Document:

<PAGE>

                                                                     EXHIBIT 4.5

                  SCOTTISHPOWER ENERGY RETAIL LIMITED CONFORMED
                                 SUPPLY LICENCE

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         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.

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Condition 30.  Not used

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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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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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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).

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<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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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).

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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).

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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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<PAGE>

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

<PAGE>

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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<PAGE>

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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<PAGE>

     (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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<PAGE>

                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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<PAGE>

     (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.

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<PAGE>

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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<PAGE>

     (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

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<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

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<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

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<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)))

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<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),

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<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.

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<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:

                                      232

<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<PAGE>

                                                                     EXHIBIT 4.6

                             SP DISTRIBUTION LIMITED
                         CONFORMED DISTRIBUTION LICENCE

1.                This conformed electricity distribution 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 3 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") (b) the
                  standard conditions for electricity distribution licences
                  determined by the Secretary of State on 27 September 2001 as
                  brought into effect in relation to SP Distribution Limited by
                  the scheme (c) all directions and consents of a continuing
                  nature issued under the licence and (d) all modifications to
                  the licence made since 1 October 2001.

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 underline and strike through contained in this document
                  reflect the changes made by the modification to the
                  electricity distribution licence issued to licence holders
                  having a distribution services area situated in Scotland dated
                  21 December 2001.

                            Shepherd & Wedderburn WS
                                 Saltire Court
                               20 Castle Terrace
                               Edinburgh EH1 2ET

                       [LOGO OF Shepherd & Wedderburn WS]

                               Tel: 0131-228 9900
                               Fax: 0131-228 1222

<PAGE>

                                    CONTENTS

                                  PRELIMINARY

<TABLE>
<S>                                                                                            <C>
PART I - TERMS OF THE LICENCE.                                                                  1

PART II - THE STANDARD CONDITIONS                                                               3

PART III - AMENDED STANDARD CONDITIONS                                                          5

                        CONSOLIDATED STANDARD CONDITIONS

SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS                                             6

1.   Definitions and Interpretation                                                             6

2.   Application of Section C (Distribution Services Obligations)                              24

3.   Payments By Licensee to the Authority                                                     27

SECTION B. GENERAL                                                                             30

4.   Basis of Charges for Use of System and Connection to System: Requirements
     for Transparency                                                                          30

4A.  Non-Discrimination in the Provision of Use of System and
     Connection to System                                                                      35

4B.  Requirement to Offer Terms for Use of System and Connection                               36

4C.  Functions of the Authority                                                                41

5.   Distribution System Planning Standard and Quality of Service                              43

6.   Safety and Security of Supplies Enquiry Service                                           44

7.   Provision of Information about Theft or Abstraction of Electricity,
     Damage and Meter Interference                                                             46

8.   Provisions Relating to the Connection of Metering Equipment                               47

9.   Distribution Code                                                                         49

9A.  Compliance with other Distribution Codes                                                  52

10.  Balancing and Settlement Code and NETA Implementation                                     53

11.  Change Co-ordination for NETA                                                             56

12.  Settlement Agreement for Scotland                                                         57

12A. Compliance with the Trading Code in Scotland                                              58
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                            <C>
13.  Change Co-ordination for the Utilities Act 2000                                           59

14.  The Master Registration Agreement                                                         61

15.  Compliance with the Grid Codes                                                            62

16.  Security Arrangements                                                                     63

17.  Provision of Services for Persons who are of Pensionable Age or
     Disabled or Chronically Sick                                                              64

18.  Provision of Services for Persons who are Blind or Deaf                                   65

19.  Code of Practice on Procedures with Respect to Site Access                                66

20.  Payments in Relation to Standards of Performance                                          67

21.  Complaint Handling Procedure                                                              68

22.  Preparation, Review of and Compliance with Customer Service Codes                         69

23.  Record of and Report on Performance                                                       71

24.  Provision of Information to the Authority                                                 72

25.  Long Term Development Statement                                                           74

26.  Compliance with CUSC                                                                      77

27.  Not used                                                                                  79

28.  Not used                                                                                  79

29.  Disposal of Relevant Assets                                                               80

30.  Not used                                                                                  83

31.  Not used                                                                                  83

Section C. Distribution Services Obligations                                                   84

32.  Interpretation of Section C (Distribution Services Obligations)                           84

32A. Convenience Customers                                                                     86

33.  Not used                                                                                  87

34.  Compulsory Acquisition of Land etc                                                        88

35.  Other Powers etc.                                                                         89

36.  Basis of Charges for Distributor Metering and Data Services:
     Requirements for Transparency                                                             90

36A. Non-Discrimination in the Provision of Distributor Metering
     and Data Services                                                                         92

36B. Requirement to offer Terms for the Provision of Distributor Metering
     and Data Services                                                                         93
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                           <C>
36C. Functions of the Authority                                                                96

37.  The Metering Point Administration Service and the Master
     Registration Agreement                                                                    98

38.  Establishment of a Data Transfer Service                                                 101

39.  Restriction on Use of Certain Information and Independence of
     the Distribution Business                                                                104

40.  Appointment of Compliance Officer                                                        106

41.  Prohibition of Cross-Subsidies                                                           109

42.  Regulatory Accounts                                                                      110

42A. Change of Financial Year                                                                 115

43.  Restriction on Activity and Financial Ring Fencing                                       117

44.  Availability of Resources                                                                120

45.  Undertaking from Ultimate Controller                                                     123

46.  Credit Rating of Licensee                                                                124

47.  Indebtedness                                                                             125

48.  Last Resort Supply: Payment Claims                                                       128

49.  Incentive Scheme and Associated Information                                              132

                        SPECIAL CONDITIONS AND SCHEDULES

A:   Interpretation                                                                           139

B:   Definitions                                                                              140

C:   Restriction of distribution charges                                                      145

Annex C to Special Condition C (Restriction of Distribution Charges)                          150

D:   Restriction of distribution charges: adjustments                                         151

E:   Information to be provided to the Authority in connection with
     the distribution charge restriction conditions                                           152

F:   Allowances in respect of security costs                                                  156

G:   Duration of charge restriction conditions                                                161

Schedule A:Supplementary provisions of the charge restriction conditions                      163

Part A.    Principles for Attribution                                                         163

Part B.    EHV premises                                                                       165
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                           <C>
Part C.    Excluded services                                                                  166

Part D.    Regulated distribution unit categories                                             169

Part E.    Calculation of factor in respect of distribution losses                            171

H:   Arrangements relating to supplies to premises within the licensee's
     distribution services area                                                               174

I:   The Settlement Agreement for Scotland                                                    177

SCHEDULE 1 - SPECIFIED AREA                                                                   180

SCHEDULE 2 - REVOCATION                                                                       181

SCHEDULE 3 - DISTRIBUTION SERVICES AREA                                                       184

                            CONSENTS AND DIRECTIONS

(01.04.92) Consent issued under Condition 20 of Scottish Power UK plc
           licence now Standard Condition 29 of this licence                                  186

(19.04.00) Direction issued under Condition 9 (of Part V) of the public
           electricity supply licence of Scottish Power UK plc now
           Standard Condition 39 of this licence                                              191

(19.04.00) Direction issued under Condition 9 (of Part V) of the public
           electricity supply licence of Scottish Power UK plc now
           Standard Condition 39 of this licence and Condition 12 of the
           public electricity supply licence of Manweb plc                                    194

(28.07.01) Direction issued under Condition 9 (of Part V) of the public
           electricity supply licence of Scottish Power UK plc now
           Standard Condition 39 of this licence; Condition 12 of the
           public electricity supply licence of Manweb plc and Condition 8A
           (of Part IV) of the Electricity Transmission Licence granted to
           Scottish Power UK plc                                                              197

(01.10.01) Consent issued under Standard Condition 47 of this licence                         201

(01.10.01) Consent issued under Standard Condition 47 of this licence
           and Annex thereto                                                                  203

(01.10.01) General Consent issued under Standard Condition 29 of this licence                 213

(20.11.01) Consent issued under Standard Condition 47 of this licence                         220
</TABLE>

<PAGE>

                                  PRELIMINARY

                                    PART I.

                              TERMS OF THE LICENCE

1.   This licence, treated as granted under section 6(l)(c) of the Electricity
     Act 1989 ("the Act") authorises SP Distribution Limited (a company
     registered in Scotland under number SCI89125 ("the licensee") whose
     registered office is situated at 1 Atlantic Quay, Robertson Street, Glasgow
     G2 8SP, to distribute electricity for the purpose of giving a supply to any
     premises or enabling a supply to be so given in the area specified in
     Schedule 1 during the period specified in paragraph 3 below, subject to -

     (a)   the standard conditions of electricity distribution 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"); and

     (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 or 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 Act (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.

                                       1

<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 6 of standard condition 2 (Application of Section C
     (Distribution Services Obligations)) of the Electricity Distribution
     Licence the "distribution services area" is specified in Schedule 3 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(1)(c) of the Electricity Act
1989.

                                       2

<PAGE>

                                    PART II

                            THE STANDARD CONDITIONS

Standard conditions in effect in this licence

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Section A                               Section B                             Section C
-----------------------------------------------------------------------------------------------------------
<S>                                     <C>                                   <C>
Standard condition 1                    Standard condition 4                  Standard condition 32
-----------------------------------------------------------------------------------------------------------
Standard condition 2                    Standard condition 4A                 Standard condition 32A
-----------------------------------------------------------------------------------------------------------
Standard condition 3                    Standard condition 4B                 Standard condition 34
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 4C                 Standard condition 35
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 5                  Standard condition 36
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 6                  Standard condition 36A
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 7                  Standard condition 36B
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 8                  Standard condition 36C
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 9                  Standard condition 37
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 9A                 Standard condition 38
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 10                 Standard condition 39
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 11                 Standard condition 40
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 12                 Standard condition 41
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 12A                Standard condition 42
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 13                 Standard condition 42A
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 14                 Standard condition 43
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 15                 Standard condition 44
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 16                 Standard condition 45
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 17                 Standard condition 46
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 18                 Standard condition 47
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 19                 Standard condition 48
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 20                 Standard condition 49
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 21
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 22
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 23
-----------------------------------------------------------------------------------------------------------
</TABLE>

                                       3

<PAGE>

<TABLE>

-----------------------------------------------------------------------------------------------------------
<S>                                     <C>                                   <C>
                                        Standard condition 24
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 25
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 26
-----------------------------------------------------------------------------------------------------------
                                        Standard condition 29
-----------------------------------------------------------------------------------------------------------
</TABLE>

Note: A copy of the current standard conditions of electricity distribution
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.

                                       4

<PAGE>

                                    PART III

                          AMENDED STANDARD CONDITIONS

1.   Standard condition 1 (Definitions and Interpretation) shall be amended
     by the addition of the following text as an additional definition:-

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

2.   Standard condition 41 (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."

                                       5

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

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

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

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

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

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

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

                                       6

<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.

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

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

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

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

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

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

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

                                       7

<PAGE>

                                                 that condition.

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

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

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

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

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

      "core industry documents"                  for the purposes of standard
                                                 conditions 10 (Balancing and
                                                 Settlement Code and NETA
                                                 Implementation) and 11 (Change
                                                 Co-ordination for NETA) only,
                                                 has the meaning given in
                                                 standard condition 10; and for
                                                 the purposes of standard
                                                 condition 26 (Compliance with
                                                 CUSC) only, has the meaning
                                                 given in that condition.

      "cross-default obligation"                 for the purposes of standard
                                                 condition 47 (Indebtedness)
                                                 only, has the meaning given in
                                                 that condition.

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

      "CUSC"                                     for the purposes of standard
                                                 condition 26 (Compliance

                                       8

<PAGE>

                                                 with CUSC) only, has the
                                                 meaning given in that
                                                 condition.

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

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

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

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

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

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

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

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

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

                                       9

<PAGE>

      "distribution business"                    means a business of the
                                                 licensee, or in relation to
                                                 sub-paragraphs (a) and (b)
                                                 below, and except to the extent
                                                 otherwise specified by the
                                                 authority in a direction to the
                                                 licensee, any business of any
                                                 affiliate or related
                                                 undertaking of the licensee
                                                 comprising:
                                                 (a) the distribution of
                                                     electricity through the
                                                     licensee's distribution
                                                     system, including any
                                                     business in providing
                                                     connections to such system;
                                                 (b) the provision of the
                                                     services specified in
                                                     sub-paragraphs (c) and (d)
                                                     of paragraph 1 of standard
                                                     condition 36B (Requirement
                                                     to Offer Terms for the
                                                     Provision of Distributor
                                                     Metering and Data
                                                     Services); and
                                                 (c) the provision of the
                                                     services specified in
                                                     sub-paragraphs (a) and (b)
                                                     of paragraph 1 of standard
                                                     condition 36B (Requirement
                                                     to Offer Terms for the
                                                     Provision of Distributor
                                                     Metering and Data
                                                     Services),
                                                 or any business ancillary
                                                 thereto.

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

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

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

      "Distribution Services Direction"          has the meaning given in
                                                 standard condition 2
                                                 (Application of Section C
                                                 (Distribution Services

                                       10

<PAGE>

                                                 Obligations)).

      "distribution services provider"           means a licensed distributor in
                                                 whose licence Section C has
                                                 effect.

      "distribution system"                      means the system consisting
                                                 (wholly or mainly) of  electric
                                                 lines owned or operated by an
                                                 authorised distributor and used
                                                 for the distribution of
                                                 electricity from grid supply
                                                 points or generation sets or
                                                 other entry points (and bulk
                                                 supply points in Scotland) to
                                                 the points of delivery to
                                                 customers or authorised
                                                 electricity operators or any
                                                 transmission company within
                                                 Great Britain in its capacity
                                                 as operator of a transmission
                                                 system and includes any remote
                                                 transmission assets (owned by a
                                                 transmission licensee within
                                                 England and Wales) operated by
                                                 such distributor and any
                                                 electrical plant, meters and
                                                 metering equipment owned or
                                                 operated by such distributor in
                                                 connection with the
                                                 distribution of electricity,
                                                 but shall not include any part
                                                 of a transmission system.

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

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

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

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

                                       11

<PAGE>

                                                 that condition.

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

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

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

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

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

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

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

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

                                       12

<PAGE>

                                                 approval of the Authority.

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

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

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

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

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

      "interconnection"                          means:
                                                 the 275 kV and 400 kV circuits
                                                 between and including the
                                                 associated switchgear at Harker
                                                 sub-station in Cumbria and the
                                                 associated switchgear at
                                                 Strathaven sub-station in
                                                 Lanarkshire; the 275 kV
                                                 transmission circuit between
                                                 and including the associated
                                                 switchgear at Cockenzie in East
                                                 Lothian and the associated
                                                 switchgear at Stella in Tyne
                                                 and Wear; and
                                                 the 400 kV transmission circuit
                                                 between and including the
                                                 associated switchgear at
                                                 Torness in East Lothian and the
                                                 associated switchgear at Stella
                                                 in Tyne and Wear all as
                                                 existing at the date on

                                       13

<PAGE>

                                                 which the transmission licence
                                                 comes into force as from time
                                                 to time maintained, repaired or
                                                 renewed, together with any
                                                 alteration, modification or
                                                 addition (other than
                                                 maintenance, repair or renewal)
                                                 which is primarily designed to
                                                 effect a permanent increase in
                                                 one or more particular
                                                 interconnection capacities as
                                                 they exist immediately prior to
                                                 such alteration, modification
                                                 or addition and as from time to
                                                 time maintained, repaired or
                                                 renewed; and
                                                 the 132 kV transmission circuit
                                                 between and including (and
                                                 directly connecting) the
                                                 associated switchgear at
                                                 Chapelcross and the associated
                                                 switchgear at Harker
                                                 sub-station in Cumbria; and the
                                                 132 kV transmission circuit
                                                 between and including (and
                                                 connecting, via Junction V) the
                                                 associated switchgear at
                                                 Chapelcross and the associated
                                                 switchgear at Harker
                                                 sub-station in Cumbria all as
                                                 existing at the date on which
                                                 the transmission licence comes
                                                 into force and as from time to
                                                 time maintained, repaired or
                                                 renewed.

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

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

      "investment grade issuer credit rating"    for the purposes of Section C
                                                 only, has the meaning given in
                                                 standard condition 46 (Credit
                                                 Rating of Licensee).

                                       14

<PAGE>

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

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

      "licensee's distribution system"           means the distribution system
                                                 owned or operated by the
                                                 licensee.

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

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

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

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

      "Metering Point Administration Service     has the meaning given in
      operator"                                  standard condition 38
                                                 (Establishment of a Data
                                                 Transfer Service).

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

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

                                       15

<PAGE>

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

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

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

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

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

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

      "relevant asset"                           means any asset for the time
                                                 being forming part of the
                                                 licensee's distribution system,
                                                 any control centre for use in
                                                 conjunction therewith, and any
                                                 legal or beneficial interest in
                                                 land upon which any of the
                                                 foregoing is situate (which for
                                                 the purposes of property
                                                 located in Scotland means any
                                                 estate, interest, servitude or
                                                 other heritable or leasehold
                                                 right in or over land including
                                                 any leasehold interests or
                                                 other rights to occupy or use
                                                 and any contractual or personal
                                                 rights relating to such
                                                 property or the acquisition
                                                 thereof).

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

      "relevant proportion"                      for the purposes of standard
                                                 condition 3 (Payments by the
                                                 Licensee to the Authority)
                                                 only, has the meaning
                                       16

<PAGE>

                                                 given in that condition.

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

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

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

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

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

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

      "Secretary of State's costs"               for the purposes of standard
                                                 condition 3 (Payments by
                                                 Licensee to the Authority)
                                                 only, has the meaning given in
                                                 that condition.

      "separate business"                        for the purposes of standard
                                                 condition 39 (Restriction on
                                                 Use of Certain Information and
                                                 Independence of the

                                       17

<PAGE>

                                                 Distribution Business) only,
                                                 has the meaning given in that
                                                 condition.

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

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

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

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

      "standby"                                  means the periodic or
                                                 intermittent supply or sale of
                                                 electricity:

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

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

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

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

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

      "top-up"                                   means the supply or sale of
                                                 electricity on a continuing or
                                                 regular basis:

                                                 (a) to an authorised
                                                     electricity operator to
                                                     make

                                       18

<PAGE>

                                                     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.

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

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

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

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

      "ultimate controller"                      means:

                                                 (a) a holding company of the
                                                     licensee which is

                                       19

<PAGE>

                                                     not itself a subsidiary of
                                                     another company; and

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

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

                                                     (ii) rights of ownership
                                                          (including rights
                                                          attached to or
                                                          deriving from
                                                          securities or rights
                                                          under a trust) which
                                                          are held by him or of
                                                          which he is a
                                                          beneficiary; but
                                                          excluding any director
                                                          or employee of a
                                                          corporate body in his
                                                          capacity as such; and

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

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

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

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

                                       20

<PAGE>

                                                 person.

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

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

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

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

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

6.    Any reference in these standard conditions to -
      (a)  a provision thereof;
      (b)  a provision of the standard conditions of electricity supply
           licences, or
      (c)  a provision of the standard conditions of  electricity generation
           licences,
      (d)  a provision of the standard conditions of electricity transmission
           licences,

                                       21

<PAGE>

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

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

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

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

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

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

                                       22

<PAGE>

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

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

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

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

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

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

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

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

                                       23

<PAGE>

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

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

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

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

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

2.        Until -

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

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

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

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

                                       24

<PAGE>

      suspension and providing for those paragraphs to have effect in this
      licence with effect from the date specified in the notice.

