<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 20-F
[_]REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 1999
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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SCOTTISH POWER plc
(Exact name of Registrant as specified in its charter)
SCOTLAND
(Jurisdiction of incorporation or organization)
1 Atlantic Quay, Glasgow G2 8SP, Scotland
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- ------------------------
<S> <C>
Ordinary shares of 50p each ("ordinary shares") New York Stock Exchange*
American Depositary Shares ("ADSs") New York Stock Exchange
each of which represents 4 ordinary shares
</TABLE>
- --------
* Not for trading but only in connection with the registration of ADSs
pursuant to the requirements of the Securities and Exchange Commission.
----------------
Securities registered or to be registered pursuant to Section 12(g) of the
Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.
<TABLE>
<S> <C>
Ordinary shares of 50p each.... 1,198,678,222 shares (as of March 31, 1999)
Special rights non-voting
redeemable preference share of (Pounds)1..... 1 share (as of March 31, 1999)
</TABLE>
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 which financial statement item the registrant has
elected to follow.
Item 17 [_] Item 18 [X]
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<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
Introduction 1
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Exchange Rates 1
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Glossary 2
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Part I
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Item 1. Description of Business 6
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Introduction 6
Energy Business 11
Southern Water 21
ScottishTelecom 24
Other Businesses 25
Year 2000 26
Regulation of the Electricity Industry 27
Regulation of the Water Industry 32
Effect of Price Controls 36
The Competition Act 1998 37
Environmental Regulation 37
Research & Development 41
Employees 41
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Item 2. Description of Property 42
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Generation Facilities 42
Transmission and Distribution Facilities 42
Water Supply and Wastewater Treatment Facilities 42
Telecommunication Facilities 43
Retail Facilities 43
Non-Operational Facilities 43
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Item 3. Legal Proceedings 44
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Item 4. Control of Registrant 44
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Item 5. Nature of Trading Market 45
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Exchange Controls and Other Limitations Affecting
Item 6. Security Holders 45
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Item 7. Taxation 46
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Taxation of Dividends 47
Taxation of Capital Gains 48
United States Information Reporting and Backup
Withholding 48
U.K. Inheritance Tax 48
U.K. Stamp Duty and Stamp Duty Reserve Tax 49
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Item 8. Selected Financial Data 49
Dividends 51
Exchange Rates 52
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Management's Discussion and Analysis of Financial
Condition
Item 9. and Results of Operations 52
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Results of Operations 52
Liquidity and Capital Resources 61
Cash Flow 62
</TABLE>
ScottishPower Form 20-F 1999
i
<PAGE>
<TABLE>
<CAPTION>
Page
<C> <S> <C>
Treasury 63
Recent Developments 65
Outlook 65
European Economic and Monetary Union and the impact
of the euro 65
Year 2000 66
U.K. GAAP to U.S. GAAP Reconciliation 66
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Item 9A. Quantitative and Qualitative Disclosures About
Market Risk 67
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Market Rate Sensitive Instruments and Risk
Management 67
Financial Instruments and Risk Management 67
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Item 10. Directors and Officers of Registrant 71
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Item 11. Compensation of Directors and Officers 72
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Options to Purchase Securities from Registrant or
Item 12. Subsidiaries 73
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Item 13. Interest of Management in Certain Transactions 74
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Part II
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Item 14. Description of Securities to be Registered -- Not
Applicable 74
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Part III
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Item 15. Defaults Upon Senior Securities 74
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Changes in Securities and Changes in Security for
Item 16. Registered Securities 75
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Part IV
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Item 17. Financial Statements and Exhibits -- Not Applicable 77
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Item 18. Financial Statements and Exhibits 77
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Item 19. Financial Statements and Exhibits 77
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Signatures 79
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</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Consolidated Financial Statements of Scottish Power plc for Fiscal 1999
Accounting Policies and Definitions F-1
Group Profit and Loss Account F-7
Statement of Total Recognized Gains and Losses F-8
Note of Historical Cost Profits and Losses F-8
Reconciliation of Movement in Shareholders' Funds F-8
Notes to the Group Profit and Loss Account F-9
Group Cash Flow Statement F-12
Reconciliation of Net Cash Flow to Movement in Net Debt F-12
Notes to the Group Cash Flow Statement F-13
Balance Sheets F-16
Notes to the Balance Sheets F-17
Principal Subsidiary Undertakings and Other Investments F-40
Directors' Responsibilities for the Preparation of the Financial
Statements F-41
Report of the Independent Accountants F-41
</TABLE>
ScottishPower Form 20-F 1999
ii
<PAGE>
Introduction
In this report, except as otherwise specified, "ScottishPower" or the
"company" refers to Scottish Power plc (hereinafter also sometimes
referred to as the "registrant"), and the "group" refers to
ScottishPower and its subsidiaries and associates and any of their
respective predecessors in business. ScottishPower was incorporated
under the Companies Act on April 1, 1989 as a public limited company
under the name South of Scotland Electricity plc and changed its name
to Scottish Power plc on August 1, 1989.
