regard to the views
                           of the Competition Commission.

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

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

                                       41

<PAGE>


SECTION B.  GENERAL

Condition 5.  Compliance with Grid Codes

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


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

                                       42

<PAGE>

Condition 6.  Compliance with Distribution Codes

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


2.   The Authority may (following consultation with any licensed distributor
     directly affected thereby) issue directions relieving the licensee of its
     obligation under paragraph 1 in respect of such parts of the Distribution
     Code of any such distributor and to such extent as may be specified in
     those directions.

                                       43

<PAGE>

Condition 7.  Duty to Offer Terms for Meter Provision

1.   Where the licensee is the owner of any relevant metering equipment, it
     shall, on an application made by any person:


     (a)  offer to enter into an agreement for the provision of such relevant
          metering  equipment  whether,  at the discretion of the licensee, by
          way of sale, hire or loan; and


     (b)  where the terms offered are acceptable to the person making the
          application, sell, hire or loan the relevant metering equipment in
          accordance with the terms offered.

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


     (a)  the date by which the terms of the agreement shall be fulfilled,
          including the date by which the relevant metering equipment will be
          available for use by the applicant (time being of the essence unless
          otherwise agreed between the parties);

     (b)  the charges to be paid to the licensee; and


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


3.   The licensee shall offer terms for agreements in accordance with paragraph
     1 as soon as practicable after the receipt by the licensee of an
     application containing all such information as it may reasonably require
     for the purpose of formulating the terms of the offer.

4.   The licensee shall not be obliged pursuant to this condition to offer to
     enter or to enter into any agreement if to do so would be likely to cause
     the licensee to be in breach of:

                                       44

<PAGE>

     (a)  any regulations made under section 29 of the Act or of any other
          enactment relating to safety or standards  applicable in respect of
          the licensee;

     (b)  any of the applicable Grid Codes or Distribution Codes; or


     (c)  the conditions.


5.   The Authority may, on the application of the licensee, issue a direction
     relieving the licensee of its obligations under paragraph 1 in respect of
     such relevant metering equipment and subject to such terms and conditions
     as may be specified in the direction.

6.   Without prejudice to the provisions of paragraphs 1 to 5 above, the
     licensee, whether it is the owner of any metering equipment or not, shall
     not enter into any agreement (whatever the nature of the agreement):

     (a)  with any customer to provide metering equipment to that customer; or

     (b)  with any other person, to provide metering equipment to that person
          or to procure the provision of metering equipment to or on behalf of
          any customer

     which in each case is intended or is likely to restrict, distort or prevent
     competition in the supply of electricity.

7.   In this condition:


     "relevant metering equipment"      means metering equipment sited at any
                                        premises to which a supply of
                                        electricity is being or is required to
                                        be given by an electricity supplier
                                        other than the licensee.

                                       45

<PAGE>

Condition 7A.  Not Used

                                       46

<PAGE>

Condition 8.  Settlement Agreement for Scotland

1.   Insofar as the licensee supplies or offers to supply electricity to any
     premises situated in Scotland, it shall become a party to and thereafter
     comply with the provisions of the Settlement Agreement for Scotland.

2.   In this condition:

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

                                       47

<PAGE>

Condition 8A.  Compliance with Trading Code in Scotland

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

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

2.   In this condition:

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

                                       48

<PAGE>

Condition 8B.  Generation Security Standard

1.   Insofar as the licensee supplies or offers to supply electricity to any
     premises situated in Scotland, the licensee shall make arrangements
     sufficient to meet the generation security standard.

2.   Not later than 3 months before the end of each financial year, the licensee
     shall provide to the Authority a statement complying with the provisions of
     paragraph 3.

3.   The statement to be provided to the Authority under paragraph 2 shall:

     (a)  be signed by 2 directors of the licensee;

     (b)  describe the arrangements made or to be made by the licensee to meet
          the generation security standard in each of the 7 succeeding financial
          years;

     (c)  state the planning margin or margins adopted by the licensee for the
          purpose of the above arrangements and set out the methodology and
          calculations used in arriving at such margin or margins;

     (d)  refer to data, assumptions and demand forecasts (including insofar as
          relevant those relating to diversity of demand, own generation,
          arrangements for trading energy and capacity with other persons,
          arrangements with qualifying customers and relevant purchasers,
          including those permitting interruption and reduction of supply,
          forecast maximum demand from qualifying customers and relevant
          purchasers, the maximum demand which the licensee can meet without
          failing to meet the generation security standard, contracted
          availability of generation, and load management (if any) of qualifying
          customers and relevant purchasers); and

     (e)  include such other matters as the Authority shall specify in
          directions issued by the Authority to the licensee for the purpose of
          this condition not later than 6 months before the end of the financial
          year in which the statement is provided.

                                       49

<PAGE>

4.   The licensee shall upon request by the Authority provide to the Authority
     such information as the Authority may require for the purpose of monitoring
     compliance with this condition and to enable the Authority (having regard
     to his statutory duties) to review the operation of the generation security
     standard.

5.   The licensee shall not make or agree any alteration, other than an
     alteration to which paragraph 7 applies, to the arrangements described in
     any statement provided to the Authority under paragraph 2 as having been
     made by the licensee to meet the generation security standard for the first
     financial year covered by such statement.

6.   The licensee shall:

     (a)  procure that, except to the extent that the Authority shall otherwise
          approve, arrangements described in any statement provided to the
          Authority under paragraph 2 as falling to be made by the licensee to
          meet the generation security standard for the first financial year
          covered by such statement shall be made; and

     (b)  not make or agree any alteration, other than an alteration to which
          paragraph 7 applies to the arrangements so made.

7.   This paragraph applies to an alteration which the Authority considers is
     unlikely to result in the licensee failing to meet the generation security
     standard.

8.   Save as required by law, the licensee shall not enter into any contract for
     the supply of electricity if the entering into of the contract would cause
     demand in the first year covered by the statement most recently provided to
     the Authority under paragraph 2 to exceed the maximum demand which the
     licensee can meet in that year without failing to meet the generation
     security standard as referred to in such statement, unless the Authority
     shall consider that the entering into of the contract is unlikely to result
     in the licensee failing to meet the generation security standard.

                                       50

<PAGE>

9.   Subject to paragraph 10, the licensee shall not:

     (a)  enter into any contract to supply electricity to a person other than a
          qualifying customer if the licensee has interrupted or reduced the
          supply of electricity to any qualifying customer (other than by reason
          of relevant constraints) and the interruption or reduction continues
          during the period or any part of the period in which electricity would
          otherwise be supplied under such contract; or

     (b)  interrupt or reduce the supply of electricity to any qualifying
          customer (except to the extent that such interruption or reduction is
          made by reason of relevant constraints) if at or shortly before the
          time of the interruption or reduction the licensee enters into any
          contract to supply electricity to a person other than a qualifying
          customer during the period or part of the period that the supply is
          interrupted or reduced; or

     (c)  interrupt or reduce the supply of electricity to any qualifying
          customer in circumstances where:

          (i)  electricity is available for purchase under the terms of the
               Balancing and Settlement Code, the Settlement Agreement for
               Scotland or the trading system established by the Trading Code at
               a price less than value of lost load; and

          (ii) the licensee is not prevented from purchasing such electricity by
               reason of relevant constraints.

10.  Notwithstanding paragraph 9, the licensee may interrupt or reduce a supply
     of electricity in circumstances where it is necessary to do so by reason of
     planned maintenance undertaken on the distribution system or transmission
     system required by the licensee for the supply of electricity or by reason
     of a fault on or affecting either the distribution system or transmission
     system required by the licensee for the supply of electricity or the
     quantities of electricity delivered into that system.

11.  In the event that the Authority, after consultation with the licensee,
     shall at any time or from time to time issue a direction to the licensee
     for the purpose of this condition to the effect

                                       51

<PAGE>

     that, in the opinion of the Authority, it is desirable that the licensee
     make arrangements such as are specified in the direction to meet the
     generation security standard, then the duty imposed by paragraph 1 shall
     not be capable of being discharged by the licensee after such date as shall
     be specified for the purpose in the direction except by the licensee making
     the arrangements so specified

12.  The Authority, after consultation with the licensee, may at any time and
     from time to time by directions issued to the licensee for the purpose of
     this condition make such modifications to this condition or any other
     condition to which the licensee is subject as, in the opinion of the
     Authority, are the most appropriate to ensure that the licensee's supply
     charges are restricted in circumstances where the licensee fails to meet
     demand from its qualifying customers by reason of an insufficiency of
     electricity generation available for the purposes of supply by the licensee
     to such customers.

13.  The duty of the licensee under paragraph 1 may, in relation to qualifying
     customers whose premises are located in isolated areas, be discharged by
     the making of arrangements sufficient to meet a standard of generation
     security (other than the generation security standard) agreed between the
     licensee and the Authority.

14.  The provisions of this condition are without prejudice to the duties of the
     licensee under any regulation made under section 29 of the Act.

15.  In this condition:

         "generation security standard"         means:

                                                (a)  such standard of generation
                                                     security as will ensure:

                                                     (i)   that the supply of
                                                           electricity to
                                                           qualifying customers
                                                           will not be
                                                           discontinued in more
                                                           than 9 years

                                       52

<PAGE>

                                                   in any period of 100 years;
                                                   and

                                             (ii)  that the voltage or frequency
                                                   of electricity supplied to
                                                   qualifying customers will not
                                                   be reduced below usual
                                                   operational limits in more
                                                   than 30 years in any period
                                                   of 100 years.

                                             by reason of insufficiency of
                                             electricity generation available
                                             for the purposes of supply by the
                                             licensee to its qualifying
                                             customers at times of annual system
                                             peak demand; and

                                        (b)  sufficient electricity generation
                                             being available for the purposes of
                                             supply by the licensee to its
                                             qualifying customers at times other
                                             than times of annual system peak
                                             demand to ensure that the standard
                                             of generation security at each such
                                             time will be not less than that
                                             referred to in sub-paragraph (a)
                                             above for times of annual system
                                             peak demand.

         "modification"                 shall have the same meaning as in
                                        section 111 of the Act.

         "qualifying customer"          means any purchaser from the licensee
                                        entitled and requiring at any time to be
                                        supplied by the licensee at premises
                                        within Scotland but shall exclude a
                                        purchaser under an interruptible
                                        contract or a contract

                                       53

<PAGE>

                                        containing load management terms to the
                                        extent that supplies to that purchaser
                                        may be interrupted or reduced in
                                        accordance with the terms of that
                                        contract.

         "relevant constraints"         means any constraints on the
                                        transmission system of any transmission
                                        licensee or on the interconnector or
                                        Scottish interconnection or on a
                                        distribution system required by the
                                        licensee for the supply of electricity.

         "relevant purchaser"           means any purchaser from the licensee
                                        who is not a qualifying customer.

         "value of lost load"           means, in respect of the financial year
                                        ending on 31 March 2002, the sum
                                        of(pound)2.90 per kWh and, in respect of
                                        each succeeding financial year, the sum
                                        which corresponds to(pound)2.90 per kWh
                                        as adjusted to reflect the percentage
                                        change in the Retail Price Index between
                                        the index published or determined in
                                        respect of the December prior to the
                                        start of that financial year and the
                                        index published or determined for
                                        December 2000.

                                       54

<PAGE>

Condition 9.  Compliance with CUSC

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

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

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

4.   In this condition:

     "bilateral agreement"              means an agreement between the holder of
                                        a transmission licence in England and
                                        Wales and a CUSC user supplemental to
                                        the CUSC relating to a direct connection
                                        to that transmission system identifying
                                        the

                                       55

<PAGE>

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

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

      "core industry documents"         means those documents which have been so
                                        designated by the Secretary of State as
                                        such.

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

      "CUSC Framework Agreement"        means the agreement of that title, in
                                        the form approved by the Secretary of
                                        State, by

                                       56

<PAGE>

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

                                       57

<PAGE>

Condition 10.  Balancing and Settlement Code and NETA Implementation

1.   Insofar as the licensee shall supply or offer to supply electricity to any
     premises in England and Wales, the licensee shall be a party to the BSC
     Framework Agreement and shall comply with the BSC.

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

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

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

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

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

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

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

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

                                       58

<PAGE>

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

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

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

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

     (g)  for the Authority, in the circumstances set out in the scheme, to
          require that consideration be given to the making of a proposal to
          modify the BSC and, if so, to require the making of such proposal in
          the manner set out in the scheme, such power to be exercisable at any
          time within the period of 12 months after the effective time (as
          defined in standard condition 12 (Pooling and Settlement Agreement
          Run-off)).

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

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

                                       59

<PAGE>

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

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

8.   In this condition:

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

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

     "core industry documents"          mean those documents which

                                        (a)   in the Secretary of State's
                                              opinion are central industry
                                              documents associated with the
                                              activities of the licensee and
                                              authorised

                                       60

<PAGE>

                                              electricity operators, the subject
                                              matter of which relates to or is
                                              connected with the BSC or the
                                              balancing and settlement
                                              arrangements, and

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

                                       61

<PAGE>

Condition 11.  Change Co-ordination for NETA

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

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

                                       62

<PAGE>

Condition 12.  Pooling and Settlement Agreement Run-off

1.   Insofar as the licensee shall supply or offer to supply electricity to any
     premises in England and Wales, the licensee shall continue to be a party to
     and a pool member under, and shall comply with, the Pooling and Settlement
     Agreement for the purposes of run-off, until the provisions of the BSC
     relating to run-off become effective.

2.   This condition shall apply to the extent that the licensee was party to and
     a Pool member under the Pooling and Settlement Agreement immediately prior
     to the effective time.

3.   In this condition:

     "effective time"                   means the start of the first period for
                                        trading under the BSC as determined by
                                        the Secretary of State.

     "run-off"                          means the determination and settlement
                                        (including by way of reconciliation) of
                                        amounts due arising under or in
                                        connection with the Pooling and
                                        Settlement Agreement in relation to
                                        settlement periods up to and including
                                        the settlement period immediately prior
                                        to the effective time (including the
                                        resolution of disputes in respect
                                        thereof).

                                       63

<PAGE>

Condition 12A.  Prohibition of Discrimination in Selling Electricity

1.   The licensee shall not, and shall procure that any affiliate or related
     undertaking of the licensee shall not, sell or offer to sell electricity to
     any one purchaser or person seeking to become a purchaser on terms as to
     price which are materially more or less favourable than those on which it
     sells or offers to sell electricity to comparable purchasers. For these
     purposes regard shall be had to the circumstances of the sale to such
     purchasers including (without limitation) volumes, load factors, conditions
     of interruptibility and the dates and durations of the relevant agreements.

2.   For the purposes of paragraph 1, references to selling or sale of
     electricity:

     (a)  do not include sale by way of supply to premises;

     (b)  include entering into or disposing of the benefit of a contract, which
          has (or taken together with any other arrangement has) the commercial
          effect of selling electricity, by conferring rights or obligations
          (including rights or obligations by way of option) in relation to or
          by reference to the sale, purchase or delivery of electricity at any
          time or the price at which electricity is sold or purchased at any
          time,

      and "purchaser", "purchasing" and "purchase" shall be construed
      accordingly.

                                       64

<PAGE>

Condition 12B.  Prohibition of Cross-Subsidies

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

2.   Nothing which the licensee is obliged to do or not to do pursuant to this
     licence or any other document which grants a licence to the licensee under
     the Act shall be regarded as a cross-subsidy for the purposes of this
     condition.

                                       65

<PAGE>

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

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

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

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

     (a)   the Pooling and Settlement Agreement;

     (b)   the Balancing and Settlement Code;

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

     (d)   the Settlement Agreement for Scotland;

     (e)   the Master Registration Agreement;

     (f)   the Data Transfer Services Agreement;

     (g)   the Radio Teleswitch Agreement;

     (h)   any Grid Code;

     (i)   any Distribution Code;

     (j)   the Trading Code;

     (k)   the Fuel Security Code;

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

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

                                       66

<PAGE>

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

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

                                       67

<PAGE>

Condition 14.  Security Arrangements

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

2.   Insofar as the licensee shall supply or offer to supply electricity to any
     premises in Scotland:

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

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

3.   In this condition:


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

                                       68

<PAGE>

Condition 15.  Security and Safety of Supplies

1.   The licensee shall make arrangements to keep each of its customers informed
     of the postal address and telephone number of an enquiry service
     established and operated by the licensed distributor to whose distribution
     system such customer's premises are connected pursuant to standard
     condition 6 (Safety and Security of Supplies Enquiry Service) of such
     licensed distributor's distribution licence for use by any person for the
     purposes of receiving reports and offering information, guidance or advice
     about any matter or incident that:

     (a)  causes danger or requires urgent attention, or is likely to cause
          danger or require urgent attention, in relation to the supply or
          distribution of electricity; or

     (b)  affects or is likely to affect the maintenance of the security,
          availability and quality of service of the distribution system
          through which the relevant customer is supplied with electricity.

2.   The licensee may discharge the duty imposed by paragraph 1 by providing the
     requisite information to each of its customers:

     (a)  in respect of any customer supplied pursuant to a contract, on the
          occasion of the customer first commencing to take a supply from the
          licensee; and

     (b)  either:


          (i)  where bills or statements in respect of charges for the supply of
               electricity are rendered to the customer, on a quarterly basis
               (it being sufficient that the information is included on or with
               any bill or statement); or

          (ii) where no bills or statements in respect of charges for the supply
               of electricity are rendered to the customer, on an annual basis,

          and by publishing such information in such manner as will in the
          opinion of the licensee secure adequate publicity for it.

                                       69

<PAGE>

3.   The licensee shall, in so far as is practicable, take steps to inform each
     of its customers of any change to the address or telephone number of the
     service referred to at paragraph 1 prior to such change becoming effective.

                                       70

<PAGE>

Condition 16.  Procedures for the Detection and Prevention of Theft or
Abstraction of Electricity, Damage and Meter Interference

1.   The licensee shall (and shall ensure that its agents shall) take all
     reasonable steps to detect and prevent:

     (a)  the theft or abstraction of electricity at premises which are supplied
          by it;

     (b)  damage to any electrical plant, electric line or metering equipment
          through which such premises are supplied; and

     (c)  interference with any metering equipment through which such premises
          are supplied.

2.   The licensee shall (and shall ensure that its agents shall), as soon as is
     reasonably practicable, inform the relevant distributor and (if different)
     the owner of any electrical plant, electric lines or meter of any incident
     where it has reason to believe:

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

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

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

3.   Where the licensee has reason to believe that any incident reported to the
     relevant distributor by it in accordance with paragraph 2 or any incident
     reported by the relevant distributor to it pursuant to paragraph 2 of
     standard condition 7 (Provision of Information about Theft or Abstraction
     of Electricity, Damage and Meter Interference) of the relevant
     distributor's distribution licence has been caused by the

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     criminal act of any person it shall provide the relevant distributor with
     such information as is reasonably required for the purposes of
     investigating the incident and resolving any safety concerns arising out of
     it.

4.   The licensee shall inform the relevant distributor of its policy in
     relation to incidents of the type referred to at paragraph 3, and in
     particular whether and in which circumstances it requires the relevant
     distributor to remedy such incidents by the use of:

     (a)  the substitution of alternative meters;

     (b)  the provision of prepayment meters; and

     (c)  the discontinuation of supply to the premises at which the incident
          occurred.

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Condition 17.  Reading and Inspection of Meters

1.   The licensee shall use all reasonable endeavours to ensure that, at least
     once in every period of two years beginning with the date on which this
     condition comes into force, it inspects any non-half-hourly meter at
     premises at which it has at all times during that period been the supplier.

2.   An inspection in accordance with paragraph 1 shall be carried out by a
     person of appropriate skill and experience and shall include:

     (a)  taking a meter reading; and

     (b)  undertaking a visual inspection of the meter and its associated
          installation for the purpose of assessing whether:

          (i)   there has been damage to the meter or to any electric line or
                electrical plant associated with it or other part of any
                metering equipment;

          (ii)  there has been interference with the meter to alter its register
                or prevent it from duly registering the quantity of electricity
                supplied; or

          (iii) the meter has deteriorated in any way that might affect its
                safety or proper functioning.

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Condition 18.  Licensee's Apparatus on Customer's Side of Meter

1.   This condition applies where the licensee installs, or arranges for the
     installation of, a second meter or other apparatus for the purpose of
     ascertaining or regulating the amount of electricity supplied, the period
     of supply, or any other quantity or time connected with the supply on the
     customer's side of a non half-hourly meter registering the quantity of the
     supply to that customer's premises.

2.   Any second meter or other apparatus installed by or on behalf of the
     licensee in the position and for a purpose described in paragraph 1 shall
     be such that the power consumed by it, when aggregated with the power
     consumed by any other meter or apparatus installed by or on behalf of the
     licensee in the like position and for a like purpose in relation to the
     customer, does not exceed 10 watts except where otherwise agreed with the
     customer.

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Condition 19.  Provision of Information to the Authority

1.   Subject to paragraphs 2 and 4, the licensee shall furnish to the Authority,
     in such manner and at such times as the Authority may reasonably require,
     such information and shall procure and furnish to it such reports, as the
     Authority may reasonably require or as may be necessary for the purpose of
     performing:

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

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

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

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

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

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

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Condition 20.  The Master Registration Agreement

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

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Condition 21.  Publication of Information to Customers

1.   Subject to paragraph 3, the licensee shall inform each of its customers of
     a number or numbers (the "Supply Number(s)") relevant to the registration
     of that customer, under the Master Registration Agreement, with the
     licensee to the premises owned or occupied by such customer:

     (a)  in a form in accordance with the terms of a direction issued by the
          Authority, on each bill or statement given to the customer in relation
          to the supply of electricity; and

     (b)  annually where the customer does not receive such a bill or statement.

2.   The Supply Number shall consist of a number of data items, each of which
     shall be represented by a numerical identifier which shall:

     (a)  have the number of digits specified in a direction issued by the
          Authority;

     (b)  be approved by the Authority; and

     (c)  be used by the licensee in common with all electricity suppliers.

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

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Condition 22.  Domestic Premises

1.   Any non-domestic premises which were supplied under contract by the
     licensee at a rate reasonably expected not to exceed 12,000 kilowatt hours
     a year, immediately before the date on which these standard conditions were
     determined by the Secretary of State pursuant to section 33(1) of the
     Utilities Act 2000, and in respect of which the customer has remained a
     customer of the licensee continuously from that date, shall, for the
     purposes of this licence, be treated as domestic premises until the first
     of the following occurs:

     (a)  the contract expires or is terminated; or

     (b)  31 March 2003.

2.   Any premises supplied by the licensee which were domestic premises at the
     time when the customer entered into a contract or became subject to a
     deemed contract with the licensee in respect of supply to the said premises
     shall, notwithstanding subsequent changes to the nature of the consumption
     of electricity at those premises, be domestic premises for the purposes of
     this licence, until the first of the following occurs:

     (a)  in the case of premises supplied under a contract, the contract
          expires or is terminated; or

     (b)  in the case of premises supplied under a deemed contract, the premises
          come to be supplied under a contract with the licensee or the licensee
          ceases to supply the premises.

3.   Any premises supplied by the licensee which were non-domestic premises at
     the time when the customer entered into a contract or became subject to a
     deemed contract with the licensee in respect of supply to the said premises
     shall, notwithstanding subsequent changes to the nature of the consumption
     of electricity at those premises, be non-domestic premises for the purposes
     of this licence until the first of the following occurs:

     (a)  in the case of premises supplied under a contract, the contract
          expires or is terminated; or

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     (b)  in the case of premises supplied under a deemed contract, the premises
          come to be supplied under a contract with the licensee or the licensee
          ceases to supply the premises.

4.   Any domestic premises supplied by the licensee which are supplied under a
     multi-site contract, shall, for the purposes of this licence, be treated as
     non-domestic premises until that contract expires or is terminated.

5.   For the purposes of this condition, a "multi-site contract" is a contract
     for the supply of electricity both to:

     (a)  one or more non-domestic premises; and

     (b)  one or more domestic premises occupied for purposes ancillary to those
          for which any of the said non-domestic premises is occupied;

     where all the premises are owned or occupied by:

     (i)  the same person or body of persons whether corporate or unincorporate;
          or

     (ii) an undertaking (the "principal undertaking") and any holding company,
          subsidiary, or subsidiary of the holding company of that principal
          undertaking, or any other undertaking in which the principal
          undertaking has a participating interest.

6.   Paragraphs 1 to 5 shall not apply in respect of the obligations in standard
     conditions 26 (Record of and Report on Performance), 35 (Code of Practice
     on Payment of Bills and Guidance for Dealing with Customers in Difficulty),
     36 (Code of Practice on the Use of Prepayment Meters), 37 (Provision of
     Services for Persons who are of Pensionable Age or Disabled or Chronically
     Sick), 38 (Provision of Services for Persons who are Blind or Deaf) and 49
     (Assignment of Outstanding Charges).

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Condition 22A.  Restriction or Revocation: Securing Continuity of Supply

1.   Without prejudice to the Authority's power under section 6(4) of the Act,
     if the licensee applies to the Authority for a modification of any term
     contained in the licence so as to restrict the premises to which the
     licensee may give a supply of electricity, or for the revocation of the
     licence in accordance with any term contained in it, the licensee shall
     provide the Authority with sufficient information so as to enable the
     Authority to determine whether such arrangements have been made as:

     (a)  will secure continuity of supply for all relevant customers; and

     (b)  in the case of each relevant customer who is supplied with electricity
          in pursuance of a contract, will ensure such continuity on the same
          terms as nearly as may be as the terms of such contract.

2.   A person is a relevant customer for the purpose of paragraph 1 above if:

     (a)  immediately before the restriction or revocation takes effect, he is
          being supplied with electricity by the licensee; and

     (b)  in the case of a restriction, his premises are excluded from the
          licence by the restriction.

3.   Where, in preparation for a restriction or the revocation of its licence,
     the licensee is making arrangements for securing continuity of supply for
     its customers, it shall, in respect of its customers supplied with
     electricity in pursuance of deemed contracts, except in so far as the
     Authority consents:

     (a)  in making those arrangements, reasonably endeavour to select one or
          more new suppliers which offer or will offer comparable services at
          the lowest available cost, and

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     (b)  use its reasonable endeavours to give its customers likely to be
          affected, reasonable notice of those arrangements.