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

5.      A Distribution Services Direction:

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

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

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

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

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

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

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

                                       25

<PAGE>

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

                                       26

<PAGE>

Condition 3. Payments By Licensee to the Authority

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

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

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

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

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

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

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

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

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

                                       27

<PAGE>

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

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

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

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

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

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

5.   In relation to any data or information specified by the Authority in a
     direction /1/ given for the purposes of this condition generally, the
     licensee shall submit a certificate to the Authority, approved by a
     resolution of the board of directors of the licensee and signed by a
     director of the licensee pursuant to that resolution. Such certificate
     shall be submitted to the Authority each year on the date specified by the
     Authority. Each certificate shall be in the following form -

     "In the opinion of the directors of [the licensee], all data and
     information provided to the Authority on [date provided to the Authority]
     for the purposes of enabling the Authority

__________________
/1/  Licence Modification (25.09.01)

                                       28

<PAGE>

     to calculate the licence fee payable by [the licensee] pursuant to standard
     condition 3 (Payments by the Licensee to the Authority) is accurate."

6.   In this condition:

     "estimated costs"                             means costs estimated by the
                                                   Authority as likely to be:

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

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

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

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

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

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

                                                   (b)  Schedule 7 to the
                                                        Utilities Act 2000.

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

     "Director General of Electricity Supply"      means the office previously
                                                   established under section 1
                                                   of the Act;

    "Relevant Consumers Committees"                means the committees
                                                   previously appointed by the
                                                   Director General of
                                                   Electricity Supply under
                                                   section 2 of that Act.

                                       29

<PAGE>

SECTION B. GENERAL

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

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

     (a) use of system; and

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

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

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

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

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

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

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

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

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

     (a) a schedule listing those items (including the carrying out of works and
         the provision and installation of electric lines or electrical plant)
         of significant cost liable to be

                                       30

<PAGE>

     required for the purpose of connection (at entry or exit points) to the
     licensee's distribution system for which connection charges may be made or
     levied and including (where practicable) indicative charges for each such
     item and (in other cases) an explanation of the methods by which and the
     principles on which such charges will be calculated;

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

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

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

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

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

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

                                       31

<PAGE>

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

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

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

     (a) such further information as shall be reasonably necessary to enable
         such person to identify and evaluate the opportunities available when
         connecting to and making use of the part or parts of the licensee's
         distribution system specified in the request; and

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

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

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

                                       32

<PAGE>

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

7.   The licensee:

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

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

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

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

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

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

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

                                       33

<PAGE>

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

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

13   The licensee shall, not less than 5 months prior to the date on which it
     proposes to amend its use of system charges in respect of any agreement for
     use of system, send to the Authority a notice setting out the licensee's
     proposals in relation to such amendment together with an explanation of the
     proposed amendment (including a statement of any assumptions on which such
     proposals are based), and the licensee shall send a copy of such notice to
     any person who has entered into an agreement for use of system under
     standard condition 4B (Requirement to Offer Terms for Use of System and
     Connection).

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

                                       34

<PAGE>

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

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

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

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

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

                                       35

<PAGE>

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

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

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

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

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

3.   Where the licensee:

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

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

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

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

     (b)  the carrying out of the works (if any) in connection with the
          extension or reinforcement of the licensee's distribution system
          rendered (in the licensee's

                                       36

<PAGE>

         discretion) appropriate or necessary by reason of making the connection
         or modification to an existing connection and for the obtaining of any
         consents necessary for such purpose;

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

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

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

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

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

                                       37

<PAGE>

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

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

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

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

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

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

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

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

     (c)      the principles that:

                                       38

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       39

<PAGE>

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

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

         (iv)  in breach of the conditions; or

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

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

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

                                       40

<PAGE>

Condition 4C. Functions of the Authority

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

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

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

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

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

                                       41

<PAGE>

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

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

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

                                       42

<PAGE>

Condition 5. Distribution System Planning Standard and Quality of Service

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

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

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

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

                                       43

<PAGE>

Condition 6. Safety and Security of Supplies Enquiry Service

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

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

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

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

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

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

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

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

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

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

                                       44

<PAGE>

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

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

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

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

                                       45

<PAGE>

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

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

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

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

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

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

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

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

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

                                       46

<PAGE>

Condition 8. Provisions Relating to the Connection of Metering Equipment

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

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

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

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

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

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

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

5.   The licensee shall not be obliged pursuant to this condition to offer to
     enter or to enter into any agreement where to do so would be likely to
     cause the licensee to be in breach of those provisions referred to at
     paragraph 7(a) of standard condition 4B (Requirement to Offer Terms for Use
     of System and Connection).

6.   If, after a period which appears to the Authority to be reasonable for the
     purpose, the licensee has failed to enter into an agreement with any person
     entitled or claiming to be entitled thereto pursuant to a request under
     this condition, the Authority may, on the

                                       47

<PAGE>

     application of such person or the licensee, settle any terms of the
     agreement in dispute between the licensee and that person in such manner as
     appears to the Authority to be reasonable.

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

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

                                       48

<PAGE>

Condition 9. Distribution Code

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

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

     (b) which is designed so as:

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

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

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

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

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

     (c) any written representations or objections from authorised electricity
         operators (including any proposals by such operators for revisions to
         the Distribution Code not accepted by the licensee in the course of the
         review) arising during the consultation process and subsequently
         maintained.

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

                                       49

<PAGE>

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

5.   The Distribution Code shall include:

     (a) a distribution planning and connection code containing:

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

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

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

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

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

8.   The licensee may make a charge for any copy of the Distribution Code (as
     from time to time revised) given or sent pursuant to paragraph 7 of an
     amount which will not exceed any

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<PAGE>

     amount specified for the time being for the purposes of this condition in
     directions issued by the Authority.

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

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

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<PAGE>

Condition 9A. Compliance with other Distribution Codes

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

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

                                       52

<PAGE>

Condition 10. Balancing and Settlement Code and NETA Implementation

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

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

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

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

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

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

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

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

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

     (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

                                       53

<PAGE>

         systems, processes and procedures employed in such implementation and
         employed by authorised electricity operators and others in connection
         with such operations;

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

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

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

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

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

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

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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 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.

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Condition 11. Change Co-ordination for NETA

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

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

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Condition 12. Settlement Agreement for Scotland

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

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

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<PAGE>

Condition 12A. Compliance with the Trading Code in Scotland

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

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

2.   In this condition:

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

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<PAGE>

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

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

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

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

     (a) the Pooling and Settlement Agreement;
     (b) the Balancing and Settlement Code;
     (c) Master Connection and Use of System Agreement or the Connection and Use
         of System Code;
     (d) the Settlement Agreement for Scotland;
     (e) the Master Registration Agreement;
     (f) the Data Transfer services Agreement;
     (g) the Radio Teleswitch Agreement;
     (h) any Grid Code or Scottish Grid Code;
     (i) any Distribution Code;
     (j) the Trading Code;
     (k) the Fuel Security Code;
     (l) any agreement for use of an interconnector or Scottish interconnection;
         and

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<PAGE>

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

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

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

                                       60

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Condition 14. The Master Registration Agreement

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

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Condition 15. Compliance with the Grid Codes

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

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

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<PAGE>

Condition 16. Security Arrangements

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

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

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

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

3.   In this condition:

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

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

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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<PAGE>

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

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

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

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

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

       (c)    use passwords provided for vulnerable customers;

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

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

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

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

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<PAGE>

Condition 20.  Payments in Relation to Standards of Performance

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

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<PAGE>

Condition 21. Complaint Handling Procedure

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

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

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

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<PAGE>

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

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

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

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

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

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

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

7.       The licensee shall:

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<PAGE>

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

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

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

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

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

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<PAGE>

Condition 23. Record of and Report on Performance

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

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

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

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

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

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

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

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

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<PAGE>

Condition 24. Provision of Information to the Authority

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

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

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

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

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

4.     The licensee shall not, save with the consent in writing of the
       Authority, enter (directly or indirectly) into any agreement or
       arrangement with any ultimate controller of the licensee or,

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<PAGE>

       where the ultimate controller is a corporate body, any of the
       subsidiaries of such a corporate ultimate controller (other than the
       subsidiaries of the licensee) at a time when:

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

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

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

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

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

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

8.     The power of the Authority to call for information under this condition
       is in addition to the power of the Authority to call for information
       under or pursuant to any other condition. There shall be a presumption
       that the provision of information in accordance with any other condition
       is sufficient for the purposes of that condition, but that presumption
       shall be rebutted, if the Authority states in writing that in its opinion
       such 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 25. Long Term Development Statement

1.     The purposes of this condition are:

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

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

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

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

4.     The matters referred to at paragraph 2 are:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Condition 26. Compliance with CUSC

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

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

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

4.     In this condition:

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

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<PAGE>

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

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

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

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

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

                                       78

<PAGE>

Condition 27.  Not used

Condition 28.  Not used

                                       79

<PAGE>

Condition 29. Disposal of Relevant Assets

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

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

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

       (a)   where:

             (i)    the Authority has issued directions/2/ /3/ for the purposes
                    of this condition containing a general consent (whether or
                    not subject to conditions) to:

                    (aa)    transactions of a specified description; or

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

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

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

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

       (a)   the Authority confirms in writing that it consents to such
             disposal or relinquishment (which consent may be made subject to
             the acceptance by the licensee or any third

__________________

/2/Direction issued under Condition 20 of Scottish Power plc licence now
Standard Condition 29 of this licence (01.04.92)
/3/ General Consent issued under Standard Condition 29 of this licence
(01.10.01)

                                       80

<PAGE>

              party in favour of whom the relevant asset is proposed to be
              disposed or operational control is proposed to be relinquished to)
              of such conditions as the Authority may specify; or

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

5.     In this condition:

       "disposal"                     means:

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

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

                                      and "dispose" and cognate expressions
                                      shall be

                                       81

<PAGE>

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

                                       82

<PAGE>

Condition 30.  Not used

Condition 31.  Not used

                                       83

<PAGE>

SECTION C.  DISTRIBUTION SERVICES OBLIGATIONS

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

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

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

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

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

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

                                       84

<PAGE>

                               licence.

                               means the purpose of all or any of the following:
"permitted purpose"
                               (a)       the distribution business or any other
                                         business or activity within the limits
                                         of paragraph 4 of standard condition 43
                                         (Restriction on Activity and Financial
                                         Ring Fencing);

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

                               (c)       without prejudice to the generality of
                                         sub-paragraph (a), any payment or
                                         transaction lawfully made or undertaken
                                         by the licensee for a purpose within
                                         sub-paragraphs 1(b)(i) to (vii) of
                                         standard condition 47 (Indebtedness);

                                       85

<PAGE>

Condition 32A.  Convenience Customers

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

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

                                       86

<PAGE>

Condition 33.  Not used

                                       87

<PAGE>

Condition 34. Compulsory Acquisition of Land etc

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

       (a)   are comprised within its distribution business; and

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

                                       88

<PAGE>

Condition 35.  Other Powers etc.

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

       (a)   are comprised within its distribution business; and

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

                                       89

<PAGE>

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

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

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

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

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

5.     The licensee:

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

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

                                       90

<PAGE>

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

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

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

                                       91

<PAGE>

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

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

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

                                       92

<PAGE>

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

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

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

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

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

       (d)   data transfer services.

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

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

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

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

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

             (i)    to be presented in such a way as to be referable to the
                    statements prepared in accordance with paragraph 1 of
                    standard condition 36 (Basis of Charges for Distributor
                    Metering and Data Services: Requirements for Transparency)
                    or any revision thereof;

                                       93

<PAGE>

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

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

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

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

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

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

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

       (d)   in breach of the conditions.

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

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

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

                                       94

<PAGE>

10.    In this condition:

         "data retrieval"              means services comprising any or all of
                                       the following:

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

         "data processing"             means services comprising any or all of
                                       the following:

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

         "data aggregation"            means services comprising any or all of
                                       the following:

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

                                       95

<PAGE>

Condition 36C. Functions of the Authority

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

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

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

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

3.     If either party to such agreement proposes to vary the contractual terms
       of any agreement for the provision of any of the distributor metering and
       data services entered into pursuant to standard condition 36B
       (Requirement to Offer Terms for the Provision of Distributor Metering and
       Data Services) or this condition in any manner provided for under such
       agreement, the Authority may, at the request of that party, settle any
       dispute relating to such variation in such manner as appears to the
       Authority to be reasonable.

4.     The Authority may (following consultation with the licensee) issue
       directions relieving the licensee of its obligations under standard
       condition 36B (Requirement to Offer Terms

                                       96

<PAGE>

         for the Provision of Distributor Metering and Data Services) relating
         to distributor metering and data services in respect of such parts of
         that condition and to such extent as may be specified in the
         directions.

                                       97

<PAGE>

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

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

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

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

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

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

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

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

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

             (i)    any electricity supplier or agent thereof;

                                       98

<PAGE>

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

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

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

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

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

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

       (b)   on the other part:

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

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

5.     The Master Registration Agreement shall comprise:

                                       99

<PAGE>

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

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

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

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

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

       (f)   such other matters as are or may be appropriate for the
             development, maintenance and operation of an efficient,
             co-ordinated and economical system for the supply of electricity
             and for the purpose of facilitating competition in electricity
             supply.

                                      100

<PAGE>

Condition 38. Establishment of a Data Transfer Service

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

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

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

2.     The data transfer service shall:

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

       (b)   operate and maintain that network; and

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

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

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

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

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

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

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

                                      101

<PAGE>

       (f)   different agents of the same electricity supplier;

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

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

4.     The purposes of this paragraph are to:

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

       (b)   communicate meter reading and meter standing data;

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

       (d)   communicate distribution use of system information; and

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

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

6.     In fulfilling its obligations under paragraph 1 the licensee shall not,
       or (if appropriate) shall ensure that any third party acting on the
       licensee's instruction or behalf shall not, restrict, distort or prevent
       competition in the provision of meters, meter maintenance, data
       retrieval, data processing, data aggregation or prepayment meter services
       and markets for any of the distributor metering and data services.

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

                                      102

<PAGE>

       distribution services providers acting co-operatively and by means of
       procurement of third party services.

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

9.     In this condition:

       "Metering Point Administration Service means the licensee or any other
       distribution services operator" provider in its capacity as a provider of
       metering point administration services.

                                      103

<PAGE>

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

1.     In this Condition:

       "Confidential Information" means information relating to, or derived
       from, the distribution business which is not published or otherwise
       legitimately in the public domain; and

       "Relevant supplier or shipper" means the holder of an electricity or gas
       supply licence or a gas shipper's licence, which is an affiliate or
       related undertaking of the licensee.

2.     The Licensee shall put in place and at all times maintain managerial and
       operational systems which prevent any relevant supplier or shipper from
       having access to confidential information except and to the extent that
       such information:

       (a)   is made available on an equal basis to any gas or electricity
             supplier or gas shipper or

       (b)   appertains to a customer who at the time to which the information
             relates was a customer of the relevant supplier.

3.     The Licensee shall at all times manage and operate the Distribution
       Business in a way calculated to ensure that it does not restrict, prevent
       or distort competition in the supply of electricity or gas or the
       shipping of gas or the generation of electricity.

4.     Unless otherwise directed by the Authority, the Licensee shall no later
       than 31 May 2002 have in place a statement (in this condition "the
       statement"), approved by the Authority, describing the practices,
       procedures and systems which the Licensee has adopted (or intends to
       adopt) to secure compliance with paragraphs 2 and 3.

5.     Where the Authority does not indicate otherwise within 60 days of receipt
       of the statement, the statement shall be deemed to be approved by the
       Authority.

                                      104

<PAGE>

6.     The statement shall in particular (but without prejudice to the
       generality of paragraphs 2 and 3) set out how the Licensee shall:

       (a)   maintain the full managerial and operational independence of the
             Distribution Business from any relevant shipper or supplier;

       (b)   maintain the branding of the Distribution Business so that it is
             fully independent from the branding used by any relevant supplier
             or shipper;

       (c)   secure that any arrangements for the use of or access to:

             (i)    premises or parts of premises occupied by persons engaged
                    in, or in respect of, the management or operation of the
                    Distribution Business;

             (ii)   systems for the recording, processing or storage of data to
                    which persons engaged in, or in respect of, the management
                    or operation of the Distribution Business also have access;

             (iii)  equipment, facilities or property employed for the
                    management or operation of the Distribution Business; or

             (iv)   the services of persons who are (whether or not as their
                    principal occupation) engaged in, or in respect of, the
                    management or operation of the Distribution Business;

             by any relevant supplier or shipper or by any person engaged in or
             in respect of the activities of such a relevant supplier or shipper
             shall be such as to prevent any breach of the requirements of those
             paragraphs; and

       (d)   manage the transfer of employees from the Distribution Business to
             any relevant supplier or shipper. The Licensee may, with the
             approval of the Authority, revise the statement prepared in
             accordance with paragraph 4.

7.     The Licensee shall take all reasonable measures to ensure compliance with
       the terms of the statement as from time to time revised and approved by
       the Authority.

8.     The Licensee shall publish a copy of the approved statement prepared in
       accordance with paragraph 4 (or the latest approved revision) on its
       company's website within five working days of its approval by the
       Authority.

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Condition 40.  Appointment of Compliance Officer

1.     The Licensee shall ensure, following consultation with the Authority,
       that a competent person (who shall be known as the "compliance officer")
       shall be appointed for the purpose of facilitating compliance by the
       Licensee with standard condition 39, paragraph 1 of standard conditions
       4A and 36A, and, insofar as it relates to relationships with suppliers
       and shippers, standard condition 41.

2.     The Licensee shall at all times ensure that the compliance officer is
       engaged for the performance of such duties and tasks as the Licensee
       considers it appropriate to assign to him for the purposes specified at
       paragraph 1, which duties and tasks shall include those set out at
       paragraph 5.

3.     The Licensee shall procure that the compliance officer:

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

       (b)   has such access to the Licensee's premises, systems, information
             and documentation

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

4.     The Licensee shall make available to the compliance officer a copy of any
       complaint or representation received by it from any person in respect of
       a matter arising under or by virtue of those standard conditions and
       parts of standard conditions specified in paragraph 1.

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

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

       (b)   monitoring the effectiveness of the practices, procedures and
             systems adopted by the Licensee in accordance with the statement
             referred to at paragraph 4 of standard condition 39;

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       (c)   advising whether, to the extent that the implementation of such
             practices, procedures and systems requires the co-operation of any
             other person, they are designed so as reasonably to admit of the
             required co-operation;

       (d)   investigating any complaint or representation made available to him
             in accordance with paragraph 4;

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

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

             (i)    the practices, procedures and systems adopted in accordance
                    with the statement referred to at paragraph 4 of standard
                    condition 39; and

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

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

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

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

       (b)   as to its implementation of the practices, procedures and systems
             adopted in accordance with the statement referred to at paragraph 4
             of standard condition 39.

7.     The report produced in accordance with paragraph 6 shall in particular:

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

       (b)   refer to such other matters as are or may be appropriate in
             relation to the implementation of the practices, procedures and
             systems adopted in accordance with the statement referred to at
             paragraph 4 of standard condition 39; and

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

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

             (ii)   the outcome of such investigations; and

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

8.     The Licensee shall submit to the Authority a copy of the report produced
       in accordance with paragraph 6, and shall publish the report on its
       website.

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Condition 41. Prohibition of Cross-Subsidies

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

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.

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Condition 42. Regulatory Accounts

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

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

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

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

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

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

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

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

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

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

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

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

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     the Authority, in addition to preparing accounting statements on those
     bases which it has adopted, prepare such accounting statements on the bases
     which applied in respect of the immediately preceding financial year.

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

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

     (b)  state the accounting policies adopted; and

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

6.   Unless the accounting statements and information prepared under
     sub-paragraph 2(b)(i) and (b)(iii) are prepared on the current cost basis
     as provided by the alternative accounting rules, the licensee shall, unless
     otherwise agreed by the Authority, in addition to preparing those
     accounting statements under that paragraph, prepare accounting statements
     for the consolidated distribution business covering the same period, which
     shall comprise and show separately:

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

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

          (ii) show or disclose the information and other matters required by
               the alternative accounting rules to be shown or disclosed in
               accounts where the amounts included in respect of assets covered
               by any items shown in those

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               accounts have been determined on any basis mentioned in paragraph
               31 of section C of Part II of Schedule 4 to the Companies Act
               1985;

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

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

     and shall deliver the same, together with an auditors' report prepared in
     relation to the current cost basis accounting statements in the form
     referred to in sub-paragraph 2(c), to the Authority within the time limit
     referred to in sub-paragraph 2(d), and shall (with the exception of the
     part of such statements and information which shows separately the amounts
     charged, apportioned or allocated and describes the bases of charge or
     apportionment or allocation respectively) publish the same with the
     statutory accounts of the licensee.