References to fiscal years are to 12 month periods commencing in each
case on April 1 of the prior year and ending on March 31 of the year
indicated. References to years not specified as being fiscal years are
to calendar years.
ScottishPower's Registered Office is located at 1 Atlantic Quay,
Glasgow, G2 8SP, Scotland, and its telephone number is 011 44 141 248
8200.
Exchange Rates
The group publishes its consolidated financial statements in pounds
sterling. In this report, references to "pounds sterling", "(Pounds)",
"pence" or "p" are to United Kingdom currency and references to "U.S.
dollars", "U.S.$" or "$" are to United States currency. Solely for the
convenience of the reader, this report contains translations of certain
pounds sterling amounts into U.S. dollars at specified rates, or, if
not so specified, at 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 (the "Noon Buying Rate") on March 31,
1999 of (Pounds)1.00 = $1.61. On June 30, 1999, the Noon Buying Rate
was $1.58 to (Pounds)1.00. No representation is made that the pound
sterling amounts have been, could have been or could be converted into
U.S. dollars at the rates indicated or at any other rates.
The following table sets forth, for the fiscal year indicated, certain
information concerning the Noon Buying Rate in New York City for pounds
sterling and U.S. dollars per (Pounds)1.00.
<TABLE>
<CAPTION>
Fiscal Year Ended March 31 High Low Average/1/ Year-end
-------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $1.64 $1.46 $1.57 $1.62
1996 $1.62 $1.50 $1.57 $1.53
1997 $1.71 $1.49 $1.60 $1.64
1998 $1.69 $1.61 $1.65 $1.68
1999 $1.72 $1.60 $1.65 $1.61
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</TABLE>
/1/The average of the Noon Buying Rates on the last day of each month
during the relevant period.