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Condition 23.  Payments Received in Relation to Standards of Performance

1.   Any relevant payment made to the licensee by a distributor under its use of
     system agreement shall be paid, as soon as reasonably practicable after its
     receipt by the licensee, to the relevant customer as defined in paragraph 2
     below.

2.   In this condition:

     "relevant payment"            means a compensation payment made in relation
                                   to any customer of the licensee (the
                                   "relevant customer") pursuant to any
                                   provision of the Regulations made under
                                   section 39A of the Act.

     "use of system agreement"     means an agreement for the use of a
                                   distributor's distribution system for the
                                   distribution of electricity by such
                                   distributor for the licensee.

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Condition 24.  Code of Practice on Procedures with Respect to Site Access

1.   The licensee shall prepare and submit to the Authority for its approval a
     code of practice setting out the principles and procedures the licensee
     will follow in respect of any person acting on the licensee's behalf who
     requires access to customers' premises.

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

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

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

     (c)  use passwords provided for vulnerable customers;

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

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

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

3.   This condition is subject to the provisions of standard condition 27
     (Preparation, Review of and Compliance with Customer Service Codes).

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Condition 25.  Efficient Use of Electricity

1.   The licensee shall prepare and submit to the Authority for its approval a
     code of practice setting out the ways in which the licensee will make
     available to customers such guidance on the efficient use of electricity,
     in each case given or prepared by a suitably qualified person, as will, in
     the opinion of the licensee, enable such customers to make informed
     judgements on measures to improve the efficiency with which they use the
     electricity supplied to them.

2.   The code of practice shall include, but shall not be limited to:

     (a)  the preparation and making available free of charge to any customer
          who requests it of a statement, in a form approved by the Authority,
          setting out information and advice for the guidance of customers in
          the efficient use of electricity supplied to them;

     (b)  the making of arrangements for maintaining sources from which
          customers may obtain further information about the efficient use of
          electricity supplied to them, including the maintenance of a telephone
          information service; and

     (c)  the preparation and making available free of charge to any customer
          who requests it of a statement or statements of sources (to the extent
          that the licensee is aware of the same) outside the licensee's
          organisation from which customers may obtain additional information or
          assistance about measures to improve the efficiency with which they
          use the electricity supplied to them, such statement or statements to
          include basic information which is publicly available on financial
          assistance towards the costs of such measures available from central
          or local government or through bodies in receipt of financial support
          from Government in connection with measures to promote the efficiency
          of energy use.

3.   Where the Authority (who may have regard to the need for economy,
     efficiency and effectiveness before giving directions under this paragraph)
     gives directions to do so, the licensee shall:

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     (a)  review and prepare a revision of the code of practice;

     (b)  take steps to bring to the attention of customers information on the
          efficient use of electricity supplied to them; and

     (c)  send to each customer a copy of any information in relation to the
          efficient use of electricity published by the Authority pursuant to
          section 48 of the Act,

     in such manner and at such times as will comply with those directions.

4.   This condition is subject to the provisions of standard condition 27
     (Preparation, Review of and Compliance with Customer Service Codes).

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Condition 26.  Record of and Report on Performance

1.   The licensee shall keep a record of its general operation of the
     arrangements mentioned in standard conditions 24 (Code of Practice on
     Procedures with Respect to Site Access) and 25 (Efficient Use of
     Electricity) and (where a Domestic Supply Direction has been issued to the
     licensee) in standard conditions 35 (Code of Practice on Payment of Bills
     and Guidance for Dealing with Customers in Difficulty), 36 (Code of
     Practice on the Use of Prepayment Meters), 37 (Provision of Services for
     Persons who are of Pensionable Age or Disabled or Chronically Sick), 38
     (Provision of Services for Persons who are Blind or Deaf) and 39 (Complaint
     Handling Procedure) and if the Authority so directs in writing, of its
     operation of any particular cases specified, or of a description specified,
     by the Authority.

2.   The licensee shall, where a Domestic Supply Direction has been issued to
     the licensee, keep a statistical record of its performance in relation to
     the provision of electricity supply services to its domestic customers.

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

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

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

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

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

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

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Condition 27.  Preparation, Review of and Compliance with Customer Service Codes

1.   This condition applies to any code of practice required to be prepared by
     the licensee pursuant to standard conditions 24 (Code of Practice on
     Procedures with Respect to Site Access) and 25 (Efficient Use of
     Electricity) and (where a Domestic Supply Direction has been issued to the
     licensee) pursuant to standard conditions 35 (Code of Practice on Payment
     of Bills and Guidance for Dealing with Customers in Difficulty), 36 (Code
     of Practice on the Use of Prepayment Meters), 37 (Provision of Services for
     Persons who are of Pensionable Age or Disabled or Chronically Sick), 38
     (Provision of Services for Persons who are Blind or Deaf) and 39 (Complaint
     Handling Procedure) of this licence.

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

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

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

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

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

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7.   The licensee shall:


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

     (b)  at least once in each year, draw the attention of those of its
          customers to whom such code applies to the existence of the code and
          of each substantive revision of it and to the means by which they may
          inspect a copy of such code in its latest form; and

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

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

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

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Condition 28.  Deemed Contracts

1.   This condition sets out the obligations placed on the licensee in relation
     to its deemed contracts.

2.   The licensee shall use its reasonable endeavours to ensure the terms of its
     deemed contracts are not unduly onerous.

3.   In the case of any class of domestic customers or of any class of
     non-domestic customers, the terms of a deemed contract shall be taken to be
     unduly onerous if the revenue derived from supplying electricity to
     customers of the class in question on those terms -

     (a)  significantly exceeds the costs of supply of electricity; and

     (b)  exceeds such costs of supply by significantly more than the licensee's
          revenue exceeds costs of supply in the case of the generality of its
          domestic customers or, as the case may be, in the case of the
          generality of its non-domestic customers (excluding in each case
          customers supplied in accordance with standard condition 29 (Supplier
          of Last Resort)).

4.   For the purposes of paragraph 3 "costs of supply" shall not include any
     costs attributable to any promotional, marketing or advertising activities
     of the licensee.

5.   The licensee shall, as soon as is reasonably practicable after determining
     or revising (in whole or in part) any of the terms of its deemed contracts,
     send a copy to the Authority.

6.   At the request of any person, the licensee shall supply that person with a
     copy of the terms of its deemed contracts.

7.   The licensee shall ensure that the terms of its deemed contracts are such
     that, in their application to electricity supplied under a last resort
     supply direction, the amount of any charges for electricity so supplied
     complies with the provisions of paragraphs 13, 14 and 16 of standard
     condition 29 (Supplier of Last Resort).

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8.   Where the licensee supplies a customer with electricity under a deemed
     contract, it shall use its reasonable endeavours to furnish the customer
     with -

     (a)  details of the principal terms of that deemed contract;

     (b)  written notice that contracts on terms other than deemed contracts may
          be available and as to how information can be obtained as to any such
          terms; and

     (c)  where the customer is a domestic customer, an accurate summary of the
          principal terms of domestic supply contracts available.

9.   The licensee shall ensure the terms of its deemed contracts -

     (a)  make the like provision as is required in the case of a contract by
          paragraph 1 of standard condition 29B (Provision for Termination upon
          a Direction);

     (b)  where the customer is a domestic customer, make the like provision as
          is required in the case of a contract by standard condition 45
          (Security Deposits);

     (c)  where the customer is a domestic customer, make the like provision as
          is required in the case of a contract by paragraph 1 of standard
          condition 47 (Termination of Contracts in Specified Circumstances);
          and

     (d)  provide that where the customer intends to be supplied with
          electricity at the premises under a contract with the licensee or
          another electricity supplier, the deemed contract does not terminate
          but continues to have effect until the time when the licensee or, as
          the case may be, the other electricity supplier begins to supply
          electricity under a contract, at which time the deemed contract ceases
          to have effect.

10.  Subject to paragraph 17 of standard condition 29 (Supplier of Last Resort),
     nothing in paragraph 9 shall be construed as preventing the inclusion of
     terms providing for the termination of a deemed contract which are
     additional to and do not derogate from those required by sub-paragraphs
     (a), (c) and (d) of paragraph 9.

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11.  In determining the number of kilowatt hours of electricity which are to be
     treated as supplied or taken under a deemed contract, the licensee shall
     act on a reasonable basis, taking into account available electricity demand
     data for the premises in question and other relevant factors.

12.  Paragraphs 2 to 4 and sub-paragraph (b) of paragraph 8 shall not apply in
     relation to customers supplied with electricity in accordance with standard
     condition 29 (Supplier of Last Resort).

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Condition 29.  Supplier of Last Resort

1.   Where this paragraph applies, the Authority may in writing direct the
     licensee to supply electricity in accordance with this condition ("the last
     resort supply direction").

2.   Paragraph 1 applies where it appears to the Authority that -

     (a)  circumstances have arisen which would entitle the Authority to revoke
          the supply licence of an electricity supplier other than the licensee
          ("the other supplier"); and

     (b)  the licensee could comply with the last resort supply direction
          without significantly prejudicing its ability -

          (i)  to continue to supply its customers; and

          (ii) to fulfil its contractual obligations for the supply of
               electricity.

3.   The last resort supply direction shall take effect from the date of
     revocation of the other supplier's licence and shall continue for such
     period (being no longer than 6 months) specified in the direction.

4.   The licensee shall supply electricity to customers of the other supplier at
     such premises as are specified or described in the last resort supply
     direction.

5.   The licensee shall not be required under this condition to supply
     electricity to a particular customer at particular premises which it would
     not be required to supply by virtue of sub-paragraphs 2(b) to (e) of
     standard condition 32 (Duty to Supply Domestic Customers).

6.   Within 2 working days of the last resort supply direction taking effect,
     the licensee shall send to the Authority, for its approval, a draft of the
     notice referred to in paragraph 7 which the licensee proposes to send to
     each of the premises specified or described in the direction.

7.   As soon as reasonably practicable after the Authority has approved the form
     and content, except as to the level of charges payable for supply of
     electricity under the direction or an

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     explanation of how the charges are determined, of the notice sent to it
     pursuant to paragraph 6, the licensee shall send a copy of the notice to
     each of the premises specified or described in the last resort supply
     direction. The notice to be sent to all premises specified or described in
     the last resort supply direction, shall -

     (a)  inform the customer in question that, notwithstanding any contract or
          deemed contract the customer may have had with the other supplier, the
          customer is no longer supplied by that supplier and has not been
          supplied by the other supplier since the date on which the direction
          took effect;

     (b)  inform the customer in question that, the licensee became the supplier
          of electricity to the customer from the date the direction took
          effect; and

     (c)  set out the charges payable for the supply of electricity under the
          direction or an explanation of how the charges are determined.

8.   Unless the Authority otherwise consents, the licensee shall, so far as is
     reasonably practicable, give the Authority at least 5 days notice of any
     increase in charges for the supply of electricity to premises in accordance
     with the last resort supply direction.

9.   The licensee shall use all reasonable endeavours to secure a meter reading
     at each of the premises specified or described in the last resort supply
     direction within 14 days of the direction taking effect.

10.  The licensee is not obliged to secure a meter reading where-

     (a)  the Authority accepts that it would not be feasible or economic to do
          so; or

     (b)  to do so would necessitate the entering of particular premises without
          the consent of the occupier or the seeking of entry on more than one
          occasion.

11.  The licensee may charge for the supply of electricity to the premises
     specified or described in the last resort supply direction at a rate which
     is no greater than -

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     (a)  such charges as may be expected, in aggregate, approximately to equal
          the licensee's reasonable costs of supply (including such costs
          attributable to the purchase of electricity at short notice) together
          with a reasonable profit; or

     (b)  the charges set out in the notice given by the Authority under
          paragraph 12.

12.  Where, within 5 days of receipt by the Authority of the notice given by the
     licensee under paragraph 8, the Authority determines that charges proposed
     by the licensee would be likely to cause hardship to domestic customers, it
     may direct by notice in writing to the licensee that licensee's charges
     shall not exceed those which it specifies in the notice as being likely to
     avoid or mitigate such hardship.

13.  The licensee shall not be required by paragraph 11(b) to make charges which
     are less than those which would be made under the licensee's deemed
     contract for comparable premises with similar metering arrangements
     supplied with electricity otherwise than in accordance with a last resort
     supply direction.

14.  Unless the Authority otherwise consents, the licensee shall ensure that its
     terms and conditions (including charges) for a supply pursuant to a last
     resort supply direction do not show any undue preference or undue
     discrimination as between any persons or classes of persons.

15.  Notwithstanding anything in standard condition 28 (Deemed Contracts), the
     terms of the licensee's deemed contract scheme for the supply of
     electricity to premises in accordance with a last resort supply direction
     may provide that, until the direction ceases to have effect, the customer
     may not terminate his deemed contract except -

     (a)  with the consent of the licensee;

     (b)  on taking a supply at the premises under a contract with the licensee
          or another electricity supplier; or

     (c)  on ceasing to take electricity at the premises.

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16.  Where the licensee enters into any new contract for the purchase of
     electricity in order to comply with its obligations under this condition,
     it shall use reasonable endeavours to make the purchase as economically as
     possible in all the circumstances.

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Condition 29A. Supplier of Last Resort Supply Payments

1.   This condition sets out how, and how much, the licensee may recover in
     respect of any losses it incurs in complying with a last resort supply
     direction given under standard condition 29 (Supplier of Last Resort).

2.   Except in relation to a claim made following a direction by the Authority
     pursuant to paragraph 13 of standard condition 29 (Supplier of Last
     Resort), paragraphs 3 to 12 of this condition shall not have effect in this
     licence in relation to any claim under sub-paragraph 3(a), sub-paragraph
     3(b) or both those sub-paragraphs if before a last resort supply direction
     is issued to the licensee it gives notice of consent to that effect to the
     Authority.

3.   Where the licensee intends to make a claim for the payment of monies ("last
     resort supply payments") pursuant to -

     (a)  standard condition 33 (Last Resort Supply: Security for Payment), as
          incorporated in the licence of the other supplier (as defined in
          paragraph 2 of standard condition 29 (Supplier of Last Resort);

     (b)  standard condition 48 (Last Resort Supply: Payment Claim) of the
          standard conditions of the electricity distribution licence,

     the licensee shall in respect of each claim made notify the proposal to the
     Authority. The notification must include a calculation of the relevant
     amount with supporting information and must be received by the Authority
     within 6 months of the last resort supply direction to which it relates
     ceasing to have effect.

4.   Subject to paragraphs 5 and 6, the total sum of last resort supply payments
     claimed by the licensee ("the relevant amount") shall not exceed the amount
     by which -

     (a)  the aggregate costs (including interest on working capital) reasonably
          incurred by the licensee in supplying electricity to premises in
          pursuance of the last resort supply direction, together with a
          reasonable profit,

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     are  greater than

     (b)  the aggregate amounts recovered by the licensee by way of charges for
          electricity supplied to premises in pursuance of the last resort
          supply direction (after taking all reasonable steps to recover such
          charges).

5.   Where the Authority considers that it is appropriate in all the
     circumstances for the licensee to make the claim notified pursuant to
     paragraph 3, the Authority will issue a written consent to the licensee.
     The Authority may, within 3 months of the notification under paragraph 3
     and after consulting the licensee, determine that an amount other than that
     notified to it by the licensee is a more accurate calculation of the
     relevant amount.

6.   Where the Authority makes a determination in pursuance of paragraph 5, the
     amount specified in the determination shall be treated as the relevant
     amount for the purposes of the following paragraphs of this condition.

7.   In respect of a claim of the type mentioned in sub-paragraph 3(a), the
     licensee shall, within 6 months of the last resort supply direction to
     which it relates ceasing to have effect, submit the claim to the trustee
     appointed by the Authority pursuant to standard condition 33 (Last Resort
     Supply: Security for Payment) of the supply licence of the other supplier
     (as defined in paragraph 2 of standard condition 29 (Supplier of Last
     Resort)) specifying the relevant amount.

8.   Where a last resort supply payment made to the licensee by the trustee
     referred to in paragraph 7 is less than the relevant amount, the licensee
     may claim from the relevant electricity distributors further last resort
     supply payments pursuant to paragraphs 9 and 10.

9.   Last resort supply payments claimed by the licensee from the relevant
     electricity distributors shall not in aggregate exceed the amount by which
     the payment (if any) made to the licensee by the trustee referred to in
     paragraph 7 fell short of the relevant amount (the "under payment").

10.  In respect of a claim of the type mentioned in sub-paragraph 3(b), the
     licensee shall, within 6 months of the last resort supply direction to
     which it relates ceasing to have

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     effect, submit the claim to each relevant electricity distributor (so far
     as is reasonably practicable all claims shall be submitted at the same
     time) specifying -

     (a)  their respective proportion of the under payment (as defined in
          paragraph 9); and

     (b)  whether payment is to be made by quarterly or monthly instalments.

11.  The respective proportion shall be the same as the proportion of the total
     number of premises in Great Britain which is located within that relevant
     distributor's distribution services area.

12.  In this condition "relevant distributor" means a distributor in whose
     licence Section C has effect.

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Condition 29B.  Provision for Termination upon a Direction

1.   The licensee shall not enter into a contract for the supply of electricity
     to any premises whether or not the contract is for a specified period
     unless it provides that it shall terminate when a last resort supply
     direction given to an electricity supplier other than the licensee in
     pursuance of standard condition 29 (Supplier of Last Resort) of that other
     supplier's licence comes into effect in relation to the premises in
     question.

2.   Where a domestic supply contract is for both the supply of electricity and
     the provision of other goods or services, any reference in this condition
     to its termination is a reference to its termination in respect of the
     supply of electricity alone.

                                      100

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Condition 30.  Not used

                                      101

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SECTION C.  DOMESTIC SUPPLY OBLIGATIONS

Condition 31.  Interpretation of Section C

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


         "date of the domestic          means, in respect of any domestic supply
         supply contract"               contract, the date on which that
                                        contract is entered into.


         "deposit"                      means a deposit of money by way of
                                        security for the payment of charges for
                                        the supply of electricity.

         "fixed term period"            means, in relation to a domestic supply
                                        contract, a specified period of more
                                        than 12 months during which the
                                        principal terms of that contract may not
                                        be varied by the licensee other than by
                                        agreement with the customer.

         "relevant premises"            in relation to a domestic supply
                                        contract, means any premises supplied
                                        with electricity under the terms of the
                                        contract.

         "termination fee"              means any sum of money or other penalty
                                        (whether financial or otherwise) which
                                        may be demanded of a customer solely in
                                        consequence of the termination of a
                                        domestic supply contract.

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         "valid notice of termination"  has the meaning given in paragraph 2 of
                                        standard condition 46 (Termination of
                                        Contracts on Notice).

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Condition 32.  Duty to Supply Domestic Customers

1.   Subject to the provisions of this condition, and without prejudice to any
     of the licensee's obligations and rights under the Act or this licence, the
     licensee shall, upon receipt of a request (as defined in paragraph 3) from
     a domestic customer, as soon as is reasonably practicable:

     (a)  offer to enter into a domestic supply contract to supply electricity
          to the domestic premises in respect of which the supply is requested;
          and

     (b)  where the terms offered are accepted by the domestic customer, give a
          supply of electricity to those premises in accordance with the terms
          offered.

2.   The licensee shall not be required by paragraph 1 or standard condition 29
     (Supplier of Last Resort) to give a supply of electricity where:

     (a)  the domestic customer having requested a supply of electricity,
          declines to enter into the domestic supply contract offered pursuant
          to paragraph 1;

     (b)  the licensee or another electricity supplier is bound by the
          provisions of a domestic supply contract in respect of the premises
          where the supply is requested and such domestic supply contract will
          neither have expired nor have been terminated by the date from which
          the domestic customer requires a supply of electricity from the
          licensee to commence;

     (c)  there are circumstances beyond the licensee's control which prevent
          the licensee from supplying electricity to the domestic premises in
          respect of which the supply is requested (save that this shall not
          relieve the licensee from an obligation to take all requisite steps,
          so far as is reasonably practicable, to secure the necessary supply of
          electricity);

     (d)  the licensee would or might be in breach of regulations made under
          section 29 of the Act in relation to the supply of electricity to the
          premises in respect of which a supply is requested and the licensee
          has taken all such steps as it was reasonable to

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          take both to prevent the circumstances from occurring and to prevent
          them from having that effect;

     (e)  it is not reasonable in all the circumstances for the licensee to be
          required to supply electricity; or

     (f)  in relation to an obligation set out in paragraph 1, the licensee has
          requested a deposit by way of security for the payment of charges and
          the customer concerned has not paid this;

     provided that in the circumstances referred to in sub-paragraph (e), and
     where the licensee already supplies electricity to the premises in respect
     of which the supply is requested, the licensee shall have first given not
     less than 7 working days' notice of its intention to discontinue the
     supply.

3.   In this condition:

     (a)  "request" includes, to the extent that the licensee so requires, the
          following information:

          (i)   the premises in respect of which the supply is required;

          (ii)  the day on which the supply is required to commence;

          (iii) the maximum power which may be required at any time to the
                extent that this differs from that normally required by a
                domestic customer; and

          (iv)  the minimum period for which the supply is required to be given;
                and

     (b)  any reference to giving a supply of electricity includes a reference
          to continuing to give such a supply and any reference to requesting a
          supply includes a reference to requesting such a supply to continue to
          be given.

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Condition 33.  Last Resort Supply: Security for Payments

1.   The licensee shall establish and maintain arrangements ("security
     arrangements") in accordance with this condition.

2.   If licensed to supply electricity to domestic customers, the licensee shall
     establish security arrangements by -

     (a)  taking out a bond or other instrument approved by the Authority; or

     (b)  making other arrangements as the Authority may approve,

     to secure such sum of money as is calculated in accordance with principles
     determined by the Authority and notified to the licensee but in any case
     not exceeding the maximum sum set out in paragraph 7.

3.   The security arrangements established by the licensee shall provide that,
     in the event of the Authority giving directions to one or more other
     electricity suppliers under standard condition 29 (Supplier of Last Resort)
     as incorporated in those suppliers' licences to supply the licensee's
     domestic customers, there shall be payable, to such person as the Authority
     may appoint ("the trustee"), such sums, or instalments of sums, as the
     trustee may (after consulting the Authority) request, subject, however, to
     paragraphs 4 and 5.

4.   The Authority may, at any time, vary the principles determined under
     paragraph 2 following consultation with the licensee, all other suppliers
     and the Consumer Council.

5.   The licensee shall maintain the security arrangements and shall -

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     (a)  ensure that the arrangements are not terminated or varied (save for
          the purpose of extending their duration or in accordance with
          sub-paragraph (b)) other than with the prior consent of the Authority;
          and

     (b)  at least once in each year -

          (i)  consider whether the sum secured by the arrangements requires to
               be revised in order to ensure that it continues to be set in
               compliance with the principles determined by the Authority (as
               varied from time to time); and

          (ii) where such sum requires revision, establish and thereafter
               maintain additional or amended arrangements with the approval of
               the Authority.

6.   Where the Authority reasonably considers that the security arrangements
     established and maintained by the licensee do not secure a sum calculated
     in accordance with the principles determined by the Authority (as varied
     from time to time), it may at any time, issue a direction/1/ to the
     licensee requiring the licensee to establish and thereafter maintain
     additional or amended arrangements to secure such sums as may be specified
     in the direction.

7.   The maximum sum referred to in paragraph 2 shall be determined for each
     calendar year and shall be the aggregate of -

     (a)  the number of domestic premises expected to be supplied in that year
          multiplied by the specified amount

          and

     (b)  the amount of electricity expected to be supplied (expressed in
          kilowatt hours) in that year multiplied by the specified amount.

8.   For the purposes of paragraph 7, the "specified amount" shall be the amount
     approved by the Authority in accordance with paragraph 9, not exceeding -

___________________

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     (a)  in the case of sub-paragraph (a) of paragraph 7,(pound)4 per premises
          (as adjusted for inflation); and

     (b)  in the case of sub-paragraph (b) of paragraph 7, 0.21 pence per
          kilowatt hour (as adjusted for inflation).

9.   The Authority may, in respect of any relevant year, approve for the
     purposes of this condition generally a sum as the specified amount. If it
     does so -

     (a)  in the case of the calendar year beginning on 1 January 2001, not
          later than 1 month after the date on which the Secretary of State
          determines these standard conditions pursuant to sub-section 33(1) of
          the Utilities Act 2000; and

     (b)  in the case of any subsequent calendar year, not later than 30
          September in the previous year,

     and where the Authority fails to approve a sum in respect of any year, the
     specified amount for that year shall be the sum which it last so approved
     in respect of a previous year.

10.  For the purposes of paragraph 8, each of the amounts referred to in
     sub-paragraphs (a) and (b) shall be adjusted for inflation in respect of
     each calendar year by multiplying that amount by x, where x is obtained by
     dividing the retail price index for 1 August in that year by the retail
     price index for 1 August 2001

11.  In paragraph 10, the "retail price index" is a reference to the general
     index of retail prices (for all items) published by the Office for National
     Statistics; and if that index is not published for any month that reference
     shall be read as a reference to any substituted index or index figure
     published by that office for that month.

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<PAGE>

Condition 34.  Not used

                                      109

<PAGE>

Condition 35. Code of Practice on Payment of Bills and Guidance for Dealing with
Customers in Difficulty

1.       The licensee shall, no later than the date on which this condition
         takes effect pursuant to the provisions of standard condition 2
         (Application of Section C (Domestic Supply Obligations)), prepare and
         submit to the Authority for its approval a code of practice concerning
         the payment of electricity bills by its domestic customers, including
         appropriate guidance for the assistance of such customers who, through
         misfortune or inability to cope with electricity supplied on credit
         terms, may have difficulty in paying such bills.

2.       The code of practice shall include procedures by which the licensee can
         distinguish, so far as is reasonably practicable, customers in such
         difficulty (the "relevant customers with payment difficulties") from
         others in default and by which the licensee can:

         (a)      provide general information as to how relevant customers with
                  payment difficulties might reduce their bills in the future by
                  the more efficient use of electricity;

         (b)      where such a facility is available, accept in payment for
                  electricity supplied sums which are deducted at source from
                  social security benefits payable to relevant customers with
                  payment difficulties;

         (c)      detect failures by relevant customers with payment
                  difficulties to comply with arrangements entered into for
                  paying by instalments charges for electricity supplied;

         (d)      make such arrangements so as to take into account the
                  customers' ability to comply with them;

         (e)      ascertain, with the assistance of any information provided by
                  other persons or organisations, the ability of customers to
                  comply with such arrangements; and

         (f)      provide for customers who have failed to comply with such
                  arrangements, or procure for them the provision of, a
                  prepayment meter (where safe and practicable to do so).