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

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

9.   For the purposes of paragraph 6:

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      "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 as
                                               may be issued in replacement or
                                               substitution therefor.

10.  For the purposes of this condition:

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

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

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Condition 42A. Change of Financial Year

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

2.   Such notice:

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

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

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

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

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

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

     (c)  shall be accompanied by a report by the auditors and addressed to the
          Authority stating whether in their opinion the audited group accounts
          have been properly prepared in accordance with this condition and give
          a true and 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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     (e)  shall clearly disclose any differences between the accounting policies
          underlying the preparation of the statutory accounts of the licensee
          and the accounting policies underlying the preparation of the audited
          group accounts.

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

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

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Condition 43. Restriction on Activity and Financial Ring Fencing

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

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

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

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

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

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

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

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

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

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

4.   Nothing in this condition shall prevent the licensee or an affiliate or
     related undertaking of the licensee in which the licensee holds shares or
     other investments (a 'relevant

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     associate') conducting de-minimis business as defined in this paragraph so
     long as the limitations specified in this paragraph are complied with.

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

          (i)  the distribution business; and

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

     (b)  The licensee or a relevant associate may carry on de-minimis business
          provided that the relevant associate carries on no other business
          except activities of the distribution business and business activities
          authorised by the Authority under paragraph 3(d), and neither of the
          following limitations is exceeded, namely:

          (i)  the aggregate turnover of all the de-minimis business carried on
               by the licensee and all its relevant associates does not in any
               period of twelve months commencing on 1 April of any year exceed
               2 1/2% of the aggregate turnover of the distribution business as
               shown by the most recent audited accounting statements of the
               licensee produced under paragraphs 2(b)(i) and (c) of standard
               condition 42 (Regulatory Accounts); and

          (ii) the aggregate amount (determined in accordance with sub-paragraph
               (d) below) of all investments made by the licensee and all its
               relevant associates in their de-minimis business or de-minimis
               businesses does not at any time after the date this condition
               takes effect in this licence exceed 2 1/2% of the sum of share
               capital in issue, share premium and consolidated reserves of the
               licensee as shown by its most recent audited historical cost
               financial statements then available.

     (c)  For the purpose of sub-paragraph (b) of this paragraph, "investment"
          means any form of financial support or assistance given by or on
          behalf of the licensee or a relevant associate for the de-minimis
          business whether on a temporary or permanent basis including (without
          limiting the generality of the foregoing) any commitment to provide
          any such support or assistance in the future.

     (d)  At any relevant time, the amount of an investment shall be the sum of:

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          (i)   the value at which such investment was included in the audited
                historical cost balance sheet of the licensee or a relevant
                associate as at its latest accounting reference date to have
                occurred prior to the date this condition takes effect in this
                licence (or, where the investment was not so included, zero);

          (ii)  the aggregate gross amount of all expenditure (whether of a
                capital or revenue nature) howsoever incurred by the licensee or
                a relevant associate in respect of such investment in all
                completed accounting reference periods since such accounting
                reference date; and

          (iii) all commitments and liabilities (whether actual or contingent)
                of the licensee or a relevant associate relating to such
                investment outstanding at the end of the most recently completed
                accounting reference period.

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Condition 44.  Availability of Resources

1.   The licensee shall at all times act in a manner calculated to secure that
     it has available to it all such resources, including (without limitation)
     management and financial resources, personnel, fixed and moveable assets,
     rights, licences, consents and facilities on such terms and with all such
     rights as shall ensure that it is at all times able:

     (a)  to properly and efficiently to carry on the distribution business; and

     (b)  to comply in all respects with its obligations under this licence and
          such obligations under the Act as apply to the distribution business
          including, without limitation, its duty to develop and maintain an
          efficient, co-ordinated and economical system of electricity
          distribution.

2.   The licensee shall submit a certificate to the Authority, approved by a
     resolution of the board of directors of the licensee and signed by a
     director of the licensee pursuant to that resolution. Such certificate
     shall be submitted in June of each year. Each certificate shall be in one
     of the following forms:

     (a)  "After making enquiries, the directors of the licensee have a
          reasonable expectation that the licensee will have available to it,
          after taking into account in particular (but without limitation) any
          dividend or other distribution which might reasonably be expected to
          be declared or paid, sufficient financial resources and financial
          facilities to enable the licensee to carry on the distribution
          business for a period of 12 months from the date of this certificate."

     (b)  "After making enquiries, the directors of the licensee have a
          reasonable expectation, subject to what is said below, that the
          licensee will have available to it, after taking into account in
          particular (but without limitation) any dividend or other distribution
          which might reasonably be expected to be declared or paid, sufficient
          financial resources and financial facilities to enable the licensee to
          carry on the distribution business for a period of 12 months from the
          date of this certificate. However, they would like to draw attention
          to the following factors which may cast doubt on the ability of the
          licensee to carry on the distribution business."

     (c)  "In the opinion of the directors of the licensee, the licensee will
          not have available to it sufficient financial resources and financial
          facilities to enable the licensee to carry

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          on the distribution business for a period of 12 months from the date
          of this certificate."

3.   The licensee shall submit to the Authority with that certificate a
     statement of the main factors which the directors of the licensee have
     taken into account in giving that certificate.

4.   The licensee shall inform the Authority in writing immediately if the
     directors of the licensee become aware of any circumstance which causes
     them no longer to have the reasonable expectation expressed in the then
     most recent certificate given under paragraph 2.

5.   The licensee shall use its best endeavours to obtain and submit to the
     Authority with each certificate provided for in paragraph 2 a report
     prepared by its auditors and addressed to the Authority stating whether or
     not the auditors are aware of any inconsistencies between, on the one hand,
     that certificate and the statement submitted with it and, on the other
     hand, any information which they obtained during their audit work.

6.   The directors of the licensee shall not declare or recommend a dividend,
     nor shall the licensee make any other form of distribution within the
     meaning of section 263 of the Companies Act 1985, unless prior to the
     declaration, recommendation or making of the distribution (as the case may
     be) the licensee shall have issued to the Authority a certificate complying
     with the following requirements of this paragraph.

     (a)  The certificate shall be in the following form:

          "After making enquiries, the directors of the licensee are satisfied:

          (i)  that the licensee is in compliance in all material respects with
               all obligations imposed on it by standard condition 24 (Provision
               of Information to the Authority), standard condition 43
               (Restriction on Activity and Financial Ring-fencing), standard
               condition 44 (Availability of Resources), standard condition 45
               (Undertaking from Ultimate Controller), standard condition 46
               (Credit Rating) and paragraph 1 of standard condition 47 (
               Indebtedness) of the licence; and

          (ii) that the making of a distribution of [ ] on [ ] will not, either
               alone or when taken together with other circumstances reasonably
               foreseeable at

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               the date of this certificate, cause the licensee to be in breach
               to a material extent of any of these obligations in the future.

     (b)  The certificate shall be signed by a director of the licensee and
          approved by a resolution of the board of directors of the licensee
          passed not more than 14 days before the date on which the declaration,
          recommendation or payment will be made.

     (c)  Where the certificate has been issued in respect of the declaration or
          recommendation of a dividend, the licensee shall be under no
          obligation to issue a further certificate prior to payment of that
          dividend provided such payment is made within six months of that
          certificate.

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Condition 45.  Undertaking from Ultimate Controller

1.   The licensee shall procure from each company or other person which the
     licensee knows or reasonably should know is at any time an ultimate
     controller of the licensee a legally enforceable undertaking in favour of
     the licensee in the form specified by the Authority that that ultimate
     controller ("the covenantor") will refrain from any action, and will
     procure that any person (including, without limitation, a corporate body)
     which is a subsidiary of, or is controlled by, the covenantor (other than
     the licensee and its subsidiaries) will refrain from any action, which
     would then be likely to cause the licensee to breach any of its obligations
     under the Act or this licence. Such undertaking shall be obtained within 7
     days of the company or other person in question becoming an ultimate
     controller and shall remain in force for as long as the licensee remains
     the holder of this licence and the covenantor remains an ultimate
     controller of the licensee.

2.   The licensee shall:

     (a)   deliver to the Authority evidence (including a copy of each such
           undertaking) that the licensee has complied with its obligation to
           procure undertakings pursuant to paragraph 1;

     (b)   inform the Authority immediately in writing if the directors of the
           licensee become aware that any such undertaking has ceased to be
           legally enforceable or that its terms have been breached; and

     (c)   comply with any direction from the Authority to enforce any such
           undertaking;

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

     (i)   an undertaking complying with paragraph 1 is not in place in relation
           to that ultimate controller; or

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

     (iii) the licensee is in breach of the terms of any direction issued by the
           Authority under paragraph 2 of this condition.

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Condition 46.  Credit Rating of Licensee

1.   The licensee shall use all reasonable endeavours to ensure that the
     licensee maintains at all times an investment grade issuer credit rating.

2.   In this condition:

     "investment grade issuer credit rating" means:

     (a)   an issuer rating of not less than BBB- by Standard & Poor's Ratings
           Group or any of its subsidiaries or a corporate rating of not less
           than Baa3 by Moody's Investors Service, Inc. or any of its
           subsidiaries or such higher rating as shall be specified by either of
           them from time to time as the lowest investment grade credit rating,
           or

     (b)   an equivalent rating from any other reputable credit rating agency
           which, in the opinion of the Authority, notified in writing to the
           licensee, has comparable standing in the United Kingdom and the
           United States of America.

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Condition 47. Indebtedness

1.   In addition to the requirements of standard condition 29 (Disposal of
     Relevant Assets), the licensee shall not without the prior written consent
     of the Authority /4 5 6/ (following the disclosure by the licensee of all
     material facts):

     (a)  create or continue or permit to remain in effect any mortgage, charge,
          pledge, lien or other form of security or encumbrance whatsoever,
          undertake any indebtedness to any other person or enter into any
          guarantee or any obligation otherwise than:

          (i)   on an arm's length basis;

          (ii)  on normal commercial terms;

          (iii) for a permitted purpose; and

          (iv)  (if the transaction is within the ambit of standard condition 29
                (Disposal of Relevant Assets)) in accordance with that
                condition;

     (b)  transfer, lease, license or lend any sum or sums, asset, right or
          benefit to any affiliate or related undertaking of the licensee
          otherwise than by way of:

          (i)   a dividend or other distribution out of distributable reserves;

          (ii)  repayment of capital;

          (iii) payment properly due for any goods, services or assets provided
                on an arm's length basis and on normal commercial terms;

          (iv)  a transfer, lease, licence or loan of any sum or sums, asset,
                right or benefit on an arm's length basis, on normal commercial
                terms and made in compliance with the payment condition;

          (v)   repayment of or payment of interest on a loan not prohibited by
                sub-paragraph (a);

__________

/4/  Consent issued under Standard Condition 47 of this licence (01.10.01)

/5/  Consent issued under Standard Condition 47 of this licence and Annex
     thereto (01.10.01)

/6/  Consent issued under Standard Condition 47 of this licence and (20.11.01)

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          (vi)   payments for group corporation tax relief or for the surrender
                 of Advance Corporation Tax calculated on a basis not exceeding
                 the value of the benefit received ; or

          (vii)  an acquisition of shares or other investments in conformity
                 with paragraph 2 of standard condition 43 (Restriction on
                 Activity and Financial Ring Fencing) made on an arm's length
                 basis and on normal commercial terms;

     (c)  enter into an agreement or incur a commitment incorporating a
          cross-default obligation; or

     (d)  continue or permit to remain in effect any agreement or commitment
          incorporating a cross-default obligation subsisting at the date this
          condition takes effect in this licence, save that the licensee may
          permit any cross-default obligation in existence at that date to
          remain in effect for a period not exceeding twelve months from that
          date, provided that the cross-default obligation is solely referable
          to an instrument relating to the provision of a loan or other
          financial facilities granted prior to that date and the terms on which
          those facilities have been made available as subsisting on that date
          are not varied or otherwise made more onerous.

     (e)  the provisions of sub-paragraphs (c) and (d) of this paragraph shall
          not prevent the licensee from giving any guarantee permitted by and
          compliant with the requirements of sub-paragraph (a).

     (f)  The payment condition referred to in sub-paragraph (b)(iv) is that the
          consideration due in respect of the transaction in question is paid in
          full when the transaction is entered into unless either:

          (i)    the counter-party to the transaction has and maintains until
                 payment is made in full an investment grade issuer credit
                 rating, or

          (ii)   the obligations of the counter-party to the transaction are
                 fully and unconditionally guaranteed throughout the period
                 during which any part of the consideration remains outstanding
                 by a guarantor which has and maintains an investment grade
                 issuer credit rating.

2.   In this condition:

      "cross-default obligation"             means a term of any agreement or
                                             arrangement

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                                             whereby the licensee's liability to
                                             pay or repay any debt or other sum
                                             arises or is increased or
                                             accelerated or is capable of
                                             arising, increasing or of
                                             acceleration by reason of a default
                                             (howsoever such default may be
                                             described or defined) by any person
                                             other than the licensee, unless:

                                             (i)   that liability can arise only
                                                   as the result of a default by
                                                   a subsidiary of the licensee,

                                             (ii)  the licensee holds a majority
                                                   of the voting rights in that
                                                   subsidiary and has the right
                                                   to appoint or remove a
                                                   majority of its board of
                                                   directors, and

                                             (iii) that subsidiary carries on
                                                   business only for a purpose
                                                   within paragraph (a) of the
                                                   definition of permitted
                                                   purpose.

          "indebtedness"                     means all liabilities now or
                                             hereafter due, owing or incurred,
                                             whether actual or contingent,
                                             whether solely or jointly with any
                                             other person and whether as
                                             principal or surety, together with
                                             any interest accruing thereon and
                                             all costs, charges, penalties and
                                             expenses incurred in connection
                                             therewith.

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<PAGE>

Condition 48.  Last Resort Supply: Payment Claims

1.   This condition sets out the circumstances in which the licensee shall
     increase its use of system charges in order to compensate any electricity
     supplier (a "claimant") which claims for losses that it has incurred in
     complying with a last resort supply direction.

2.   The following provisions apply where the licensee receives from a claimant
     a valid claim for a last resort supply payment.

3.   Where the licensee receives a valid claim it shall, during the relevant
     year, make a consequential increase to its use of system charges in respect
     of that year which relate to the distribution of electricity to premises to
     such an extent as it reasonably estimates to be appropriate to secure that
     such consequential increase in its revenue equals the specified amount.

4.   The licensee shall, during, or as soon as practicable after the end of, the
     relevant year, pay to the claimant, by quarterly or monthly instalments (as
     specified in the claim), the amount of that consequential increase in
     revenue mentioned in paragraph 3 to the extent that it does not exceed the
     specified amount.

5.   If the amount paid to the claimant under paragraph 4 is less than the
     specified amount, the licensee shall in the following year -

     (a)  pay to the claimant (in accordance with any directions given by the
          Authority) the shortfall together with 12 months' interest thereon;
          and

     (b)  increase the charges which relate to the distribution of electricity
          to premises during the year following the relevant year to such extent
          as it reasonably estimates to be appropriate to secure that the
          consequential increase in its revenue equals the amount of that
          shortfall together with 12 months' interest thereon.

6.   If the amount of the consequential increase mentioned in paragraph 3
     exceeds the specified amount, the licensee shall, during the year following
     the relevant year,

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<PAGE>

     decrease the charges which relate to the distribution of electricity to
     premises to the extent that it reasonably estimates to be necessary in
     order to reduce its use of system revenue for that year by an amount equal
     to the excess together with 12 months' interest thereon.

7.   Any question whether any estimate for the purposes of paragraph 3, 5 or 6
     is a reasonable one shall be determined by the Authority.

8.   The licensee shall not enter into any use of system agreement with an
     electricity supplier which does not permit variation of its use of system
     charges in pursuance of this condition.

9.   The provisions of this condition shall have effect notwithstanding that the
     licensee has not provided the notice required by paragraph 13 of standard
     condition 4 (Basis of Charges for Use of System and Connection to System:
     Requirements for Transparency).

10.  In calculating the licensee's use of system revenue during any period for
     the purposes of a price control condition any increase or decrease in
     revenue attributable to the licensee's compliance with this condition shall
     be treated as if it had not occurred.

11.  The licensee shall prepare, in respect of each year in which it increases
     or decreases charges in pursuance of paragraph 3, 5 or 6, a statement
     showing -

     (a)  the aggregate amount of its revenue derived from increases in charges
          in pursuance of paragraph 3;

     (b)  the aggregate amount of its revenue derived from increases in charges
          in pursuance of paragraph 5;

     (c)  the aggregate amount of the decrease in its revenue resulting from
          decreases in charges in pursuance of paragraph 6; and

     (d)  in the case of each last resort supply payment, the aggregate payments
          to the claimant made in respect of the year in question (whenever
          those payments were made).

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12.  The licensee shall give the statements referred to in paragraph 11 to the
     Authority within the first 4 months of the year following that to which
     they relate.

13.  On giving the statement mentioned in paragraph 11(d) to the Authority, the
     licensee shall publish it in such manner as, in the reasonable opinion of
     the licensee, will secure adequate publicity for it.

14.  Where the licensee receives more than one claim for a last resort payment,
     this condition (other than sub-paragraphs 11(a), (b) and (c)) shall apply
     separately as respects each separate claim but in so far as it results in
     changes to the licensee's use of system charges it shall have the
     cumulative effect of such separate applications.

15.  (a)   For the purposes of this condition -

           "last resort supply direction" and "last resort supply payment" have,
           respectively the meanings given to them in standard conditions 29
           (Supplier of Last Resort) and 29A (Supplier of Last Resort Supply
           Payments) of the standard conditions of the electricity supply
           licence;

           "price control condition" means any condition of the licence which
           places a monetary limitation on the use of system charges which may
           be levied or the use of system revenue which may be recovered by the
           licensee during a given period;

           "relevant year" means, in relation to any valid claim -

           (a)  where the claim was received by the licensee at least 60 days
                before the beginning of a year, that year; or

           (b)  where the claim was received by the licensee less than 60 days
                before the beginning of a year, the next year;

           "specified amount" means the amount specified on a valid claim
           together with interest calculated in accordance with sub-paragraph
           (b);

           "valid claim" means a claim for which a claimant has been give a
           consent by the Authority pursuant to standard condition 29A (Supplier
           of Last Resort

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           Supply Payments) of the standard conditions of the electricity supply
           licence; and

           "year" means a period of 12 months beginning with 1/st/ April.

     (b)   The interest referred to in sub-paragraph (a) is simple interest for
           the period commencing with the date on which the valid claim was
           received by the licensee and ending with the date which is 61 days
           before the start of the relevant year, except where that period is of
           30 days or less, in which case no interest shall be payable.

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<PAGE>

Condition 49.  Incentive Scheme and Associated Information

1.   The principal purpose of this condition is to secure the collection of
     information on a common basis, and to an appropriate degree of accuracy, by
     each distribution services provider so as:

     (a)  to facilitate the establishment and operation of an incentive scheme
          ("the scheme") to improve the operation and delivery of appropriate
          outputs of the licensee; and

     (b)  to monitor any perverse incentives arising from the collection and
          publication of such information and from the operation of the scheme
          and the charge restriction conditions.

2.   The licensee shall establish appropriate systems, processes and procedures
     to measure and record specified information from the dates specified in
     paragraph 4 and in accordance with Regulatory Instructions and Guidance
     (including any associated information specified therein).

