SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

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

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

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

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

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

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

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

A description of the registrant's common stock follows:

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

Table of Contents
PART I PAGE

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

PART II

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

PART III

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

PART IV

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

Cautionary Statement Regarding Forward-Looking Information

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

SELECTED DEFINITIONS

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

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

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

"Calendar Year" means a year ended December 31.

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

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

"Electricity Act" means the Electricity Act 1989.

"EMFs" means electromagnetic fields.

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

"Fiscal Year" means a year ended March 31.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"SEC" means the Securities and Exchange Commission.

"SFAS" means US Statement of Financial Accounting Standard.

"UK" means the United Kingdom.

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

"US" means the United States of America.

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

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

iii

PART I

Item 1. BUSINESS

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

General

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

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

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

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

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

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

I-1

Overview of the Electric Utility Industry in England and Wales

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

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

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

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

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

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

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

I-2

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

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

WPD's Distribution Business

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

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

Strategy

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

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

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

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

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

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

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

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

o Availability the minutes each end user is without supply;

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

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

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

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

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

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

End Users

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

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

Distribution Business
- ------------------------------------------------------------------------------------------------------------------------
Distribution End Users Electricity Units Distributed Revenues(4)
------------------------------ --------------------------------- -----------
% of 5 year Volume % of 5 year % of
Number(1) Total CAGR(2) Twh(3) Total CAGR(2) Total

-------- ----- ------- ------ ----- ------- -----
Non half hourly metered....... 1,353,800 99.8 1.07% 9.2 61 1.8% 78
Half hourly metered........... 3,092 0.2 2.37 5.8 39 2.6 22
---------- ----- --- --- ----
Total 1,356,892 100.0 1.07 15.0 100 2.1 100
========= ===== ==== === ===

- --------------
(1) At March 31, 2001.
(2) Represents the compound annual growth rate ("CAGR") for the period from
April 1, 1996 through March 31, 2001.
(3) In terawatt hours for fiscal year 2001.
(4) For fiscal year 2001.

I-4

Distribution Facilities

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

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

Overhead lines Underground cables
Operating voltage: (Circuit miles) (Circuit miles)

--------------- ---------------
132kV........................................................................ 1,120 66
33kV......................................................................... 1,766 640
11kV......................................................................... 10,831 4,004
480 or 415/240V.............................................................. 4,842 7,349
------- -------
Total................................................................... 18,559 12,059
====== ======

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

Aggregate Capacity
(mega Volt-
Number Amperes)

-------------- --------------------
Transformers:
132kV/lower voltages......................................................... 89 5,595
33kV/11kV or 6.6kV........................................................... 538 7,685
11kV or 6.6kV/lower voltages (including 39,862 pole mounted transformers) 51,508 6,946

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

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

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

WPD's Ancillary Business Activities

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

I-5

Regulatory Environment

Utility Regulation

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

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

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

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

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

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

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

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

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

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

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

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

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

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

UK Environmental Regulation

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

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

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

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

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

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

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

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

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

Employees

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

Item 2. PROPERTIES

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

Network Land and Buildings

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

Non-Network Land and Buildings

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

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

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

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

Item 3. LEGAL PROCEEDINGS

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

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

None.

I-9

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY

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

Item 6. SELECTED FINANCIAL DATA

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

(In Millions)

Fiscal Fiscal Fiscal Fiscal Fiscal
Year Year Year Year Year
2001 2000 1999 1998 1997
--------------------- --------- -------- ----------- -----------

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

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

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

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

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

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

II-1

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

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

EFFECTS OF CERTAIN ORGANIZATIONAL CHANGES

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

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

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

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

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

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

FACTORS AFFECTING DISTRIBUTION REVENUES

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

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

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

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

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

RESULTS OF OPERATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

II-4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

II-6

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

Operating Activities

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

Investing Activities

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

Financing Activities

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

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

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

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

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

LITIGATION AND OTHER CONTINGENCIES

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

NEW ACCOUNTING PRONOUNCEMENTS

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

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

II-8

Cautionary Statement Regarding Forward-Looking Information

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

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

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

Additional Factors that Could Affect Future Performance

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

II-9

Risks Related to the Company's Business

Effect of Government Regulation

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

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

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

Price Regulation of Distribution

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

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

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

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

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

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

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

II-10

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SIUK plc and Subsidiaries

Index to the Consolidated Financial Statements

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

II-11

SIUK plc AND SUBSIDIARIES

MANAGEMENT'S REPORT
2001 Annual Report

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

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

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

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

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

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

June 22, 2001

II-12

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of SIUK plc:

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

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

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

ARTHUR ANDERSEN
Bristol, England

June 22, 2001

II-13

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

CONSOLIDATED STATEMENTS OF INCOME

(In Millions)

2001 2000 1999
(Note 1)
----------- -------------- ---------- -----------

OPERATING REVENUES (pound) 234 $ 332 (pound) 275 (pound) 261
COST OF SALES 23 33 20 16
----------- -------------- ---------- -----------
GROSS MARGIN 211 299 255 245

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

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

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

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

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

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

(In Millions)

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

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

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

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

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

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

II-15

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

2001 2000 1999
(Note 1)
----------- ---------- --------- -----------

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

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

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

SIUK plc AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

AT MARCH 31, 2001 AND 2000

(In Millions)

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

(Note 1)

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

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

The accompanying notes are an integral part of these consolidated balance sheets.

II-17

SIUK plc AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

AT MARCH 31, 2001 AND 2000

(In Millions)

STOCKHOLDER'S EQUITY AND LIABILITIES 2001 2000
- ----------------------------------------------------------------------------- ------------- --------------- -----------

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

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

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

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

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

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

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

The accompanying notes are an integral part of these consolidated balance sheets.