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<PAGE>

3.       In formulating the procedures for the code of practice referred to at
         paragraph 2 the licensee shall have particular regard:

         (a)      to the purpose of avoiding, in so far as is practicable, the
                  disconnection of premises occupied by relevant customers with
                  payment difficulties otherwise than following compliance by
                  the licensee with such procedures; and

         (b)      to the interests of relevant customers with payment
                  difficulties who are of pensionable age or disabled or
                  chronically sick and to the purpose of avoiding, in so far as
                  is practicable, the disconnection of premises occupied by such
                  customers with payment difficulties during the winter months
                  of each year, (that is to say the months of January, February,
                  March, October, November and December in each year),

         and the procedures shall be designed for the achievement of such
         purposes.

4.       This condition is subject to the provisions of standard condition 27
         (Preparation, Review of and Compliance with Customer Service Codes).

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<PAGE>

Condition 36.  Code of Practice on the Use of Prepayment Meters

 1.      The licensee shall, no later than the date on which this condition
         takes effect pursuant to the provisions of standard condition 2
         (Application of Section C (Domestic Supply Obligations)), prepare and
         submit to the Authority for its approval a code of practice concerning
         the use of prepayment meters by its domestic customers, including
         appropriate guidance for the assistance of its prepayment meter
         customers who wish to take a supply of electricity on other terms.

 2.      The code of practice shall set out the licensee's policy on the
         installation of prepayment meters and shall include procedures by which
         the licensee will where appropriate:

         (a)      provide general information for customers on the operation,
                  usefulness, advantages and disadvantages of prepayment meters,
                  including details of:

                  (i)      token outlets and card or key charging facilities
                           within the areas supplied with electricity by the
                           licensee;

                  (ii)     the actions available to customers on the malfunction
                           of a prepayment meter or a prepayment card or key;
                           and

                  (iii)    any standards of performance (and associated
                           payments) applying to the licensee in relation to
                           premises supplied by it through prepayment meters;

         (b)      arrange for the calibration of any prepayment meter provided
                  in accordance with sub-paragraph 2(f) of standard condition 35
                  (Code of Practice on Payment of Bills and Guidance for Dealing
                  with Customers in Difficulty) so as to take into account,
                  having due regard to all information available to the licensee
                  (including any information provided by other persons or
                  organisations), the relevant customer with payment
                  difficulties' ability to pay any charges due from him under
                  the arrangements contemplated by that standard condition in
                  addition to the other charges lawfully being recovered through
                  the prepayment meter;

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<PAGE>

         (c)      arrange for the recalibration of prepayment meters:

                  (i)      in the case of an individual customer, at the
                           conclusion of any such arrangements applying to that
                           customer; and

                  (ii)     generally, following changes in the price at which
                           the licensee supplies electricity to prepayment meter
                           customers; and

         (d)      remove prepayment meters, setting out the timescale and the
                  conditions under which such removal might take place.

3.       This condition is subject to the provisions of standard condition 27
         (Preparation, Review of and Compliance with Customer Service Codes).

                                      113

<PAGE>

Condition 37. Provision of Services for Persons who are of Pensionable Age or
Disabled or Chronically Sick

1.       The licensee shall, no later than the date on which this condition
         takes effect pursuant to the provisions of standard condition 2
         (Application of Section C (Domestic Supply Obligations)), prepare and
         submit to the Authority for its approval a code of practice detailing
         the special services the licensee will make available for its domestic
         customers who are of pensionable age or disabled or chronically sick.

2.       The code of practice shall include arrangements by which the licensee
         will on request of such customers, where reasonably practicable and
         appropriate, and in each case free of charge:

         (a)      provide special controls and adapters for electrical
                  appliances and meters (including prepayment meters) and
                  reposition meters;

         (b)      provide special means of identifying persons acting on behalf
                  of the licensee;

         (c)      give advice on the use of electricity;

         (d)      send bills in respect of the supply of electricity to any such
                  customer to any person who is willing to be sent such bills
                  and is nominated by that customer (without prejudice, however,
                  to the right of the licensee to send such bills both to the
                  customer and to the nominated person where that appears
                  appropriate to the licensee); and

         (e)      provide, where neither the customer nor anyone living with him
                  is able to read the electricity meter, for the meter to be
                  read once in each quarter and for the customer to be informed
                  of the readings so obtained.

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

         (a)      establish a list (the "Priority Service Register") of those of
                  its domestic customers who, by virtue of being of pensionable
                  age or disabled or chronically sick, require:

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                  (i)      information and advice in respect of the matters set
                           out at paragraph 2; or

                  (ii)     (where they have special communication needs or
                           depend on electricity for medical reasons) advance
                           notice of planned interruptions to the supply of
                           electricity;

         (b)      notify its customers at least once each year of the existence
                  of the Priority Service Register and of how domestic customers
                  may be included on it;

         (c)      maintain the Priority Service Register, comprising the
                  relevant details of each of its domestic customers who
                  requests his inclusion on it, or on behalf of whom such a
                  request is received from any third party; and give to those
                  customers so registered:

                  (i)      in respect of the matters set out at paragraph 2; and

                  (ii)     in respect of interruptions to the supply of
                           electricity,

                  such information and advice as may be appropriate and is of
                  such nature as shall be set out in the code of practice,
                  provided that where the licensee is reliant on the relevant
                  distributor for any such information, the licensee shall use
                  all reasonable endeavours to obtain such information from the
                  relevant distributor as soon as is practicable; and

         (d)      provide the relevant distributor with such information in the
                  Priority Service Register relating to the matters mentioned in
                  paragraphs 2(a) and (b) and 3(a)(ii), in such form and at such
                  intervals, as is relevant to the distributor's licence
                  obligations.

4        This condition is subject to the provisions of standard condition 27
         (Preparation, Review of and Compliance with Customer Service Codes).

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<PAGE>

Condition 38.  Provision of Services for Persons who are Blind or Deaf

 1.      The licensee shall, no later than the date on which this condition
         takes effect pursuant to the provisions of standard condition 2
         (Application of Section C (Domestic Supply Obligations)), prepare and
         submit to the Authority for its approval a code of practice detailing
         the special services the licensee will make available for its domestic
         customers who are disabled by virtue of being blind or partially
         sighted, or deaf or hearing impaired.

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

         (a)      make available to its blind and partially sighted customers,
                  by telephone or other appropriate means, information
                  concerning the details of any bill relating to the supply of
                  electricity to them and a facility for enquiring or
                  complaining in respect of any such bill or any service
                  provided by the licensee; and

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

3.       This condition is subject to the provisions of standard condition 27
         (Preparation, Review of and Compliance with Customer Service Codes).

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<PAGE>

Condition 39.  Complaint Handling Procedure

1.       The licensee shall, by 1 November 2001 or the date on which this
         condition takes effect in this licence, whichever date is later,
         pursuant to the provisions of standard condition 2 (Application of
         Section C (Domestic Supply Obligations)), prepare and submit to the
         Authority for its approval a code of practice detailing the procedure
         for handling complaints from domestic customers about the manner in
         which the licensee conducts its supply business. Such code shall also
         establish a procedure for handling complaints from domestic customers
         which relate to matters associated with the distribution of electricity
         or any other activity connected with the supply of electricity not
         forming part of the supply business.

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

3.       This condition is subject to the provisions of standard condition 27
         (Preparation, Review of and Compliance with Customer Service Codes).

                                      117

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Condition 40.  Information Given to Domestic Customers

1.       The licensee shall keep each of its domestic customers (save, insofar
         as the customer receives an unmetered supply) informed of the amount of
         electricity which, since the customer was last informed, its records
         show as having been consumed by that customer:

         (a)      according to the meter through which the customer is supplied;
                  or

         (b)      where no meter reading is available, according to the estimate
                  of the licensee.

2.       It shall be a sufficient compliance with paragraph 1 if the information
         required by the paragraph in question is given on or with each bill or
         statement which is rendered in respect of the supply of electricity to
         a domestic customer in relation to the supply of electricity or
         annually, where the customer does not receive such a bill or statement.

3.       The licensee shall inform any of its domestic customers of the most
         recent meter reading if so requested.

4.       The licensee shall keep each of its domestic customers informed:

         (a)      that the Consumer Council can assist in resolving complaints
                  which the licensee has not resolved to the customer's
                  satisfaction; and

         (b)      how the relevant office of the Consumer Council can be
                  contacted,

         by giving that information on or with each bill rendered or statement
         provided in respect of the supply of electricity to such customers and
         annually to each domestic customer to whom no such bills or statements
         are given.

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Condition 41. Terms for Supply of Electricity Incompatible with Licence
Conditions

1.       The licensee shall not enter into or offer to enter into a variation of
         or operate any domestic supply contract or deemed contract for the
         supply of electricity to a customer at domestic premises otherwise than
         on terms which comply with the licensee's obligations under the
         licence.

2.       The licensee shall not enforce or take advantage of any term of a
         domestic supply contract for the supply of electricity to a customer at
         domestic premises if:

         (a)      the inclusion of that term was incompatible with its
                  obligations under any of the conditions, or

         (b)      the enforcement or the taking advantage of that term would be
                  so incompatible.

3.       The licensee shall not take advantage of the omission of any term from
         a domestic supply contract or deemed contract for the supply of
         electricity to a customer at domestic premises if that term was
         required to be included in the contract or deemed contract in question
         by reason of the conditions.

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Condition 42.  Domestic Supply Contracts

1.       A domestic supply contract is a contract for the supply of electricity
         to domestic premises (as varied from time to time) which complies with
         the provisions of this condition.

2.       Without prejudice to its rights and obligations under the Act, the
         licensee shall not supply electricity to domestic premises except under
         a domestic supply contract or a deemed contract.

3.       A domestic supply contract shall:

         (a)      be in a standard form, save that there may be (reasonably)
                  different forms for different areas, cases and circumstances;

         (b)      set out all the terms and conditions, including terms as to
                  price, on which the licensee will supply electricity in the
                  relevant case; and

         (c)      contain terms reflecting the termination provisions of
                  standard conditions 46 (Termination of Contracts on Notice)
                  and 47 (Termination of Contracts in Specified Circumstances).

4.       The licensee shall determine the terms on which it is prepared to enter
         into a domestic supply contract and, for the purposes of this paragraph
         -

         (a)      different terms may be determined for different cases or
                  classes of cases, or for different areas; and

         (b)      the terms shall include ones which correspond, as nearly as
                  may be (save in so far as they may provide for lower charges),
                  to those of a deemed contract under paragraph 3 of Schedule 6
                  to the Act.

5.       Any domestic supply contract for both the supply of electricity and the
         provision of goods or services shall identify separately the charge for
         that supply of electricity from the charge for the goods or services..

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6.       Where the Secretary of State has specified an area of Scotland by an
         order made pursuant to section 3A of the Act, a domestic supply
         contract for the supply of electricity to premises within that area
         shall be on terms as to price which are the same as those for an
         equivalent supply to any other premises within that area.

7.       Where a domestic supply contract may be terminated by a customer by
         virtue of any provision included in that domestic supply contract in
         compliance with standard conditions 46 (Termination of Contracts on
         Notice) and 47 (Termination of Contracts in Specified Circumstances),
         the licensee may at its discretion accept a lesser period of notice
         than is specified in that provision.

8.       Nothing in this licence shall prevent the licensee from entering into a
         domestic supply contract which contains provisions for its termination
         that are additional to and do not derogate from the principles set out
         at standard conditions 46 (Termination of Contracts on Notice) and 47
         (Termination of Contracts in Specified Circumstances).

                                      121

<PAGE>

Condition 43.  Contractual Terms - Methods of Payment

1.       Where the licensee offers to supply electricity to domestic customers
         under a domestic supply contract, it shall have available forms of
         domestic supply contract which provide for the payment of charges for
         electricity supplied to domestic premises:

         (a)      by prepayment through a prepayment meter;

         (b)      by different methods, including:

                  (i)      by cash, at such places and to such persons, as are
                           reasonable in all the circumstances; and

                  (ii)     by cheque, and

(c)      at a reasonable range of different intervals, including:

                  (i)      paying twice-monthly or fortnightly or more
                           regularly, such sums as agreed;

                  (ii)     paying monthly a predetermined sum; and

                  (iii)    paying quarterly in arrears.

2.       Where the licensee supplies electricity to domestic premises under a
         deemed contract, the terms of that contract shall include terms in
         respect of all the ways of making payments mentioned in sub-paragraph
         1(b) and the frequencies mentioned in sub-paragraph 1(c). The foregoing
         shall not apply to deemed contracts made following a direction under
         paragraph 1 of standard condition 29 (Supplier of Last Resort).

3.       Before entering into any domestic supply contract (other than through a
         prepayment meter) the licensee shall inform the customer of and offer
         to enter into domestic supply contracts which comply with
         sub-paragraphs 1(b) and (c).

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4.       The licensee shall process all requests for a supply of electricity to
         domestic premises without undue preference or undue discrimination.

5.       The licensee shall send copies of each of the forms of domestic supply
         contract (as revised from time to time) under which it supplies or
         offers to supply electricity:

         (a)      on receipt of a request, to any person; and

         (b)      not later than the date on which it first offers to supply
                  electricity under each such form of domestic supply contract
                  (or revision thereof), to the Authority and the Consumer
                  Council.

6.       The licensee shall prepare, in respect of each form of domestic supply
         contract:

         (a)      a document which sets out an accurate summary of the principal
                  terms of that form of domestic supply contract; and

         (b)      particulars of any inducements offered to any person entering
                  into such a domestic supply contract which might reasonably be
                  expected materially to influence the decision whether or not
                  to enter into it.

7.       The licensee shall publish the documents and particulars referred to at
         paragraph 6 in a manner that will in the opinion of the licensee secure
         adequate publicity for them, and shall send copies of them to the
         Authority and the Consumer Council no later than the date on which they
         are published.

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Condition 44.  Notification of Terms

1.   Before entering into any domestic supply contract the licensee shall take
     all reasonable steps to draw the attention of the customer to the principal
     terms of the domestic supply contract.

2.   Paragraph 3 below applies where a domestic supply contract has been entered
     into with, or an offer which is not within 5 days rejected by the licensee
     is made by, a domestic customer in the course of:

     (a)  any visit by a representative of the licensee to the premises of the
          domestic customer,

     (b)  any conversation in a place to which the public have access between a
          representative of the licensee and the domestic customer, or

     (c)  any telephone conversation, or any internet or other electronic or
          telegraphic communication between the licensee and the domestic
          customer.

3.   Where this paragraph applies, the licensee shall (except where it has
     already done so) provide the domestic customer with a copy of the full
     terms of any domestic supply contract that has arisen, or which on
     acceptance will arise, between the licensee and the customer within 5 days
     after the domestic supply contract was entered into, or the offer was made
     by the customer.

4.   Subject to paragraph 5 and to standard condition 32 (Duty to Supply
     Domestic Customers), the licensee shall, at least 30 days before a domestic
     supply contract is due to expire or otherwise terminate, send to the
     domestic customer:

     (a)  a written offer to enter into a new domestic supply contract for the
          supply of electricity from the date of expiry of the existing domestic
          supply contract,

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          drawing the attention of the domestic customer to the principal terms
          relevant to that offer;

     (b)  an accurate summary of the principal terms of other domestic supply
          contracts which the licensee will make available to the domestic
          customer; and

     (c)  details of how the domestic customer can obtain continuity of supply
          from the licensee; and

     (d)  the principal terms in writing of the deemed contract that would apply
          upon the expiry or termination of the domestic supply contract if no
          new domestic supply contract is agreed.

5.   Paragraph 4 shall not apply where:

     (a)  the domestic customer has informed the licensee that the customer does
          not wish to continue to be supplied with electricity by the licensee
          after the expiry or termination of the existing domestic supply
          contract; or

     (b)  it is not reasonable in all the circumstances for the licensee to be
          required to continue to supply that customer and the licensee has (at
          least 30 days before the contract was due to expire) both notified the
          domestic customer to that effect and informed him that if the domestic
          customer does not make arrangements to obtain a supply from another
          electricity supplier, then the customer's supply will be under deemed
          contract.

6.   Except in such cases or classes of cases as may be approved by the
     Authority, where a domestic supply contract allows for its unilateral
     variation (in any respect) by the licensee and pursuant thereto the
     licensee raises the charges for the supply of electricity pursuant to such
     contract or otherwise varies any term to the significant disadvantage of
     the domestic customer, the licensee shall within 10 days of the variation
     give to the customer written notice:

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     of the variation;

     of the domestic customer's right to terminate the domestic supply contract;
     and

     of the effect of paragraph 7.

7.   Where a domestic customer gives to the licensee a valid notice of
     termination within 14 days of receiving notice under paragraph 6, the
     licensee shall treat the variation as ineffective and shall neither enforce
     nor take advantage of it.

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Condition 45.  Security Deposits

1.   The licensee shall not, in respect of the supply of electricity to any
     domestic customer, require a deposit:

     (a)  where the domestic customer is prepared to be supplied through a
          prepayment meter and it is reasonably practicable in all the
          circumstances (including in particular the risk of loss or damage) for
          the licensee to provide such a meter; or

     (b)  where it is otherwise unreasonable in all the circumstances to do so.

2.   Any deposit required of such a domestic customer may be 1 1/2 times the
     value of the average quarterly consumption of electricity reasonably
     expected at the relevant premises, or more if that is reasonable in all the
     circumstances.

3.   Where the licensee requires a deposit from such a domestic customer it
     shall at the same time inform him of the effect of paragraphs 5 and 7.

4.   Where the licensee holds any deposit for more than a month, it shall pay
     the domestic customer simple interest on the deposit at a rate which is
     from time to time equivalent to the base rate of Barclays Bank plc or, if
     there is no such base rate, not less than such base rate as the Authority
     may designate for the purposes thereof.

5.   Subject to paragraph 6, any deposit given by a domestic customer shall be
     repaid (with interest) by the licensee:

     (a)  within 14 days where, in the previous 12 months, the domestic customer
          has paid all charges for electricity supplied within 28 days of each
          written demand made; or

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     (b)  as soon as reasonably practicable, and in any event within 1 month,
          where the licensee has ceased to supply the customer and the customer
          has paid all charges for electricity supplied.

6.   Sub-paragraph 5(a) shall not apply where it is reasonable in all the
     circumstances for the licensee to retain the deposit.

7.   Any dispute arising under this condition between the licensee and a
     domestic customer may be referred by either party to the Authority. The
     Authority shall determine any such dispute, following such practice and
     procedure as it considers appropriate.

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Condition 46.  Termination of Contracts on Notice

1.   The licensee shall not enter into a domestic supply contract unless the
     domestic supply contract contains a term allowing the customer to terminate
     such domestic supply contract at any time by-

     (a)  giving to the licensee a valid notice of termination; and

     (b)  subject to paragraphs 6 and 7, paying to the licensee on demand a
          termination fee.

2.   A notice of termination is valid where it is given at least 28 days in
     advance of the date on which it is to take effect and where, not later than
     that date, the requirements of paragraph 3 and (unless the licensee
     expressly agrees to waive it) paragraph 4 are satisfied.

3.   The requirement of this paragraph is that either-

     (a)  another electricity supplier commences a supply of electricity to the
          relevant premises; or

     (b)  the relevant premises are cut off because the domestic customer at
          those premises has ceased to require a supply.

4.   The requirement of this paragraph is that no charges for electricity
     supplied to the customer (whether at the relevant premises or at any
     premises previously occupied by him), having been demanded in writing prior
     to the notice of termination being given, remain owing to the licensee more
     than 28 days after that demand was made.

5.   Each domestic supply contract shall provide that a notice of termination
     which is not valid shall not be effective to terminate such domestic supply
     contract.

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6.   A termination fee shall not be demanded of a domestic customer where:

     (a)  the domestic supply contract was terminated under any provision of
          standard condition 47 (Termination of Contracts in Specified
          Circumstances);

     (b)  the domestic supply contract was a domestic supply contract of
          indefinite length and was terminated other than during a fixed term
          period;

     (c)  the licensee notified the customer, under paragraph 6 of standard
          condition 44 (Notification of Terms), of a unilateral variation of the
          domestic supply contract and the customer gave notice of termination
          in accordance with paragraph 7 of that standard condition; or

     the domestic supply contract was a domestic supply contract to which
     paragraph 3 of standard condition 47 (Termination of Contracts in Specified
     Circumstances) applied and the licensee did not, before entering into it,
     take all reasonable steps to draw the attention of the customer to the
     effect of the terms set out at that paragraph.

7.   Where a termination fee is payable, it shall be of an amount not greater
     than that which the licensee may in all the circumstances reasonably
     require.

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Condition 47.  Termination of Contracts in Specified Circumstances

1.   The licensee shall not enter into a domestic supply contract unless the
     domestic supply contract provides that it will terminate:

     (a)  on the date on which the domestic customer ceases to own or occupy the
          relevant premises, having given the licensee at least 2 working days'
          notice of that date; or

     (b)  where the domestic customer has ceased to own or occupy the premises
          without giving the licensee such notice, on the first in time of:

          (i)   the second working day after the domestic customer has given
                notice to the licensee;

          (ii)  the next date on which the meter is due to be read; and

          (iii) the date on which electricity is supplied to the premises, by
                the licensee or another electricity supplier, under a domestic
                supply contract or deemed contract with a person other than the
                domestic customer.

2.   Each domestic supply contract shall provide that, where it is terminated by
     virtue of a term included in the domestic supply contract in compliance
     with paragraph 1, the domestic customer shall remain liable for any charges
     for the supply of electricity until the date of termination.

3.   Any domestic supply contract which -

     (a)  provides for the licensee to supply electricity for a specified period
          of more than 12 months; or

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     (b)  contains an initial fixed term period (as defined in standard
          condition 31 (Interpretation of Section C)),

     shall provide that it may be terminated immediately by the customer at any
     time within 5 working days of the date of the domestic supply contract.

4.   Where a domestic supply contract is for both the supply of electricity and
     the provision of goods or services:

     (a)  any reference in standard conditions 46 (Termination of Contracts on
          Notice) and 47 (Termination of Contracts in Specified Circumstances)
          to its termination is a reference to its termination in respect of the
          supply of electricity alone; and

     (b)  on its termination by virtue of any provision of standard conditions
          46 (Termination of Contracts on Notice) and 47 (Termination of
          Contracts in Specified Circumstances), the licensee may require the
          domestic customer to give any reasonable security for his future
          compliance with those aspects of such contract as relate to the
          provision of goods and services.

5.   Where a domestic customer terminates a domestic supply contract or ceases
     to take a supply by way of a deemed contract with the licensee for the
     supply of electricity, the licensee shall not:

     (a)  exercise any right to recover any meter owned by the licensee at, or
          by reason of, the termination of such domestic supply contract or the
          cessation of supply by way of a deemed contract, or

     (b)  authorise any of its officers to enter the domestic customer's
          premises for the purpose of removing any such meter (whether under
          paragraph 10 of Schedule 6 to the Act or otherwise),

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     in the event that another electricity supplier undertakes prior to the date
     of such termination or cessation to make an arrangement with the licensee
     on terms that the licensee receives such compensation (if any) as may be
     appropriate having regard to the value of the meter.

6.   Where a domestic customer terminates a domestic supply contract or ceases
     to take a supply by way of a deemed contract with the licensee for the
     supply of electricity, and the customer agrees with another electricity
     supplier that the customer will have a new meter installed at the relevant
     premises (to be provided by or on behalf of the other supplier), then the
     licensee shall be obliged to remove any meter owned or provided by it from
     the customer's premises if it receives a written request to do so from the
     other supplier (the other supplier having obtained the customer's consent
     to the removal). Removal will take place as soon as reasonably practicable
     following service of the request, and in any event within 30 days of the
     service of the request.

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Condition 48.  Marketing of Electricity to Domestic Customers

1.   This condition applies to the marketing activities of the licensee in
     respect of the supply or the proposed supply of electricity to domestic
     premises.

2.   The licensee shall:

     (a)  set up appropriate procedures for the selection of staff employed or
          engaged in roles the principal duties of which involve oral
          communication with domestic customers for the purposes of the
          marketing activities of the licensee;

     (b)  take all reasonable steps to ensure that each such person is trained
          so as to have a sufficient understanding of:

          (i)   the arrangements for competition in electricity supply in Great
                Britain; and

          (ii)  the principal terms of domestic supply contracts made available
                by the licensee;

          such that any relevant advice given by him to domestic customers is
          not misleading;

     (c)  take all reasonable steps to ensure that:

          (i)   a domestic customer may readily identify the licensee whenever
                he is contacted by a representative of the licensee;

          (ii)  a domestic customer will readily understand that he has entered
                into a domestic supply contract; and

          (iii) any unsolicited contact made on behalf of the licensee with any
                domestic customer takes place at a reasonable time; and

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     (d)  take all reasonable steps to ensure that any agents and
          sub-contractors of the licensee set up equivalent procedures and take
          equivalent steps to those set out at sub-paragraphs (a), (b) and (c).

3.   Paragraph 4 shall apply where a domestic supply contract has been entered
     into by a domestic customer in the course of -

     (a)  a visit to that customer's premises by a representative of the
          licensee;

     (b)  a conversation in a place to which the public have access between a
          representative of the licensee and a domestic customer; or

     (c)  a telephone conversation between a domestic customer and a
          representative of the licensee.

4.   Where this paragraph applies, the licensee shall, through a representative
     who is not engaged in activities leading to the entering into domestic
     supply contracts between the licensee and domestic customers, and not less
     than 24 hours nor more than 14 days after the date of the domestic supply
     contract in question:

     (a)  use its reasonable endeavours to contact the domestic customer by
          telephone or by letter seeking his confirmation that:

          (i)   he understands that he has entered into a domestic supply
                contract;

          (ii)  he is content to have entered into that domestic supply
                contract; and

          (iii) he is content with the way in which the marketing activities of
                the licensee were conducted;

     (b)  if in the course of such telephone contact, or within a reasonable
          period of sending such a letter, the domestic customer indicates that
          he is not content to have entered into the domestic supply contract
          and wishes to terminate it, take all reasonable steps to ensure that
          the domestic supply contract is terminated and,

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          where reasonably practicable, that the licensee does not commence a
          supply to the customer; and

     (c)  if the response of the domestic customer, alone or when considered
          with the responses of other customers, suggests weaknesses in the
          methods, systems or personnel employed or engaged by the licensee or
          its agents or sub-contractors for the purpose of its marketing
          activities, ensure that all reasonable steps to remedy the matter are
          taken.