3.   For the purposes of this condition:

     "charge restriction conditions" shall have the same meaning as in special
     condition A (Definitions) for licensed distributors in England and Wales or
     special condition B for licensed distributors in Scotland;

     "charging review date" means the date from which modifications to the
     charge restriction conditions relating to all distribution services
     providers have effect:

     (a)  whether before or after the date upon which the modifications are
          made;

     (b)  whether or not the same modifications are made in respect of each
          distribution services provider; and

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     (c)  where such modifications have been proposed by the Authority following
          a review by the Authority of the charge restriction conditions (or
          that part to which the modifications relate) in relation to all
          distribution services providers;

          "Regulatory Instructions and Guidance" means any instructions and
          guidance issued by the Authority for the purposes of this condition as
          modified from time to time by notice under paragraph 9 and may
          include:

          (a)  instructions and guidance as to the establishment of different
               systems, processes, procedures and manners for providing and
               recording information and of standards for different classes of
               information;

          (b)  a timetable for the development of the systems, processes and
               procedures required to achieve the appropriate standards of
               accuracy and reliability with which specified information shall
               be recorded;

          (c)  the meaning of words and phrases used in defining specified
               information;

          (d)  requirements for the recording of information associated with
               specified information which are reasonably necessary to enable an
               examiner to determine the accuracy and reliability of specified
               information;

          (e)  requirements as to the form and manner in which specified
               information shall be provided to the Authority;

          (f)  requirements as to the manner in which specified information
               shall be recorded and as to the standards of accuracy and
               reliability with which it shall be recorded; and

          (g)  a statement as to whether and to what extent each category of
               specified information is required for the purposes of the scheme;

          "specified information" means:

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<PAGE>

     (a)     the number of interruptions in the supply of electricity through
             the licensee's distribution system which occur in each period of 12
             months commencing on 1 April in each calendar year and have a
             duration of -

             (i)   less than three minutes, together (in respect of each
                   interruption) with the number of customers whose supply was
                   interrupted and the cause of that interruption; and

             (ii)  three minutes or more, together (in respect of each
                   interruption) with -

                   (aa) the number of customers whose supply of electricity was
                        interrupted and the duration of the interruption;

                   (bb) the source, voltage level and HV circuit; and

                   (cc) the aggregate number of re-interruptions;

     (b)     in relation to telephone calls made to the enquiry service operated
             under paragraph 1 of standard condition 6 (Safety and Security of
             Supplies Enquiry Service) -

             (i)   the speed of response for answering each call; and

             (ii)  in the case of each call answered by a human operator -

                   (aa) the telephone number of the caller;

                   (bb) the time of the call; and

                   (cc) if known, the name of the caller and whether the caller
                        is or is not a domestic customer;

     (c)     (i)   the aggregate number and cause of faults occurring in
                   specified classes or types of electrical plant or electric
                   lines:

             (ii)  a statement setting out the asset management strategy of the
                   licensee in respect of the licensee's distribution system;
                   and

             (iii) a statement of the reasons for any material increase or
                   decrease in the number and cause of faults referred to in
                   sub-paragraph (i) having regard to equivalent data held in
                   respect of previous years; and

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<PAGE>

     (d)  such other information as may from time to time be specified by the
          Authority, by notice to the licensee in accordance with paragraph 9.

4.   The licensee shall collect specified information in respect of:

     (a)  the matters specified in sub-paragraphs (a), (b) and (c) of the
          definition of specified information from and including 1 April 2001;
          and

     (b)  any matter specified under sub-paragraph (d) of that definition from
          the date specified in a notice given in accordance with paragraph 9.

5.   The licensee shall provide to the Authority:

     (a)  the information referred to in sub-paragraph (b)(ii) of the definition
          of specified information for each week within 4 days of the end of
          that week;

     (b)  the information referred to in sub-paragraphs (a),(b)(i) and (c) of
          that definition on or before 31 May 2002 and 30 April in each
          succeeding year (or such later date as the Authority may by notice
          specify) in respect of the period of 12 months expiring on the
          preceding 31 March; and

     (c)  the information referred to in sub-paragraph (d) of that definition in
          respect of such period and by such date as shall be specified in the
          relevant notice given under that sub-paragraph.

6.   The licensee shall permit a person or persons nominated by the Authority
     (in each case "an examiner") to examine the systems, processes and
     procedures referred to in paragraph 2 and their operation, the specified
     information and the extent to which each complies, and is in accordance,
     with Regulatory Instructions and Guidance.

7.   The licensee shall (and shall procure, insofar as it is able to do so, that
     any affiliate of the licensee, any person by whom it procures the
     performance of the obligation in paragraph 2 and any auditor of such person
     or of the licensee shall) co-operate fully with an

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<PAGE>

     examiner so as to enable him to carry out, complete and report to the
     Authority on any examination carried out in accordance with paragraph 6.

8.   The licensee's obligation under paragraph 7 to co-operate or procure
     co-operation with an examiner shall include, without limitation and insofar
     as necessary or expedient for such purpose, in each case subject to
     reasonable prior notice to the licensee:

     (a)  providing access to management, employees, agents or independent
          contractors of the licensee sufficient to enable the examiner to make
          any enquiries and to discuss any matters which he reasonably considers
          to be relevant to the carrying out of the examination;

     (b)  giving to the examiner access at reasonable hours to any premises
          occupied by the licensee or any other person in performing the
          obligations set out in this condition; and

     (c)  allowing the examiner at reasonable hours:

          (i)   to inspect and make copies of, and take extracts from, any
                documents and records of the licensee maintained in relation to
                specified information (other than information which is subject
                to legal privilege);

          (ii)  to carry out inspections, measurements and tests on or in
                relation to any systems maintained and operated for or in
                relation to the requirements of this condition; and

          (iii) to take onto such premises or onto or into any assets used for
                the purpose of the licensee such other persons and such
                equipment as may be necessary or expedient for the purpose of
                carrying out the examination.

9.   A notice published by the Authority which adds to the categories of
     specified information or which modifies Regulatory Instructions and
     Guidance (in each case, an "amendment") shall have effect where the
     Authority has:

     (a)  given prior notice to all distribution services providers:

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<PAGE>

          (i)   stating that it proposes to make the amendment and setting out
                its effect, the date it is proposed it should take effect and
                (where relevant) whether the additional category of specified
                information is required for the purposes of the scheme;

          (ii)  stating the reasons why it proposes to make the amendment; and

          (iii) specifying the time (not being less than 28 days from the date
                of publication of the notice) within which representations or
                objections with respect to the proposed amendment may be made;
                and

     (b)  considered any representations or objections which are duly made and
          not withdrawn.

10.  A notice under paragraph 9 may not, where the amendment relates to a
     requirement in Regulatory Instructions and Guidance to provide any
     specified information to a greater level of accuracy or the introduction of
     an additional category of specified information which is or is intended to
     be required for the purposes of the scheme, specify a date for the purpose
     of paragraph 9(a)(i) other than a charging review date nor be given less
     than 12 months prior to that date unless all distribution services
     providers have agreed an alternative date or period of notice.

11.  The reasons for proposing an amendment which relates to any change in
     Regulatory Instructions and Guidance (other than that referred to in
     paragraph 10) in respect of specified information which is or is intended
     to be required for the purposes of the scheme may have regard in particular
     to the desirability of:

          (i)   removing or reducing inconsistencies between distribution
                services providers in the application of the Regulatory
                Instructions and Guidance or its interpretation;

          (ii)  improving the presentation or style of the Regulatory
                Instructions and Guidance or of the form and manner in which the
                specified information is to be provided;

          (iii) summarising the terms of reference and instructions from time to
                time given to an examiner; or

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<PAGE>

          (iv) setting out any of the matters referred to in paragraphs (a) to
               (f) of the definition of Regulatory Instructions and Guidance in
               respect of any additional category of specified information

          so as more effectively to achieve the purposes of this condition.

Department of Trade and Industry
September 2001

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<PAGE>

                        SPECIAL CONDITIONS AND SCHEDULES

Special Condition A: Interpretation

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 supply licences;

     (d)  a provision of the standard conditions of electricity generation
          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.

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<PAGE>

Special Condition B: Definitions

1.   This Condition and Special Conditions C to G and Schedule A apply only to
     the distribution services area (as defined in standard condition 1
     (Definitions and Interpretation)) of the licensee.

2.   In this Condition and in Special Conditions C to G and Schedule A:

      "attributed"                            means when used in relation to
                                              transmission connection point
                                              charges or distribution losses
                                              attributed in accordance with the
                                              principles set out in Part A of
                                              Schedule A and attribute,
                                              attributed, attributable and
                                              attribution shall be construed
                                              accordingly.

      "average charge per regulated           means the regulated distribution
      unit distributed"                       revenue in the relevant year
                                              divided by the regulated quantity
                                              distributed in that year.

      "average specified rate"                means the average of the daily
                                              base rates of the Governor and
                                              Company of the Bank of Scotland
                                              (or such other bank as the
                                              Authority shall specify from time
                                              to time) current from time to time
                                              during the period in respect of
                                              which the calculation falls to be
                                              made.

      "charge restriction conditions"         means Special Conditions B to G
                                              inclusive together with Schedule A
                                              to this licence, as from time to
                                              time modified or replaced in
                                              accordance with the provisions of
                                              the Act.

      "distribution losses"                   means units unaccounted for on the
                                              licensee's distribution system,
                                              measured as being the difference
                                              between the units metered on entry
                                              into the system and the units
                                              metered on leaving the system.

      "distribution revenue"                  means the revenue (measured on an
                                              accruals basis) derived by the
                                              licensee from the

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                                              provision of distribution services
                                              in the relevant year, after
                                              deduction of:

                                              (i)   an amount equal to such part
                                                    of the total amount payable
                                                    in that relevant year to SP
                                                    Transmission Limited and
                                                    Scottish Hydro-Electric
                                                    Transmission Limited
                                                    (measured on an accruals
                                                    basis) in respect of
                                                    transmission connection
                                                    point charges and which
                                                    would otherwise be included
                                                    in distribution revenue by
                                                    reason of being recovered in
                                                    that relevant year by the
                                                    licensee in its use of
                                                    system charges as falls to
                                                    be attributed to the
                                                    regulated quantity
                                                    distributed in that relevant
                                                    year; and

                                              (ii)  value added tax (if any) and
                                                    any other taxes based
                                                    directly on the amounts so
                                                    derived.

          "distribution services"             means all services provided by
                                              the licensee as part of its
                                              distribution business other than
                                              excluded services.

          "EHV premises"                      means those premises to which
                                              units are delivered by the
                                              licensee which fall to be treated
                                              as EHV premises in accordance with
                                              Part B of Schedule A.

          "EHV units"                         means units distributed by the
                                              licensee which are delivered or
                                              deemed to be delivered to EHV
                                              premises.

          "eleventh relevant year"            means the relevant year commencing
                                              1st April 2000.

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<PAGE>

         "excluded services"                 means those services which in
                                             accordance with the principles set
                                             out in Part C of Schedule A fall to
                                             be treated as excluded services.

         "HV units"                          means units (other than EHV units)
                                             distributed by the licensee which
                                             are delivered to premises connected
                                             to the licensee's distribution
                                             system at a voltage at or higher
                                             than 1000 volts.

         "LV units"                          means units distributed by the
                                             licensee which are delivered to
                                             premises connected to the
                                             licensee's distribution system at a
                                             voltage less than 1000 volts.

         "LV1 units"                         means LV units which are
                                             distributed by the licensee outside
                                             night-time or weekend periods to
                                             domestic premises or small premises
                                             (other than domestic premises)
                                             where the appropriate use of system
                                             charges apply different rates in
                                             night-time or weekend periods as
                                             opposed to other times of day or
                                             week, for the avoidance of doubt
                                             including the use of system charges
                                             under the tariffs specified in
                                             paragraph D2 of Part D of Schedule
                                             A.

         "LV2 units"                         means LV units which are
                                             distributed by the licensee to
                                             domestic premises or small premises
                                             (other than domestic premises):

                                             (a)  during night-time or weekend
                                                  periods, where the appropriate
                                                  use of system charges apply
                                                  different rates in night-time
                                                  or weekend periods as opposed
                                                  to other times of the day; or

                                             (b)  where the appropriate use of
                                             system charges are incorporated
                                             into tariffs which

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                                             restrict availability of supply to
                                             specified off-peak periods, for the
                                             avoidance of doubt including the
                                             use of system charges under the
                                             tariffs specified in paragraph D3
                                             of Part D of Schedule A.

         "LV3 units"                         means LV units other than LV1 and
                                             LV2 units for the avoidance of
                                             doubt including the units
                                             distributed under the tariffs
                                             specified in paragraph D4 of Part D
                                             of Schedule A.

         "maximum average charge per         means the charge calculated in
         unit distributed"                   accordance with the formua in
                                             paragraph 1 of Special Condition C
                                             (Restriction of distribution
                                             charges).

         "metered"                           means, in relation to any quantity
                                             distributed, 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.

         "regulated distribution unit        means as the case may be HV units
         category"                           or LV1 Units or LV2 units or LV3
                                             units.

         "regulated distribution revenue"    means distribution revenue except
                                             such part thereof as derives from
                                             the distribution of EHV units or
                                             excluded services.

         "regulated quantity distributed"    means the aggregate quantity of
                                             units distributed (for any person
                                             under use of system) by the
                                             licensee through the licensee's
                                             distribution system in relevant
                                             year t metered at exit points on
                                             leaving the licensee's distribution
                                             system but excluding for this
                                             purpose:

                                            (a) units distributed for the
                                                purpose of

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<PAGE>

                                                  supply to premises outside the
                                                  licensee's distribution
                                                  services area; and

                                             (b)  EHV units.

         "relevant year t"                   means a financial year
                                             commencing on or after 1 April
                                             1990.

         "relevant year"                     means that relevant year for the
                                             purposes of which any calculation
                                             falls to be made.

         "relevant year t-I"                 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 expressions
                                             shall be construed accordingly.

         "transmission connection point      means charges levied by a
         charges"                            transmission company as connection
                                             charges by direct reference to the
                                             number or nature of the connections
                                             between the licensee's distribution
                                             system and a transmission system
                                             and payable by the licensee.

         "unit"                              means a kilowatt hour.

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<PAGE>

Special Condition C: Restriction of distribution charges

Basic Formula

1.   Without prejudice to Special Condition F (Allowances in respect of security
     costs), the licensee shall in setting its charges for the provision of
     distribution services use its best endeavours to ensure that in any
     relevant year the average charge per regulated unit distributed shall not
     exceed the maximum average charge per unit distributed calculated in
     accordance with the following formula:

           M\\dt\\ = P\\dt\\ + PN\\d\\ + LF\\dt\\ - PM\\dt\\ - K\\dt\\

2.   For the purposes of paragraph 1, M\\dt\\ means the maximum average charge
     per unit distributed in relevant year t.

Formula for P\\dt\\ as used in paragraph 1

3.   For the purposes of paragraph 1 P\\dt\\ is derived from the following
     formula:

      P\\dt\\=(PUM.GR\\t\\.PID\\t\\)+(PL.(AL\\t\\-L\\t\\).PIL\\t\\) -D\\t\\

     where:

     PUM       means an amount equal to(pound)261.9 million.

     GR\\t\\   in the eleventh relevant year has the value of 1 and in each
               subsequent relevant year is derived from the following formula:

                                 MP\\oi\\.D\\it\\+ C\\dt\\   C\\dt\\
                    GR\\t\\ =0.5 ----------------------- + -------   GR\\t-1\\
                                 MP\\oi\\.D\\it-1\\          C\\dt-1\\
     where:

      M        means the summation across all regulated distribution unit
               categories i as described in the definition of the term P\\oi\\.

      P\\oi\\. means in respect of each regulated  distribution unit category i
               set out below in column 1, the value equal to that amount set
               opposite that category in column 2.

             ---------------------------------------------------------------
               Column 1                                         Column 2
             ---------------------------------------------------------------
               Regulated distribution unit category 1           Value (p)
                                                              ---------
             ---------------------------------------------------------------
               HV                                               0.482

               LV1                                              2.790

               LV2                                              0.281

               LV3                                              1.704

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

                                      145

<PAGE>

  D\\it\\     means that number of units in each regulated distribution unit
              category i distributed in relevant year t.

  D\\it-1\\   means that number of units in each regulated distribution unit
              category i distributed in relevant year t- 1.

  C\\dt\\     means a notional figure representing the number of customers in
              the licensee's distribution services area (for the purpose of this
              term C\\dt\\ only) for each relevant year, given in the table
              below.

              relevant year beginning:

              1st April 1999                  1,838,900

              1st April 2000                  1,857,300

              1st April 2001                  1,875,900

              1st April 2002                  1,894,700

              1st April 2003                  1,913,600

              1st April 2004                  1,932,700

              provided that for any relevant year t beginning on or after 1st
              April 2005, Cdt shall equal 1,932,700.

  C\\dt\\     means the number equal to C\\dt\\ in relevant year t-1.

  PID\\t-1\\  in the eleventh relevant year has the value of 1 and in each
              subsequent relevant year is derived from the following formula:

                        (   RPI\\t\\-Xd\\t\\)
              PID\\t\\= (1+ ----------------) PID\\t-1\\
                        (        100        )

  where:

  RPI\\t\\    means the percentage change (whether of a 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.

  Xd\\t\\     shall equal 3.

  PL          means an amount equal to 2.9p.

                                      146

<PAGE>

         AL\\t\\     means in respect of relevant year t allowed distribution
                     losses calculated as provided in paragraph E5 of Part E of
                     Schedule A.

         L\\t\\      means in respect of relevant year t, adjusted distribution
                     losses calculated as provided in paragraphs E2 to E4 of
                     Schedule A.

         PIL\\t\\    is derived from the following formula:

                                (    RPI\\t\\ )
                     PIL\\t\\ = (1 + -------- ) PIL\\t-1\\
                                (      100    )

         where, for the eleventh relevant year, PIL\\t-l\\ equals 1.

         D\\t\\      means the regulated quantity distributed in relevant year
                     t.

Formula for PN\\dt\\ as used in paragraph 1

4.       For the purposes of paragraph 1, in the eleventh and subsequent
         relevant years the term PN\\dt\\ shall be calculated in accordance with
         the following formula:

                     (PS + PR) PIR\\t\\
         PN\\dt\\ =  ------------------
                           D\\t\\

         where:

         PS          means an amount equal to(pound)3.25 million for each of the
                     eleventh to the fifteenth relevant years, and thereafter
                     shall be 0.

         PR          means, in the eleventh and all subsequent relevant years an
                     amount equal to (pound)2.0l million.

         PIR\\t\\    is derived from the following formula:

         where for the ninth relevant year P1R\\t-l\\ equals 1.

Formula for PM\\dt\\ as used in paragraph 1

5.       For the purposes of paragraph 1, PM\\dt\\ is derived from the following
         formula:

                    RM\\dt\\
         PM\\dt\\ = ---------
                      D\\t\\

         where:

         RM\\dt\\    means an amount equal to the licensee's relevant reduction
                     in costs in relevant year t resulting from the fact that
                     the licensee has ceased to provide meter provision services
                     and meter operation services as defined in paragraph 1 of
                     standard condition 36B (Requirement to Offer Terms for the
                     Provision of

                                      147

<PAGE>

         Distributor Metering and Data Services) in respect of customers in
         respect of whom it provided meter provision services and meter
         operation services at 31 March 2000. The licensee's relevant reduction
         in costs shall be calculated in real terms, and shall be the amount, if
         any, by which the licensee's cash operating costs (excluding costs of a
         non-recurring nature) of providing such services in the relevant year t
         fall short of the cash operating costs (excluding costs of a
         non-recurring nature) of providing such services in the tenth relevant
         year, to the extent that such shortfall is attributable to the fact
         that the licensee has ceased, since 31 March 2000, to provide (whether
         directly or through an agent acting on its behalf) meter provision
         services and meter operation services in respect of such customers. The
         licensee's relevant reduction in costs shall exclude the amount of any
         reduction in costs in providing any services which constitute excluded
         services.