ScottishPower Form 20-F 1999 1
<PAGE>
Glossary
Appointment Instrument of Appointment made by the Secretary
of State for the Environment as a water and
sewerage undertaker, now under WIA 1991
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BNFL British Nuclear Fuels Limited
British Energy British Energy plc, a public limited company
formed from the merger of Nuclear Electric plc
and Scottish Nuclear plc
------------------------------------------------------------------------
Combined Group the group, PacifiCorp and its consolidated
subsidiaries
company Scottish Power plc
Competition Commission the Competition Commission, formerly the
Monopolies and Mergers Commission
Composite License license under the Electricity Act to generate
electricity, transmit electricity within its
authorized transmission area and distribute and
supply electricity within its authorized supply
area
CREST a relevant system (as defined in the CREST
Regulations) in respect of which CRESTCo Limited
is the operator (as defined in the CREST
Regulations)
CREST Regulations the Uncertificated Securities Regulations 1995
(SI 1995 No. 3272) as from time to time amended
------------------------------------------------------------------------
DGES Director General of Electricity Supply
DGWS Director General of Water Services
DTI Department of Trade and Industry
------------------------------------------------------------------------
EA Environment Agency
effluent treated sewage outflow
Electricity Act Electricity Act 1989
EPA Environmental Protection Act 1990
ESI Electricity Supply Industry in Great Britain,
comprising the activities of electricity
generation, transmission, distribution and supply
EU European Union
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FERC U.S. Federal Energy Regulatory Commission
------------------------------------------------------------------------
GBY the Great Britain Yardstick which is defined as
the average generation purchase cost per unit of
the England and Wales RECs, and is used to cap
the allowed generation purchase costs of
ScottishPower's supply business
2 ScottishPower Form 20-F 1999
<PAGE>
gearing leverage (net debt divided by shareholders'
equity expressed as a percentage)
gigawatt (GW); a gigawatt is a unit of power equivalent to one
gigawatt-hour million kilowatts; one gigawatt hour represents
(GWh) one hour of electricity consumption at a constant
rate of 1 GW
Great Britain England, Wales and Scotland
Green Paper consultation document detailing proposals for
future regulation of the electricity, gas, water
and telecommunications industries. Sets out the
results of the review announced by the President
of the Board of Trade, Rt. Hon Margaret Beckett
MP, in June 1997
group Scottish Power plc and its consolidated
subsidiaries
Guaranteed Standards standards of performance agreed between the
company and OFFER in relation to transmission,
distribution and supply
------------------------------------------------------------------------
HM Government Her Majesty's Government of the United Kingdom
------------------------------------------------------------------------
Interconnector Interconnector between the Scottish transmission
systems and the national grid in England and
Wales
IPC the system of Integration Pollution Control
introduced by the EPA
------------------------------------------------------------------------
kilovolt (kV) one thousands volts
kilowatt (kW); a kilowatt is a unit of power, representing the
kilowatt-hour rate at which energy is used or produced (i.e.
(kWh) the product of voltage and current); one
kilowatt-hour represents one hour of electricity
consumption at a constant rate of 1 kW
------------------------------------------------------------------------
Labour Party a political party that currently forms the
Government of the United Kingdom of Great Britain
and Northern Ireland
LCPD Large Combustion Plant Directive--European
Council Directive 88/609 on the limitation of
emissions of certain pollutants into the air from
large combustion plants
------------------------------------------------------------------------
megawatt (MW); one megawatt equals one thousand kilowatts; one
megawatt-hour megawatt-hour represents one hour of electricity
(MWh) consumption at a constant rate of 1 MW
Merger the proposed merger of ScottishPower and
PacifiCorp
metric tonnes one metric tonne is equivalent to: 1.102 short
tons or 0.9842 long tons
Ml megaliter; one million liters
------------------------------------------------------------------------
NEA Nuclear Energy Agreement among British Energy,
Scottish & Southern and ScottishPower dated June
1, 1990 and any amendments thereto with respect
to the entitlement and must take obligation of
ScottishPower and Scottish & Southern to British
Energy's nuclear generating capacity. The Nuclear
Energy Agreement terminates on April 1, 2005
ScottishPower Form 20-F 1999 3
<PAGE>
New ScottishPower New Scottish Power plc (to be renamed Scottish
Power plc)
New ScottishPower the articles of association of New ScottishPower
Articles
New ScottishPower the special rights non-voting redeemable
Special Share preference share of (Pounds)1 in New