5.   Where, by virtue of any domestic supply contract, electricity is not to be
     supplied to premises before the expiry of 60 days after the date of the
     domestic supply contract, the licensee shall take reasonable steps during
     the period after that date and prior to the commencement of supply to keep
     the domestic customer informed that he has entered into a domestic supply
     contract with the licensee.

6.   The complaint handling procedures to be established by the licensee in
     accordance with standard condition 39 (Complaint Handling Procedure) shall
     provide in appropriate cases for the payment of compensation to domestic
     customers adversely affected by the failure of the licensee to perform its
     obligations under this condition.

7.   The licensee shall keep a record of its compliance with its obligations
     under this condition, including:

     (a)  the contacting of domestic customers in pursuance of sub-paragraph
          4(a) and the response of customers to such contact;

     (b)  the termination of contracts in pursuance of sub-paragraph 4(b); and

     (c)  compensation paid in pursuance of paragraph 6.

8.   Except as the Authority may determine for the purposes of this condition
     generally, as soon as reasonably practicable after the end of each period
     of three months ending on 31 March, 30 June, 30 September and 31 December
     in every year, the licensee shall submit

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     to the Authority and to the Consumer Council a report dealing with the
     matters specified in paragraph 7 in that period and shall:

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

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

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

9.   Reports in pursuance of paragraph 8 shall be presented by the licensee, in
     so far as is reasonably practicable, in a standard format submitted to and
     approved by the Authority for the purposes of this condition.

10.  Except as the Authority may approve-

     (a)  for the purpose of protecting the interests of any domestic customer
          who, prior to 21 July 1998, may have made a payment in advance with a
          view to arranging a supply of electricity; or

     (b)  where any payment in advance is wholly or mainly for services other
          than arranging the supply of energy,

     the licensee shall not enter into any commercial relations connected with
     the supply of electricity to domestic premises with any person who has
     sought, after 21 July 1998, payment in advance (other than one governed by
     standard condition 45 (Security Deposits)) from any domestic customer with
     a view to arranging a supply of electricity, and the licensee shall not
     enter into a domestic supply contract for the supply of electricity to any
     such customer made through the agency (either for the licensee or for any
     customer) of such a person.

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11.  The licensee shall take all reasonable steps:

     (a)  to establish management arrangements that facilitate the licensee in
          meeting its obligations under paragraphs 2 to 9 of this condition; and

     (b)  to ensure that any agents and sub-contractors of the licensee take
          steps equivalent to those arrangements.

12.  This condition shall cease to have effect on a date (the "termination
     date") which shall be 31 March 2002, provided that:

     (a)  if the Authority, after consultation with the licensee and all other
          licensed electricity suppliers in whose supply licence the standard
          conditions in Section C have effect, the Consumer Council and such
          other persons or bodies as in the opinion of the Authority are
          representative of those likely to be affected, gives notice for the
          purposes of this condition generally:

          (i)  by publishing the notice in such a manner as the Authority
               considers appropriate for the purpose of bringing it to the
               attention of persons likely to be affected by it; and

          (ii) by sending a copy of the notice to all such licensed suppliers,
               to the Secretary of State and to the Consumer Council,

          that the Authority considers that the development of competition in
          electricity supply is such as to require the continuation of any part
          of this condition until such date - not later than two years from the
          termination date - as may be specified in the notice (the "new
          termination date"), then such part of this condition as may be
          specified in the notice shall continue to apply as if for the
          termination date there were substituted the new termination date; and

     (b)  notice under sub-paragraph (a) may be given on more than one occasion.

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13.  In this condition:

     "marketing                   activities" means any activities of the
                                  licensee directed at or incidental to the
                                  identification of and communication with
                                  domestic customers supplied or to be supplied
                                  with electricity by the licensee, and includes
                                  entering into domestic supply contracts with
                                  such customers.

     "representative"             in relation to the licensee, means any person
                                  directly or indirectly authorised to represent
                                  the licensee in its dealings with customers.

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Condition 49.  Assignment of Outstanding Charges

1.   This condition shall apply where:


     (a)  the licensee has commenced the supply of electricity to domestic
          premises at which a supply was previously given to its customer by the
          previous supplier;

     (b)  the customer has failed to pay, within 28 days of receiving a demand
          in writing, any charges due from him to the previous supplier for the
          supply of electricity at those premises;

     (c)  that failure occurred after either the previous supplier was informed
          of the change of supplier or the licensee commenced supply to the
          premises (whichever is the earlier);

     (d)  the previous supplier has given written notice to the customer that it
          proposes to assign the debt to the licensee, which may be entitled to
          reclaim from him its costs in recovering the debt; and

     (e)  the licensee has received from the previous supplier a notice in
          accordance with paragraph 2.

2.   A notice in accordance with this paragraph is one which:

     (a)  is given at least 14 days after the notice referred to at
          sub-paragraph 1(d) and is received by the licensee within 90 days of
          it commencing a supply to the premises;

     (b)  specifies the amount of the debt which remains unpaid;

     (c)  states that the previous supplier has used all reasonable endeavours
          to recover the debt, which remains unpaid at least 42 days after being
          demanded in writing; and

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     (d)  states that the previous supplier intends to assign to the licensee
          the debt, up to a maximum sum of one-third of the value (calculated in
          accordance with the charges of the previous supplier to the customer
          immediately before it ceased to supply him) of the average annual
          consumption reasonably expected of the customer.

3.   Where this condition applies the licensee shall, within 60 days of
     receiving a notice under paragraph 2 and in consideration of the assignment
     of the debt, pay to the previous supplier the sum specified under
     sub-paragraph 2(d) (less, where they cannot be reclaimed from the customer,
     its reasonable costs of recovering that debt).

4.   For the purposes of this condition, a customer shall not be regarded as
     being in debt to the previous supplier to the extent to which that debt is
     genuinely in dispute.

5.   In this condition:

     "previous supplier"           means, in relation to any domestic premises,
                                   the electricity supplier which supplied
                                   electricity to those premises immediately
                                   prior to the commencement of supply by the
                                   licensee.

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Condition 50. Modification of Provisions under Standard Conditions 46
(Termination of Contracts on Notice) and 49 (Assignment of Outstanding Charges)

1.   In this condition, the "relevant provisions" are the provisions of
     paragraph 4 of standard condition 46 (Termination of Contracts on Notice)
     and standard condition 49 (Assignment of Outstanding Charges) of this
     licence (or any of them).

2.   Where the Authority considers (having regard to any representations made to
     it) that in any specified class of cases the relevant provisions do not
     fulfil the requirements of paragraph 4, it may direct that they shall cease
     to have effect in that class of cases.

3.   Where a direction under paragraph 2 has been made and the Authority
     considers (having regard to any representations made to it) that in the
     specified class of cases the relevant provisions would fulfil the
     requirements of paragraph 4, it may direct that they shall again have
     effect in those cases.

4.   The requirements of this paragraph are that, in the specified class of
     cases, the operation of the relevant provisions:

     (a)  significantly reduces the number of unrecovered debts otherwise to be
          expected; or

     (b)  involves expenditure in debt recovery which is less than the reduction
          in the value of unrecovered debts which it achieves.

5.   Any direction under paragraphs 2 or 3 shall be made by a notice given to
     the relevant parties which shall specify:

     (a)  the relevant provisions to which it applies;

     (b)  the class of cases to which it applies; and

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     (c)  the date on which it shall have effect (being, in a direction under
          paragraph 3, at least 3 months after the notice is given).

6.   In this condition:

     "relevant parties"            means the licensee, all other electricity
                                   suppliers, the Consumer Council and such
                                   other persons or bodies as in the opinion of
                                   the Authority are representative of those
                                   likely to be affected by a revision to the
                                   relevant provisions.

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SECTION D.  SUPPLY SERVICES OBLIGATIONS

Condition 51.  Interpretation of Section D

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

     "exempt supplier"             means a supplier authorised to supply
                                   electricity by means of an exemption order
                                   granted under the Act.

     "exempt supply services"      means the services detailed at paragraph 2
                                   of standard condition 53B (Requirements to
                                   Offer Terms for Top-up and Standby, Exempt
                                   Supply Services and Prepayment Meter
                                   Services), as provided by the licensee to
                                   exempt suppliers in respect of premises
                                   within the supply services area.

     "standby"                     means the periodic or intermittent supply or
                                   sale of electricity:

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

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

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                                        than the licensee.

     "top-up"                      means the supply or sale of electricity on a
                                   continuing or regular basis:

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

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

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Condition 52.  Regulatory Accounts

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

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

     (a)  keep or cause to be kept for the period referred to in section
          222(5)(b) of the Companies Act 1985 and in the manner referred to in
          that section such accounting records in respect of each separate
          business as would by section 221 of the Companies Act 1985 be required
          to be kept in respect of each such business if it were carried on by a
          separate company, so that the revenues, costs, assets, liabilities,
          reserves and provisions of, or reasonably attributable to, each
          separate business are separately identifiable in the accounting
          records of the licensee (and any affiliate or related undertaking)
          from those of any other business of the licensee;

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

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

               (aa) charged from or to any other business (whether or not a
                    separate business) together with a description of the basis
                    of that charge; or

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                (bb) determined by apportionment or allocation between any
                     separate business and any other business (whether or not a
                     separate business) together with a description of the basis
                     of the apportionment or allocation; and

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

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

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

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

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     provided always that the obligations set out in this paragraph 2 shall not
     apply where they have already been discharged by the licensee in respect of
     each separate business pursuant to any other licence.

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

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

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

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

     (b)  state the accounting policies adopted; and

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

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6.   Unless the accounting statements and information prepared under
     sub-paragraph 2(b)(i) and 2(b)(iii) are prepared on the current cost basis
     as provided by the alternative accounting rules, the licensee shall, unless
     otherwise agreed by the Authority, in addition to preparing those
     accounting statements under that paragraph, prepare accounting statements
     for each separate business covering the same period, which shall comprise
     and show separately:

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

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

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

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

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

     and shall deliver the same, together with an auditors' report prepared in
     relation to the current cost basis accounting statements in the form
     referred to in sub-paragraph 2(c), to the Authority within the time limit
     referred to in sub-paragraph 2(d), and shall (with the exception of the
     part of such statements and information which shows separately the amounts
     charged, apportioned or allocated and describes the bases of charge or
     apportionment or allocation respectively and with the exception of the
     accounting

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     statements relating to the out-of-area supply business) publish the same
     with the statutory accounts of the licensee.

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

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

9.   For the purposes of paragraph 6:

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

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

     "the handbook"                          means the handbook issued by the
                                             Accounting Standards Committee of
                                             the Consultative Committee of
                                             Accounting Bodies (CCAB Limited) or
                                             any successor body entitled
                                             "Accounting for the effects of
                                             changing prices: a Handbook" in its
                                             current edition for the time being
                                             or in the event that no such
                                             handbook shall be in issue such
                                             guidance or publication

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                                             as may be issued in replacement or
                                             substitution therefor.

     "in-area supply business"               means in respect of each supply
                                             services area the business of the
                                             licensee comprising or ancillary to
                                             the supply of electricity to
                                             premises which are within the
                                             supply services area.

     "out-of-area supply business"           means in respect of each supply
                                             services area the business of the
                                             licensee comprising or ancillary to
                                             the supply of electricity to
                                             premises which are outside the
                                             supply services area.

10.  For the purposes of this condition:

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

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Condition 52A.  Change of Financial Year

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

2.   Such notice:

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

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

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

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

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

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

     (c)  shall be accompanied by a report by the auditors and addressed to the
          Authority stating whether in their opinion the audited group accounts
          have been properly prepared in accordance with this condition and give
          a true and fair view of the state of affairs of the group of companies
          and of its profits or losses, total recognised gains or losses and
          cash flows during the financial year;

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

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<PAGE>

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

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

6.   No provisions of this condition shall apply to the financial year of the
     licensee as defined in standard condition 1 (Definitions and
     Interpretation) for the purpose of accounts produced in compliance with
     standard condition 52 (Regulatory Accounts). No provisions of this
     condition shall affect the licensee's obligations in respect of payment of
     licence fees under standard condition 4 (Payments by the Licensee to the
     Authority).

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Condition 53. Basis of Charges for Top-up and Standby, Exempt Supply Services
and Prepayment Meter Services: Requirements for Transparency

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

     (a)  top-up and standby ; and

     (b)  exempt supply services

     in each case in such form and with such detail as shall be necessary to
     enable any person to make a reasonable estimate of the charges to which he
     would become liable for the provision of such services, and (without
     prejudice to the foregoing) including the information set out in paragraphs
     3 and 4 respectively.

2.   The licensee shall as soon as practicable prepare a statement in a form
     approved by the Authority setting out the basis upon which charges will be
     made for the provision of prepayment meter services, which statement shall
     be in such form and with such detail as shall be necessary to enable any
     person to make a reasonable estimate of the charges to which he would
     become liable for the provision of such services and of the other terms,
     likely to have a material impact on the conduct of his business, upon which
     the services would be provided and (without prejudice to the foregoing)
     including the information set out in paragraph 5.

3.   The statement referred to at sub-paragraph 1(a) shall set out the methods
     by which and the principles on which the charges for the provision of each
     of top-up supplies or sales and standby supplies or sales will be made.

4.   The statement referred to at sub-paragraph 1(b) shall set out the methods
     by which and the principles on which charges for the provision of such
     services will be made.

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<PAGE>

5.   The statement referred to at paragraph 2 shall include a schedule of
     charges for prepayment meter services, together with an explanation of the
     methods by which and the principles on which such charges will be
     calculated.

6.   The basis on which charges for the provision of top-up and standby shall be
     set shall reflect the costs directly incurred in the provision thereof,
     together with a reasonable rate of return on the capital represented by
     such costs.

7.   The basis on which charges for the provision of exempt supply services
     shall be set shall reflect the costs directly incurred in the provision
     thereof, together with a reasonable rate of return on the capital
     represented by such costs.

8.   The Authority may, upon the written request of the licensee, issue a
     direction relieving the licensee of its obligations under paragraph 2 to
     such extent and subject to such terms and conditions as it may specify in
     that direction.

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

10.  The licensee:

     (a)  shall, at least once in every year, review the information set out in
          the statements prepared in accordance with paragraphs 1 and 2 in order
          that the information set out in such statements shall continue to be
          accurate in all material respects; and

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

11.  The licensee shall send a copy of the statements prepared in accordance
     with paragraphs 1 and 2, and of each revision of such statements, to the
     Authority.

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<PAGE>

12.  The licensee shall give or send a copy of the statements prepared in
     accordance with paragraphs 1 and 2, or (as the case may be) of the latest
     revision of such statements, to any person who requests a copy of such
     statement or statements.

13.  The licensee may make a charge for any statement given or sent pursuant to
     paragraph 12 of an amount which shall not exceed the amount specified in
     directions issued by the Authority for the purposes of this condition based
     on the Authority's estimate of the licensee's reasonable costs of providing
     such a statement.

                                      156

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Condition 53A. Non-discrimination in the Provision of Top-up or Standby, Exempt
Supply Services and Prepayment Meter Services

1.   In the provision of top-up or standby the licensee shall not discriminate
     between any persons or class or classes of person.

2.   In the provision of exempt supply services the licensee shall not
     discriminate between any exempt suppliers or class or classes thereof.

3.   In the provision of prepayment meter services the licensee shall not
     discriminate between any persons or class or classes of person.

4.   Without prejudice to paragraphs 1, 2 and 3, and subject to the provisions
     of standard condition 53 (Basis of Charges for Top-up and Standby, Exempt
     Supply Services and Prepayment Meter Services: Requirements for
     Transparency), the licensee shall not:

     (a)  make charges for the provision of top-up or standby to any person or
          class or classes of person which differ from the charges for such
          provision to any other person or class or classes of person;

     (b)  make charges for the provision of exempt supply services to any exempt
          supplier or class or classes thereof which differ from the charges for
          such provision to any other exempt supplier or class or classes
          thereof; or

     (c)  make charges for the provision of prepayment meter services to any
          person or class or classes of person which differ from the charges for
          such provision to any other person or class or classes of person,

     except in so far as such differences reasonably reflect differences in the
     costs associated with such provision.

5.   The licensee shall not in setting its charges for the provision of top-up
     or standby, exempt supply services, or prepayment meter services restrict,
     distort or prevent competition in the generation, distribution or supply of
     electricity.

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Condition 53B. Requirement to Offer Terms for Top-up and Standby, Exempt Supply
Services and Prepayment Meter Services

1.   On application made by any person the licensee shall (subject to
     sub-paragraphs 6(a) and (b)) offer to enter into an agreement to provide
     top-up or standby.

2.   On application made by any exempt supplier the licensee shall (subject to
     paragraph 6) offer to enter into an agreement for exempt supply services
     within the supply services area and such offer shall make detailed
     provision regarding:

     (a)  the making, maintenance and termination by the licensee of
          registrations under and in accordance with the Master Registration
          Agreement in relation to premises to which the exempt supplier
          supplies or is required to supply electricity;

     (b)  the exchange between the licensee and exempt supplier of such
          information as is required for the performance of the licensee's
          obligations in accordance with sub-paragraph (a);

     (c)  the appointment by the exempt supplier of an appropriate provider of
          meters and metering equipment, meter maintenance services, and
          provision of data retrieval, data processing and data aggregation
          services in relation to premises to which it supplies electricity;

     (d)  the apportionment and settlement by the licensee of charges incurred
          by it by virtue of registrations under the Master Registration
          Agreement which are made, maintained and terminated in accordance with
          sub-paragraph (a);

     (e)  the reimbursement by the exempt supplier (by way of indemnity) of all
          charges incurred by the licensee by virtue of registrations made and
          maintained in accordance with sub-paragraph (a);

     (f)  the provision by the exempt supplier to the licensee of reasonable
          security or collateral for the performance of its obligations under
          the agreement; and

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     (g)  the varying of the agreement, including the making of amendments
          necessary to give effect to any determination made by the Authority in
          respect of the agreement.

3.   On application made by any electricity supplier the licensee shall (subject
     to sub-paragraph 6(a)) offer to enter into an agreement for the provision
     within the supply services area of access to a system which supports the
     supply of electricity to domestic customers with prepayment meters
     ("prepayment meter services"), such system providing as may be reasonably
     appropriate for prepayment meters which require tokens, cards or keys for
     their operation and comprising facilities for:

     (a)  (where requested) the purchase by electricity suppliers and/or
          encoding with data of tokens, cards or keys;

     (b)  the use by domestic customers of local outlets for the purchase of
          tokens and the crediting with value of cards or keys;

     (c)  the making of payments to electricity suppliers in respect of sums
          received by the licensee on behalf of domestic customers; and

     (d)  where relevant, the transfer of domestic customer data to electricity
          suppliers.

4.   In making an offer to enter into any agreement specified in paragraphs 1 to
     3, the licensee shall set out:

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

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

          (i)  to be presented in such a way as to be referable to the
               statements prepared in accordance with paragraphs 1 and 2 of
               standard condition 53 (Basis of Charges for Top-up and Standby,
               Exempt Supply Services and

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                Prepayment Meter Services: Requirements for Transparency) or
                any revision thereof; and

          (ii)  to be set in conformity with the requirements of standard
                condition 53 (Basis of Charges for Top-up and Standby, Exempt
                Supply Services and Prepayment Meter Services: Requirements for
                Transparency); and

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

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

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

     (a)  under paragraphs 1 to 3, if to do so would be likely to involve the
          licensee being:

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

          (ii)  in breach of any regulations made under section 29 of the Act;

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

          (iv)  in breach of the conditions;

     (b)  under paragraph 1 or 2, if the person making the application does not
          undertake to be bound, in so far as applicable, by the terms of the
          applicable Distribution Code or the applicable Grid Code from time to
          time in force;

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     (c)  under paragraph 2, if the person making the application ceases to be
          an exempt supplier.

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

                                      161

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Condition 53C.  Functions of the Authority

1.   If, after a period which appears to the Authority to be reasonable for the
     purpose, the licensee has failed to enter into an agreement with any person
     entitled or claiming to be entitled thereto pursuant to a request under
     standard condition 53B (Requirement to Offer Terms for Top-up and Standby,
     Exempt Supply Services and Prepayment Meter Services), the Authority may,
     on the application of such person or the licensee, settle any terms of the
     agreement in dispute between the licensee and that person in such manner as
     appears to the Authority to be reasonable having (in so far as relevant)
     regard in particular to the following considerations:

     (a)  that such person should pay to the licensee:


          (i)    in the case of the  provision of top-up or  standby,  such sum
                 as is determined in accordance with paragraph 6 of standard
                 condition 53 (Basis Charges for Top-up and Standby, Exempt
                 Supply Services and Prepayment Meter Services: Requirements
                 for Transparency);


          (ii)   in the case of exempt supply services, such sum as is
                 determined in accordance with paragraph 7 of standard condition
                 53 (Basis of Charges for Top-up and Standby, Exempt Supply
                 Services and Prepayment Meter Services: Requirements for
                 Transparency); and

          (iii)  in the case of  prepayment meter services, the whole or the
                 appropriate proportion of such sum as is determined in
                 accordance  with  paragraph 9 of standard condition 53 (Basis
                 of Charges for Top-up and Standby, Exempt Supply Services and
                 Prepayment Meter Services: Requirements for Transparency);


     (b)  that the performance by the licensee of its obligations under the
          agreement should not cause it to be in breach of those provisions
          referred to at sub-paragraph 6(a) of standard condition 53B
          (Requirement to Offer Terms for Top-up and Standby, Exempt Supply
          Services and Prepayment Meter Services);

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     (c)  that the terms and conditions of the agreement so settled by the
          Authority and of any other agreements entered into by the licensee
          pursuant to a request under standard condition 53B (Requirement to
          Offer Terms for Top-up and Standby, Exempt Supply Services and
          Prepayment Meter Services) should be, so far as circumstances allow,
          in as similar a form as is practicable; and

     (d)  in the case of exempt supply services, that the agreement for the
          provision of exempt supply services should make provision for all the
          matters set out at paragraph 2 of standard condition 53B (Requirement
          to Offer Terms for Top-up and Standby, Exempt Supply Services and
          Prepayment Meter Services).

2.   In so far as any person entitled or claiming to be entitled to an offer
     under standard condition 53B (Requirement to Offer Terms for Top-up and
     Standby, Exempt Supply Services and Prepayment Meter Services) wishes to
     proceed on the basis an agreement as settled by the Authority pursuant to
     paragraph 1, the licensee shall forthwith enter into and implement such
     agreement in accordance with its terms.

3.   If either party to such agreement proposes to vary the contractual terms of
     any agreement entered into pursuant to standard condition 53B (Requirement
     to Offer Terms for Top-up and Standby, Exempt Supply Services and
     Prepayment Meter Services) or this condition in any manner provided for
     under such agreement, the Authority may, at the request of that party,
     settle any dispute relating to such variation in such manner as appears to
     the Authority to be reasonable.

4.   The Authority may (following consultation with the licensee) issue
     directions relieving the licensee of its obligations under standard
     condition 53B (Requirement to Offer Terms for Top-up and Standby, Exempt
     Supply Services and Prepayment Meter Services) relating to prepayment meter
     services in respect of such parts of that standard condition and to such
     extent as may be specified in the directions.

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Condition 54. Duration of Standard Condition 53B (Requirement to Offer Terms for
Top-up and Standby, Exempt Supply Services and Prepayment Meter Services)


1.   Standard condition 53B (Requirement to Offer Terms for Top-up and Standby,
     Exempt Supply Services and Prepayment Meter Services) shall cease to have
     effect (in whole or in part, as the case may be) in accordance with this
     condition.

2.   Subject to paragraph 3, the licensee may make a request to the Authority
     that standard condition 53B (Requirement to Offer Terms for Top-up and
     Standby, Exempt Supply Services and Prepayment Meter Services) shall cease
     to have effect (in whole or in part, as the case may be) (in this condition
     a "disapplication request") at any time.

3.   No disapplication request may be made in relation to standard condition 53B
     (Requirement to Offer Terms for Top-up and Standby, Exempt Supply Services
     and Prepayment Meter Services) paragraphs 3 and 7 and such parts of
     paragraphs 4, 5 and 6 as relate to pre-payment meter services prior to the
     date which is 12 months after the date of the coming into force of this
     condition.

4.   A disapplication request shall be in writing addressed to the Authority,
     shall specify the paragraphs of standard condition 53B (Requirement to
     Offer Terms for Top-up and Standby, Exempt Supply Services and Prepayment
     Meter Services) (or such part or parts thereof) to which the request
     relates and shall state the date (in this condition "the disapplication
     date", being a date not less than 12 months (18 months in respect of a
     disapplication request concerning Prepayment Meters Services) after the
     date of delivery of the request) from which the licensee wishes the
     Authority to agree that the specified paragraphs (or such specified part or
     parts thereof) shall cease to have effect.

5.   A disapplication request shall not take effect if the Authority so
     determines within 12 months (18 months in respect of a disapplication
     request concerning Prepayment Meters Services) of the disapplication
     request.

6.   A disapplication request shall take effect, if the Authority consents in
     writing to that disapplication request within 12 months (18 months in
     respect of a disapplication request concerning Prepayment Meters Services)
     of the disapplication request, from the disapplication date or such other
     date specified by the Authority in the consent.

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<PAGE>

7.   Save where the Authority otherwise agrees, no further disapplication
     request may be served earlier than 12 months after any previous
     disapplication request by the licensee.


Department of Trade and Industry

September 2001

                                      165

<PAGE>

                        SPECIAL CONDITIONS AND SCHEDULES

                           PART IV. SPECIAL CONDITIONS

Special Condition A: Interpretation and Application

1.   Unless the context otherwise requires words and expressions used in the
     standard conditions of this licence shall bear the same meaning in these
     Special Conditions.

2.   Any reference in these Special Conditions to

     (a)  a provision thereof;

     (b)  a provision of the standard conditions;

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

     (d)  a provision of the standard conditions of electricity distribution
          licences;

     (e)  a provision of the standard conditions of electricity transmission
          licences; shall, if these or the standard conditions in question come
          to be modified, be construed, so far as the context permits, as a
          reference to the corresponding provision of these or the standard
          conditions in question as modified.