Formula for K\\dt\\ as used in paragraph 1

6.   For the purposes of paragraph 1, K\\dt\\ means the correction factor per
     unit (whether of a positive or a negative value) derived, subject to
     paragraph 3 of Special Condition D (Restriction of distribution charges:
     adjustments), from the following formula: provided that the value of
     K\\dt\\ for the eleventh relevant year shall be the value of K\\dt\\
     arising for that year from the application of the formula applicable under
     Schedule 6 to the Generation, Transmission and Public Electricity Supply
     Licences held immediately prior to the determination day by ScottishPower
     in the form of that condition in force on 31 March 2000, but adjusted by
     adding the amount TA\\dt\\ (in the case of the licensee, zero (expressed in
     pounds million)) for the tenth relevant year, calculated by the application
     of the formula applicable under Schedule 6 to the Generation, Transmission
     and Public Electricity Supply Licence as then in force:

               R\\dt\\-1 - (D\\t-1\\ . M\\dt-1\\)      I\\dt\\
     K\\dt\\ = ---------------------------------- (1+ --------)
                            D\\t\\                       100

     where:

     R\\dt-l\\   means the distribution revenue in relevant year t-1.

     D\\t-l\\    means the regulated quantity distributed in relevant year t-l.

     M\\t-l\\    means maximum average charge per unit distributed in relevant
                 year t-l.

                                      148

<PAGE>

       I\\dt\\ means that interest rate in relevant year t which is equal to,
               where K\\dt\\ (taking no account of I\\dt\\ for this purpose) has
               a positive value, the average specified rate plus 4, or where
               K\\dt\\ taking no account of I\\dt\\ for this purpose) has a
               negative value, the average specified rate.

Formula for LF\dt\ as used in paragraph 1

7.     For the purposes of paragraph 1, for the tenth and preceding relevant
       years LP\\dt\\ shall be zero, and for any subsequent relevant year
       LF\\dt\\ is derived from the following formula:

                              LP\\dt\\ - LA\\dt\\
                  LF\\dt\\ =  -------------------
                                  D\\t\\
                              -------------------

                  where:LP\\dt\\ means an amount equal to the payments made by
                  the licensee, in the relevant year t, in accordance with its
                  obligations set out in Standard Licence Condition 3 or, in
                  respect of the eleventh relevant year, made by the predecessor
                  company of the licence holder to the Director General of
                  Electricity Supply under the licence condition entitled
                  'Payment of fees' in the Generation, Transmission and Public
                  Electricity Supply Licence referred to in paragraph 6.

         LA\\dt\\ is derived from the following formula:

                  LA\\dt\\ = PF.PIF\\t\\

         PF       means, in the eleventh and all subsequent relevant years, the
                  amount given against the licensee's name in column PF of Annex
                  C to this Condition.

         PIF\\t\\ is derived from the following:

                             (  RPI\\t\\)
                  PIF\\t\\ = (1+--------) PIF\\t-1\\
                             (  100     )

                  where for the ninth relevant year PIF\t-1\ equals 1.

                                      149

<PAGE>

         ANNEX C TO SPECIAL CONDITION C (RESTRICTION OF DISTRIBUTION CHARGES)

         -----------------------------------------------------------------------
                                                                    PF
                                                                    --
         -----------------------------------------------------------------------
                                                                    (Pounds)m
                                                                    --------
         -----------------------------------------------------------------------
         SP DISTRIBUTION LIMITED                                    0.496
         -----------------------                                    -----
         -----------------------------------------------------------------------
         SCOTTISH HYDRO-ELECTRIC POWER DISTRIBUTION LIMITED         0.210
         --------------------------------------------------         -----
         -----------------------------------------------------------------------

                                      150

<PAGE>

Special Condition D: Restriction of distribution charges: adjustments

1.   If, in respect of any relevant year, the average charge per regulated unit
     distributed exceeds the maximum average charge per unit distributed by more
     than 3 per cent, the licensee shall furnish an explanation to the Authority
     and in the next following relevant year the licensee shall not effect any
     increase in charges for the provision of distribution services unless it
     has demonstrated to the reasonable satisfaction of the Authority that the
     average charge per regulated unit distributed would not be likely to exceed
     the maximum charge per unit distributed in that next following relevant
     year.

2.   If, in respect of any two successive relevant years, the sum of the
     percentage amounts by which the average charge per regulated unit
     distributed has exceeded the maximum average charge per unit distributed by
     more than 4 per cent, then in the next following relevant year the licensee
     shall, if required by the Authority, adjust its charges such that the
     average charge per regulated unit distributed would not be likely, in the
     judgement of the Authority, to exceed the maximum average charge per unit
     distributed in that next following relevant year.

3.   If, in respect of two successive relevant years, the average charge per
     regulated unit distributed is less than 90 per cent of the maximum average
     charge per unit distributed, the Authority, after consultation with the
     licensee, may direct that in calculating K\\dt\\ for the purposes of
     paragraph 6 of Special Condition C (Restriction of distribution charges) in
     respect of the next following relevant year, there shall be substituted for
     R\\dt-l\\ in the formula at that paragraph 6 of Special Condition C
     (Restriction of distribution charges) such figure as the Authority may
     specify being not less than R\\dt-i\\ and not more than 0.90 (D\\t-l\\ .
     M\\dt-l\\).

                                      151

<PAGE>

Special Condition E: Information to be provided to the Authority in connection
with the distribution charge restriction conditions

1.   Where the licensee is intending to make any change in charges for the
     provision of distribution services regulated under Special Condition C
     (Restriction of distribution charges) the licensee shall (unless otherwise
     agreed by the Authority) not later than the date of publication of such
     charges provide the Authority with:

     (a)  a written forecast of the maximum average charge per unit distributed,
          together with its components, in respect of the relevant year t in
          which such a change is to take effect and in respect of the next
          following relevant year t+1; and

     (b)  a written estimate of the maximum average charge per unit distributed,
          together with its components, in respect of the relevant year t-1
          immediately preceding the relevant year in which the change is to take
          effect, unless a statement complying with paragraph 7 in respect of
          relevant year t-l has been furnished to the Authority before the
          publication of the proposed change.

2.   [Not in use]

3.   If within 3 months of the commencement of any relevant year t the licensee
     has not made any such change in charges as are referred to in paragraph 1,
     the licensee shall provide the Authority with a written forecast of the
     maximum average charge per unit distributed, together with its components,
     in respect of the relevant year t.

4.   The Authority may issue directions providing that any forecast or estimate
     provided in accordance with paragraphs 1 or 3 shall be accompanied by such
     information as regards the assumptions underlying the forecast or estimate
     as may be necessary to enable the Authority to be satisfied that the
     forecast or estimate has been properly prepared on a consistent basis.

5.   Not later than six weeks after the commencement of each relevant year t,
     the licensee shall send to the Authority a statement as to:

                                       152

<PAGE>

     (a)  whether or not the provisions of Special Condition D (Restriction of
          distribution charges: adjustments) are likely to be applicable in
          consequence of the average charge per regulated unit distributed in
          the preceding relevant year t-l or the two preceding relevant years
          t-1 and t-2; and

     (b)  its best estimate as to the relevant correction factor K\\dt\\ to be
          applied in calculating the maximum average charge per unit distributed
          in respect of the relevant year t.

6.   [Not in use]

7.   Not later than three months after the end of each relevant year the
     licensee shall send to the Authority a statement, in respect of that
     relevant year, showing the specified items referred to in paragraph 9.

8.   The statement referred to in the preceding paragraph shall be:

     (a)  accompanied by a report from the Auditors that in their opinion

          (i)  such statement fairly presents each of the specified items
               referred to in paragraph 9 in accordance with the requirements of
               the charge restriction conditions; and

          (ii) the amounts shown in respect of each of those specified items are
               in accordance with the licensee's accounting records which have
               been maintained in respect of the distribution business in
               accordance with standard condition 42 (Regulatory Accounts) of
               this licence; 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)  there is no amount included in its calculations under Special
               Condition C (Restriction of distribution charges) and Schedule A
               which represents other than:

               (aa) bona fide consideration for the provision of distribution
                    services in the course of its distribution business; or

                                      153

<PAGE>

               (bb) an amount permitted under the charge restriction conditions
                    to be so included;

         (ii)  there is no amount included in its calculations of allowed
               security costs under Special Condition F (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; and

         (iv)  all amounts which should properly be taken into account for the
               purposes of the charge restriction conditions have been taken
               into account.

9.   The specified items to be contained in the statement referred to in
     paragraph 7 shall be the following:

     (a) the regulated quantity distributed;

     (b) the quantity distributed in each regulated distribution unit category;

     (c) the average charge per regulated unit distributed;

     (d) the amount in respect of the terms AL\\t\\ and L\\t\\ in paragraph 3 of
         Special Condition C (Restriction of distribution charges) calculated as
         therein provided;

     (e) the value of the term TA\\dt\\ in respect of the tenth relevant year
         only together with the value of each of the component parts, as
         detailed in paragraph 6 of Special Condition C (Restriction of
         distribution charges);

     (f) the information referred to at paragraph 8 of Special Condition F
         (Allowances in respect of Security costs);

     (g) the statements and information referred to in paragraphs A5, B2, C7, Dl
         and El0 of Schedule A;

                                      154

<PAGE>

     (h)  the value of the term LF\\dt\\ together with the value of each of its
          component parts, as detailed in paragraph 7 of special condition C
          (Restriction of distribution charges).

10.  Where the Authority issues directions in accordance with paragraph 9 of
     Special Condition F (Allowances in respect of Security costs) or paragraphs
     A6, B3, C8, D5 or E11 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 7
     prior to the issue of the directions related, unless such statement (or the
     accompanying report or certificate under paragraph 8) or any statement,
     report or certificate in respect of an earlier relevant year was incorrect
     or was misleading in any material respect.

11.  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.

                                      155

<PAGE>

Special Condition F: 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) 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

     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 licensee's allowed
          security costs incurred by the licensee as costs in its distribution
          business are recovered by means of appropriate equitable increases in
          the charges made by the licensee in its distribution 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

                                      156

<PAGE>

     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.

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 are 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 the licensee's allowed
     security costs in that year or (insofar as not previously recovered) any
     previous year, by means of appropriate equitable increases in the charges
     made by the licensee in its distribution business.

7.   Paragraph 6 shall not apply insofar 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 in paragraph 7 of Special Condition E (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

                                      157

<PAGE>

     (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 in
          the distribution 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 or purchasers from the distribution business (as the case may
     be) 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
     the 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 from the relevant authorised electricity
     operator.

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 charge restriction provisions of Special Condition
     C (Restriction of distribution charges).

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

                                      158

<PAGE>

                                        related to his power to issue directions
                                        under 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 Scottish Power Energy Retail
                                   Limited's allowed security costs;

        "Fuel Security Code"       shall have the meaning given in standard
                                   condition 16 (Security Arrangements);

        "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 that 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

                                      159

<PAGE>

                                   of such persons.

                                      160

<PAGE>

Special Condition G: 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 the date which is the later of:

     (a)  a date being not less than 18 months after delivery of the
          disapplication request; and,

     (b)  31 March 2005.

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 of the
     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.

                                      161

<PAGE>

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 of the Act deliver to the Authority written notice terminating the
     application of such charge restriction conditions with effect from the
     disapplication date or a later date.

6.   A disapplication request or notice served under this Condition may be
     served in respect of a specified geographic area.

                                      162

<PAGE>

SCHEDULE A: SUPPLEMENTARY PROVISIONS OF THE CHARGE RESTRICTION CONDITIONS

Part A. Principles for Attribution

General Principles

A.1  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.

A.2  The following paragraphs of this Part of Schedule A are without prejudice
     to paragraph Al.

Transmission connection point charges

A.3  The transmission connection point charges requiring to be attributed
     between the regulated quantity distributed and other quantities distributed
     shall be attributed in proportion to the transmission connection point
     capacity or equivalent method required for the purpose of distributing
     those quantities.

Distribution losses

A.4  Where an amount (in units) in respect of distribution losses requires to be
     calculated and attributed in respect of EHV units and units distributed by
     the licensee for the purpose of supply to premises outside the licensee's
     distribution services area, such calculation and attribution shall be made
     consistently with the principles underlying the schedule of adjustment
     factors as referred to at sub-paragraph (b) of paragraph 2 of standard
     condition

                                      163

<PAGE>

     4 (Basis of Charges for Use of System and Connection to System:
     Requirements for Transparency).

Information to be provided by Licensee

A.5  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 7 of Special Condition E (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), a statement confirming that the calculation of the
     transmission connection point charges and of distribution losses was made
     in accordance with the provisions of this Part of Schedule A.

A.6  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 10 of Special Condition E (Information to be
     provided to the Authority in connection with the charge restriction
     conditions)) such other date as may be specified in those directions.

                                      164

<PAGE>

Part B. EHV premises

B.1  EHV premises shall comprise:

     (a)  in relation to premises connected to the licensee's distribution
          system as at the date this licence entered into force those premises
          specified in the list of EHV premises notified in writing to the
          Authority by the licensee within twenty eight days after this licence
          entered into force; and

     (b)  in relation to premises connected to the licensee's distribution
          system which are either first connected or (having been previously
          connected) have had their connections materially altered following the
          date this licence entered into force, means premises connected to the
          licensee's distribution system at a voltage at or higher than 22
          kilovolts or at a sub-station with a primary voltage of 66 kilovolts
          or above.

B.2  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 7 of Special Condition E (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), a statement listing any changes in the premises falling to be
     treated as EHV premises.

B.3  Where the Authority is satisfied that any premises treated by the licensee
     as being or not being EHV premises should not in conformity with
     sub-paragraph B 1(b) above be so treated, the Authority may issue
     directions to that effect, and such premises shall cease to be treated as
     EHV premises from the date of the issue of the directions or (subject to
     paragraph 10 of Special Condition E (Information to be provided to the
     Authority in connection with the charge restriction conditions)) such other
     date as may be specified in those directions.

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Part C. Excluded services

C.1  There may be treated as excluded services provided by the licensee in its
     distribution business such services in respect of which charges are made
     which:

     (a)   do not fall within paragraph C2 of this Part; and

     (b)   may (subject to paragraph C8) be determined by the licensee as
           falling under one of the principles set out in paragraphs C3 to C6.

C.2  No service provided by the licensee as part of its distribution business
     shall be treated as an excluded service insofar as it consists of the
     provision of services remunerated under use of system charges in accordance
     with standard condition 4 (Basis of Charges for Use of System and
     Connection to System: Requirements for Transparency) of this licence
     including (without prejudice to the foregoing):

     (i)   (subject to paragraph C3 of this Part) the transport of electricity;

     (ii)  the carrying out of works for the installation of electric lines or
           electrical plant (not otherwise payable in the form of connection
           charges);

     (iii) the carrying out of works or the provision of maintenance or repair
           or other services for the purpose of enabling the licensee to comply
           with standard conditions 5, 9, 9A and 15, the Electricity Supply
           Regulations 1988 or any regulations made under Section 29 of the Act
           or any other enactment relating to safety or standards applicable in
           respect of the distribution business; and

     (iv)  (subject to paragraph C5 of this Part) the provision, installation
           and maintenance of any meters, switchgear or other electrical plant
           (not being part of connection charges).

C.3  The licensee may treat as being an excluded service for the purpose of the
     distribution business the transport of:

     (a)   units of electricity not consumed in the licensee's distribution
           services area; or

     (b)   EHV units, provided that the licensee's charges for the distribution
           of such units do not exceed the charging rates underlying the
           information as to EHV revenue and EHV units distributed, given by the
           licensee to the Authority and used by it for the purposes of setting
           the term PUM in Special Condition C (Restriction of

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<PAGE>

           distribution charges), subject only to such adjustments as may be
           appropriate in the reasonable opinion of the Authority to reflect
           material variations between the actual charges made and the charging
           rates underlying the information as to EHV revenue provided to the
           Authority by the licensee.

C.4  Charges of the type described in paragraphs 3 and 4 of standard condition 4
     (Basis of Charges for Use of System and Connection to System: Requirements
     for Transparency) and charges in respect of the statements referred to in
     paragraph 5 of standard condition 4 (Basis of Charges for Use of System and
     Connection to System: Requirements for Transparency), may each be treated
     as excluded services for the purposes of the distribution business.

C.5  A service provided by the licensee as part of its distribution business may
     be treated as an excluded service in so far as it consists in the provision
     of services (including metering, electric lines or electrical plant) for
     the specific benefit of any third party requesting the same and not made
     available as a normal part of its distribution business remunerated by use
     of system charges including (without prejudice to the foregoing):

     (i)   special metering (including "time of day" metering) to facilitate
           energy saving programmes for the benefit of customers requesting the
           same;

     (ii)  charges for moving mains, services or meters forming part of the
           licensee's distribution system to accommodate extension, re-design or
           re-development of any premises on which the same are located or to
           which they are connected;

     (iii) the provision of electric lines and electrical plant (a) in so far as
           the same are required for the specific purpose of enabling the
           provision of top-up or standby supplies or sales of electricity or
           (b) to provide a higher degree of security than is required for the
           purposes of complying with standard condition 5 (Distribution System
           Planning Standard and Quality of Service);

     (iv)  the amount by which charges for the provision of prepayment meters to
           customers exceed charges for the provision of standard meters for
           such customers in respect of which the amount receivable per customer
           shall not exceed that used by the

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<PAGE>

          Authority in formulating PUM in Special Condition C (Restriction of
          distribution charges);

     (v)  special metering or telemetry or data processing equipment for the
          purposes of enabling any person which is a party to the Settlement
          Agreement for Scotland to comply with its obligations in respect of
          metering thereunder or for the performance by the licensee of any
          service in relation thereto.

C.6  There may be treated as an excluded service for the purposes of the
     distribution business, charges for the relocation of electric lines or
     electrical plant and the carrying out of works associated therewith
     pursuant to a statutory obligation (other than under Section 9 (1) or
     Section 16 of the Act) imposed on the licensee.

Information to be provided to the Authority about excluded services

C.7  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 7 of Special Condition E (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), details specifying separately the nature of all services
     provided as part of the distribution business by the licensee and treated
     as excluded services by the licensee during the course of such year and
     stating the revenues derived in respect of each such service so treated.

Directions

C.8  Where the Authority is satisfied that in the light of the principles set
     out in paragraphs C2 to C6 inclusive 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 10 of Special Condition E
     (Information to be provided to the Authority in connection with the charge
     restriction conditions)) such other date as may be specified in the
     directions.

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Part D. Regulated distribution unit categories

D.1  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 7 of Special Condition E (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), details specifying separately those use of system charges in
     respect of which the licensee has, during the course of such year, treated
     the units distributed by the licensee as falling within the definition of
     each of LV1 units and LV2 units and LV3 units respectively.

D.2  The definition of LV1 units includes units distributed under the following
     tariffs:

     1.   Domestic Economy Day Units

     2.   Farm Economy Day Units

     3.   General Economy Day Units

     4.   General Evening and Weekend Day Units

     5.   Annual Maximum Demand (LV) Day Units

     6.   Maximum Demand Tariff (LV) Day Units

D.3  The definition of LV2 units includes units distributed under the following
     tariffs:

     1.   Domestic Economy Night Units

     2.   Farm Economy Night Units

     3.   General Economy Night Units

     4.   General Evening and Weekend (Evening and Weekend Units)

     5.   Annual Maximum Demand (LV) Night Units

     6.   Maximum Demand Tariff (LV) Night Units

     7.   Restricted Hours and Crop Drying Units

D.4  The definition of LV3 units includes units distributed under the following
     tariffs:

     1.   Domestic Standard

     2.   Farm Standard

     3.   General Standard

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<PAGE>

     4.   Catering

     5.   Public Lighting

     6.   LV Monthly and Quarterly Maximum Demand

D.5  Notwithstanding the provisions of paragraphs D2 to D4 above where the
     Authority is satisfied that a tariff or tariffs in respect of which the
     licensee has treated the units distributed as falling or not falling within
     one of the categories in paragraphs D2 to D4 above should not be so
     treated, the Authority shall issue directions to that effect and the tariff
     or tariffs specified in the directions shall cease to be so treated from
     the date of issue of the directions or (subject to paragraph 10 of Special
     Condition E (Information to be provided to the Authority in connection with
     the charge restriction conditions)) such other date as may be specified in
     the directions and shall with effect from such date be treated in such
     manner as may be specified in the directions.