ScottishPower to be issued to the Special
Shareholder pursuant to the Scheme
NGC The National Grid Company plc
NOx oxides of nitrogen
NRA National Rivers Authority
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OFFER Office of Electricity Regulation
OFGAS Office of Gas Supply
OFWAT Office of Water Services
------------------------------------------------------------------------
PES license license under the Electricity Act to supply
electricity as a "public electricity supplier" or
"PES" to any premises within an authorized area
Pool the wholesale electricity trading market in
England and Wales, the rules and procedures of
which are contained in a pooling and settlement
agreement entered into by parties selling
electricity through the Pool in England and Wales
principal consolidated trading subsidiaries of Scottish
subsidiary Power plc
undertakings
------------------------------------------------------------------------
REC one of twelve regional electricity companies in
England and Wales
RPI Retail Price Index measures the average change
from month to month in the prices of goods and
services bought by most consumers in the U.K. The
index is compiled using a large and
representative selection of more than 600
separate goods and services
------------------------------------------------------------------------
Scheme Date the date on which the scheme of arrangement
becomes effective, expected to be July 30, 1999
Scottish & Southern Scottish & Southern Energy plc, which was created
by the merger between Scottish Hydro-Electric plc
and Southern Electric plc
Scottish Coal Scottish Coal Company Limited
ScottishPower Scottish Power plc
ScottishPower Articles the articles of association of ScottishPower
ScottishPower Special
Share the special rights non-voting redeemable
preference share of (Pounds)1 in ScottishPower
Scottish Nuclear Scottish Nuclear plc, a subsidiary of British
Energy
4 ScottishPower Form 20-F 1999
<PAGE>
SEPA Scottish Environment Protection Agency
sewage wastewater contained in or being discharged from
sewerage
sewerage wastewater infrastructure assets
Southern Water Southern Water Services Limited, a WaSC and
Services wholly-owned subsidiary of Southern Water plc
SO\\2\\ sulphur dioxide
Special Shareholder the holder of the ScottishPower Special Share or
the New ScottishPower Special Share as the
context so requires (currently the Secretary of
State for Scotland)
SWEB South West Electricity Board
------------------------------------------------------------------------
terawatt (TW); one thousand million kilowatts of power; one
terawatt-hour terawatt hour represents one hour of electricity
(TWh) consumption at a constant rate of 1 TW
turnover sales value of energy, goods, water, wastewater
and other services supplied to customers
(excluding value added tax and intragroup sales)
------------------------------------------------------------------------
U.K. United Kingdom of England, Wales, Scotland and
Northern Ireland
UNECE United Nations Economic Commission for Europe
------------------------------------------------------------------------
WA 1989 Water Act 1989
WIA 1991 Water Industry Act 1991
WaSC Water and Sewerage Company
Water Quality
Regulations water supply water quality regulations which have
been amended by the Water Service Companies
amendment to regulation of 1989 and 1991
Windfall Tax A levy introduced by the Government in the Budget
of July 2, 1997
WTW Wastewater Treatment Works
ScottishPower Form 20-F 1999 5
<PAGE>
PART I
Item 1. Description of Business
Introduction
The group is a leading multi-utility business in the U.K. serving
approximately 5.5 million homes across Scotland, England and Wales. The
map located on the inside front cover of this report indicates the
location of the group's principal businesses. The group's activities
span the generation, transmission, distribution and supply of
electricity, gas supply, water supply and wastewater services,
telecommunications, retailing of electrical appliances, technology and
contracting services. ScottishPower and its subsidiaries comprise one
of the largest industrial groups in the U.K., positioned around the
middle of the FTSE 100 index, with an annual turnover in fiscal 1999 of
over (Pounds)3.2 billion.
Industry Background
The U.K. electricity industry has undergone a period of rapid and
dramatic change in the past decade. The sector has been restructured
and its major players privatized and floated to the public by the U.K.
government. Regulation is focused on encouraging cost reduction and
productivity gains while increasing competition, and consolidation has
brought further gains for shareholders and customers alike.
Today, supported by an open and dynamic economy, the U.K. has recently
completed another major change: full competition in the retail supply
of electricity and gas services. The gas and electricity markets
throughout Great Britain were fully opened to competition in May 1998
and May 1999, respectively. This increased competition has spurred
multi-utility convergence in the U.K. in a realignment affecting all
segments of the utility industry.