3.   The Special Conditions and Schedules listed in Table 1 below apply only to
     the Manweb supply services area (as defined in paragraph 7 of the Terms to
     this licence) and the Special Conditions and Schedules listed in Table 2
     apply only to the ScottishPower supply services area (as defined in
     paragraph 7 of the Terms to this licence).

Table 1 - Special Conditions and Schedule in relation to the Manweb supply
services area

Special Condition B (Definitions)

Special Condition C (Restraint on Supply Charges in England & Wales)

Special Condition D (Information to be provided to the Authority in connection
with the charge restriction conditions)

Special Condition E (Allowances in respect of Security costs)

Special Condition F (Duration of charge restriction conditions)

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<PAGE>

Schedule A: Supplementary provisions of the charge restriction conditions

Special Condition L: Restriction on self-supply

                                      167

<PAGE>

Table 2 - Special Conditions and Schedule in relation to the ScottishPower
supply services area


Special Condition G (Definitions)

Special Condition H (Restraints on supply charges in Scotland)

Special Condition I (Information to be provided to the Authority in connection
with the charge restriction conditions)

Special Condition J (Allowances in respect of Security costs)

Special Condition K (Duration of charge restriction conditions)

Schedule B: Supplementary provisions of the charge restriction conditions

                                      168

<PAGE>

Special Condition B: Definitions

1.   This Condition and Special Conditions C to F and Schedule A shall apply
     only to the Manweb supply services area (such area is referred to in these
     Special Conditions as the "Manweb area").

2.   In this Condition, in Special Condition C to F and in Schedule A:

     "attributed"                  means when used in relation to the fossil
                                   fuel levy or payments in lieu thereof or in
                                   relation to attributing electricity purchase
                                   or sale contracts and electricity purchase
                                   costs to domestic customers attributed in
                                   accordance with the principles set out in
                                   Part A of Schedule A and attribute,
                                   attributed, attributable and attribution
                                   shall be construed accordingly."

     "charge restriction           means Special Conditions B to F together with
     conditions"                   Schedule A to this licence, as from time to
                                   time modified or replaced in accordance with
                                   the provisions of the Act.


     "electricity purchase costs"  means the licensee's purchase costs of
                                   electricity calculated in accordance with the
                                   principles in the Public Electricity Supply
                                   Licence previously granted to Manweb in force
                                   on 31 March 1998.

     "eleventh relevant year"      means the relevant year commencing 1 April
                                   2000.

     "excluded services"           means those services provided by the licensee
                                   which in accordance with the principles set
                                   out in Part B of Schedule A fall to be
                                   treated as

                                      169

<PAGE>

                                   excluded services.

     "metered"                     means, in relation to any quantity supplied,
                                   as measured by a meter installed for such
                                   purpose or (where no such meter is installed
                                   or it is not reasonably practicable to
                                   measure the quantity by such meter) as
                                   otherwise reasonably calculated.

     "quantity supplied"           means the aggregate quantity of units
                                   supplied by the licensee in the relevant year
                                   metered at the points of supply (whether or
                                   not in the supply services area of the
                                   licensee).

     "relevant supply services     means the Manweb area listed in column 1 of
     area"                         annexes A to F of Special Condition C
                                   (Restraints on Supply Charges in England and
                                   Wales).

     "relevant year"               means a financial year commencing on or after
                                   1st April 1990.

     "relevant year t"             means that relevant year for the purposes of
                                   which any calculation falls to be made.

     "relevant year t-1"           means the relevant year preceding relevant
                                   year t or, in respect of the period prior to
                                   1st April 1990, the period of 12 calendar
                                   months commencing on 1 April 1989; and
                                   similar expression shall be construed
                                   accordingly.

     "supply"                      means supply in the Manweb area; and
                                   "supplied" and similar expressions shall be
                                   construed accordingly.

     "supply charges"              means all charges (including charges for the
                                   use of any distribution or transmission
                                   system and standing charges) made by the
                                   licensee in respect of electricity supplied
                                   by the licensee other than charges for the
                                   provision of

                                      170

<PAGE>

                                   excluded services by the licensee.


     "supply revenue"              means the revenue (measured on an accruals
                                   basis) derived by the licensee from supply
                                   charges after deduction of value added tax
                                   (if any) and any other taxes based directly
                                   on the amounts so derived.

     "twelfth relevant year"       means the relevant year commencing 1 April
                                   2001.

     "unit"                        means a kilowatt hour.

                                      171

<PAGE>

Special Condition C: Restraints on Supply Charges in England and Wales

Availability of Restricted Charges

1.   The licensee shall make available and continue to make available to all
     Domestic Customers the Standard Domestic Charge and the Domestic Economy 7
     Charge.

2.   The licensee shall not, without the consent in writing of the Authority,
     change the terms (other than price, which shall be regulated in accordance
     with this Condition) of any Restricted Charge, and the terms to which this
     prohibition applies include, for example, the hours between which
     particular prices apply and the level of consumption at which prices
     change.

Restraints on Prices for Restricted Charges

3.   Without prejudice to Special Condition E (Allowances in respect of security
     costs ).and subject to paragraph 16, the licensee shall, in addition to
     complying with paragraphs 10, 11, 12 and (where appropriate) 13, ensure
     that at any point in time in the eleventh relevant year the prices set by
     the licensee for the Standard Domestic Charge and the Domestic Economy 7
     Charge shall not exceed limits imposed by paragraph 6 and paragraph 8
     respectively.

4.   Without prejudice to Special Condition E (Allowances in respect of security
     costs), and subject to paragraph 16, the licensee shall, in addition to
     complying with paragraphs 10 to 15, ensure that at any point in time in the
     twelfth relevant year the prices set by the licensee for the Standard
     Domestic Charge and the Domestic Economy 7 Charge shall not exceed limits
     imposed by paragraph 7 and paragraph 9 respectively,

5.   Without prejudice to Special Condition E (Allowances in respect of security
     costs ), and subject to paragraph 16, the licensee shall, in addition to
     complying with paragraphs 12 to 15, ensure that at any point in time in the
     thirteenth and subsequent relevant years, the

                                      172

<PAGE>

prices set by the  licensee for the  Standard  Domestic  Charge and the Domestic
Economy 7

Charge shall not exceed the limits imposed by paragraph 7 and paragraph 9
respectively, and the limits imposed by paragraph 15;

where in paragraphs 7, 9, and 15;

references to the 'twelfth relevant year' are replaced by reference to the
relevant subsequent relevant year

references to 't+l' are to be construed as references to the relevant subsequent
relevant year

references to 't' are to be construed as references to the year preceding the
relevant subsequent relevant year

                                      173

<PAGE>

Restraint on Standard Domestic Charge


6.   The Standard Domestic Charge shall be set so that at any point in time in
     the eleventh relevant year the weighted average unit price of that charge
     represented by the term WPSDt does not exceed the lower of the two formulae
     given under (a) and (b):

     (a)  ((B\\SDt\\ + D\\SDt\\ + T\\SDt\\) x 1.015) x (1 + (F\\t\\/100))

     (b)  WP\\SDt-1\\ x ((1 + (F\\t\\/100))/(1 + (F\\d\\/100)))

     Where:

     WP\\SDt\\           is set equal to (W\\SD\\ x P\\SDt\\) + ((l-W\\SD\\) x
                         PPP\\SDt\\)

     W\\SD\\             means the weighting factor given against the relevant
                         supply services area in Column 2 of Annexe D to this
                         Condition

     P\\SDt\\            means the average unit price for the licensee's
                         Standard Domestic Charge calculated as follows, using
                         the licensee's published rates for that charge and
                         without taking account of any Prompt Payment Discount
                         available under that charge: (Annual Standing Charge +
                         (Bl\\SD\\ x Primary Unit rate) + ((3300-B1\\SD\\) x
                         Secondary Unit rate))/3300

     B1\\SD\\            has the value given against the relevant supply
                         services area in Column 2 of Annexe E to this Condition

     PPP\\SDt\\          means the average unit price for the licensee's
                         Standard Domestic Charge calculated as follows, using
                         the licensee's published rates for that charge, and
                         after taking account of any Prompt Payment Discount
                         available under that charge:

                                       174

<PAGE>

                         (Annual Standing Charge + (Bl\\SD\\ x Primary unit
                         rate) + ((3300-B1\\SD\\) x Secondary unit rate)) / 3300

     B\\SDt\\            means the base allowance, subject to paragraph 16, (in
                         respect of generation, supply and transmission services
                         use of system) given against the relevant supply
                         services area in Column 2 of Annexe B to this Condition

     D\\SDt\\            means a sum representing the distribution use of system
                         charges incurred by the licensee in the eleventh
                         relevant year in supplying a customer on a Standard
                         Domestic Charge, represented by the formula:

                         (D\\1SDt\\+ (3300 x D\\2SDt\\) + D\\3SDt\\) / 3300

     D\\1SDt\\           is the distribution use of system charge annual
                         standing charge for supplying that customer

     D\\2SDt\\           is the distribution use of system charge in respect of
                         each unit consumed by that customer

     D\\3SDt\\           is the aggregate of all other relevant distribution
                         charges for supplying that customer

     T\\SDt\\            is calculated in accordance with the following formula,
                         provided that if the transmission company changes the
                         basis upon which it calculates or charges for
                         transmission network use of system charges, the
                         Authority may by direction amend the formula to produce
                         a value of

                                       175

<PAGE>

                                       T\\SDt\\ such that the licensee is
                                       neither advantaged nor disadvantaged by
                                       the change:
                                       TNUOS x 0.1859 x Loss Adjustment Factor

                                       Where

                                       'TNUOS' is the transmission network use
                                       of system charge (expressed in pence per
                                       kWh) published for the eleventh relevant
                                       year and for the zone relevant to the
                                       licensee, as set out in the statement
                                       provided for in standard condition C7
                                       (Use of System) of the Transmission
                                       Licence.
                                       "Loss Adjustment Factor" means the factor
                                       shown against the relevant supply
                                       services area in column 2 of Annexe C to
                                       this Condition

     WP\\SDt-1\\                       is set equal to

                                       (W\\SD\\ x P\\SDt-1\\) + ((1-W\\SD\\)
                                       x PPP\\SDt-1\\)

     P\\SDt-1\\                        means the average unit price for the
                                       licensee's Standard Domestic Charge
                                       calculated as follows, using the
                                       licensee's published rates for that
                                       charge as at the end of the tenth
                                       relevant year, and without taking
                                       account of any Prompt Payment Discount
                                       available under that charge:
                                       (Annual Standing Charge + (B1\\SD\\ x
                                       Primary unit rate) + ((3300-B1\\SD\\) x
                                       Secondary Unit Rate))/3300

     PPP\\SDt-1\\                      means the average unit price for the
                                       licensee's Standard Domestic Charge
                                       calculated as follows, using the
                                       licensee's published rates for that
                                       charge as at the end

                                       176

<PAGE>

                                       of the tenth relevant year, and after
                                       taking account of any Prompt Payment
                                       Discount available under that charge:
                                       (Annual Standing Charge + (B1\\SDt\\ x
                                       Primary unit rate) + ((3300-B1\\SD\\) x
                                       Secondary unit rate))/3300

7.   The Standard Domestic Charge shall be set so that at any point in time in
     the twelfth relevant year the weighted average unit price of that charge
     represented by the term WPSDt+1 does not exceed:
     ((B\\SDt+1\\ + D\\SDt+1\\ + T\\SDt+1\\) x 1.015) x (1 + (F\\t+1\\/100))

     Where:

     WP\\SDt+1\\ is set equal to
     (W\\SD\\ x P\\SDt+1\\) + ((1-W\\SD\\) x PPP\\SDt+1\\)

     W\\SD\\             means the weighting factor given against the relevant
                         supply services area in Column 2 of Annexe D to this
                         Condition

     PS\\Dt+1\\          means the average unit price for the licensee's

                         Standard Domestic Charge in the twelfth relevant year,
                         calculated as follows using the licensee's published
                         rates for that charge, and without taking account of
                         any Prompt Payment Discount available under that
                         charge:

     (Annual Standing Charge + (B1\\SD\\ x Primary Unit rate) + ((3300-B1\\SD\\)
     x Secondary Unit rate))/3300

     B1\\SD\\            has the value given against the relevant supply
                         services area in Column 2 of Annexe E to this Condition

     PPP\\SDt+1\\        means the average unit price for the licensee's
                         Standard Domestic Charge in the twelfth relevant year,
                         calculated as follows, using the licensee's published
                         rates for that charge, and after taking account of any
                         Prompt Payment Discount available under that charge

                                       177

<PAGE>

     (Annual Standing Charge + (B1\\SD\\ x Primary Unit rate) + ((3300-B1\\SD\\)
     x Secondary Unit rate))/3300

     B\\SDt+1\\          is set equal to
                         B\\SDt\\ x (1 + (RPI\\t+1\\/100))

     D\\SDt+1\\          means a sum representing the distribution use of system
                         charges incurred by the licensee in the twelfth
                         relevant year in supplying a customer on a Standard
                         Domestic Charge, represented by the formula:
                         (D1\\SDt+1\\ + (3300 x D\\2SDt+1\\) + D\\3SDt+1\\)/3300

     D\\1SDt+1\\         is the distribution use of system charge annual
                         standing charge for supplying that customer

     D\\2SDt+1\\         is the distribution use of system charge in respect of
                         each unit consumed by that customer

     D\\3SDt+1\\         is the aggregate of all other relevant distribution
                         charges for supplying that customer

     T\\SDt+1\\          is calculated in accordance with the following formula,
                         provided that if the transmission company changes the
                         basis upon which it calculates or charges for
                         transmission network use of system charges, the
                         Authority may by direction amend the formula to produce
                         a value of TSDt+1 such that the licensee is neither
                         advantaged nor disadvantaged by the change:
                         TNUOS x 0.1859 x Loss Adjustment Factor

                         Where

                         'TNUOS' is the transmission network use of system
                         charge (expressed in pence per kWh) published for the
                         twelfth relevant year and for the zone relevant to the
                         licensee, as set out in the statement provided for in
                         standard condition C7 (Use of System) of the
                         Transmission Licence.
                         "Loss Adjustment Factor" means the factor shown against
                         the relevant supply services area in column 2 of Annexe
                         C to this Condition

                                       178

<PAGE>

                         For the purposes of this paragraph 7, any cross
                         references to it and this Condition generally the terms
                         B\\SDt\\, D\\SDt\\, and T\\SDt\\ shall have the
                         meanings given respectively, in paragraph 6 above.

Restraint on Domestic Economy 7 Charge

8.   The Domestic Economy 7 Charge shall be set so that at any point in time in
     the eleventh relevant year the weighted average unit price of that charge
     represented by the term WP\\E7t\\ does not exceed the lower of the two
     formulae given under (a) and (b):

     (a)  ((B\\E7t\\ + D\\E7t\\ + T\\E7t\\) x 1.015) x (1 + (F\\t\\/100))

     (b)  WP\\E7t-1\\ x ((1 + (F\\t\\/100))/(1 + (F\\d\\/100))) x (1 +
          (RPI\\t\\/100))

     Where:

     WP\\E7t\\           is set equal to
                         (W\\E7\\ x P\\E7t\\) + ((1-W\\E7\\) x PPP\\E7t\\)

     W\\E7\\             means the weighting factor given against the relevant
                         supply services area in Column 3 of Annexe D to this
                         Condition

     P\\E7t\\            means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge, and
                         without taking account of any Prompt Payment Discount
                         available under that charge:
                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate))/6600

     B1\\E7\\            has the value given against the relevant supply
                         services area in Column 3 of Annexe E to this Condition

     PPP\\E7t\\          means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge, and
                         after taking account of any Prompt Payment Discount
                         available under that charge: ((Annual Standing Charge +
                         (B1\\E7\\ x Day Primary Unit Rate) + ((3000 - B1\\E7\\)
                         x Day Secondary Unit Rate) + (3600 x Night Unit
                         Rate)))/6600

                                   179

<PAGE>

     B\\E7t\\            means the base allowance, subject to paragraph 16, (in
                         respect of generation, supply and transmission services
                         use of system) given against the relevant supply
                         services area in Column 3 of Annexe B to this Condition

     D\\E7t\\            means a sum representing the distribution
                         use of system charges incurred by the licensee in the
                         eleventh relevant year in supplying a customer on a
                         Domestic Economy 7 Charge, represented by the formula

                         (D\\1E7t\\ + (3000 x D\\2E7t\\) + (3600 x D\\3E7t\\) +
                         D\\4E7t\\)/6600

     D\\1E7t\\           is the  distribution use of system charge annual
                         standing charge for supplying that customer

     D\\2E7t\\           is the distribution use of system charge in respect of
                         each day unit consumed by that customer

     D\\3E7t\\           is the distribution use of system charge in respect of
                         each night unit consumed by that customer

     D\\4E7t\\           is the aggregate of all other relevant distribution use
                         of system charges for supplying that customer

     T\\E7t\\            is calculated in accordance with the following formula,
                         provided that if the transmission company changes the
                         basis upon which it calculates or charges for
                         transmission network use of system charges, the
                         Authority may by direction amend the formula to produce
                         a value of TE7t such that the licensee is neither
                         advantaged nor disadvantaged by the change:
                         TNUOS x 0.1162 x Loss Adjustment Factor

                         where

                         'TNUOS' is the transmission network use of system
                         charge (expressed in pence per kWh) published for the
                         eleventh relevant year and for the zone relevant to the
                         licensee, as set out in the statement provided for in
                         standard condition C7 (Use of System) of the
                         Transmission Licence.
                         "Loss Adjustment Factor" means the factor shown against
                         the relevant supply services area in column 3 of Annexe
                         C to this

                                      180

<PAGE>

                         Condition

     WPE\\7t-1\\         is set equal to
                         (W\\E7\\ x P\\E7t-1\\) + ((l-W\\E7\\) x PPP\\E7t-1\\)

     P\\E7t-1\\          means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge as at
                         the end of the tenth relevant year, and without taking
                         account of any Prompt Payment Discount available under
                         that charge:

                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate))/6600

     B\\1E7\\            has the value given against the relevant supply
                         services area in Column 3 of Annexe E

     PPP\\E7t-1\\        means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge at the
                         end of the tenth relevant year, and after taking
                         account of any Prompt Payment Discount available under
                         that charge:
                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate))/6600

9.   The Domestic Economy 7 Charge shall be set so that at any point in time in
     the twelfth relevant year the weighted average unit price of that charge
     represented by the term
     WP\\E7t+1\\ does not exceed:
     ((B\\E7t+1\\ + D\\E7t+1\\ + T\\E7t+1\\) x 1.015) x (1 + (F\\t+1\\/100)

     Where:

     WP\\E7t+1\\         is set equal to
                         (W\\E7\\ x P\\E7t+1\\) + ((1-W\\E7\\) x PPP\\E7t+1\\)

     W\\E7\\             means the weighting factor given against the relevant
                         supply services area in Column 3 of Annexe D to this
                         Condition

     P\\E7t+1\\          means the average unit price for the licensee's
                         Domestic Economy

                                      181

<PAGE>

                         7 Charge in the twelfth relevant year calculated as
                         follows, using the licensee's published rates for that
                         charge, and without taking account of any Prompt
                         Payment Discount available under that charge:

                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) r ((3000 - B1\\E7\\) x Day

                         Secondary Unit Rate) + (3600 X Night Unit Rate)) / 6600

     B1\\E7\\            has the value given against the relevant supply
                         services area in Column 3 of Annexe E to this Condition

     PPP\\E7t+1\\        means the average unit price for the licensee's
                         Domestic Economy 7 Charge in the twelfth relevant year
                         calculated as follows, using the licensee's published
                         rates for that charge, and after taking account of any
                         Prompt Payment Discount available under that charge
                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate))/6600

     B\\E7t+1\\          is set equal to
                         B\\E7t\\.(1 + (RP\\It+1\\/100))

     D\\E7t+1\\          means a sum representing the distribution use of system
                         charges incurred by the licensee in the twelfth
                         relevant year in supplying a customer on a Domestic
                         Economy 7 Charge, represented by the formula:
                         (D\\1E7t\\+1 + (3000 x D\\2E7t+1\\) + (3600 x
                         D\\3E7t+1\\) + D\\4E7t+1\\)/6600

     D\\1E7t+1\\         is the distribution use of system charge annual
                         standing charge for supplying that customer

     D\\2E7t+1\\         is the distribution use of system charge in respect of
                         each day unit consumed by that customer

     D\\3E7t+1\\         is the distribution use of system charge in respect of
                         each night unit consumed by that customer

     D\\4E7t+1\\         is the aggregate of all other relevant distribution
                         charges for supplying that customer

                                      182

<PAGE>

     T\\E7t+1\\          is calculated in accordance with the following formula,
                         provided that if the transmission company changes the
                         basis upon which it calculates or charges for
                         transmission network use of system charges, the
                         Authority may by direction amend the formula to produce
                         a value of TE7t+l such that the licensee is neither
                         advantaged nor disadvantaged by the change:
                         TNUOS x 0.1162 x Loss Adjustment Factor
                         where
                         'TNUOS' is the transmission network use of system
                         charge (expressed in pence per kWh) published for the
                         twelfth relevant year and for the zone relevant to the
                         licensee, as set out in the statement provided for in
                         standard condition C7 (Use of System) of the
                         Transmission Licence.
                         "Loss Adjustment Factor" means the factor shown against
                         the relevant supply services area in column 3 of Annexe
                         C to this Condition
                         For the purposes of this paragraph 9, any cross
                         references to it and this Condition generally the terms
                         B\\E7t\\, D\\E7t\\, and T\\E7t\\ shall have the
                         meanings given respectively, in paragraph 8 above.

Supplementary Restrictions

10.  Without prejudice to Special Condition E (Allowances in respect of Security
     costs), at the beginning of the eleventh relevant year the licensee shall
     set its prices on the Restricted Charges so that, except with the prior
     written consent of the Authority, in addition to complying with paragraph 6
     or, as the case may be, paragraph 8, the limits in paragraph 11 shall
     apply.

11.  The standing charge and unit rates for the Standard Domestic Charge and
     Domestic Economy 7 Charge shall not at any point in time in the eleventh
     relevant year exceed in each case the charges made at the end of the tenth
     relevant year, multiplied by the formula:

     (1+ (RPI\\t\\/100)) x ((1 + (F\\t\\/100))/(1 + (F\\d\\/100)))

                                      183

<PAGE>

12.  Without prejudice to Special Condition E (Allowances in respect of Security
     costs ), throughout the eleventh and subsequent relevant years, the
     licensee shall set its prices on all charges available to domestic
     customers (other than the Restricted Charges) so that the standing charge,
     unit rate or rates and any other component parts of the charges shall not,
     except with the prior written consent of the Authority, in the relevant
     year t exceed:- C\\pt\\ x (1 + (RPI\\t\\/100)) x ((1 + (1 +
     F\\t\\/100))/(1+F\\d\\/100)))
     Where
     C\\pt\\ means each of the standing charge, unit rate or rates, and other
     component parts of the charge, approved by the Authority, prevailing on 31
     March of the previous relevant year. Hence for the purposes of the eleventh
     relevant year, C\\Pt\\ means each of the standing charge, unit rate or
     rates, and other component parts of the charge, prevailing at the end of
     the tenth relevant year.

Prepayment Meter Charges

13.  In the eleventh and subsequent relevant years, the total charge in any
     domestic prepayment meter charge, including charges made for the provision
     of the prepayment meter, shall not exceed the total charge made in the
     equivalent domestic charge by more than the amount given against the
     relevant supply services area in column 2 of Annexe F.

14.  The Authority may by direction specify which charges are to be deemed
     prepayment meter charges and which charges are their equivalent domestic
     charges.

Standing charges and unit rates

15.  (a)  Without prejudice to Special Condition E (Allowances in respect of
          Security costs), throughout the twelfth relevant year and every
          subsequent relevant year, the licensee shall set its prices for the
          Standard Domestic Charge and the Domestic Economy 7 Charge so that,
          except with the prior written consent of the Authority, the standing
          charge, unit rate or rates and any other component part of those
          charges shall not exceed the formula given in sub-paragraph (b),

                                       184

<PAGE>

                Provided that if in the application of the formulae in
                paragraphs 7 and 9 in relevant year t:

                the value of D\\SDt+1\\ in relation to the Standard Domestic
                Charge exceeds D\\SDt\\ x (1 + (RPI\\t\\/100))

                or the value of T\\SDt\\+1 in relation to the Standard Domestic
                Charge exceeds T\\SDt\\ x (1 + (RPI\\t\\/100))

                or the value of D\\E7t+1\\ in relation to the Domestic Economy 7
                Charge exceeds D\\E7t\\ x (1 + (RPI\\t\\/100))

                or the value of T\\E7t\\ in relation to the Domestic Economy 7
                Charge exceeds T\\E7t\\ x (1 + (RPI\\t\\/100))

                then the licensee may increase that Restricted Charge up to the
                level allowed by the paragraphs 7 or 9 as appropriate.

     (b)        The formula referred to in paragraph (a) is:

                RTC\\pt\\ x (1 + (RPIt/100)) x ((1 + (F\\t\\/100))/(1 +
                (F\\d\\/100))) Where

     RTC\\pt\\  means each of the standing charge, unit rate or rates, and other
                component parts of the relevant Restricted Charge, prevailing at
                the end of relevant year t-1.

Generation, Supply Business, and Transmission Services Use of System Costs

16.  If the costs to the licensee of procuring or providing generation, supply
     or transmission services use of system increase substantially in the
     aggregate due to factors outside the licensee's control and for which the
     licensee would not reasonably have been expected to have provided so that
     the amount allowed for under the terms BSD and BE7 in the formulae given in
     paragraphs 6 to 9 no longer remunerate the licensee appropriately, the
     Authority may direct that, in the eleventh or any subsequent relevant year
     (including any year to which paragraph 5 applies), the limits imposed by
     paragraphs 6 to 9 shall be raised to the extent specified in the direction.

                                      185

<PAGE>

Fossil fuel levy

17.    If at any time after the licensee has set its prices for a relevant year
       the value of F\\t\\ is changed by an amount which is less than half a
       percentage point in the value of the then prevailing rate for F\\t\\,
       after taking account of all other changes in the value of F\\t\\ since
       its prices were set, the licensee shall not be required, solely on that
       account, to change the prices it has set.