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<PAGE>

Part E. Calculation of factor in respect of distribution losses

E.1  The terms AL\\t\\ and L\\t\\ which are used in paragraph 3 of Special
     Condition C (Restriction of distribution charges) shall each be determined
     using the consistent methodological basis set out in paragraphs E2 to E5
     below.

Consistent methodological basis for determination of AL\\t\\ and L\\t\\

E.2  Adjusted distribution losses L\\t\\ in respect of relevant year t shall
     mean the difference between adjusted bulk supply point purchases
     (calculated as provided in paragraph E3) and adjusted units distributed
     (calculated as provided in paragraph E4).

E.3  Adjusted bulk supply point purchases shall be obtained by adjusting the
     units metered on entry to the licensee's distribution system by:

     (a)  excluding that number of units which is equal to the sum of:

          (i)   EHV units; and

          (ii)  units distributed by the licensee for the purpose of supply to
                premises outside the licensee's distribution services area; and

          (iii) an amount in respect of distribution losses between the bulk
                supply point and the exit point attributable to the units
                referred to in (i) and (ii) above, as determined in accordance
                with the schedule of adjustment factors referred to at
                sub-paragraph (b) of paragraph 2 of standard condition 4 (Basis
                of Charges for Use of System and Connection to System:
                Requirements for Transparency); and

     (b)  including an amount (in units) to represent the effect of units
          entering the licensee's distribution system otherwise than at bulk
          supply points, being the difference between the number of units so
          entering and the number of units that would have been required to have
          entered at bulk supply points in their absence (such latter number of
          units calculated consistently with the principles in respect of
          distribution losses referred to at sub-paragraph (b) of paragraph 2 of
          standard

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<PAGE>

          condition 4 (Basis of Charges for Use of System and Connection to
          System: Requirements for Transparency)).

E.4  Adjusted units distributed shall be obtained by:

     (a)  calculating all units distributed by the licensee metered during
          relevant year t at exit points on leaving the licensee's distribution
          system; and

     (b)  deducting therefrom EHV units delivered or deemed to be delivered
          during relevant year t and units distributed during relevant year t
          for the purpose of supply to premises outside the licensee's
          distribution services area; and

     (c)  adding thereto an amount equal to the units consumed during relevant
          year t on the licensee's premises in the distribution services area
          (insofar as not otherwise taken into account in determining units
          distributed under sub-paragraph (a) above).

E.5  The allowed distribution losses AL\\t\\ in relevant year t shall be
     obtained by:

     (a)  ascertaining the adjusted units distributed in accordance with
          paragraph E4;

     (b)  multiplying the resulting adjusted units figure by the aggregate of
          adjusted distribution losses (calculated as provided in paragraph E2)
          over the 10 preceding relevant years; and

     (c)  dividing the product by the aggregate of adjusted units distributed
          over the same preceding relevant years.

E.6  [Not in use].

E.7  [Not in use].

E.8  [Not in use].

Information to be provided to the Authority

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<PAGE>

E.9  The licensee shall within three months after the entry into force of this
     licence furnish to the Authority a statement showing the initial relevant
     loss percentage and the underlying calculations.

E.10 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 7 of Special Condition E (Information to
     be provided to the Authority in connection with the charge restriction
     conditions), a statement showing adjusted distribution losses for that
     relevant year, accompanied by the underlying calculations and (where
     appropriate) an explanation of any changes in the basis of calculation or
     estimation thereof.

E.11 Where the Authority is satisfied that any statement or underlying
     calculation provided has not been drawn up in conformity with paragraphs E2
     to E5 above, the Authority may issue directions, and the statement or
     underlying calculation shall be adjusted with effect from the date of issue
     of the directions or (subject to paragraph 10 of Special Condition E
     (Information to be provided to the Authority in connection with the charge
     restriction conditions)) such other date as may be specified in the
     directions.

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<PAGE>

Special Condition H: Arrangements relating to supplies to premises within the
licensee's distribution services area

1.   The licensee shall, as soon as practicable and, in any event, not later
     than such date as the Authority shall specify, establish relevant supply
     arrangements.

2.   The licensee shall implement and comply with the relevant supply
     arrangements.

3.   The licensee shall, in consultation with relevant suppliers, periodically
     review (including upon the request of the Authority) the relevant supply
     arrangements. Following any such review, the licensee shall send to the
     Authority:

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

     (b)  any proposed revisions to the relevant supply arrangements as the
          licensee (having regarding to the outcome of such review) reasonably
          thinks fit for the achievement of the objective referred to in
          sub-paragraph (a) of paragraph 10; and

     (c)  any written representations or objections from relevant suppliers
          (including any proposals by such suppliers for revisions to the
          relevant supply arrangements established in accordance with paragraph
          1 not accepted by the licensee in the course of the review) arising
          during the consultation process and subsequently maintained.

4.   Revisions to the relevant supply arrangements established in accordance
     with paragraph 1 proposed by the licensee and sent to the Authority
     pursuant to paragraph 3 shall require to be approved by the Authority.

5.   Having regard to any written representations or objections referred to in
     sub-paragraph (c) of paragraph 3, and following such further consultation
     (if any) as the Authority may consider appropriate, the Authority may issue
     directions requiring the licensee to revise the relevant supply
     arrangements in such manner as may be specified in the directions, and the
     licensee shall forthwith comply with any such directions.

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<PAGE>

6.   The licensee shall give or send a copy of the relevant supply arrangements
     to the Authority.

7.   The licensee shall (subject to paragraph 8) give or send a copy of the
     relevant supply arrangements to any person requesting the same.

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

9.   In establishing, implementing and complying with the relevant supply
     arrangements the licensee shall not unduly discriminate against or prefer
     any one or any group of persons in favour of or as against any one other or
     any other group of persons.

10.  In this Condition:

     "relevant supply arrangements"          means arrangements which the
                                             Authority shall agree to be the
                                             most appropriate for securing the
                                             objective of eliminating barriers
                                             to the economic and efficient
                                             supply of electricity by relevant
                                             suppliers to relevant premises
                                             caused by relevant constraints
                                             (and, where the context admits, it
                                             means such arrangements as from
                                             time to time revised).

     "relevant                               supplier" means a person authorised
                                             to supply electricity to relevant
                                             premises by a licence granted under
                                             Section 6(1)(d) of the Act.

     "relevant premises"                     means premises situated within the
                                             licensee's distribution services
                                             area.

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<PAGE>

     "relevant constraints"                  means constraints arising from the
                                             costs of implementing technical
                                             arrangements for ensuring that the
                                             amount of electricity which is
                                             delivered by or for a relevant
                                             supplier into a system at any given
                                             time for the purpose of giving a
                                             supply to any relevant premises
                                             matches the level of demand of
                                             these relevant premises at that
                                             time.

     "system"                                means the distribution system of
                                             the licensee or any other
                                             distribution licensee or the
                                             transmission system of an affiliate
                                             or related undertaking of the
                                             licensee or any other transmission
                                             licensee.

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<PAGE>

Special Condition I: The Settlement Agreement for Scotland

1.   The licensee shall use its best endeavours, in conjunction and co-operation
     with Scottish Hydro-Electric Power Distribution Limited:

     (a)  to establish, or to procure the establishment by a third party of, a
          system (the "settlement system") which shall - to the extent required
          to facilitate the proper functioning of arrangements established in
          accordance with Special Condition H (Arrangements relating to supplies
          to premises within the licensee's distribution services area), or as
          otherwise agreed by the licensee and Scottish Hydro-Electric Power
          Distribution Limited- fulfil the objects set out at paragraph 2;

     (b)  subsequently to operate and maintain, or to procure the subsequent
          operation and maintenance by a third party of, the settlement system;

     (c)  to prepare (or procure the preparation of) a form of agreement, to be
          known as the Settlement Agreement for Scotland, which shall contain
          terms on which the settlement system will be made available and shall
          comply with the other requirements of this Condition; and

     (d)  to offer (or procure that a third party offers) to make available the
          settlement system, pursuant to and in accordance with the Settlement
          Agreement for Scotland, to any person applying for the use of such
          system who is an electricity supplier or portfolio generator or is
          otherwise an appropriate user of the system in accordance with the
          objects set out at paragraph 2.

2.   The objects set out at this paragraph are:

     (a)  to enable electricity suppliers, other than Scottish Power Energy
          Retail Limited and SSE Energy Supply Limited, to have their volumetric
          purchases of electricity from portfolio generators and from parties to
          the Balancing and Settlement Code correctly allocated to them;

     (b)  to enable electricity suppliers, other than Scottish Power Energy
          Retail Limited and SSE Energy Supply Limited, and portfolio
          generators, other than Scottish Power Generation Limited and SSE
          Generation Limited, to have their volumetric residual electricity
          requirements and provisions correctly allocated to them;

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<PAGE>

     (c)  to enable electricity suppliers to have their volumetric supplies of
          electricity to customers correctly allocated to them;

     (d)  to facilitate the calculation of accurate information regarding the
          aggregate amount of electricity provided to Scottish Power Energy
          Retail Limited by Scottish Power Generation Limited in its capacity as
          a portfolio generator and to SSE Energy Supply Limited by SSE
          Generation Limited in its capacity as a portfolio generator;

     (e)  to provide for such other matters ancillary to those specified in
          sub-paragraphs (a) to (d) as are or may be appropriate to facilitate
          competition in electricity supply in Scotland.

3.   The Settlement Agreement for Scotland shall provide - to the extent
     required to facilitate the proper functioning of arrangements established
     in accordance with Special Condition H (Arrangements relating to supplies
     to premises within the licensee's distribution services area), or as
     otherwise agreed by the licensee and Scottish Hydro-Electric Power
     Distribution Limited - for the fulfilment of the objects set out at
     paragraph 2, and shall also comprise provisions (which shall require to be
     approved in advance by the Authority):

     (a)  which relate to the level and method of recovery of charges payable by
          parties to the Settlement Agreement for Scotland in respect of the
          establishment, operation and maintenance of the settlement system,
          such charges to be set so as to reflect the Authority's estimate of
          the reasonable costs of efficiently establishing, operating and
          maintaining such a system;

     (b)  which provide for the variation of the Settlement Agreement for
          Scotland following consultation with the parties, or representatives
          of the parties, to that agreement; and

     (c)  by virtue of which the whole or (following consultation with
          representatives of all of the parties to the agreement) specified
          parts of the Settlement Agreement for Scotland shall not be capable of
          variation without the prior approval of the Authority.

4.   The licensee shall be a party to and shall comply with the provisions of
     the Settlement Agreement for Scotland.

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<PAGE>

5.   In this Condition:

     "portfolio generator"                   means any person who:

                                             (a) is authorised to generate
                                                 electricity and owns or
                                                 operates a generating station
                                                 situated in Scotland; or

                                             (b) is authorised to generate or
                                                 supply electricity and is
                                                 contracted to purchase the
                                                 output of one or more
                                                 generating stations situated in
                                                 Scotland.

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<PAGE>

                                   SCHEDULE 1

                                 SPECIFIED AREA

                                  Great Britain

If any part of the specified area is designated under a subsequent licence
granted under section 6(1)(e) of the Act, such part shall be excluded from the
specified area.

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<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 3 (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

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<PAGE>

               validity or effect of the financial penalty or before the
               proceedings relating to any such application are finally
               determined;

     (d) if the licensee fails to comply with:

         (i)   an order made by the Secretary of State under section 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 distribution of electricity to
         any of the premises within the area specified in Schedule 1 to this
         licence;

     (f) if the licensee has ceased to distribute 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.

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<PAGE>

2.   For the purposes of sub-paragraph 1(g)(i), section l23(l)(a) of the
     Insolvency Act 1986 shall have effect as if for "(Pounds)750" there was
     substituted "(Pounds)100,000,' or such higher figure as the Authority may
     from time to time determine by notice in writing to the licensee.

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.

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<PAGE>

                                   SCHEDULE 3

                           DISTRIBUTION 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
     O.S. 1:50 000 Second Series, Sheet 80
     O.S. 1:50 000 First Series, Sheets 74 + 75
     O.S. NY 36 NW
     O.S. NY 37 SW
     O.S. NY 37 SE
     O.S. NY 37 NE
     O.S. NY 47 SW
     O.S. NY 47 NW
     O.S. NY 48 SE
     O.S. NY 58 SW
     O.S. NY 58 NW
     O.S. NY 58 NE

                                      184

<PAGE>

                             CONSENTS AND DIRECTIONS

                                      185

<PAGE>

         Consent issued under Condition 20 of Scottish Power UK plc licence now
         Standard Condition 29 of this licence (01.04.92)

Our Ref: DIR/S/231

1 April 1992

Mr S R Bucknall
Regulation Manager
Scottish Power plc
Cathcart House
Spean Street
GLASGOW
G44 4BE

GENERATION, TRANSMISSION AND PUBLIC ELECTRICITY SUPPLY LICENCE

Part V: Condition 20

Disposal of Relevant Assets

The Director General of Electricity Supply ("the Director") directs that for the
purposes of Condition 20 of Part V of the Generation, Transmission and Public
Electricity Supply Licence (the "Licence") issued to Scottish Power plc (the
"Licensee") on 28 March 1990:

1.     The Licensee may dispose of a relevant asset without giving prior notice
       if:

       (i)   the relevant asset is obsolete or redundant;

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<PAGE>

       (ii)   the disposal is conditional upon possession of, and title to, the
              relevant asset remaining with the Licensee until such time as the
              relevant asset is obsolete or redundant; or

       (iii)  where the relevant asset comprises only land above or below which
              an electric line (but not electrical plant) of the licensee is
              situated, the disposal complies with paragraph 3.

2.     The consent in paragraph 1 shall not apply:

       (i)   in respect of a relevant asset if:-

             (a)   the value of that asset;

             (b)   the value of that asset and other related relevant assets
                   which are being or intended to be disposed of at the same
                   time; or

             (c)   the value of that asset and other relevant assets which
                   together formed a part of the Licensee's distribution system
                   and are being declared obsolete or redundant at the same time
                   or as part of the same operation,

             exceeds (pound)100,000 (as amended on 1 April each year by the
             percentage change in the Retail Price Index since 1 April 1990);

       (ii)  in respect of a relevant asset which is obsolete unless an
             appropriate replacement or alternative arrangement has been
             installed in the Licensee's distribution system, or is being or is
             intended to be installed in such a manner that continuity of the
             function of that system is achieved;

       (iii) where the disposal constitutes a sale and lease back arrangement;

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<PAGE>

       (iv)  where the relevant asset is intended to remain in operational use
             but not under the operational control of the Licensee and its value
             exceeds (pound)10,000 (as amended on 1 April each year by the
             percentage change in the Retail Price Index since 1 April 1990); or

       (v)   where the disposal would have the effect of reducing the ability of
             private electricity suppliers to compete with the Licensee by the
             use of its system.

3.     For the purposes of paragraph 1(iii) the disposal shall be on terms which
       will permit the electric line (including any replacement thereof) to
       remain in position for as long as it forms part of the licensee's
       distribution system under a wayleave, servitude or easement or other
       legal estate which in any such case includes sufficient rights of access
       in favour of the Licensee for the purpose of inspection, maintenance,
       replacement or repair as may reasonably be necessary to enable that line
       to remain in operation as part of the Licensee's distribution system.

4.     The Licensee may without giving prior notice dispose of any relevant
       asset to a wholly owned subsidiary ("the subsidiary") (as defined in the
       Companies Act 1985 as amended or re-enacted from time to time) of the
       Licensee if the Licensee has prior to the disposal delivered to the
       Director a document duly executed by the subsidiary and the Licensee (in
       a form capable of being enforced by the Director) undertaking to the
       Director that:-

       (i)   the subsidiary, in respect of the relevant asset, will comply with
             the provision of Conditions 20 of Part V and Condition 8 of Part II
             of the Licence as if it were the Licensee; and

       (ii)  the Licensee will not cause or permit the subsidiary to cease to be
             its wholly owned subsidiary without the prior written consent of
             the Director to the disposal of the relevant asset(s) owned by the
             subsidiary.

                                      188

<PAGE>

5.     The Licensee may without giving prior notice grant to a third party a
       servitude or easement, wayleave, licence or similar right over any land
       or property in which the Licensee has a legal or beneficial interest and
       which is a relevant asset, save where the grant of such a right would
       have a material adverse effect on the Licensee's ability to use or
       develop the land for the purposes of the Licensee's Distribution
       Business.

6.     The Licensee may without giving prior notice dispose of any relevant
       asset to another Licensee provided that:

       (i)   the Licensee to whom disposal is made is subject to the provisions
             of licence conditions equivalent to Conditions 20 of Part V and
             Condition 8 of Part II of the Licence;

       (ii)  the relevant asset will become a relevant asset under those
             equivalent licence conditions upon disposal;

       (iii) the Licensee will be able to fulfil the duties arising under or by
             virtue of the Licence after disposal of the relevant asset.

7.     The consent contained in paragraphs 1, 4, 5 and 6 relates only to
       Condition 20 of Part V of the Licence and shall not apply or be deemed to
       apply for the purpose of any consent or approval which the Director may
       or may be required to give in relation to a disposal under any other
       Condition or under the Act.

8.     In this direction:-

       "obsolete" means no longer performs its required function either in an
       efficient manner or at all through wear and tear, obsolescence, damage,
       failure, unsafe operation or advances in technology and includes
       equipment that the Licensee has decided to render obsolete as a result of
       inspection;

                                      189

<PAGE>

       "prior notice" means a notice to the Director under paragraph 2 of
       Condition 20 of Part V of the Licence;

       "redundant" means no longer required or necessary in order to enable the
       Licensee to comply with its obligations under the Act or the Licence in
       relation to the Licensee's distribution system provided that a relevant
       asset shall not be regarded as being redundant solely because it is in
       the ownership or control of a third party;

       "value" means the estimated price that could be expected to be received
       in the market at the time of disposal;

       and other words and phrases in this Direction which are defined for the
       purposes of the Licence shall have the same meaning as in the Licence.

       R N IRVINE
       Authorised on behalf of the
       Director General of Electricity Supply

                                      190

<PAGE>

       Direction issued under Condition 9 (of Part V) of the public electricity
       supply licence of Scottish Power UK plc now Standard Condition 39 of this
       licence (19.04.00)

      Direction given under Condition 9 of Part V of the public electricity
                    supply licence of Scottish Power UK plc

In accordance with paragraph 7 of Condition 9 of Part V of the public
electricity supply licence held by Scottish Power UK plc (the Licensee), the
Director hereby directs as follows.

The Licensee shall, to the extent that it is not already compliant with its
obligations as at 31/st/ March 2000, be relieved of such obligations for the
duration of this direction:

..      under paragraphs 2 to 4 of Condition 9 of Part V; and

..      under paragraphs 5 and 6 of Condition 9 of Part V

in each case subject to the terms and conditions set out below.

The Separation Plan

1.     The Licensee shall use all reasonable endeavours to comply with the terms
       of the Separation Plan.

2.     The Separation Plan shall be the document attached to this direction as
       Annex A, as it may be amended from time to time in accordance with
       paragraphs 7 and 8 below.

3.     Where the Separation Plan specifies a date by which an action is to be
       completed, the Licensee shall use all reasonable endeavours to complete
       the action by that date.

4.     Where the Separation Plan does not specify a date by which an action is
       to be completed, the Licensee shall use all reasonable endeavours to make
       progress towards the completion of the action as soon as is reasonably
       practicable.

                                      191

<PAGE>

5.     The Licensee shall report to the Director on its compliance with the
       terms of the Separation Plan at least once every 3 months during the
       currency of this direction.

6.     The Licensee shall review its compliance with the terms of the Separation
       Plan, together with the Director and in the light of its reports and of
       any reports of the Compliance Officer, at least once every 6 months
       during the currency of this direction.

7.     When the Licensee reviews its compliance under paragraph 6 above, or at
       any other time when there is a material change in the Licensee's
       circumstances, the Director may (giving his reasons) request that the
       Licensee review the terms of the Separation Plan with a view to its
       amendment. The Licensee shall, within 28 days of any such request,
       propose changes to the relevant part of the Plan. Any such changes shall
       require to be approved by the Director.