Business Strategy
The group is committed to enhancing shareholder value through building
businesses in electricity and utility related markets.
The group has grown from a regional generator, distributor and supplier
of electricity into a growing U.K. multi-utility business serving some
5.5 million of the homes in Great Britain. This is due in large part to
(i) the acquisition in 1995 of Manweb plc ("Manweb"), one of the twelve
regional electricity companies created when the electricity utility
industry in England and Wales was restructured in 1990, and (ii) the
acquisition in 1996 of Southern Water plc ("Southern Water"), one of
the ten water and wastewater service companies created when the water
and wastewater industry in England and Wales was privatized in 1989.
These acquisitions have allowed the group to expand both its customer
base (by 1.3 million customers in the case of Manweb and 1.7 million
customers in the case of Southern Water) as well as its geographic and
product base by expanding into the electricity distribution and supply
business in north-west England and Wales and into the water and
wastewater business in southern England. The group has further
leveraged its utility skills and assets in its expansion into the gas
supply and telecommunications businesses. In domestic gas supply,
ScottishPower is already established as a leading competitor to British
Gas, with a total of 760,000 domestic contracts at the end of fiscal
1999. Since the opening of the competitive electricity market, the
Company has secured 190,000 new electricity contracts.
Improving the efficiency of the group's businesses through a program of
cost reductions is a key part of the strategy. In the Scottish energy
businesses, the cost base has been significantly reduced since 1991
through a process of benchmarking operations against other major
companies around the world, both within and outside the utility sector.
ScottishPower management has delivered substantial cost savings from
both Manweb and Southern Water, totaling (Pounds)139 million to date.
Management believes that further cost savings from the Scottish energy
businesses, Manweb and Southern Water are achievable after fiscal 1999.
The group intends to build its U.K. business primarily by exploiting
the opportunity, and managing the challenge, of the deregulation of the
electricity and gas supply markets and the telecommunications sector.
The aim of the group's energy supply business will be to defend its
existing base in the ScottishPower and Manweb areas, while exploiting
the opportunity to expand its electricity and gas supply markets across
the U.K.
6 ScottishPower Form 20-F 1999
<PAGE>
In addition, the company intends to utilize its excess capacity of
efficient, coal-fired plant to continue to increase its share of the
U.K. electricity generation market by exploiting expansion of the
capacity of the Interconnector to the England and Wales market and the
construction of an Interconnector between Scotland and Northern
Ireland.
ScottishTelecom's strategy has been to achieve growth through a
combination of organic growth and selective acquisitions. This has
provided ScottishTelecom with operations in key markets across the
communications sector since its launch in 1994.
ScottishTelecom now provides, under innovative tariff packages, a wide
portfolio of communication services ranging from voice, data and mobile
telephony services to call-center, on-line information and Internet
access services.
The development of the group has caused the Directors to review the
future of ScottishTelecom. ScottishPower is currently evaluating the
strategy of ScottishTelecom and the options available to maximize
shareholder value from its investment in this business, in what is a
rapidly changing and developing sector. This assessment includes a
review of the services provided by ScottishTelecom, its funding needs
and any consequential restructuring. The Directors expect to reach a
decision during the year.
Since privatization of the U.K. electricity industry in 1990-91, the
group has experienced tightening regulation. Looking ahead it is
expected that regulation will continue to have a material bearing on
the profitability and investment capability of the group. The group's
regulated monopoly businesses comprise electricity transmission and
distribution in ScottishPower and electricity distribution in Manweb
(together representing 44% of the group's fiscal 1999 operating
profits) and the water supply and wastewater business in Southern Water
(representing 30% of the group's fiscal 1999 operating profits). The
regulatory price controls relating to these areas of the group's
business for the five-year period commencing April 1, 2000 are
currently being reviewed, and reviews are also taking place in relation
to supply and generation. Nevertheless, the Board is unable to judge
accurately the outcome of these reviews and there can be no assurance
that they will not materially affect group profits. It is expected that
final proposals resulting from these reviews will be known by November
1999.