Reporting requirements

18.    Every three months, in each of the eleventh and subsequent relevant
       years, the licensee shall submit to the Authority statements summarising
       the costs of purchasing electricity for its supply business. Such
       statements shall be in a form approved by the Authority, and shall as a
       minimum include total and average costs under electricity purchase
       contracts for the supply business, and that part to be attributed to the
       domestic sector, for the relevant year to date and forecast for the
       relevant year as a whole.

Timing

19     (a)     This paragraph applies where:

               (i)    a reduction has been or is to be made in charges for
                      distribution use of system or transmission network use
                      of system;

               (ii)   the effect of the reduction is or would be, if the
                      licensee did not reduce its Restricted Charges, to cause
                      the prices set by the licensee to exceed the limits on
                      prices imposed by this Condition; and

               (iii)  the licensee reasonably expects further changes to be made
                      to the charges for distribution use of system or
                      transmission network use of system which will further
                      alter the limits on prices imposed by this Condition.

       (b)     Where this paragraph applies, the licensee may give notice to the
               Authority:

               (i)    specifying the reduction in charges for distribution use
                      of system or transmission network use of system which have
                      been or are to be made;

               (ii)   describing the effect of the reduction on the limits on
                      prices imposed by this Condition; and

                                      186

<PAGE>

          (iii) giving particulars of the further changes which it expects to be
                made in charges for distribution use of system or transmission
                network use of system, including particulars of the grounds for
                that expectation.

     (c)  If the licensee gives such notice to the Authority, and the grounds
          for the explanation given in the notice are reasonable, the licensee
          shall be deemed not to be in breach (to the extent only that such
          breach is attributable to the reduction in charges specified in the
          notice) of any limit on prices imposed by this Condition during the
          period beginning with the date on which the Authority receives the
          notice and ending with the date specified in a direction given
          pursuant to sub-paragraph (d) or, if no such direction is given, 28
          days after the reduction in prices referred to in sub-paragraph (b)(i)
          takes effect.

     (d)  The Authority may give a direction

          (i)  specifying the end of the period during which the licensee is
               deemed not to be in breach of the limits on prices imposed by
               this Condition on account of the change in charges specified in
               the notice (which period may be shorter or longer than 28 days
               from when the change in charges takes effect) and/or

          (ii) requiring the licensee to make such reductions in its Restricted
               Charges during such period as is specified in the direction as
               will secure that the licensee makes no significant gain as a
               result of its being deemed not to be in breach of any limit on
               prices imposed by this Condition.

Interpretation

20.  In this Condition:-

     (a)  all prices and revenue shall exclude value added tax (if any);

     (b)  where published prices do not include an allowance for the fossil fuel
          levy, for the purposes of this condition such prices shall be adjusted
          to include the relevant fossil fuel levy;

     (c)  any reference to the first relevant year means the relevant year
          commencing 1 April 1990 and any reference to the second relevant year
          and so on shall be construed accordingly;

                                      187

<PAGE>

     (d) in addition to the definitions given within this Condition the
         following term(s) shall have the following meaning:

         "Standard Domestic Charge" means that charge determined by the licensee
         during the tenth relevant year specified against the relevant supply
         services area in Column 2 of Annexe A to this Condition;

         "Domestic Economy 7 Charge" means that charge determined by the
         licensee during the tenth relevant year specified against the relevant
         supply services area in Column 3 of Annexe A to this Condition;

         "Restricted Charges" means the Standard Domestic Charge and the
         Domestic Economy 7 Charge taken together;

         "Prompt Payment Discount" means any discount or reduction, given in
         respect of the relevant year (quantified on the assumption of 3300 kWh
         annual consumption for a Standard Domestic Charge, and on the basis of
         6600 kWh annual consumption for a Domestic Economy 7 Charge), for the
         prompt or timely payment of bills by cash or cheque, compared with the
         charge which would be made where payment is not made promptly or on
         time.

         "RPI\\t\\"    means the percentage change (whether of positive or a
                       negative value) in the arithmetic average of the Retail
                       Price Index numbers published or determined with respect
                       to each of the six months July to December (inclusive)
                       in relevant year t-l and the arithmetic average of the
                       Retail Price Index numbers published or determined with
                       respect to the same months in relevant year t-2.

         F\\t\\        means the rate of the fossil fuel levy prevailing from
                       time to time.

         F\\d\\        means the fossil fuel levy rate prevailing at 31 March
                       in the previous relevant year. Hence for the purposes of
                        the eleventh relevant year, F\\d\\ means 0.3.

                                       188

<PAGE>

Annexe A

The Restricted Charges

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
               Column 1                              Column 2                            Column 3
----------------------------------------------------------------------------------------------------------------
                                             Standard Domestic Charge            Domestic Economy 7 Charge
----------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                  <C>
----------------------------------------------------------------------------------------------------------------
Eastern Area                           Domestic General Charge: Table 2     Domestic Economy 7 Charge: Table 2
----------------------------------------------------------------------------------------------------------------
East Midlands Area                     Standard Charge                      Economy 7 Charge
----------------------------------------------------------------------------------------------------------------
London Area                            General Purpose Rate (Quarterly)     Economy 7 Rate (Quarterly)
----------------------------------------------------------------------------------------------------------------
Manweb Area                            Domestic 'S'                         Economy 7
----------------------------------------------------------------------------------------------------------------
Midlands Area                          D1 Domestic Credit Meter Charge      D5 Domestic Economy 7 Charge
----------------------------------------------------------------------------------------------------------------
Northern Area                          Standard Domestic Charge (D1)        Economy 7 Domestic Charge (D1T)
----------------------------------------------------------------------------------------------------------------
NORWEB Area                            D13 Domestic Charge                  D56 Economy 7 Charge
----------------------------------------------------------------------------------------------------------------
SEEBOARD Area                          Standard Domestic                    Economy 7 Domestic
----------------------------------------------------------------------------------------------------------------
Southern Area                          General Charge (Quarterly)           Economy 7 Charge (Quarterly)
----------------------------------------------------------------------------------------------------------------
South Wales Area                       Domestic Standard Charge (Quarterly) Domestic Economy 7 Charge
                                                                            (Quarterly)
----------------------------------------------------------------------------------------------------------------
South Western Area                     Domestic Charge                      Economy 7 Charge
----------------------------------------------------------------------------------------------------------------
Yorkshire Area                         General Domestic (GD)                Economy 7 (E7)
----------------------------------------------------------------------------------------------------------------
</TABLE>

                                      189

<PAGE>

Annexe B

Base Allowances


Pence per kWh (2000/01 prices)

-------------------------------------------------------------------------------
               Column 1          Column 2               Column 3
-------------------------------------------------------------------------------
                                  B\\SD\\                B\\E7\\
-------------------------------------------------------------------------------
Eastern Area                      4.867                   3.766
-------------------------------------------------------------------------------
East Midlands Area                4.910                   3.767
-------------------------------------------------------------------------------
London Area                       4.953                   3.799
-------------------------------------------------------------------------------
Manweb Area                       5.158                   3.956
-------------------------------------------------------------------------------
Midlands Area                     4.917                   3.769
-------------------------------------------------------------------------------
Northern Area                     5.012                   3.833
-------------------------------------------------------------------------------
NORWEB Area                       4.935                   3.799
-------------------------------------------------------------------------------
SEEBOARD Area                     4.956                   3.812
-------------------------------------------------------------------------------
Southern Area                     4.961                   3.805
-------------------------------------------------------------------------------
South Wales Area                  5.128                   3.893
-------------------------------------------------------------------------------
South Western Area                5.010                   3.833
-------------------------------------------------------------------------------
Yorkshire Area                    4.968                   3.808
-------------------------------------------------------------------------------

                                      190

<PAGE>

Annexe C

Peak loss adjustment factors

--------------------------------------------------------------------------------
               Column 1            Column 2                   Column 3
--------------------------------------------------------------------------------
                           Standard Domestic Charge   Domestic Economy 7 Charge
--------------------------------------------------------------------------------
Eastern Area                        1.0877                     1.0875
--------------------------------------------------------------------------------
East Midlands Area                  1.0893                     1.0891
--------------------------------------------------------------------------------
London Area                         1.0931                     1.0928
--------------------------------------------------------------------------------
Manweb Area                         1.1487                     1.1481
--------------------------------------------------------------------------------
Midlands Area                       1.0880                     1.0876
--------------------------------------------------------------------------------
Northern Area                       1.0938                     1.0936
--------------------------------------------------------------------------------
NORWEB Area                         1.0933                     1.0932
--------------------------------------------------------------------------------
SEEBOARD Area                       1.0975                     1.0973
--------------------------------------------------------------------------------
Southern Area                       1.0870                     1.0867
--------------------------------------------------------------------------------
South Wales Area                    1.0915                     1.0913
--------------------------------------------------------------------------------
South Western Area                  1.0839                     1.0838
--------------------------------------------------------------------------------
Yorkshire Area                      1.1016                     1.1012
--------------------------------------------------------------------------------

                                      191

<PAGE>

Annexe D

Prompt payment discount weightings

---------------------------------------------------------------------------
               Column 1           Column 2               Column 3
---------------------------------------------------------------------------
                                  W\\SD\\                 W\\E7\\
---------------------------------------------------------------------------
Eastern Area                       0.902                   0.886
---------------------------------------------------------------------------
East Midlands Area                 1.000                   1.000
---------------------------------------------------------------------------
London Area                        1.000                   1.000
---------------------------------------------------------------------------
Manweb Area                        0.424                   0.401
---------------------------------------------------------------------------
Midlands Area                      1.000                   1.000
---------------------------------------------------------------------------
Northern Area                      0.223                   0.263
---------------------------------------------------------------------------
NORWEB Area                        1.000                   1.000
---------------------------------------------------------------------------
SEEBOARD Area                      1.000                   1.000
---------------------------------------------------------------------------
Southern Area                      0.495                   0.503
---------------------------------------------------------------------------
South Wales Area                   1.000                   1.000
---------------------------------------------------------------------------
South Western Area                 0.520                   0.520
---------------------------------------------------------------------------
Yorkshire Area                     0.314                   0.262
---------------------------------------------------------------------------

                                      192

<PAGE>

Annexe E

Band blocks

----------------------------------------------------------------------
               Column 1             Column 2             Column 3
----------------------------------------------------------------------
                                    B1\\SD\\             B1\\E7\\
----------------------------------------------------------------------
Eastern Area                          2283                 2076
----------------------------------------------------------------------
East Midlands Area                    3300                 3000
----------------------------------------------------------------------
London Area                           3300                 3000
----------------------------------------------------------------------
Manweb Area                           3300                 3000
----------------------------------------------------------------------
Midlands Area                         3300                 3000
----------------------------------------------------------------------
Northern Area                         2272                 1344
----------------------------------------------------------------------
NORWEB Area                           3300                 3000
----------------------------------------------------------------------
SEEBOARD Area                          728                 1096
----------------------------------------------------------------------
Southern Area                         2809                 3000
----------------------------------------------------------------------
South Wales Area                      3300                 3000
----------------------------------------------------------------------
South Western Area                    3300                 3000
----------------------------------------------------------------------
Yorkshire Area                        3300                 3000
----------------------------------------------------------------------

                                      193

<PAGE>

Annexe F

Prepayment meter surcharge

---------------------------------------------------------------
               Column 1                 Column 2
---------------------------------------------------------------
                                         (pound)
---------------------------------------------------------------
Eastern Area                             11.22
---------------------------------------------------------------
East Midlands Area                       15.00
---------------------------------------------------------------
London Area                              15.00
---------------------------------------------------------------
Manweb Area                              15.00
---------------------------------------------------------------
Midlands Area                            15.00
---------------------------------------------------------------
Northern Area                            15.00
---------------------------------------------------------------
NORWEB Area                              15.00
---------------------------------------------------------------
SEEBOARD Area                            15.00
---------------------------------------------------------------
Southern Area                            15.00
---------------------------------------------------------------
South Wales Area                         15.00
---------------------------------------------------------------
South Western Area                       15.00
---------------------------------------------------------------
Yorkshire Area                           15.00
---------------------------------------------------------------

                                      194

<PAGE>

Special Condition D: Information to be provided to the Authority in connection
with the Charge Restriction Conditions

1.   [No longer used]

2.   [No longer used]

3.   Not later than three months after the end of a relevant year the licensee
     shall send the Authority a statement, in respect of that relevant year,
     showing the specified items referred to in paragraph 5.

4.   The statement referred to in the preceding paragraph shall be:

     (a)  accompanied by a report from the Auditors that in their opinion such
          statement fairly presents each of the specified items referred to in
          paragraph 5 in accordance with the requirements of the charge
          restriction conditions; and

     (b)  certified by a director of the licensee on behalf of the licensee that
          to the best of his knowledge, information and belief having made all
          reasonable enquiries:

          (i)   [No longer used]

          (ii)  there is no amount included in its calculations of allowed
                security costs under Special Condition E (Allowances in respect
                of Security costs which represents other than an amount
                permitted under the charge restriction conditions to be so
                included;

          (iii) no service has been treated as an excluded service which was not
                properly so treated and no amount included in the revenues in
                respect thereof represents other than bona fide consideration
                for the provision of the excluded service to which it relates;

          (iv)  all amounts which should properly be taken into account for the
                purposes of the charge restriction conditions have been taken
                into account; and

          (v)   [No longer used].

5.   The specified items to be contained in the statement referred to in
     paragraph 3 shall be the following:

     (a)  the information referred to at paragraph 8 of Special Condition E
          (Allowances in respect of Security costs);

     (b)  the statements and information referred to in paragraph A4 and B2 of
          Schedule A; and

                                      195

<PAGE>

6.   Where the Authority issues directions in accordance with paragraph 9 of
     Special Condition E (Allowances in respect of Security costs ) or
     paragraphs A5 and B3 of Schedule A then such directions shall not have
     effect from a date earlier than the commencement of the relevant year to
     which the statement last furnished to the Authority pursuant to paragraph 3
     prior to the issue of the directions related, unless such statement (or the
     accompanying report or certificate under paragraph 4) or any statement,
     report or certificate in respect of an earlier relevant year was incorrect
     or was misleading in any material respect.

7.   Where the Authority issues such directions as are referred to in the
     preceding paragraph the Authority may require the licensee to provide a
     revised statement in respect of such of the specified items as may be
     affected by the directions, and the licensee shall comply with such
     request.

                                      196

<PAGE>

Special Condition E: Allowances in respect of Security Costs

1.   At any time during a security period, the licensee may give notice in
     writing to the Authority suspending, with effect from the date of receipt
     of the notice by the Authority, application of such of the charge
     restriction conditions as may be specified in the notice for the unexpired
     term of the security period.

2.        At any time during a security period, the Authority may (having regard
          to its duties under the Act or under the Utilities Act 2000) by means
          of directions:

          (a)  suspend or modify for the unexpired term of the security period
               the charge restriction conditions or any part or parts thereof;
               or

          (b)  introduce for the unexpired term of the security period new
               charge restriction conditions

          (c)  in either case, so as to make such provision as in the opinion or
               estimation of the Authority is requisite or appropriate:

               (i)   to enable the licensee to recover by means of increased
                     charges an amount estimated as being equal to the
                     licensee's allowed security costs during such period; and

               (ii)  to ensure that such part of the amount referred to in
                     sub-paragraph (i) above as is estimated as being equal to
                     the allowed security costs incurred by the licensee as
                     costs in its supply business is recovered by appropriate
                     equitable increases in the charges made by the licensee in
                     that business

               and the licensee shall comply with the terms of any directions so
               issued.

3.   At any time following a security period, the Authority may (following such
     consultation with the licensee and others as the Authority may consider
     appropriate) issue directions suspending or modifying the charge
     restriction conditions or any part or parts thereof or replacing such
     directions as may have been made during the security period and introducing
     such new charge restriction conditions as in the opinion of the Authority
     are appropriate in all the circumstances (including at the Authority's
     discretion an appropriate adjustment having regard to any profit gained or
     foregone by the licensee during the security period), and the licensee
     shall comply with any directions so issued.

                                      197

<PAGE>

4.   At any time within three months after the issue of directions by the
     Authority under paragraph 3, the licensee may serve on the Authority a
     disapplication request in respect of such of the charge restriction
     conditions or any part or parts thereof as are specified in the request.

5.   If within three months of the receipt by the Authority of the
     disapplication request referred to in paragraph 4, the Authority has either
     not agreed in writing to such disapplication request or has not made a
     reference to the Competition Commission under Section 12 of the Act
     relating to the modification of the charge restriction conditions, the
     licensee may deliver one month's written notice to the Authority
     terminating the application of the charge restriction conditions (or any
     part or parts thereof) as were specified in the disapplication request.

6.   Subject to paragraphs 7 and 9, the licensee shall in any relevant year be
     entitled to recover an aggregate amount equal to its allowed security costs
     in that year or (insofar as not previously recovered) any previous year, by
     means of appropriate equitable increases on the charges made by the
     licensee in its supply business.

7.   Paragraph 6 shall not apply in so far as such allowed security costs:

          (a)  were otherwise recovered by the licensee; or

          (b)  were taken into account by the Authority in setting charge
               restriction conditions by means of directions issued under
               paragraph 3 above.

8.   The licensee shall following the end of each relevant year provide to the
     Authority, as being one of the specified items to be contained in the
     statement referred to at paragraph 4 of Special Condition D (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), details in respect of that relevant year of:

          (a)  the amount of the licensee's allowed security costs; and

          (b)  the aggregate amounts charged under paragraph 6 on account of the
               licensee's allowed security costs; and

          (c)  the bases and calculations underlying the increases in charges
               made by the licensee in its supply business under paragraph 6.

9.   Where the Authority is satisfied that the licensee has recovered amounts in
     excess of the allowed security costs, the Authority may issue directions
     requiring the licensee to take such steps as may be specified to reimburse
     customers of the supply business for the excess amounts charged to them,
     and the licensee shall comply with any directions so

                                      198

<PAGE>

     issued provided that if the excess amounts relate to allowed security costs
     paid to any authorised electricity operator, the licensee shall not be
     obliged to make any such reimbursement unless and until it has recovered
     such costs.

10.  No amounts charged by the licensee under this Condition (whether or not
     subsequently required to be reimbursed) shall be taken into account for the
     purpose of applying the supply charge restriction provisions of Special
     Condition C (Restraints on Supply Charges in England and Wales) and Special
     Condition H (Restraints on Supply Charges in Scotland).

11.  In this Condition:

     "allowed security cost"            shall have the meaning ascribed to that
                                        term in the Fuel Security Code.

     "security period"                  means a period commencing on the date on
                                        which any direction issued by the
                                        Secretary of State under Section
                                        34(4)(b) of the Act enters effect and
                                        terminating on the date (being not
                                        earlier than the date such direction, as
                                        varied, is revoked or expires) as the
                                        Authority, after consultation with such
                                        persons (including without limitation,
                                        licence holders liable to be principally
                                        affected) as it shall consider
                                        appropriate, may with the consent of the
                                        Secretary of State by notice to all
                                        licence holders determine after having
                                        regard to the views of such persons.

                                      199

<PAGE>

Special Condition F: Duration of Charge Restriction Conditions

1.   The charge restriction conditions shall apply so long as this licence
     continues in force but shall cease to have effect (in whole or in part, as
     the case may be) if the licensee delivers to the Authority a disapplication
     request made in accordance with paragraph 2 and:

          (a)  the Authority agrees in writing to the disapplication request; or

          (b)  their application (in whole or in part) is terminated by notice
               given by the licensee in accordance with either paragraph 4 or
               paragraph 5.

2.   A disapplication request pursuant to this Condition shall (a) be in writing
     addressed to the Authority, (b) specify the charge restriction conditions
     (or any part or parts thereof) to which the request relates and (c) state
     the date from which the licensee wishes the Authority to agree that the
     specified charge restriction conditions shall cease to have effect.

3.   Save where the Authority otherwise agrees, no disapplication following
     delivery of a disapplication request pursuant to this Condition shall have
     effect earlier than that date which is the later of:

     (a)  a date being not less than 18 months after delivery of the
          disapplication request; and

     (b)  31st March 2002.

4.   If the Authority has not made a reference to the Competition Commission
     under Section 12 of the Act relating to the modification of the charge
     restriction conditions before the beginning of the period of 12 months
     which will end with the disapplication date, the licensee may deliver
     written notice to the Authority terminating the application of such charge
     restriction conditions (or any part or parts thereof) as are specified in
     the disapplication request with effect from the disapplication date or a
     later date.

5.   If the Competition Commission makes a report on a reference made by the
     Authority relating to the modification of the charge restriction conditions
     (or any part or parts thereof) specified in the disapplication request and
     such report does not include a conclusion that the cessation of such charge
     restriction conditions, in whole or in part, operates or may be expected to
     operate against the public interest, the licensee may within 30 days after
     the publication of the report by the Authority in accordance with Section
     13

                                      200

<PAGE>

     of the Act deliver to him written notice terminating the application of
     such charge restriction conditions with effect from the disapplication date
     or later.

6.   A disapplication request or notice served under this Condition may be
     served in respect of a specified geographic area.

                                      201

<PAGE>

SCHEDULE A: SUPPLEMENTARY PROVISIONS OF THE CHARGE RESTRICTION CONDITIONS

Part A. Principles for Attribution

General Principles

Al.  Where for the purposes of the charge restriction conditions, a share of
     costs borne by the licensee requires to be attributed to any part of the
     market, the licensee shall make that attribution on a basis which ensures
     that no more than a fair proportion of those costs, reflecting the costs
     incurred by the licensee in supplying that part of the market, are so
     attributed.

A2.  The following paragraphs of this Part of Schedule A are without prejudice
     to paragraph Al.

Fossil Fuel Levy and payments in lieu thereof

A3.  The fossil fuel levy requiring to be attributed to supplies to domestic
     customers shall be attributed on the basis of the amount of the levy
     incorporated in the prices actually charged or to be charged by the
     licensee on supplies to such customers in the relevant year in respect of
     which the attribution falls to be made. Amounts in lieu of the fossil fuel
     levy in respect of purchases of electricity other than leviable electricity
     requiring to be calculated and then attributed to supplies to domestic
     customers in any relevant year for the purposes of Special Condition C
     (Restraints on Supply Charges in England and Wales) shall:

     (a)  be calculated as being such amounts as correspond to the lesser of:

          (i)  the premium actually payable (measured on an accruals basis) by
               the licensee during the relevant year on purchases of electricity
               other than leviable electricity as representing the benefit to
               the licensee of being able to treat such electricity as being
               other than leviable electricity for the purposes of Section 33 of
               the Act and Regulations thereunder; and

          (ii) the additional amount that would have been payable (measured on
               an accruals basis) by the licensee in respect of the fossil fuel
               levy pursuant to Regulations made under Section 33 of the Act had
               such electricity been leviable electricity; and

                                       202

<PAGE>

     (b)  be attributed to supplies to domestic customers pro rata to the amount
          which the quantity supplied to domestic customers bears to the total
          quantity supplied (in each case in the relevant year in respect of
          which the attribution falls to be made) or on the basis of the amount
          referred to in paragraph (a) incorporated in the prices actually
          charged or to be charged by the licensee on supplies to such customers
          in the relevant year in respect of which the attribution falls to be
          made or on such other basis of attribution as the licensee shall
          previously have agreed with the Authority.

Information to be provided by licensee

A4.  The licensee shall following the end of each relevant year furnish to the
     Authority, as being one of the specified items to be included in the
     statement referred to at paragraph 3 of Special Condition D (Information to
     be provided to the Authority in connection with charge restriction
     conditions), a statement confirming that the calculation of amounts in lieu
     of the fossil fuel levy and the attribution of the fossil fuel levy and
     amounts in lieu thereof was made in accordance with the provisions of this
     Part of Schedule A, accompanied (where appropriate) by:

     (a)  a statement of the total amounts attributed to domestic customers; and

     (b)  copies of statements prepared under paragraph 1 of Special Condition D
          (Information to be provided to the Authority in connection with charge
          restriction conditions) and an explanation of the basis therefor.

A5.  Where the Authority is satisfied that the basis of calculation or
     attribution (as the case may be) used by the licensee is not in conformity
     with paragraph Al the Authority may issue directions specifying an
     alternative basis of calculation or attribution, and the basis of
     calculation or attribution by the licensee (as the case may be) shall be
     adjusted accordingly with effect from the date of issue of the directions
     or (subject to paragraph 6 of Special Condition D (Information to be
     provided to the Authority in connection with charge restriction
     conditions)) such other date as may be specified in those directions.

                                      203

<PAGE>

Part B. Excluded services

B1.  Subject to paragraph B3, a service provided by the licensee as part of its
     supply business may be treated as an excluded service in so far as it
     consists of the provision of services for the specific benefit of customers
     requesting the same and not made available by the licensee as a normal part
     of such business. For the avoidance of doubt, the provision of facilities
     for prepayment may not be treated as an excluded service.

Information to be provided to the Authority

B2.  The licensee shall following the end of each relevant year furnish to the
     Authority, as being one of the specified items to be included in the
     statement referred to at paragraph 3 of Special Condition D (Information to
     be provided to the Authority in connection with charge restriction
     conditions), details specifying separately the nature of all services
     provided as part of its supply business and treated as excluded services by
     the licensee during the course of such year and stating the revenues
     derived by the licensee in respect of each such service so treated.

Directions

B3.  Where the Authority is satisfied that in light of the principles set out in
     paragraph B1 any service treated by the licensee as an excluded service
     should not be so treated, the Authority shall issue directions to that
     effect, and the service or services specified in the directions shall cease
     to be treated as excluded services from the date of issue of the directions
     or (subject to paragraph 6 of Special Condition D (Information to be
     provided to the Authority in connection with charge restriction
     conditions)) such other date as may be specified in the directions.

                                      204

<PAGE>

Special Condition G: Definitions

1.   This Condition and Special Conditions H to K and Schedule B shall apply
     only to the ScottishPower supply services area (such area is referred to in
     these Special Conditions as the "ScottishPower area").

2.   In this Condition, in Special Conditions H to K and in Schedule B:

     "attributed"                means when used in relation to the fossil fuel
                                 levy or payments in lieu thereof or in relation
                                 to attributing electricity purchase or sale
                                 contacts and electricity purchase costs to
                                 domestic customers, attributed in accordance
                                 with the principles set out in Part A of
                                 Schedule B and attribute, attributed,
                                 attributable and attribution shall be construed
                                 accordingly.