8.     The Licensee may at any time request the Director to approve changes to
       the Separation Plan.

Confidential Information

9.     Subject to paragraph 10 below, and save as provided for in the Separation
       Plan, the Licensee shall not engage for the purposes of the Distribution
       Business the same employees, agents, advisers, consultants or contractors
       as are engaged for the purposes of any other business of itself (or any
       affiliate or related undertaking).

10.    Paragraph 9 above shall not apply insofar as:

       (a)   in the case of agents, advisers, consultants or contractors engaged
             by the Distribution Business and also by any other business of the
             Licensee (or by any affiliate or related undertaking) ("the
             appointees"), the Licensee has used all reasonable endeavours to
             ensure that:

                                      192

<PAGE>

             (i)    the Distribution Business does not give any cross-subsidy to
                    or receive any cross-subsidy from that other business; and

             (ii)   the appointees cannot have access to confidential
                    information about the Distribution Business unless effective
                    arrangements are maintained in place which prevent the use
                    or disclosure of such information in any way which would
                    obtain a commercial advantage for any other business and
                    that such information is used only for the purpose of the
                    Distribution Business or any external distribution
                    activities of the Licensee;

             or

       (b)   in any particular case, the Licensee has obtained the prior written
             approval of the Director.

Duration and Interpretation

11.    The direction in respect of paragraph 2 to 4 of Condition 9 of Part V
       shall cease to have effect on 31 March 2002. The direction in respect of
       paragraph 5 to 6 of Condition 9 of Part V shall cease to have effect on
       31 March 2002, unless on or before that date the Licensee has
       demonstrated to the reasonable satisfaction of the Director that it is,
       and will remain, in compliance with the requirements of paragraph 7(c) of
       Condition 9 of Part V, in which event this direction shall cease to have
       effect on 31 March 2005.

12.    Words and phrases used in this direction shall, unless the contrary
       intention appears, have the same meaning as in the public electricity
       supply licence held by the Licensee.

PAM BARRETT
Authorised on behalf of the Director                               19 April 2000

                                      193

<PAGE>

Direction issued under Condition 9 (of Part V) of the public electricity supply
licence of Scottish Power UK plc now Standard Condition 39 of this licence and
Condition 12 of the public electricity supply licence of Manweb plc (19.04.00)

                            The Electricity Act 1989
                                Sections 6 and 7
       Public Electricity Supply Licences granted to Scottish Power UK plc
                                 and Manweb plc
                                    Direction
                                     of the
                     Director General of Electricity Supply

Whereas:-

(1)    Scottish Power UK plc ("SP") and Manweb plc ("Manweb") are the holders of
       public electricity supply licences granted under section 6(1)(c) of the
       Electricity Act 1989 (the SP and Manweb Licences respectively).

(2)    SP and Manweb are members of the same group of companies.

(3)    Condition 9 in Part V of the SP Licence and Condition 12 of the Manweb
       Licence (the "Conditions") require the Distribution Businesses of SP and
       of Manweb to have information separation and managerial and operational
       independence from other businesses of SP and of Manweb.

(4)    Paragraph (7) of each of the Conditions provides that the Director may
       issue a direction relieving each licence holder from certain of its
       obligations under the Conditions.

(5)    SP and Manweb each have requested the Director to issue a direction
       relieving them from the above mentioned obligations to the extent
       necessary for the Distribution Businesses of SP and Manweb to be managed
       and operated as a single business.

                                      194

<PAGE>

(6)    In response to the request the Director is satisfied that, having regard
       to the terms of paragraph (7) of the Conditions, he is entitled to issue
       directions in the manner hereinafter appearing.

NOW THEREFORE THE DIRECTOR ISSUES THE FOLLOWING DIRECTION -

1.     The terms "Distribution Business of SP" and "Distribution Business of
       Manweb" have the meaning given to the term "Distribution Business" in the
       SP and Manweb licences respectively.

2.     This Direction is issued for the purposes of the paragraphs numbered 7 in
       both Condition 9 in Part V of the SP licence and Condition 12 of the
       Manweb Licence.

3.     SP and Manweb are relieved of their obligations under paragraphs 1 to 6
       of Condition 9 in Part V of the SP licence and Condition 12 of the Manweb
       Licence respectively to such extent as is necessary for the management
       and operation of the Distribution Business of SP and the Distribution
       Business of Manweb to be managed and operated as a single business
       subject to the conditions that -

       (a)   in the case of paragraph 5 and sub-paragraph 6(b) of the
             Conditions, any arrangements for the use of or access to premises,
             systems, equipment, facilities, property or personnel by both the
             Distribution Businesses of SP and of Manweb;

             (i)    do not involve a cross-subsidy being given to the SP
                    Distribution Business from the Manweb Distribution Business
                    or received from the SP Distribution Business by the Manweb
                    Distribution Business;

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

                                      195

<PAGE>

             (iii)  do not restrict, distort or prevent competition in the
                    generation or supply of electricity; and

       (b)   nothing in this Direction shall relieve either SP of Manweb from
             any obligation in respect of any Separation Plan prepared for the
             purpose of or in relation to any other Direction given pursuant to
             paragraph 7 of either of the Conditions.

4.     This Direction shall cease to have effect on the earlier of

       (a)   notification by the Director to SP and to Manweb that he is
             satisfied that there has been a material failure to comply with the
             condition set out in paragraph 3 above,

       (b)   the Conditions ceasing to have effect, or

       (c)   the expiry of 28 days from the date of service on the Director by
             either SP or Manweb of a request for the revocation of the
             Direction.

Pam Barrett
Authorised in that behalf by
the Director General of
Electricity Supply

Dated 19.4.2000

                                      196

<PAGE>

         Direction issued under Condition 9 (of Part V) of the public
         electricity supply licence of Scottish Power UK plc now Standard
         Condition 39 of this licence; Condition 12 of the public electricity
         supply licence of Manweb plc and Condition 8A (of Part IV) of the
         Electricity Transmission Licence granted to Scottish Power UK plc
         (28.07.00)

                            The Electricity Act 1989
                                Sections 6 and 7
       Electricity Transmission Licence granted to Scottish Power (UK) plc
      Public Electricity Supply Licences granted to Scottish Power (UK) plc
                                 and Manweb plc
                                    Direction
                                     of the
                     Director General of Electricity Supply

Whereas -

(1)    Scottish Power UK plc ("SP") is the holder of a transmission licence
       ("the Transmission Licence") granted under section 6(1)(b) of the
       Electricity Act 1989 ("the Act").

(2)    SP and Manweb plc ("Manweb") are the holders of public electricity supply
       licences granted under section 6(1)(c) of the Act ("the SP PES Licence"
       and "the Manweb PES Licence" respectively).

(3)    SP and Manweb are members of the same group of companies.

(4)    Condition 8 in Part IV of the Transmission Licence ("Condition 8")
       prohibits SP from disclosing confidential information.

(5)    Condition 8A in Part IV of the Transmission Licence ("Condition 8A")
       requires SP to maintain the full managerial and operational independence
       of the Transmission Business of SP from other businesses of SP and of its
       affiliates and related undertakings.

                                      197

<PAGE>

(6)      Paragraph (9) of Condition 8A provides that the Director in certain
         circumstances may issue a direction relieving SP of its obligations
         under Condition 8 and under paragraphs 1(a), 2 and 8 of Condition 8A to
         such extent and subject to such terms and conditions as he may specify
         in that direction.

(7)      Condition 9 in Part V of the SP PES Licence ("Condition 9") and
         Condition 12 of the Manweb PES Licence ("Condition 12") require the
         Distribution Businesses of SP and of Manweb to have information
         separation and managerial and operational independence from other
         businesses of SP and of Manweb.

(8)      Paragraph (7) of each of the Condition 9 and Condition 12 provides that
         the Director in certain circumstances may issue a direction relieving
         SP and Manweb from certain of their obligations under the Conditions.

(9)      SP and Manweb have requested the Director to issue directions relieving
         them from their above mentioned obligations to the extent necessary for
         the Transmission and Distribution Businesses of SP to be managed and
         operated as a single business with the Distribution Business of Manweb.

(10)     In response to the request the Director is satisfied that, having
         regard to the terms of paragraph (9) of Condition 8A and to paragraph
         (7) of each of Condition 9 and Condition 12, he is entitled to issue a
         direction in the manner hereinafter appearing.

NOW THEREFORE THE DIRECTOR ISSUES THE FOLLOWING DIRECTION -

1.       Except where the context requires otherwise, any terms used in this
         direction that are defined in Part 1 of the composite document setting
         out the generation and public electricity supply licences of SP and the
         Transmission Licence shall have the meaning given to them in that Part.

                                      198

<PAGE>

2.     This direction is issued for the purposes of paragraph (9) of Condition
       8A and of paragraph (7) of each of Condition 9 and Condition 12.

3.     SP is relieved of its obligations under Condition 8 and paragraphs 1(a),
       2 and 8 of Condition 8A and SP and Manweb are relieved of their
       obligations under paragraphs 1 to 6 of Condition 9 and Condition 12
       respectively to such extent as is necessary for the Transmission and
       Distribution Businesses of SP to be managed and operated as a single
       business with the Distribution Business of Manweb subject to the
       conditions that-

       (a)   any arrangements for the use of or access to premises, systems,
             equipment, facilities, property or personnel by the Transmission
             and Distribution Businesses of SP and the Distribution Businesses
             of Manweb:

             (i)    do not involve a cross-subsidy being given by any one of the
                    Transmission or Distribution Businesses of SP or the Manweb
                    Distribution Business to any other of those businesses;

             (ii)   obtain for the Transmission and Distribution Businesses of
                    SP and the Manweb Distribution Business, in the most
                    efficient and economical manner possible, the use of the
                    relevant premises, systems, equipment, facilities, property
                    or personnel; and

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

       (b)   nothing in this direction shall relieve either SP or Manweb from
             any obligation in respect of any Separation Plan prepared for the
             purpose of any of the conditions of the SP and Manweb PES Licences,
             and

       (c)   nothing in this direction shall relieve either SP or Manweb from
             any obligation imposed on them by Directive 96/92/EC.

                                      199

<PAGE>

4.     This direction shall cease to have effect on the earlier of-

       (a)   notification by the Director to SP and to Manweb that he is
             satisfied that there has been a material failure to comply with the
             condition set out in paragraph 3 above,

       (b)   Condition 8, Condition 8A, Condition 9 or Condition 12 ceasing to
             have effect, or

       (c)   the expiry of 28 days from the date of service on the Director by
             either SP or Manweb of a request for the revocation of the
             direction.

       The Official Seal of the Director General
       of Electricity Supply hereunto affixed is
       authenticated by

       Charles Coulthard
       Authorised in that behalf by the Director
       General of Electricity Supply

       Date 28 July 2000

                                       200

<PAGE>

         Consent issued under Standard Condition 47 of this licence (01.10.01)

         To SP Distribution Ltd ('the Licensee')
         1 Atlantic Quay
         Glasgow
         G2 8SP

         Consent under Distribution Standard Licence Condition 47

         1.      This consent is issued by the Gas and Electricity Markets
                 Authority ('the Authority') to the Licensee under paragraph 1
                 of the above condition ('the Condition').

         2.      The Authority hereby consents to the Licensee being a party to
                 a group registration scheme with HM Customs & Excise for value
                 added tax ('VAT') purposes, subject to the following condition,
                 namely that throughout the period during which such
                 registration subsists, the Licensee shall have the benefit of a
                 legally enforceable undertaking and indemnity from the
                 controlling member of the VAT group in respect of which the
                 registration has been made whereby the Licensee is kept
                 indemnified from any liability to VAT (including interest,
                 penalties and costs) which does not arise out of the authorised
                 business of the Licensee under the Licence but which is claimed
                 against the Licensee as a result of such group registration.

         3.      This consent shall have effect on and from the date specified
                 below. It shall remain in effect until the Authority shall
                 withdraw it or replace it by a further consent made under the
                 Condition.

                                      201

<PAGE>

         4.      Words and expressions used in this consent have the meaning
                 attributed to them in the said Standard Licence Conditions.

         Dated: 1 October 2001

         Signed

         Charles Coulthard
         Duly authorised in that behalf by the Authority

                                      202

<PAGE>

           Consent issued under Standard Condition 47 of this licence
                          and Annex thereto (01.10.01)

ELECTRICITY DISTRIBUTION LICENCE
STANDARD LICENCE CONDITIONS

To SP Distribution Limited ('the Licensee')
1 Atlantic Quay
Glasgow
G2 8SP

Consent under Standard Distribution Licence Condition 47 (Indebtedness)

1.   This consent is issued by the Gas and Electricity Markets Authority ('the
     Authority') to the Licensee under paragraph 1 of the above condition ('the
     Condition').

2.   The Authority refers to the application from Scottish Power UK plc ('SPUK')
     to the Authority dated 9 July (and forwarded by fax on 10 July 2001) ('the
     Application'), and hereby consents to the Licensee giving those guarantees
     given or to be given in support of or in relation to the borrowings which
     are referred to or set out in Annex A to the Application, subject to the
     conditions set out in the Annex to this consent.

3.   This consent is given subject to the further condition that no change shall
     be made to the financial arrangements set out in the Application, or in the
     parties to them, without the prior written consent of the Authority.

4.   This consent shall have effect on and from the date specified below. It
     shall remain in effect until the Authority shall revoke or replace it by a
     further consent pursuant to condition 11 in the Annex to this consent.

                                      203

<PAGE>

5.   Save where the context otherwise requires, words and expressions used in
     this consent have the meaning attributed to them in the said Standard
     Licence Conditions.

Dated 1 October 2001

Signed

Charles Coulthard

duly authorised in that behalf by the Authority

                                      204

<PAGE>

SP Distribution Limited ('the Licensee')

Annex to Consent issued under Standard Licence Condition 47 (Indebtedness) in
respect of the Application of the Licensee ('the Application') dated 10 July
2001

The following conditions, in addition to those contained in its distribution
licence, are applicable to the Licensee:

1.   any guarantee to be provided by the Licensee pursuant to this consent (each
     an "Upstream Guarantee") is to be in favour of the lender(s) or, as the
     case may be, contract counter-parties from time to time (or where
     applicable their nominee or agent as trustee for their interests) under one
     or more of the borrowing arrangements detailed in Annex A to the
     Application and directly related derivative contracts;

2.   Upstream guarantees may extend only to amounts due and payable from time to
     time by Scottish Power UK plc ("SPUK") (the "guaranteed indebtedness")
     under, and in accordance with the terms of, the bank facility, bonds, and
     notes existing on the date on which SPUK's Transfer Scheme under Schedule 7
     to the Utilities Act 2000 becomes effective (the "transfer date"), and to
     amounts becoming due and payable under, and in accordance with the terms
     of, derivative contracts from time to time entered into solely for the
     purpose of hedging interest rate or currency exposures arising under the
     guaranteed indebtedness ("directly related derivative contracts");

3.   Upstream Guarantees may not: (a) extend to amounts becoming due and payable
     under any extension, renewal or replacement of the bonds and notes other
     than in respect of amounts refinanced on the same terms as those existing
     as at the transfer date or upon terms more beneficial to the borrower (save
     that in no case may the stated maturity of the replacement instrument be
     later than the stated maturity of the instrument replaced); nor (b) may
     they cover amounts becoming due and payable under the bank facility if the
     terms and conditions of such facility are varied after the transfer date in
     any material

                                      205

<PAGE>

     respect so as to increase the amounts that may become payable under the
     bank facility or to extend its term or otherwise to impose additional or
     more onerous financial obligations on SPUK, nor (c) may they cover any
     other liabilities whatsoever (unless and to the extent incurred
     consistently with the conditions of the Licensee's distribution licence or
     any consent validly issued thereunder);

4.   for so long as any Upstream Guarantee remains outstanding, the Licensee is
     to be fully and effectively indemnified, in a form satisfactory to Ofgem,
     against any and all costs, expenses, damages and losses it may incur or
     suffer as a result of any call made, or the performance of any obligation,
     under an Upstream Guarantee. Such indemnities are to be given by
     ScottishPower Investments Limited ("Investments"), may not be limited in
     time or amount, and shall comply with the requirements of paragraphs 5 and
     6 below;

5.   it shall be a term of the indemnities that Investments has, for so long as
     the Upstream Guarantees remain in force, an investment grade corporate
     credit rating from either Standard & Poor's Ratings Group or Moody's
     Investors Services, Inc. In the event that such a rating is not held,
     Investments shall take such steps as the Licensee may require in accordance
     with a direction of the Authority, acting reasonably after consultation
     with the Licensee, to secure that the value of the indemnities to the
     Licensee is not materially reduced or, if this is not practicable, that
     additional or alternative protections are put in place so as to leave the
     Licensee in a position not materially less favourable to it than that which
     would have obtained had such rating been held;

6.   it shall be a further term of the indemnities that, without prejudice to
     the requirement in paragraph 5 above, Investments undertakes not without
     the prior consent of the Authority notified to the Licensee in writing to
     dispose of or refinance the whole or any major part of its business or
     assets, or of the business or assets of Manweb plc, unless the proceeds of
     such sale or refinancing are applied to reduce pro tanto the aggregate
     amount of the obligations covered by Upstream Guarantees then outstanding
     or there are put in place alternative or additional indemnity arrangements
     satisfactory to the Authority, acting reasonably;

                                      206

<PAGE>

7.   for so long as any Upstream Guarantee remains outstanding, the Licensee
     shall, as soon as reasonably practicable, use all reasonable endeavours to
     obtain release of its obligations thereunder;

8.   before any Upstream Guarantee may be entered into, the Licensee shall
     obtain from SPUK legally enforceable undertakings to the following effect:

     (1) until the occurrence of the Relevant Event (as defined below), SPUK
         shall not conduct any business nor carry on any activity provided,
         however, that this undertaking shall not prevent SPUK from

         a)    continuing to conduct any business or carry on any activity which
               it was conducting on the transfer date (or which arises in the
               ordinary course of any such business or activity) but (without
               prejudice to the provisions of sub-paragraphs b), c) and d)
               below) by the date twelve months from the transfer date (or such
               later date as the Authority may specify to the Licensee in
               writing) SPUK shall transfer to an affiliate or otherwise cease
               to conduct or carry on any such business or activity together (so
               far as reasonably practicable) with all rights and/or obligations
               of SPUK arising in respect of contracts or other arrangements
               entered into by SPUK on or prior to such twelve month anniversary
               which survive such twelve month anniversary. SPUK shall procure
               an indemnity in respect of any such rights and obligations which
               are not so transferred in form satisfactory to the Authority from
               such person or persons as SPUK shall nominate (being in any case
               not a subsidiary of SPUK and having and agreeing, for so long as
               any Upstream Guarantee remains outstanding, to maintain an
               investment grade corporate credit rating) or such other person or
               persons as the Authority, acting reasonably, shall approve;

                                      207

<PAGE>

     b)  holding or acquiring shares or other securities in, or making or
         receiving loans and advances to or from, any body corporate as, or
         performing the supervisory or management functions of, an investor, nor
         performing the supervisory or management functions of a holding company
         in respect of any subsidiary (including, for the avoidance of doubt,
         the provision of customary corporate services to subsidiaries or
         holding companies within SPUK's group, including those transport,
         learning and procurement activities and services currently provided by
         SPUK);

     c)  conducting any business or carrying on any activity to which the
         Authority has given its consent in writing (such consent not to be
         unreasonably withheld or delayed); or

     d)  conducting any other business or carrying on any other activity which,
         were it carried on by the Licensee, would be de minimis business (as
         defined in Standard Condition 43 of the Licensee's distribution licence
         but substituting respectively for the turnover and for the aggregate of
         share capital, share premium and reserves of the Licensee the
         equivalent figures for SPUK as shown (in the case of turnover) in its
         consolidated financial statements or (in the case of share capital and
         reserves) its unconsolidated financial statements, all at the relevant
         date);