II-18

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

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

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

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

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

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

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

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

II-19

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

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

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

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

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

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

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

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

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

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

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

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

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

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

II-20

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

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

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

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

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

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

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

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

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

II-21

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

2. COMPREHENSIVE INCOME (LOSS)

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

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

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

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

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

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

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

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

3. WRITE DOWN OF ASSETS

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

II-22

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

4. GAIN ON RECOGNITION OF DEFERRED CONTINGENT CONSIDERATION

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

5. RETIREMENT BENEFITS

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

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

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

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

II-23

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

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

March 31, 2001 March 31, 2000
------------ ----------- ------------------

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

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

Fiscal Year Fiscal Year Fiscal Year
2001 2000 1999
---------- ---------- ----------- ------------

Service cost...........................(pound) 6 $ 9 (pound) 8 (pound) 7
Interest cost........................... 36 51 36 39
Expected return on plan assets.......... (68) (97) (60) (60)
Amortization of prior service cost...... 2 3 1 -
---------- ---------- ----------- ------------
Gross benefit credit.................... (24) (34) (15) (14)
Employee contributions.................. (1) (1) (2) (4)
---------- ---------- ----------- ------------
Net pension income...................... (25) (35) (17) (18)
========== ========== =========== ============

The assumptions used in the actuarial calculations were as follows:

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

II-24

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

6. COMMITMENTS AND CONTINGENT MATTERS

Operating Leases

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

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

Labor Subject to Collective Bargaining Agreements

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

II-25

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

7. SEGMENT AND RELATED INFORMATION

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

Business Segments

Fiscal Year Distribution Other Eliminations Consolidated
(in millions)

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

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

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

8. INCOME TAXES

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

Fiscal Year Fiscal Year Fiscal Year
2001 2000 1999

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

II-26

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

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

The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the financial statements and their respective tax
bases which give rise to deferred tax assets and liabilities are as follows (in
millions):

March 31, March 31,
2001 2000
----------- -------- -------------

Deferred tax liabilities:
Property, plant, and equipment basis differences.............................(pound)338 $ 480 (pound) 333
Pensions..................................................................... 51 72 43
Accruals..................................................................... - - 2
Heldover gain................................................................ 40 57 39
----- ----- -----
Total................................................................ 429 609 417
Deferred tax assets:
Accruals, including acquisition related items....................... 10 14 -
----- ----- -----
Net deferred tax liabilities (pound) 419 $ 595 (pound) 417
===== ===== =====

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

Fiscal Year Fiscal Year Fiscal Year
2001 2000 1999
----------- ----------- -----------

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

9. FINANCIAL INSTRUMENTS

Derivative Hedging Instruments

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

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

II-27

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

Interest Rate Hedging

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

Foreign Currency Hedging

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

Credit Risk

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

Fair Values

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

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

March 31, 2001 March 31, 2000
Carrying Amount Fair Value Carrying Amount Fair Value
------------------------------ ------------------------------

Liabilities
Long-term debt, including current portion (pound) 352 (pound) 350 (pound) 301 (pound) 298
Preferred securities (pound) 58 (pound) 45 (pound) 50 (pound) 46
Receivables
Loans to affiliated company (pound) 410 (pound) 395 (pound) 351 (pound) 344

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

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

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

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

10. PROPERTY, PLANT, AND EQUIPMENT

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

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

11. CAPITAL BUDGET

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

12. DEBT

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

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

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

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

II-29

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

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

13. INVESTMENTS

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

14. COMMON STOCKHOLDER'S EQUITY

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

15. BUSINESS DEVELOPMENTS

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

16. SUBSEQUENT EVENTS

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

II-30

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

None.

II-31

PART III

Item 10. Directors and Executive Officers of the Registrant

MANAGEMENT

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

Name Age Position
- ------------ ------- -------------

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 11. EXECUTIVE COMPENSATION

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

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

III-2

Name and Address Amount and Nature Percent
of Beneficial of Beneficial of
Title of Class Owner Ownership Class
- --------------- -------------------------------- ------------------ ------------

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

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

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

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

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

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

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

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

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with management and others.
None.

Certain business relationships.
See Item 11 herein.

Indebtedness of management.
None.

Transactions with promoters.
None.

III-3

PART IV

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

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

(1) Financial Statements:

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

(2) Financial Statement Schedules:

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

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

(3) Exhibits:

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

(b) Reports on Form 8-K:

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

IV-1

SIGNATURES

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

SIUK plc

By: Barney S. Rush
Chairman and Chief
Executive Officer

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

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

Signature Title Date

BARNEY S. RUSH Chairman and Chief
Executive Officer

D. CHARL S. OOSTHUIZEN Chief Financial and
Accounting Officer

ROBERT A. SYMONS

MAURICE E. FLETCHER

RICHARD F. OWEN

ROBERT W. BURKE

PAUL CHAMPAGNE
Directors
RICK L. KLINGENSMITH

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

IV-2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE

To the Board of Directors of SIUK plc:

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

ARTHUR ANDERSEN

Bristol, England
June 22, 2001

S-1

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

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

(In Millions)

Additions
-------------------------------
Balance at Charged Charged to Balance
Beginning (Credited) Other at End of
of Period to Income Accounts Deductions Period
(pound) (pound) (pound) (pound) (pound)
------------- -------------- ------------ ------------- --------------

Provision for Uncollectable Accounts

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

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

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

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

S-2

EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* 21.1 -- Subsidiaries of Registrant.

* 24.1 -- Power of Attorney and Resolution.

E-2