     "charge restriction         means Special Conditions G to K together with
     conditions"                 Schedule B to this licence, as from time to
                                 time modified or replaced in accordance with
                                 the provisions of the Act.

     "electricity purchase       means the licensee's purchase costs of
     costs"                      electricity calculated in accordance with the
                                 principles in the Public Electricity Supply
                                 Licence previously granted to ScottishPower in
                                 force on 3l March 1998.

     "excluded services"         means those services provided by the licensee
                                 which in accordance with the principles set out
                                 in Part B of Schedule B fall to be treated as
                                 excluded services.

     "metered"                   means, in relation to any quantity supplied, as
                                 measured by a meter installed for such purpose
                                 or (where no such meter is installed or it is
                                 not reasonably practicable to measure the
                                 quantity by

                                      205

<PAGE>

                                 such meter) as otherwise reasonably calculated.

     "quantity supplied"         means the aggregate quantity of units supplied
                                 by the licensee in the relevant year metered at
                                 the points of supply (whether or not in the
                                 supply services area of the licensee).

     "relevant supply services   means the ScottishPower Area listed in column 1
     area"                       of Annexes A to F of Special Condition H
                                 (Restraints on Supply Charges in Scotland).

     "relevant year"             means a financial year commencing on or after
                                 1st April 1990.

     "relevant year t"           means that relevant year for the purposes of
                                 which any calculation falls to be made.

     "relevant year t-1"         means the relevant year

                                 preceding relevant year t or in respect of the
                                 period prior to 1st April 1990, the period of
                                 12 calendar months commencing on 1st April
                                 1989; and similar expressions shall be
                                 construed accordingly.

     "supply"                    means supply in the ScottishPower area; and
                                 "supplied" and similar expressions shall be
                                 construed accordingly.

     "supply charges"            means all charges (including charges for the
                                 use of any distribution or transmission system
                                 and standing charges) made by the licensee in
                                 respect of electricity supplied by the licensee
                                 other than charges for the provision of
                                 excluded services by the licensee.

     "unit"                      means a kilowatt hour.

                                      206

<PAGE>

Special Condition H: Restraints on Supply Charges in Scotland

1.   This Condition shall apply only to the ScottishPower area.

     Availability of Restricted Charges

2.   The licensee shall make available and continue to make available to all
     Domestic Customers the Standard Domestic Charge and the Domestic Economy 7
     Charge.

3.   The licensee shall not, without the consent in writing of the Authority
     change the terms (other than price, which shall be regulated in accordance
     with this Condition) of any Restricted Charge, and the terms to which this
     prohibition applies include, for example, the hours between which
     particular prices apply and the level of consumption at which prices
     change.

     Restraints on Prices for Restricted Charges

4.   Without prejudice to Special Condition J (Allowances in respect of Security
     costs), and subject to paragraph 17, the licensee shall, in addition to
     complying with paragraphs 11, 12, 13 and (where appropriate) 14, ensure
     that at any point in time in the eleventh relevant year the prices set by
     the licensee for the Standard Domestic Charge and the Domestic Economy 7
     Charge shall not exceed limits imposed by paragraph 7 and paragraph 9
     respectively.

5.   Without prejudice to Special Condition J (Allowances in respect of Security
     costs), and subject to paragraph 17, the licensee shall, in addition to
     complying with paragraphs 11 to 16, ensure that at any point in time in the
     twelfth relevant year the prices set by the licensee for the Standard
     Domestic Charge and the Domestic Economy 7 Charge shall not exceed limits
     imposed by paragraph 8 and paragraph 10 respectively.

6.   Without prejudice to Special condition J (Allowances in respect of Security
     costs), and subject to paragraph 17, the Licensee shall, in addition to
     complying with paragraphs 13 to 16, ensure that at any point in time in the
     thirteenth and subsequent relevant years, the prices set by the licensee
     for the Standard Domestic Charge and the Domestic Economy 7 Charge shall
     not exceed the limits imposed by paragraphs 8 and 10 respectively and the
     limits imposed by paragraph 16;

     where in paragraphs 8, 10, and 16:

     references to the 'twelfth relevant year' are replaced by reference to the
     relevant subsequent relevant year; and

                                       207

<PAGE>

     references to 't+1' are to be construed as references to the relevant
     subsequent relevant year; and

     references to 't' are to be construed as references to the year preceding
     the relevant subsequent relevant year.

Restraint on Standard Domestic Charge

7.   The Standard Domestic Charge shall be set so that at any point in time in
     the eleventh relevant year the weighted average unit price of that charge
     represented by the term WPSDt does not exceed the lower of the two formulae
     given under (a) and (b):

     (a)  ((B\\SDt\\+D\\SDt\\+T\\SDt\\) x 1.015 ) x (l+(F\\t\\/100))

     (b)  WP\\SDt-1\\ x ((1 + (F\\t\\/100))/( 1+(F\\d\\/100))) x (1 +
          (RPI\\t\\/100))

     where:

     WP\\SDt\\      is set equal to (W\\SD\\ x P\\SDt\\) + ( (1-W\\SD\\) x
                    PPP\\SDt\\)

     W\\SD\\        means the weighting factor given against the relevant supply
                    services area in Column 2 of Annexe D to this Condition.

     P\\SDt\\       means the average unit price for the licensee's Standard
                    Domestic Charge calculated as follows, using the licensee's
                    published rates for that charge, and without taking account
                    of any Prompt Payment Discount available under that charge:
                    (Annual Standing Charge + (B1\\SD\\ X Primary Unit rate) +
                    ((3300-B1\\SD\\) X Secondary Unit rate)) / 3300


     B1\\SD\\       has the value given against the relevant supply services
                    area in Column 2 of Annexe E to this Condition.


     PPP\\SDt\\     means the average unit price for the licensee's Standard
                    Domestic Charge calculated as follows, using the licensee's
                    published rates for that charge, and after taking account of
                    any Prompt Payment Discount available under that charge:
                    (Annual Standing Charge + (B1\\SD\\ X Primary unit rate) +
                    ((3300-B1\\SD\\) X Secondary unit rate)) / 3300

     B\\SDt\\       means the base allowance, subject to paragraph 17, (in
                    respect of generation, supply and transmission services use
                    of system) given against the relevant supply services area
                    in Column 2 of Annexe B to this Condition.

                                       208

<PAGE>

     D\\SDt\\   means a sum representing the distribution use of system
                charges incurred by the licensee in the eleventh relevant
                year in supplying a customer on a Standard Domestic Charge,
                represented by the formula

                (D\\1SDt\\ + (3300 . D\\2SDt\\) + D\\3SDt\\) / 3300

     where:

     D\\1SDt\\      is the distribution use of system annual standing charge for
                    supplying that customer;

     D\\2SDt\\      is the distribution use of system charge in respect of each
                    unit consumed by the customer; and

     D\\3SDt\\      is the aggregate of all other relevant distribution charges
                    for supplying that customer;

     T\\SDt\\       means a sum representing the transmission use of system
                    charges incurred by the licensee in the eleventh relevant
                    year in supplying a customer on a Standard Domestic Charge,
                    represented by the formula;

                    T\\1SDt\\+ (3,300 x T\\2SDt\\))/3,300

     where:

     T\\1SDt\\      is the transmission use of system charge annual standing
                    charge attributable to or for supplying that customer;

     T\\2SDt\\      is the transmission use of system charge in respect of each
                    unit consumed by that customer.

     WP\\SDt-1\\    is set equal to

                    (WSD x P\\SDt\\-1) + ((1- W\\SD\\) x PPP\\SDt-1\\)

     where:

     P\\SDt-1\\     means the average unit price for the licensee's Standard
                    Domestic Charge calculated as follows, using the licensee's
                    published rates for that charge as at the end of the tenth
                    relevant year and without taking account of any Prompt
                    Payment Discount available under that charge:

                    (Annual Standing Charge + (B1\\SD\\ x Primary Unit rate) +
                    ((3,300-B1\\SD\\) x Secondary Unity rate)) / 3,300.

     PPP\\SDt-1\\   means the average unit price for the licensee's Standard
                    Domestic

                                       209

<PAGE>

                         Charge calculated as follows, using the licensee's
                         published rates for that charge as at the end of the
                         tenth relevant year, and after taking account of any
                         Prompt Payment Discount available under that charge:
                         (Annual Standing Charge + (B1SD x Primary Unit rate) +
                         ((3,300-B1\\SD\\) x Secondary Unity rate)) / 3,300.

8.   The Standard Domestic Charge shall be set so that at any point in time in
     the twelfth relevant year the weighted average unit price of that charge
     represented by the term WP\\SDt+1\\ does not exceed:

     ((B\\SDt+1\\ +D\\SDt+1\\ + T\\SDt+1\\ x 1.015) x (1 + (F\\t+1\\/100)

     where:

     WP\\SDt+1\\         is set equal to

                         (W\\SD\\ x P\\SDt+1\\) + ((1- W\\SD\\) x PPP\\SDt+1\\)

     W\\SD\\             means the weighting factor given against the relevant
                         supply services area in Column 2 of Annexe D to this
                         Condition.

     P\\SDt+1\\          means the average unit price for the licensee's
                         Standard Domestic Charge in the twelfth relevant year
                         calculated as follows, using the licensee's published
                         rates for that charge and without taking account of any
                         Prompt Payment Discount available under that charge:

                         (Annual Standing Charge + (B1SD x Primary Unit rate) +
                         ((3,300-B1\\SD\\) x Secondary Unity rate)) / 3,300.

     B1\\SD\\            has the value given against the relevant supply
                         services area in column 2 of Annexe E to this
                         Condition.

     PPP\\SDt+1\\        means the average unit price for the licensee's
                         Standard Domestic Charge in the twelfth relevant year
                         calculated as follows, using the licensee's published
                         rates for that charge and after taking account of any
                         Prompt Payment Discount available under that charge:
                         (Annual Standing Charge + (B1SD x Primary Unit rate) +
                         ((3,300-B1\\SD\\) x Secondary Unity rate)) / 3,300.

     B1\\SDt+1\\         is set to equal to

                                      210

<PAGE>

                         B\\SDt\\ x (1 + (RPI\\t+1\\/100))

     D\\SDt+1\\          means a sum representing the distribution use of system
                         charges incurred by the licensee in the twelfth
                         relevant year in supplying a customer on a Standard
                         Domestic Charge, represented by the formula:

                         (D\\1SDt+1\\ + (3,300 x D\\2SDt+1\\)) + D\\3SDt+1\\) /
                         3,300

     where:

     D\\1SDt+1\\         is the distribution use of system charge annual
                         standing charge for supply that customer;

     D\\2SDt+1\\         is the distribution use of system charge in respect of
                         each unit consumed by that customer; and

     D\\3SDt+1\\         is the aggregate of all other relevant distribution
                         charges for supplying that customer.

     T\\SDt+1\\          means a sum representing the transmission use of system
                         charges incurred by the licensee in the twelfth
                         relevant year in supplying a customer on a Standard
                         Domestic Charge, represented by the formula:

                         (T\\1SDt+1\\ + (3300 x T\\2SDt+1\\))/3300

     where:

     T\\1SDt+1\\         is the transmission use of system charge annual
                         standing charge attributable to or for supplying that
                         customer; and

     T\\2SDt+1\\         is the transmission use of system charge in respect of
                         each unit consumed by that customer.

     For the purposes of this paragraph 8, any cross references to it and this
     Condition generally the terms B\\SDt\\, D\\SDt\\, and T\\SDt\\) shall have
     the meanings given respectively, in paragraph 7 above.

Restraint on Domestic Economy 7 charge

9.   The Domestic Economy 7 Charge shall be set so that at any point in time in
     the eleventh relevant year the weighted average unit price of that charge
     represented by the term WP\\E7t\\ does not exceed the lower of the two
     formulae given under (a) and (b)

     (a)  ((B\\E7t\\ + D\\E7t\\ + T\\E7t\\) x 1.015) x (1 + (F\\t\\/100))

                                      211

<PAGE>

     (b)  WP\\E7t-1\\ x ((1 + (F\\t\\/100)) / (1 + F\\d\\/100)) x (1 +
          (RPI\\t\\/100))

     where:

     WP\\E7t\\           is set equal to
                         (W\\E7\\ x P\\E7t\\) + ((1 -W\\E\\7) x PPP\\E7t\\))

     and:

     W\\E7\\             means the weighting factor given against the relevant
                         supply services area in column 3 of Annexe D to this
                         Condition;

     P\\E7t\\            means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge and
                         without taking account of any Prompt Payment Discount
                         available under that charge:

                         (Annual Standing Charge + (B1\\E7\\. Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate ))/6600.

     B1\\E7\\            has the value given against the relevant supply
                         services area in Column 3 of Annexe E to this
                         Condition.

     PPP\\ETt\\          means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge, and
                         after taking account of any Prompt Payment Discount
                         available under that charge:

                         ((Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate)) / 6600.

     B\\E7t\\            means the base allowance, subject to paragraph 17, (in
                         respect of generation, supply and transmission services
                         use of system) given against the relevant supply
                         services area in Column 3 of Annexe B to this
                         Condition.

     D\\E7t\\            means a sum representing the distribution use of system
                         charges incurred by the licensee in the eleventh
                         relevant year in supplying a customer on a Domestic
                         Economy 7 Charge, represented by the formula:

                                       212

<PAGE>

                         (D\\1E7t\\ + (3000 x D\\2E7t\\) + (3600 x D\\3E7t\\ ) +
                         D4\\E7t\\) / 6600

     where

     D\\1E7t\\           is the distribution use of system charge annual
                         standing charge for supplying that customer

     D \\2E7t\\          is the distribution use of system charge in respect of
                         each day unit consumed by that customer

     D\\3E7t\\           is the distribution use of system charge in respect of
                         each night unit consumed by that customer; and

     D\\4E7t\\           is the aggregate of all other relevant distribution
                         charges for supplying that customer.

     T\\E7t\\            means a sum representing the transmission use of system
                         charges incurred by the licensee in the eleventh
                         relevant year in supplying a customer on a Domestic
                         Economy 7 Charge, represented by the formula:

                         (T\\1E7t\\ + (3000 x T\\2E7t\\) + (3,600 x T\\3E7t\\))
                         / 6600

     where:

     T\\1E7t\\           is the transmission use of system charge annual
                         standing charge;

     T\\2E7t\\           is the transmission use of system in respect of each
                         day unit consumed by that customer; and

     T\\3E7t\\           is the transmission use of system charge in respect of
                         each night unit consumed by that customer.

     WP\\E7t-1\\         is set equal to
                         (W\\E7\\ x P\\E7t-1\\) + ((1- W\\E7\\) x PPP \\E7t-1\\)

     P\\E7t-1\\          means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge as at
                         the end of the tenth relevant year, and without taking
                         account of any Prompt Payment Discount available under
                         that charge:

                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate)) / 6600

     B1\\E7\\            has the value given against the relevant supply
                         services area in

                                       213

<PAGE>

                         column 3 of Annexe E.

     PPP\\E7t-1\\        means the average unit price for the licensee's
                         Domestic Economy 7 Charge calculated as follows, using
                         the licensee's published rates for that charge at the
                         end of the tenth relevant year and after taking account
                         of any Prompt Payment Discount available under that
                         charge:

                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate)) / 6600

10.  The Domestic Economy 7 Charge shall be set so that at any point in time in
     the twelfth relevant year the weighted average unit price of that charge
     represented by the terms WP\\E7t+1\\ does not exceed:

     ((B \\E7t+1\\ + D \\E7t+1\\+T \\E7t+1\\) x 1.015) x (1+(F\\t+1\\/100))

     where:

     WP\\E7t+1\\         is set equal to

                         (W\\E7\\ x P\\E7t+1\\) + ((1- W\\E7\\) x PPP\\E7t+1\\)

     W\\E7\\             means the weighting factor given against the relevant
                         supply services area in Column 3 of Annexe D to this
                         condition;

     P\\E7t+1\\          means the average unit price for the licensee's
                         Domestic Economy 7 Charge in the twelfth relevant year
                         calculated as follows, using the licensee's published
                         rates for that charge and without taking account of any
                         Prompt Payment Discount available under that charge:

                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate)) / 6600

     B1 \\E7\\           has the value given against the relevant supply
                         services area in Column 3 of Annexe E to this
                         Condition.

     PPP\\E7t-1\\        means the average unit price for the licensee's
                         Domestic Economy 7 Charge in the twelfth relevant year
                         calculated as follows, using the licensee's published
                         rates for that charge and after taking account of any
                         Prompt Payment Discount available under that

                                       214

<PAGE>

                         charge:

                         (Annual Standing Charge + (B1\\E7\\ x Day Primary Unit
                         Rate) + ((3000 - B1\\E7\\) x Day Secondary Unit Rate) +
                         (3600 x Night Unit Rate)) / 6600

     B\\E7t+1\\          is set equal to

                         B\\E7t\\ x (1 + (RPI\\t+1\\ / 100))

     D\\E7t+1\\          means a sum representing the distribution use of system
                         charges incurred by the licensee in the twelfth
                         relevant year in supplying a customer on a Domestic
                         Economy 7 Charge, represented by the formula.

                         D\\1E7t+1\\ + (3000 x D\\2E7t+1\\) + (3600 x
                         D\\3E7t+1\\) + D\\4E7t+1\\) / 6600

     where

     D\\1E7t+1\\         is the distribution use of system charge annual
                         standing charge for supplying that customer

     D\\2E7t+1\\         is the distribution use of system charge in respect of
                         each day unit consumed by that customer

     D\\3E7t+1\\         is the distribution use of system charge in respect of
                         each night unit consumed by that customer

     D\\4E7t+1\\         is the aggregate of all other relevant distribution
                         charges for supplying that customer.

     T\\E7t+1\\          means a sum representing the transmission use of system
                         charges incurred by the licensee in the twelfth
                         relevant year in supplying a customer on a Domestic
                         Economy 7 Charge, represented by the formula:

                         (T\\1E7t+1\\ + (3000 x T\\2E7t+1\\) + (3600 x
                         T\\3E7t+1\\))/6600

     where

     T\\1E7t+1\\         is the transmission use of system charge annual
                         standing charge attributable to or for supplying that
                         customer;

     T\\2E7t+1\\         is the transmission use of system charge in respect of
                         each day unit consumed by that customer; and

     T\\3E7t+1\\         is the transmission use of system charge in respect of
                         each night unit consumed by that customer.

                                       215

<PAGE>

     For the purposes of this paragraph 10, any cross references to it and this
     Condition generally the terms B\\E7t\\, D\\E7t\\, and T\\E7t\\ shall have
     the meanings given respectively, in paragraph 9 above.

Supplementary Restrictions

11.  Without prejudice to Special Condition J (Allowances in respect of Security
     costs), at the beginning of the eleventh relevant year the licensee shall
     set its prices on the Restricted Charges so that, except with the prior
     written consent of the Authority, in addition to complying with paragraph 7
     of this condition or, as the case may be, paragraph 9, the limits in
     paragraph 12 shall apply.

12.  The standing charge and unit rates for the Standard Domestic Charge and
     Domestic Economy 7 Charge shall not at any point in time in the eleventh
     relevant year exceed in each case the charges made at the end of the tenth
     relevant year, multiplied by the formula:

     (1 + (RPI\\t\\/ 100)) x ((1 + (F\\t\\/l00))/(1 + (F\\d\\/100)))

13.  Without prejudice to Special Condition J, (Allowances in respect of
     Security costs), throughout the eleventh and subsequent relevant years, the
     licensee shall set its prices on all charges available to domestic
     customers (other than the Restricted Charges) so that the standing charge,
     unit rate or rates and any other component parts of the charges shall not,
     except with the prior written consent of the Authority, in the relevant
     year t exceed:-

     C\\pt\\ x (1 + (RPI\\t\\ / 100 )) x ((1 + (F\\t\\/l00))/(1+(F\\d\\/100)))

     Where:

     C\\pt\\ means each of the standing charge, unit rate or rates, and other
     component parts of the charge, approved by the Authority, prevailing on 31
     March of the previous relevant year. Hence for the purposes of the eleventh
     relevant year, C\\pt\\ means each of the standing

                                       216

<PAGE>

       charge, unit rate or rates, and other component parts of the charge,
       prevailing at the end of the tenth relevant year.

Prepayment Meter Charges

14.    In the eleventh and subsequent relevant years, the total charge in any
       domestic prepayment meter charge, including any charges made for the
       provision of the prepayment meter, shall not exceed the total charge made
       in the equivalent domestic charge by more than the amount given against
       the relevant supply services area in column 2 of Annexe F.

15.    The Authority may by direction specify both which charges are to be
       deemed prepayment meter charges and which charges are their equivalent
       domestic charges.

Standing charges and unit rates

16 (a) Without prejudice to Special Condition J (Allowances in respect of
       Security costs), throughout the twelfth relevant year and every
       subsequent relevant year, the licensee shall set its prices for the
       Standard Domestic Charge and the Domestic Economy 7 Charge so that,
       except with the prior written consent of the Authority, the standing
       charge, unit rate or rates and any other component part of those charges
       shall not exceed the formula given in sub-paragraph (b),

       Provided that if in the application of the formulae in paragraphs 8 and
       10 in relevant year t:

       the value of D\\SDt+1\\ in relation to the Standard Domestic Charge
       exceeds

       D\\SDt\\ x (1 + (RPI\\t\\/100))

       or the value of T\\SDt+1\\ in relation to the Standard Domestic Charge
       exceeds

       T\\SDt\\ x (1+ (RPI\\t\\ / 100))

                                       217

<PAGE>

     or the value of D\\E7t+1\\ in relation to the Domestic Economy 7 Charge
     exceeds

     D\\E7t\\ x (l + (RPI\\t\\/100))

     or the value of T\\E7t+1\\ in relation to the Domestic Economy 7 Charge
     exceeds

     T\\E7t\\ x (1 + (RP1\\t\\/100))

     then the licensee may increase that Restricted Charge up to the level
     allowed by the paragraphs 8 or 10 as appropriate.

(b)  The formula referred to in paragraph (a) is:

     RTC\\pt\\ . (1 +(RPI\\t\\/100)) x ((1+(F\\t\\/100))/(1+(F\\d\\/100)))

     Where:

     RTC\\pt\\           means each of the standing charge, unit rate or rates,
                         and other component parts of the relevant Restricted
                         Charge, prevailing at the end of relevant year t-1.

Generation, Supply Business, and Transmission Services Use of System Costs

17.  If the costs to the licensee of procuring or providing generation, supply
     or transmission services use of system increase substantially in the
     aggregate due to factors outside the licensee's control and for which the
     licensee would not reasonably have been expected to have provided so that
     the amount allowed for under the terms BSD and BE7 in the formulae given in
     paragraphs 7 to 10 no longer remunerate the licensee appropriately, the
     Authority may direct that in the eleventh or any subsequent relevant year
     (including any year to which paragraph 6 applies), the limits imposed by
     paragraphs 7 to 10 shall be raised to the extent specified in the
     direction.

                                       218

<PAGE>

Fossil fuel levy

18.    If at any time after the licensee has set its prices for a relevant year
       the value of F\\t\\ is changed by an amount which is less than half a
       percentage point in the then prevailing rate of F\\t\\, after taking
       account of all other changes in the value of F\\t\\ since its prices were
       set, the licensee shall not be required, solely on that account, to
       change the prices it has set.

Reporting requirements

19.    Every three months, in each of the eleventh and subsequent relevant
       years, the licensee shall submit to the Authority statements detailing
       the costs of purchasing electricity for its supply business. Such
       statements shall be in a form approved by the Authority, and shall as a
       minimum include total and average costs under electricity purchase
       contracts for the supply business, and that part to be attributed to the
       domestic sector, for the relevant year to date and forecast for the
       relevant year as a whole.

Timing

20(a)  This paragraph applies where

       (i)     a reduction has been or is to be made in charges for distribution
               use of system or transmission network use of system;

       (ii)    the effect of the reduction is or would be, if the licensee did
               not reduce its Restricted Charges, to cause the prices set by the
               licensee to exceed the limits on prices imposed by this
               Condition; and

       (iii)   the licensee reasonably expects further changes to be made to the
               charges for distribution use of system or transmission network
               use of system which will further alter the limits on prices
               imposed by this Condition.

(b)    Where this paragraph applies, the licensee may give notice to the
       Authority:

       (i)     specifying the reduction in charges for distribution use of
               system or transmission network use of system which have been or
               are to be made;

       (ii)    describing the effect of the reduction on the limits on prices
               imposed by this Condition; and

                                       219

<PAGE>

       (iii)   giving particulars of the further changes which it expects to be
               made in charges for distribution use of system or transmission
               network use of system, including particulars of the grounds for
               that expectation.

(c)    If the licensee gives such notice to the Authority, and the grounds for
       the explanation given in the notice are reasonable, the licensee shall be
       deemed not to be in breach (to the extent only that such breach is
       attributable to the reduction in charges specified in the notice) of any
       limit on prices imposed by this Condition during the period beginning
       with the date on which the Authority receives the notice and ending with
       the date specified in a direction given pursuant to sub-paragraph (d) or,
       if no such direction is given, 28 days after the reduction in prices
       referred to in sub-paragraph (b)(i) takes effect.

(d)    The Authority may give a direction

       (i)     specifying the end of the period during which the licensee is
               deemed not to be in breach of the limits on prices imposed by
               this Condition on account of the change in charges specified in
               the notice (which period may be shorter or longer than 28 days
               from when the change in charges takes effect) and/or

       (ii)    requiring the licensee to make such reductions in its Restricted
               Charges during such period as is specified in the direction as
               will secure that the licensee makes no significant gain as a
               result of its being deemed not to be in breach of any limit on
               prices imposed by this Condition.