(2)  until the occurrence of the Relevant Event, SPUK shall not enter into nor
     permit or suffer to exist any guarantee of any obligation nor enter into
     nor permit or suffer to subsist any agreement to which it is a party
     containing a cross-default obligation (as defined in Standard Condition 47
     of the Licensee's distribution licence) provided, however, that this
     undertaking shall not prevent SPUK from:

     a)  (without prejudice to the provisions of sub-paragraphs b) or c) of this
         paragraph 8(2)) permitting or suffering to exist any guarantee that was
         outstanding on the transfer date or entering into further guarantees in

                                      208

<PAGE>

         respect of similar obligations during the period commencing on the
         transfer date and ending twelve months thereafter but by the end of
         such period except with the consent of the Authority previously
         notified to the Licensee in writing, SPUK must (so far as reasonably
         practicable) have obtained unconditional release from or otherwise
         ceased to have any continuing liability whatsoever under such
         guarantees. SPUK shall procure an indemnity for any such liability
         which survives the end of such period in a form reasonably satisfactory
         to the Authority from such person or persons as SPUK shall nominate
         (being in any case not a subsidiary of SPUK and having and agreeing for
         so long as any Upstream Guarantee remains outstanding to maintain an
         investment grade corporate credit rating) or such other person or
         persons as the Authority, acting reasonably, shall approve;

     b)  (without prejudice to the provisions of sub-paragraphs a) or c) of this
         paragraph 8(2)), permitting or suffering to subsist any agreement
         subsisting at the transfer date provided that any cross-default
         obligation therein contained is not referable to the default of any
         person that is not a wholly-owned subsidiary of SPUK nor (save during
         the period of twelve consecutive months commencing on the transfer
         date) to the default of ScottishPower Energy Trading Limited ("SPETL")
         or of any other person carrying on analogous activities to those
         carried on by SPETL in succession to SPUK or otherwise;

     c)  (without prejudice to the provisions of sub-paragraphs a) or b) of this
         paragraph 8(2)), entering into or permitting or suffering to exist any
         agreement containing a cross-default obligation referable solely to a
         default of the Licensee, SP Transmission Limited or Manweb plc;

(3)  until the occurrence of the Relevant Event, SPUK acknowledges that it
     should have a corporate credit rating no lower than either BBB from
     Standard & Poor's
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     ratings Group or Baa2 from Moody's Investors Services, Inc. and shall
     ensure that the aggregate gross principal amount outstanding from time to
     time in respect of indebtedness for money borrowed by it or amounts in the
     nature of such indebtedness shall not exceed(pound)5 billion. If at any
     relevant time SPUK does not hold such credit ratings or exceed such limit
     it undertakes to procure that the obligations of the Licensee under all
     Upstream Guarantees then outstanding are fully and effectively indemnified
     by (i) an unrelated third party (such as a bank or credit insurer), or (ii)
     any holding company of SPUK (including one as is envisaged in terms of
     paragraph 12 below), or (iii) subject to approval of the Authority, a
     subsidiary or holding company of, or a subsidiary of a holding company of,
     SPUK, in each case having and at all times maintaining an investment grade
     corporate credit rating;

(4)  until the occurrence of the Relevant Event, SPUK shall not without the
     prior consent of the Authority notified to the Licensee in writing dispose
     of or refinance the whole or any major part of its business or assets, or
     of the business or assets of any of its subsidiaries, unless the proceeds
     of such sale or refinancing are applied to reduce pro tanto the aggregate
     amount of the obligations covered by Upstream Guarantees then outstanding
     or there are put in place alternative or additional indemnity arrangements
     satisfactory to Ofgem acting reasonably;

(5)  for the purposes of these undertakings, the Relevant Event shall be the
     earlier to occur of (a) the first date by which all Upstream Guarantees
     have been released or the Licensee has otherwise ceased to have any
     continuing liability thereunder whatsoever, and (b) the date of publication
     of the annual regulatory accounts of the Licensee and of SP Transmission
     Limited required by or under their respective licences issued pursuant to
     the Electricity Act 1989 (as amended) (or, if each is not published on the
     same day, the later of their respective dates of publication to occur)
     which first show the total combined indebtedness of the Licensee and of SP
     Transmission Limited to be below the level that is equivalent to 78% of
     their combined Regulatory Asset Values (as shown in such accounts or,

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         if not so shown, the equivalent figures at the date to which such
         accounts are drawn up as certified by the relevant auditors). For these
         purposes, indebtedness shall include the gross amount of all
         liabilities for money borrowed by each of the Licensee and SP
         Distribution Limited and, in addition, the maximum total liability
         under all guarantees of indebtedness (including Upstream Guarantees)
         entered into by either of them and then outstanding (taking into
         account contributions to which either of them may be entitled as
         against the other in respect of liabilities assumed jointly or jointly
         and severally), but shall exclude liabilities for money borrowed from
         SPUK if and to the extent such liabilities are effectively subordinated
         to all other claims that might be validly brought against the Licensee
         or, as the case may be, SP Distribution Limited;

     (6) for so long as any Upstream Guarantee remains outstanding, SPUK shall,
         as soon as reasonably practicable, use its reasonable endeavours to
         obtain release of its obligations thereunder. For the avoidance of
         doubt, this undertaking shall not require SPUK to repay any amount or
         replace any facility before the due date for payment or termination
         thereof nor agree to any variation in the terms and conditions of any
         indebtedness covered by an Upstream Guarantee that is prejudicial to
         SPUK;

9.   the Licensee shall provide satisfactory evidence to the Authority that it
     has obtained the requisite indemnities and undertakings, including
     certified true copies of the indemnities and Deed of Covenant (or other
     instrument) setting forth the undertakings and the Licensee shall procure
     that all such indemnities and undertakings are legally enforceable;

10.  the Licensee shall use all reasonable endeavours to enforce its rights
     under the indemnities and the undertakings, and shall comply with any
     reasonable directions from the Authority in relation thereto;

11.  the Authority reserves the right to, and if so requested by the Licensee
     shall, review this consent in the light of any material change of
     circumstance, and, if appropriate (and

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     having due regard to the nature and extent of any obligations undertaken by
     the Licensee on the basis of this consent), amend or revoke it;

12.  it is acknowledged and agreed that none of the undertakings or restrictions
     hereby required of SPUK shall in any way prevent or restrict any such
     actions being undertaken by any holding company from time to time of SPUK
     (provided SPUK is not thereby prevented from fulfilling its undertakings to
     the Licensee);

13.  in determining the price control limits applicable to the Licensee under
     its Distribution licence, the Authority shall be entitled to disregard any
     costs incurred by the Licensee in relation to any Upstream Guarantee or to
     the indemnities or undertakings or any of them (including legal and other
     costs relating to any proceedings whether taken by or against the
     Licensee).

27.9.01

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<PAGE>

  General Consent issued under Standard Condition 29 of this licence (01.10.01)

THE ELECTRICITY ACT 1989 (AS AMENDED)

ELECTRICITY DISTRIBUTION LICENCES

GENERAL CONSENT ISSUED PURSUANT TO STANDARD LICENCE CONDITION 29 (DISPOSAL OF
RELEVANT ASSETS) OF THE ELECTRICITY DISTRIBUTION LICENCE

This direction is issued by the Gas and Electricity Markets Authority ('the
Authority') under paragraph 3(a)(i) of Condition 29 (Disposal of relevant
assets) in the standard licence conditions of the electricity distribution
licences granted or treated as granted under section 6(1)(c) of the Electricity
Act 1989 (as amended) ('the Act').

The provisions of this direction are applicable to, and available for, every
holder ('the licensee') of such an electricity distribution licence ('the
licence'). The direction takes effect on and from the date specified below.

The Authority hereby directs that the licensee may enter into an agreement or
arrangement whereby operational control of a relevant asset or relevant assets
ceases to be under the sole management of the licensee without giving prior
notice in any case where the agreement or arrangement (for these purposes called
'the transaction') complies in all respects with the terms set out below:

1.   The transaction shall be consistent with all applicable conditions
     contained in the licence.

2.   Any other consent or clearance required under statute or under the licence
     in respect of the transaction shall have been obtained.

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3.   The transaction shall provide for the supply of a service or the provision
     of a resource which relates to a relevant asset or relevant assets by a
     counter-party ('the resource provider') on behalf of the licensee.

4.   The resource provider shall be and remain an affiliate of the licensee but
     shall not be a holding company of the licensee.

5.   The transaction shall be effected by contract made between the licensee and
     the resource provider; such contract shall be binding and enforceable both
     in Great Britain and in any other jurisdiction in which the resource
     provider has its principal place of business; and the contract shall
     contain provisions to the following effect:

     (a) no force majeure or equivalent provision in the contract shall excuse
         any failure on the part of the licensee, or the resource provider
         acting on its behalf, to comply with the licensee's statutory or
         licence obligations unless (and to the extent that) the event or
         circumstance in question would have excused the licensee under the Act
         or the licence if it had itself performed the service or provided the
         resource;

     (b) responsibility for performance of all obligations to which the contract
         relates shall be clearly specified, subject to the overriding
         requirement that the licensee remains ultimately responsible for all
         statutory and licence obligations applicable to the licensee's
         business;

     (c) the resource provider shall covenant with the licensee to refrain from
         any action which would then be likely to cause the licensee to breach
         any of its licence or statutory obligations;

     (d) the resource provider shall disclose to the licensee the basis or bases
         of all charges for services provided or supplies made pursuant to the
         contract, together with sufficient information and analysis to support
         the basis for the calculation of the

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<PAGE>

         total sum payable by the licensee; and the resource provider shall not
         raise any objection to, or seek to prevent, disclosure of such
         information to the Authority;

     (e) the licensee shall be free, at any time after the fifth anniversary of
         the commencement of the contract, without penalty and on reasonable
         notice, to resource any service or supply from an alternative source of
         its choosing if more favourable terms become available; and

     (f) the resource provider shall be under obligation to provide to the
         licensee any information within its possession or control which the
         licensee may from time to time require in order to enable the licensee:

         (i)   to comply with any request by the Authority for information or
               reports pursuant to Condition 24 (Provisions of Information to
               the Authority) of the licence (subject to paragraphs 5 and 7 of
               that condition);

         (ii)  to assess the performance or position of the resource provider or
               any of its subsidiaries with respect to the provision of any
               service or supply made to the licensee; or

         (iii) to monitor adherence by the resource provider to the terms of the
               contract.

6.   (1) The licensee  shall procure from that company or other  corporate body
         which is from time to time the ultimate holding company of the licensee
         and the resource provider, or from such other corporate body as the
         Authority may from time to time agree, acknowledgements and legally
         enforceable undertakings in favour of the licensee in the form annexed
         to this direction and headed Form A. Such acknowledgements and
         undertakings shall be obtained within seven days of the company or
         other corporate body in question ('the covenantor') becoming such
         ultimate holding company and shall remain in force for so long as the
         covenantor remains such ultimate holding company.

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(2)  For the purpose of this paragraph "ultimate holding company" means the
     company or other corporate body which is the holding company of both the
     licensee and the resource provider and is not itself a subsidiary of
     another company or corporate body.

(3)  The licensee shall:

     (a) deliver to the Authority evidence (including a copy of the
         acknowledgements and undertakings) that the licensee has complied with
         its obligation to procure acknowledgements and undertakings pursuant to
         this paragraph;

     (b) inform the Authority immediately in writing if the directors of the
         licensee become aware that any such undertaking has ceased to be
         legally enforceable or that its terms have been breached; and

     (c) comply with any direction from the Authority to enforce any such
         undertaking.

(4)  The licensee shall not, save with the consent in writing of the Authority,
     obtain or continue to obtain the service or resource in question from the
     resource provider at any time when:

     (a) the specified acknowledgements and undertakings are not in place; or

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

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

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7.   The consent given by this direction applies only for the purpose of the
     said Condition 29 and shall not apply or be deemed to apply for any other
     purpose.

8.   Words or phrases in this direction which are defined for the purposes of
     the licence shall have the same meaning as in the licence.

Dated 1 October 2001

Signed __________________________

Richard Ramsay

duly authorised by the Authority in that behalf

                                      217

<PAGE>

ANNEXURE TO THE DIRECTION BY THE GAS AND ELECTRICITY MARKETS AUTHORITY MADE
PURSUANT TO STANDARD CONDITION 29 IN THE ELECTRICITY DISTRIBUTION LICENCE ON THE
2001

Form A

Acknowledgements and Undertakings

Acknowledgements

The covenantor acknowledges to the licensee:

(1)  that it is in the best interests of the covenantor that the licensee
     complies with its statutory and licence obligations; and

(2)  that all matters relating to the enforcement of the licensee's rights under
     the relevant contract(s) shall be reserved to the directors of the licensee
     without regard to other interests.

Undertakings

The covenantor undertakes to the licensee:

(1)  to procure that the resource provider will:

     (a) refrain from any action which would then be likely to cause the
         licensee to breach any of its statutory or licence obligations;

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<PAGE>

     (b) provide the licensee with any information within its possession or
         control which the licensee may from time to time require in order to
         enable the licensee:

         -  to comply with any request by the Authority for information or
            reports pursuant to Condition 24 (Provision of Information to the
            Authority) of the licence (subject to paragraphs 5 and 7 of that
            condition);

         -  To assess the performance or position of the resource provider or
            any of its subsidiaries with respect to the provision of any service
            or supply made to the licensee; or

         -  to monitor adherence by the resource provider to the terms of the
            contract;

     (a) not unduly discriminate in favour of, or against, the licensee in the
         provision to it of supplies or services; and

     (b) not take any action which would constitute disposal of, or
         relinquishment of operational control over, any asset to which
         Condition 29 of the licence applies save in accordance with the
         requirements of that condition and any consent issued by the Authority
         under it (other than to the licensee upon the expiry or termination of
         any relevant contract in accordance with its terms);

(1)  to procure that any contract between the licensee and the resource provider
     shall comply with the requirements set out in the direction to which this
     form is annexed and shall not be amended so as to cease in any way to be
     compliant with those requirements; and

(2)  to procure that the resource provider has and maintains resources and
     operating capacity at a level sufficient to ensure efficient performance of
     the contract and the efficient discharge of the relevant obligations of the
     licensee.

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<PAGE>

Consent issued under Standard Condition 47 of this licence (20.11.01)

The Company Secretary
SP Distribution Limited
('the Licensee')
1 Atlantic Quay
Glasgow G2 8SP                             Our Ref: CC/jh.0020
                                           Direct Dial: 0141 331 1772
                                           Email: charles.coulthard@ofgem.gov.uk
                                           20 November 2001

Dear Sir,

ELECTRICITY DISTRIBUTION LICENCE
STANDARD LICENCE CONDITIONS

Consent under Standard Licence Condition 47 (Indebtedness)

1.   This consent is issued by the Gas and Electricity Markets Authority ('the
     Authority') to the Licensee under paragraph 1 of the above condition ('the
     condition').

2.   The Authority refers to the application from Scottish Power UK plc ('SPUK')
     to the Authority dated 9 July (and forwarded by fax on 10 July) 2001 ('the
     Application'), and to the consent ('the Principal Consent') given by the
     Authority, subject to the conditions specified therein, on 1 October 2001
     to certain guarantees by the Licensee pursuant to the Application.

3.   It has been brought to the Authority's notice that the borrowing
     arrangements specified in the Application contain certain cross-default
     obligations affecting SPUK pursuant to the Facility Agreement dated 5 June
     2001 made between SPUK, Royal Bank of Scotland (as

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<PAGE>

     agent) and Royal Bank of Scotland and others (as lenders) (the 'RBoS
     Facility'), the effect of which would be, in the absence of consent thereto
     by the Authority, to constitute a breach of Standard Licence Condition 47
     in the Licensee's distribution licence notwithstanding the issue to the
     Licensee of the Principal Consent.

4.   The Authority hereby consents to the inclusion in the borrowing
     arrangements authorised by the Principal Consent of the cross-default
     obligations referred to in paragraph 3 above, subject to the two additional
     conditions set out in paragraphs 5 and 6 below (in addition to those
     imposed under the Principal Consent), and subject to the modification of
     the Principal Consent, in its application to such cross-default
     obligations, specified in paragraph 7 below.

5.   Within seven days of the date of this consent, the Licensee shall have
     obtained from SPUK (in addition to the undertakings required under the
     Principal Consent) enforceable undertakings in favour of the Licensee to
     the effect that:

     (a) until the occurrence of a Relevant Event or until the date on which the
         RBoS Facility determines or is renegotiated on a basis satisfactory to
         the Authority (whichever is the earlier to occur), and for so long as
         Thus plc ('Thus') is a Subsidiary of SPUK (within the meaning of the
         RBoS Facility), SPUK shall:

         (i)   procure that Thus does not at any time have any Borrowings
               (within the meaning of the RBoS Facility) to which Clause 19.5 of
               the RBoS Facility applies, save Borrowings (as so defined) from
               SPUK;

         (ii)  not make any demand on or exercise any right (other than the
               exercise of any right to withhold the making of further advances
               or to extend further credit to Thus) against Thus which would, or
               would then be likely to, cause an Event of Default (within the
               meaning of Clause 19 of the RBoS Facility) to occur; and

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<PAGE>

         (iii) undertake that, if on the date which is twelve months after the
               date of this consent Thus remains a Principal Subsidiary of SPUK
               (within the meaning of the RBoS Facility) SPUK shall forthwith
               transfer to an affiliate or related undertaking which is not and
               does not thereafter become a subsidiary of SPUK or otherwise
               dispose of its investment in Thus in such manner as to ensure
               that Thus ceases forthwith to be, and does not again become, such
               a Principal Subsidiary; and

     (b) for so long as SPUK is a party to any agreement containing a
         cross-default obligation permitted by condition 8(2)(b) in the Annex to
         the Principal Consent (as modified by this consent) SPUK shall procure
         that, in respect of all its subsidiaries other than Thus, SPUK holds a
         majority of the voting rights and has the power to appoint or remove a
         majority of the directors of those subsidiaries.

6.   Within seven days of the date of this consent the Licensee shall have
     obtained from Scottish Power plc ('Holdco') enforceable undertakings in
     favour of the Licensee to the effect that until the occurrence of a
     Relevant Event or until the date on which the RBoS Facility determines or
     is re-negotiated on a basis satisfactory to the Authority (whichever is the
     earlier to occur), Holdco shall not:

     (a) incur or permit or suffer to subsist any Borrowings (within the meaning
         of the RBoS Facility) to which Clause 19.5 of the RBoS Facility applies
         save that for a period of twelve consecutive months commencing on the
         Transfer Date Holdco may permit or suffer to subsist any Borrowings to
         which such clause applies as were outstanding on the Transfer Date (but
         no others); nor

     (b) enter into a Guarantor Accession Agreement or otherwise become an
         Obligor (within the meaning of the RBoS Facility).

7.   Under paragraph 8(2) in the Annex to the Principal Consent the Licensee is
     under obligation to obtain an undertaking from SPUK not to enter into nor
     permit or suffer to

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     subsist as any agreement containing a cross default obligation (as there
     defined), save that under sub-paragraph 8(2)(b) SPUK may permit or suffer
     to subsist certain agreements provided that any cross-default obligation
     therein contained is not referable to the default of any person that is not
     a wholly-owned subsidiary of SPUK. Notwithstanding this provision, SPUK
     shall not be in breach of its obligations under the said paragraph 8(2) if
     the default in relation in relation to which the cross-default obligation
     is referable is that of a subsidiary of SPUK which is not a wholly-owned
     subsidiary of SPUK, so long as SPUK is and remains in compliance with the
     provisions of paragraph 5(b) of this consent in relation to the subsidiary
     in question.

8.   The Licensee shall comply with the requirements of paragraphs 9 and 10 in
     the Annex to the Principal Consent in relation to the undertakings required
     by this consent.

9.   This consent shall be deemed to have come into effect on and from the 1
     October 2001. It shall remain in effect for so long as the Principal
     Consent continues in force.

10.  Save where the context otherwise requires or this consent specifies
     otherwise, words and expression used in this consent have the meaning
     attributed to them in the Principal Consent.

Dated             November 2001

Signed

duly authorised in that behalf by the Authority

DLF 6.11.01

                                      223

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