Interpretation

21.    In this Condition:

       (a)     all prices and revenue shall exclude value added tax (if any);

       (b)     where published prices do not include an allowance for the fossil
               fuel levy, for the purposes of this condition such prices shall
               be adjusted to include the relevant fossil fuel levy;

       (c)     any reference to the first relevant year means the relevant year
               commencing 1 April 1990 and any reference to the second relevant
               year and so on shall be construed accordingly;

       (d)     in addition to the definitions given within this Condition the
               following term(s) shall have the following meaning:

                                       220

<PAGE>

     "Standard Domestic Charge"      means that charge determined by the
                                     licensee during the tenth relevant year
                                     specified against the relevant supply
                                     services area in Column 2 of Annexe A to
                                     this Condition;

     "Domestic Economy 7 Charge"     means that charge offered by the licensee
                                     during the tenth relevant year specified
                                     against the relevant supply services area
                                     in Column 3 of Annexe A to this Condition;

     "Restricted Charges"            means the Standard Domestic Charge and the
                                     Domestic Economy 7 Charge taken together;

     "Prompt Payment Discount"       means any discount or reduction, given in
                                     respect of the relevant year (quantified on
                                     the assumption of 3300 kWh annual
                                     consumption for a Standard Domestic Charge,
                                     and on the basis of 6600 kWh annual
                                     consumption for a Domestic Economy 7
                                     Charge), for the prompt or timely payment
                                     of bills by cash or cheque, compared with
                                     the charge which would be made where
                                     payment is not made promptly or on time.

     "RPI\\t\\"                      means the percentage change (whether of
                                     positive or a negative value) in the
                                     arithmetic average of the Retail Price
                                     Index figures published or determined with
                                     respect to each of the six months July to
                                     December (inclusive) in relevant year t-l
                                     and the arithmetic average of the Retail
                                     Price Index figures published or determined
                                     with respect to the same months in relevant
                                     year t-2.

     "F\\t\\"                        means the rate of the fossil fuel levy
                                     prevailing from time to time;

                                       221

<PAGE>

     "F\\d\\"                        means the fossil fuel levy prevailing at 31
                                     March in the previous relevant year. Hence
                                     for the purposes of the eleventh relevant
                                     year, F\\d\\ means 0.

                                      222

<PAGE>

Annexe A

The Restricted Charges

--------------------------------------------------------------------------------
Column 1                 Column 2                    Column 3
--------------------------------------------------------------------------------
ScottishPower Area       Domestic Tariff             White Meter Tariff No. 1
--------------------------------------------------------------------------------
Scottish Hydro Area      Domestic Standard Tariff    Domestic Economy Tariff
--------------------------------------------------------------------------------

                                      223

<PAGE>

Annexe B

Base Allowances

Pence per kWh (2000/01 prices)

--------------------------------------------------------------------------------
Column 1                        Column 2                     Column 3
--------------------------------------------------------------------------------
                                B\\SD\\                      B\\E7\\
--------------------------------------------------------------------------------
ScottishPower Area              4.967                        3.814
--------------------------------------------------------------------------------
Scottish Hydro Area             5.056                        3.893
--------------------------------------------------------------------------------

                                      224

<PAGE>

Annexe C

[Not used]

                                      225

<PAGE>

Annexe D

Prompt payment discount weightings

--------------------------------------------------------------------------------
Column 1                        Column 2                Column 3
--------------------------------------------------------------------------------
                                W\\SD\\                 W\\E7\\
--------------------------------------------------------------------------------
ScottishPower Area              0.618                   0.622
--------------------------------------------------------------------------------
Scottish Hydro Area             0.530                   0.530
--------------------------------------------------------------------------------

                                      226

<PAGE>

Annexe E

Band blocks

--------------------------------------------------------------------------------
Column 1                        Column 2                Column 3
--------------------------------------------------------------------------------
                                B1\\SD\\                B1\\E7\\
--------------------------------------------------------------------------------
ScottishPower Area              3300                    3000
--------------------------------------------------------------------------------
Scottish Hydro Area             3300                    3000
--------------------------------------------------------------------------------

                                      227

<PAGE>

Annexe F

Prepayment meter surcharge

--------------------------------------------------------------------------------
Column 1                              Column 2
--------------------------------------------------------------------------------
                                      (pound)
--------------------------------------------------------------------------------
ScottishPower Area                    15.00
--------------------------------------------------------------------------------
Scottish Hydro Area                   0.00
---------------------------------------------------------------- ---------------

                                      228

<PAGE>

Special Condition I: Information to be provided to the Authority in connection
with the Charge Restriction Conditions

1.   [No longer used]

2.   [No longer used]

3.   Not later than three months after the end of a relevant year the licensee
     shall send the Authority a statement, in respect of that relevant year,
     showing the specified items referred to in paragraph 5.

4.   The statement referred to in the preceding paragraph shall be:

     (a)  accompanied by a report from the Auditors that in their opinion such
          statement fairly presents each of the specified items referred to in
          paragraph 5 in accordance with the requirements of the charge
          restriction conditions; and

     (b)  certified by a director of the licensee on behalf of the licensee that
          to the best of his knowledge, information and belief having made all
          reasonable enquiries:

          (i)   [No longer used]

          (ii)  there is no amount included in its calculations of allowed
                security costs under Special Condition J (Allowances in respect
                of Security costs which represents other than an amount
                permitted under the charge restriction conditions to be so
                included;

          (iii) no service has been treated as an excluded service which was not
                properly so treated and no amount included in the revenues in
                respect thereof represents other than bona fide consideration
                for the provision of the excluded service to which it relates;

          (iv)  all amounts which should properly be taken into account for the
                purposes of the charge restriction conditions have been taken
                into account; and

          (v)   [No longer used].

5.   The specified items to be contained in the statement referred to in
     paragraph 3 shall be the following:

          (a)   the information referred to at paragraph 8 of Special Condition
                J (Allowances in respect of Security costs);

          (b)   the statements and information referred to in paragraph A4 and
                B2 of Schedule B; and

                                       229

<PAGE>

6.   Where the Authority issues directions in accordance with paragraph 9 of
     Special Condition J (Allowances in respect of Security costs) or paragraphs
     A5 and B3 of Schedule B then such directions shall not have effect from a
     date earlier than the commencement of the relevant year to which the
     statement last furnished to the Authority pursuant to paragraph 3 prior to
     the issue of the directions related, unless such statement (or the
     accompanying report or certificate under paragraph 4) or any statement,
     report or certificate in respect of an earlier relevant year was incorrect
     or was misleading in any material respect.

7.   Where the Authority issues such directions as are referred to in the
     preceding paragraph the Authority may require the licensee to provide a
     revised statement in respect of such of the specified items as may be
     affected by the directions, and the licensee shall comply with such
     request.

                                       230

<PAGE>

Special Condition J: Allowances in respect of Security Costs

1.   At any time during a security period, the licensee may give notice in
     writing to the Authority suspending, with effect from the date of receipt
     of the notice by the Authority, application of such of the charge
     restriction conditions as may be specified in the notice for the unexpired
     term of the security period.

2.   At any time during a security period, the Authority may (having regard to
     its duties under the Act or under the Utilities Act 2000) by means of
     directions:

     (a)  suspend or modify for the unexpired term of the security period the
          charge restriction conditions or any part or parts thereof; or

     (b)  introduce for the unexpired term of the security period new charge
          restriction conditions

     (c)  in either case, so as to make such provision as in the opinion or
          estimation of the Authority is requisite or appropriate:

          (i)  to enable the licensee to recover by means of increased charges
               an amount estimated as being equal to the licensee's allowed
               security costs during such period; and

          (ii) to ensure that such part of the amount referred to in
               sub-paragraph (i) above as is estimated as being equal to the
               allowed security costs incurred by the licensee as costs in its
               supply business is recovered by appropriate equitable increases
               in the charges made by the licensee in that business

     and the licensee shall comply with the terms of any directions so issued.

3.   At any time following a security period, the Authority may (following such
     consultation with the licensee and others as the Authority may consider
     appropriate) issue directions suspending or modifying the charge
     restriction conditions or any part or parts thereof or replacing such
     directions as may have been made during the security period and introducing
     such new charge restriction conditions as in the opinion of the Authority
     are appropriate in all the circumstances (including at the Authority's
     discretion an appropriate

                                      231

<PAGE>

     adjustment having regard to any profit gained or foregone by the licensee
     during the security period), and the licensee shall comply with any
     directions so issued.

4.   At any time within three months after the issue of directions by the
     Authority under paragraph 3, the licensee may serve on the Authority a
     disapplication request in respect of such of the charge restriction
     conditions or any part or parts thereof as are specified in the request.

5.   If within three months of the receipt by the Authority of the
     disapplication request referred to in paragraph 4, the Authority has either
     not agreed in writing to such disapplication request or has not made a
     reference to the Competition Commission under Section 12 of the Act
     relating to the modification of the charge restriction conditions, the
     licensee may deliver one month's written notice to the Authority
     terminating the application of the charge restriction conditions (or any
     part or parts thereof) as were specified in the disapplication request.

6.   Subject to paragraphs 7 and 9, the licensee shall in any relevant year be
     entitled to recover an aggregate amount equal to its allowed security costs
     in that year or (insofar as not previously recovered) any previous year, by
     means of appropriate equitable increases on the charges made by the
     licensee in its supply business.

7.   Paragraph 6 shall not apply in so far as such allowed security costs:

     (a)  were otherwise recovered by the licensee; or

     (b)  were taken into account by the Authority in setting charge restriction
          conditions by means of directions issued under paragraph 3 above.

8.   The licensee shall following the end of each relevant year provide to the
     Authority, as being one of the specified items to be contained in the
     statement referred to at paragraph 4 of Special Condition J (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), details in respect of that relevant year of:

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<PAGE>

     (a)  the amount of the licensee's allowed security costs; and

     (b)  the aggregate amounts charged under paragraph 6 on account of the
          licensee's allowed security costs; and

     (c)  the bases and calculations underlying the increases in charges made by
          the licensee in its supply business under paragraph 6.

9.   Where the Authority is satisfied that the licensee has recovered amounts in
     excess of the allowed security costs, the Authority may issue directions
     requiring the licensee to take such steps as may be specified to reimburse
     customers of the supply business for the excess amounts charged to them,
     and the licensee shall comply with any directions so issued provided that
     if the excess amounts relate to allowed security costs paid to any
     authorised electricity operator, the licensee shall not be obliged to make
     any such reimbursement unless and until it has recovered such costs.

10.  No amounts charged by the licensee under this Condition (whether or not
     subsequently required to be reimbursed) shall be taken into account for the
     purpose of applying the supply charge restriction provisions of Special
     Condition C (Restraints on Supply Charges in England and Wales) and Special
     Condition H (Restraints on Supply Charges in Scotland).

11.  In this Condition:

     "allowed security cost"       means any cost (whenever arising) incurred by
                                   the licensee and approved by the Authority as
                                   being directly attributable to actions taken
                                   or omitted to be taken by the licensee or by
                                   any authorised electricity operator (as the
                                   case may be) in consequence of:

                                   (i)  complying with directions issued by the
                                        Secretary of State under Section 34(3)
                                        or 34(4) of the Act; or

                                   (ii) implementing recommendations of any
                                        committee constituted to advise the
                                        Secretary of State as to matters related
                                        to his power to issue directions under

                                      233

<PAGE>

                                        Section 34 of the Act which are made to
                                        and accepted by the Secretary of State
                                        in contemplation of circumstances likely
                                        to lead to the issue of directions by
                                        the Secretary of State under Section
                                        34(3) or 34(4) of the Act;

                                   but for the avoidance of doubt excluding any
                                   cost which forms part of SP Transmission
                                   Limited's or SP Distribution Limited's
                                   allowed security costs.

     "security period"             means a period commencing on the date on
                                   which any direction issued by the Secretary
                                   of State under Section 34(4)(b) of the Act
                                   enters effect and terminating on the date
                                   (being not earlier than the date such
                                   direction, as varied, is revoked or expires)
                                   as the Authority, after consultation with
                                   such persons (including without limitation,
                                   licence holders liable to be principally
                                   affected) as it shall consider appropriate,
                                   may with the consent of the Secretary of
                                   State by notice to all licence holders
                                   determine after having regard to the views of
                                   such persons.

                                       234

<PAGE>

Special Condition K: Duration of Charge Restriction Conditions

1.   The charge restriction conditions shall apply so long as this licence
     continues in force but shall cease to have effect (in whole or in part, as
     the case may be) if the licensee delivers to the Authority a disapplication
     request made in accordance with paragraph 2 and:

     (a)  the Authority agrees in writing to the disapplication request; or

     (b)  their application (in whole or in part) is terminated by notice given
          by the licensee in accordance with either paragraph 4 or paragraph 5.

2.   A disapplication request pursuant to this Condition shall (a) be in writing
     addressed to the Authority, (b) specify the charge restriction conditions
     (or any part or parts thereof) to which the request relates and (c) state
     the date from which the licensee wishes the Authority to agree that the
     specified charge restriction conditions shall cease to have effect.

3.   Save where the Authority otherwise agrees, no disapplication following
     delivery of a disapplication request pursuant to this Condition shall have
     effect earlier than that date which is the later of:

     (a)  a date being not less than 18 months after delivery of the
          disapplication request; and

     (b)  31st March 2002.

4.   If the Authority has not made a reference to the Competition Commission
     under Section 12 of the Act relating to the modification of the charge
     restriction conditions before the beginning of the period of 12 months
     which will end with the disapplication date, the licensee may deliver
     written notice to the Authority terminating the application of such charge
     restriction conditions (or any part or parts thereof) as are specified in
     the disapplication request with effect from the disapplication date or a
     later date.

5.   If the Competition Commission makes a report on a reference made by the
     Authority relating to the modification of the charge restriction conditions
     (or any part or parts thereof) specified in the disapplication request and
     such report does not include a

                                       235

<PAGE>

     conclusion that the cessation of such charge restriction conditions, in
     whole or in part, operates or may be expected to operate against the public
     interest, the licensee may within 30 days after the publication of the
     report by the Authority in accordance with Section 13 of the Act deliver to
     him written notice terminating the application of such charge restriction
     conditions with effect from the disapplication date or later.

6.   A disapplication request or notice served under this Condition may be
     served in respect of a specified geographic area.

                                       236

<PAGE>

SCHEDULE B: SUPPLEMENTARY PROVISIONS OF THE CHARGE RESTRICTION CONDITIONS

Part A. Principles for Attribution

General Principles

Al.   Where for the purposes of the charge restriction conditions, a share of
      costs borne by the licensee requires to be attributed to any part of the
      market, the licensee shall make that attribution on a basis which ensures
      that no more than a fair proportion of those costs, reflecting the costs
      incurred by the licensee in supplying that part of the market, are so
      attributed.

A2.   The following paragraphs of this Part of Schedule B are without prejudice
      to paragraph Al.

Fossil Fuel Levy and payments in lieu thereof

A3.   The fossil fuel levy requiring to be attributed to supplies to domestic
      customers shall be attributed on the basis of the amount of the levy
      incorporated in the prices actually charged or to be charged by the
      licensee on supplies to such customers in the relevant year in respect of
      which the attribution falls to be made.

Information to be provided by licensee

A4.   The licensee shall following the end of each relevant year furnish to the
      Authority, as being one of the specified items to be included in the
      statement referred to at paragraph 3 of Special Condition I (Information
      to be provided to the Authority in connection with charge restriction
      conditions), a statement confirming that the calculation of amounts in
      lieu of the fossil fuel levy and the attribution of the fossil fuel levy
      and amounts in lieu thereof was made in accordance with the provisions of
      this Part of Schedule B, accompanied (where appropriate) by:

                                       237

<PAGE>

      (a)  a statement of the total amounts attributed to regulated domestic
           customers and other customers; and

      (b)  copies of statements prepared under paragraph 3 of Special Condition
           I (Information to be provided to the Authority in connection with
           charge restriction conditions) and an explanation of the basis
           therefor.

A5.   Where the Authority is satisfied that the basis of calculation or
      attribution (as the case may be) used by the licensee is not in conformity
      with paragraph Al. the Authority may issue directions specifying an
      alternative basis of calculation or attribution, and the basis of
      calculation or attribution by the licensee (as the case may be) shall be
      adjusted accordingly with effect from the date of issue of the directions
      or (subject to paragraph 6 of Special Condition I (Information to be
      provided to the Authority in connection with charge restriction
      conditions)) such other date as may be specified in those directions.

                                       238

<PAGE>

Part B. Excluded Services

B1    Subject to paragraph B3, a service provided by the licensee as part of its
      supply business may be treated as an excluded service in so far as it
      consists of the provision of services for the specific benefit of
      customers requesting the same and not made available by the licensee as a
      normal part of such business. For the avoidance of doubt, the provision of
      facilities for prepayment may not be treated as an excluded service.

Information to be provided to the Authority

B2.   The licensee shall following the end of each relevant year furnish to the
      Authority, as being one of the specified items to be included in the
      statement referred to at paragraph 3 of Special Condition I (Information
      to be provided to the Authority in connection with charge restriction
      conditions), details specifying separately the nature of all services
      provided as part of its supply business by the licencee and treated as
      excluded services by the licensee during the course of such year and
      stating the revenues derived by the licensee in respect of each such
      service so treated.

Directions

B3.   Where the Authority is satisfied that in light of the principles set out
      in paragraph B1 any service treated by the licensee as an excluded service
      should not be so treated. the Authority shall issue directions to that
      effect, and the service or services specified in the directions shall
      cease to be treated as excluded services from the date of issue of the
      directions or (subject to paragraph 6 of Special Condition I (Information
      to be provided to the Authority in connection with charge restriction
      conditions)) such other date as may be specified in the directions.

                                       239

<PAGE>

Special Condition L: Restriction on Self-Supply

1.    The licensee shall not at any time after this Condition comes into effect:

      (a)  enter into any new electricity purchase contract or other equivalent
           agreement or arrangement (directly or indirectly) with an electricity
           generator which is an affiliate or related undertaking of the
           licensee for the benefit of that part of the licensee's business
           which comprises the supply of electricity to former designated
           customers within the Manweb supply services area specified in
           Schedule 3A;

      (b)  make or permit (without the prior consent of the Authority) any
           material variation of any electricity purchase contract or other
           equivalent agreement or arrangement entered into for the benefit of
           that part of the licensee's business referred to in paragraph 1(a) to
           which an affiliate or related undertaking of the licensee is a party.

2.    For the purpose of this Condition:

      "former designated customer" means a customer who would have fallen within
      the definition of "designated customer" (as defined in the public
      electricity supply licence previously granted to Manweb plc in the form of
      that licence in force on 27 September 2001) and who is supplied by the
      licensee.

3.    Subject to paragraph 4, the Authority may in writing direct that this
      Condition shall cease to have effect in this licence on:

      (a)  the date on which any of Special Conditions C to F is first modified
           by the Authority; or

      (b)  any date thereafter which is specified in a direction given by the
           Authority to the licensee for the purpose of this paragraph.

4.    The Authority may not give a direction under paragraph 3 unless it has
      first:

      (a)  given not less than 28 days' notice of its intention to give the
           direction in such a manner as the Authority considers appropriate for
           the purpose of bringing the notice to the attention of persons likely
           to be affected by it;

                                       240

<PAGE>

      (b)  sent a copy of such notice to the licensee, all other licensed
           suppliers, and the Consumer Council; and

      (c)  duly considered all objections or representations received by the
           Authority after the date of publication of the notice which are not
           withdrawn.

                                      241

<PAGE>

                                   SCHEDULE 1

                                 SPECIFIED AREA



                                  Great Britain

                                       242

<PAGE>

                                   SCHEDULE 2

                                   REVOCATION

1.    The Authority may at any time revoke the licence by giving no less than 30
      days' notice (24 hours' notice, in the case of a revocation under
      sub-paragraph 1(g)) in writing to the licensee:

      (a)  if the licensee agrees in writing with the Authority that the licence
           should be revoked:

      (b)  if any amount payable under standard condition 4 (Payments by
           licensee to the Authority) is unpaid 30 days after it has become due
           and remains unpaid for a period of 14 days after the Authority has
           given the licensee notice that the payment is overdue - provided that
           no such notice shall be given earlier than the sixteenth day after
           the day on which the amount payable became due;

      (c)  if the licensee fails:

           (i)   to comply with a final order (within the meaning of section 25
                 of the Act) or with a provisional order (within the meaning of
                 that section) which has been confirmed under that section and
                 (in either case) such failure is not rectified to the
                 satisfaction of the Authority within three months after the
                 Authority has given notice in writing of such failure to the
                 licensee - provided that no such notice shall be given by the
                 Authority before the expiration of the period within which an
                 application under section 27 of the Act could be made
                 questioning the validity of the final or provisional order or
                 before the proceedings relating to any such application are
                 finally determined; or

           (ii)  to pay any financial penalty (within the meaning of section 27A
                 of the Act) by the due date for such payment and such payment
                 is not made to the Authority within three months after the
                 Authority has given notice in writing of such failure to the
                 licensee - provided that no such notice shall be given by the
                 Authority before the expiration of the period within which an
                 application under section 27E of the Act could be made
                 questioning the validity or effect of the financial penalty or
                 before the proceedings relating to any such application are
                 finally determined;

                                       243

<PAGE>

      (d)  if the licensee fails to comply with:

           (i)    an order made by the Secretary of State under sections 56, 73,
                  74 or 89 of the Fair Trading Act 1973; or

           (ii)   an order made by the court under section 34 of the Competition
                  Act 1998.

      (e)  if the licensee has not within 5 years after the date on which this
           licence comes into force, commenced the supply of electricity to any
           of the premises within the area specified in Schedule 1 to this
           licence;

      (f)  if the licensee has ceased to supply electricity to all of the
           premises within the area specified in Schedule 1 to this licence for
           a period of 5 years;

      (g)  if the licensee:

           (i)    is unable to pay its debts (within the meaning of section
                  123(1) or (2) of the Insolvency Act 1986, but subject to
                  paragraphs 2 and 3 of this schedule) or has any voluntary
                  arrangement proposed in relation to it under section 1 of that
                  Act or enters into any scheme of arrangement (other than for
                  the purpose of reconstruction or amalgamation upon terms and
                  within such period as may previously have been approved in
                  writing by the Authority);

           (ii)   has a receiver (which expression shall include an
                  administrative receiver within the meaning of section 251 of
                  the Insolvency Act 1986) of the whole or any material part of
                  its assets or undertaking appointed;

           (iii)  has an administration order under section 8 of the Insolvency
                  Act 1986 made in relation to it;

           (iv)   passes any resolution for winding-up other than a resolution
                  previously approved in writing by the Authority; or

           (v)    becomes subject to an order for winding-up by a court of
                  competent jurisdiction; or

      (h)  if the licensee is convicted of having committed an offence under
           section 59 of the Act in making its application for the licence.

2.    For the purposes of sub-paragraph l(g)(i), section 123(I)(a) of the
      Insolvency Act 1986 shall have effect as if for "(pound)750" there was
      substituted "(pound)100,000" or such higher figure as the Authority may
      from time to time determine by notice in writing to the licensee.

                                       244

<PAGE>

3.    The licensee shall not be deemed to be unable to pay its debts for the
      purposes of sub-paragraph 1(g)(i) if any such demand as is mentioned in
      section 123(1)(a) of the Insolvency Act 1986 is being contested in good
      faith by the licensee with recourse to all appropriate measures and
      procedures or if any such demand is satisfied before the expiration of
      such period as may be stated in any notice given by the Authority under
      paragraph 1.

                                       245

<PAGE>

                                   SCHEDULE 3A

                           MANWEB SUPPLY SERVICES AREA

The supply services area shall comprise that area which is outlined on the
attached map and shall additionally include those premises listed in List A (the
"Additional Premises") but shall not include those premises listed in List B
(the "Excluded Premises").

A:    ADDITIONAL PREMISES

      None

B:    EXCLUDED PREMISES

(a)   PART OF THE SUPPLY SERVICES AREA OF NORWEB ENERGY LIMITED

Address                                              Grid Ref:

Halsall Lane Pumping Station                         SD 4080 0864
Halsall Lane
Ormskirk
L39 3AT

                                      246

<PAGE>

                                   SCHEDULE 3B

                       SCOTTISH POWER SUPPLY SERVICES AREA

1.    Scotland (except the area specified in The Electricity Act 1989 (North of
      Scotland Specified Area) Order 1990 made on 7 March 1990), the areas in
      the north of England supplied prior to 30 March 1990 by the South of
      Scotland Electricity Board and shown on the twelve boundary maps signed by
      representatives of South of Scotland Electricity Board, North Eastern
      Electricity Board and the North Western Electricity Board, and deposited
      with the Secretary of State for Scotland on 28 March 1990.

2.    In this Schedule "the twelve boundary maps" mean

      0.S. 1:50 000 Second Series, Sheet 80 O.S.I:50 000 First Series, Sheets 74
      + 75

      O.S.N.Y 36 NW
      O.S.N.Y 37 SW
      O.S.N.Y 37 SE
      O.S.N.Y 37 NE
      O.S.N.Y 47 SW
      O.S.N.Y 47 NW
      O.S.N.Y 48 SE
      O.S.N.Y 58 SW
      O.S.N.Y 58 NW
      O.S.N.Y 58 NE

                                      247

<PAGE>

                             CONSENTS AND DIRECTIONS

                                      248

<PAGE>

Company Secretary
Scottish Power Energy Retail Limited
1 Atlantic Quay
GLASGOW
G2 8SP                                                            1 October 2001



Dear Sir/Madam

Re: Security Cover Direction

Please find enclosed a Direction issued under Standard Condition 33 of the Gas
and Electricity Supply Licences. The Direction sets the level of security cover
("the bond") for a Supplier of Last Resort in gas and electricity to zero from 1
October 2001.

The Direction applies to all suppliers that have Section C (domestic supply
obligations) of their supply licences switched on in accordance with Condition 2
of the Supply Licence.

Yours faithfully



FRAN GILLON
HEAD OF SUPPLIER FAILURE AND LICENSING

                                       249

<PAGE>

THE ELECTRICITY ACT 1989 (as amended)

ELECTRICITY SUPPLY LICENCES

Direction under Standard Licence Condition 33


1.    This direction is made by the Gas and Electricity Markets Authority ("the
      Authority") under standard condition 33 ("the Condition") of the
      electricity supply licences granted (or treated as granted) under section
      6(1)(d) of the Electricity Act 1989 (as amended). It is addressed to all
      the holders of such licences.

2.    Under paragraph 2 of the Condition the Authority is to determine the sum
      of money to be secured by the licensee by a bond or other instrument or by
      other arrangements as approved by the Authority.

3.    The Authority hereby directs that the sum of money to be so secured by the
      licensee shall be zero.

4.    This direction shall have effect on and from 1 October 2001. It shall
      remain in effect until such time as the Authority shall withdraw it or
      replace it by a further direction made under the Condition.


Dated:      27 September 2001

Signed:     ___________________________
Duty authorised on behalf of the Authority

                                      250