Through organic growth and acquisitions, ScottishPower has laid the
foundations for its U.K. business, creating a broadly based utility
group that is strongly placed to add value for shareholders and
customers.
As well as continuing to drive for growth in its U.K. businesses, the
group has explored international opportunities in the electricity
sector. The focus has been on the United States, where management
believes the cultural fit and the likely development of U.K.-style
industry restructuring and convergence offers opportunities to deliver
shareholder value by applying the group's core skills.
Proposed ScottishPower--PacifiCorp Merger
On December 7, 1998, the boards of ScottishPower and PacifiCorp
announced that they had reached agreement on the proposed merger of
their two companies. Under the terms of the Merger, PacifiCorp common
shareholders (other than ScottishPower or any subsidiary of
ScottishPower or PacifiCorp) will be entitled to receive 0.58
ScottishPower ADSs, which will be listed on the New York Stock
Exchange, or 2.32 ordinary shares of ScottishPower, which will be
listed on the London Stock Exchange, for each share of PacifiCorp they
own. ScottishPower shareholders will continue to own their existing
shares after the Merger.
The Combined Group intends to account for the Merger using the
acquisition method of accounting under U.K. GAAP and using the purchase
method of accounting under U.S. GAAP. The Merger is subject to a number
of conditions, including its approval by both the ScottishPower
shareholders and the PacifiCorp shareholders which were recently
obtained. The Merger is also conditional on a number of regulatory, tax
and other consents and confirmations in the U.S. and the U.K. The
Merger is expected to be completed this year.
The Merger will create an international utility company with
significant energy businesses in the U.K. and the U.S. with
approximately seven million customers. The Directors believe that
significant benefits will be derived from the Merger and that the
Combined Group will be more operationally efficient and stronger
financially than either ScottishPower or PacifiCorp would be on its
own. The Merger is expected to enhance New ScottishPower's or
ScottishPower's, as applicable, earnings per share, before goodwill
amortization, from the first full year after
ScottishPower Form 20-F 1999 7
<PAGE>
completion of the Merger compared to the Directors' present
expectations for the existing group. See "Scheme of Arrangement" below.
The Merger represents a major step in ScottishPower's stated strategy
of achieving growth and creating value for shareholders by utilizing
its core skills in the U.S.
ScottishPower has carried out detailed analyses of the U.S. market and
possible combination partners. The Directors believe that PacifiCorp is
an excellent partner, in that it combines:
. a sound business, good quality assets and an extensive customer base
in a region of the U.S. benefiting from good economic growth;
. substantial scope for improved performance and efficiency;
. experienced operational management; and
. low-cost coal resources and generation plant.
The Combined Group will focus on accelerating PacifiCorp's strategy to
improve the performance of its western U.S. electricity business.
ScottishPower and PacifiCorp believe that the application of best
practices of the two companies will reduce costs and increase operating
efficiencies with the goal of enhancing shareholder value. Although it
is difficult to predict the source of cost savings, the Directors
expect most, if not all, of the anticipated cost savings to come from
the application of best practices in operational and overhead areas
rather than through elimination of costs duplicated between
ScottishPower and PacifiCorp. The Directors believe that this will
enable PacifiCorp, which has recently suffered from a period of
financial under-performance, to achieve more quickly its stated aim of
earning the authorized regulatory rate of return in each U.S. state in
which it conducts business and will bring PacifiCorp's non-generation
costs per customer in the U.S. in line with some of the most efficient
comparable utilities, based on comparisons drawn from information filed
with FERC.
To assist the delivery of these improvements, the Directors intend to
transfer a number of senior managers with integration experience into
PacifiCorp. Some PacifiCorp managers will also be transferred into
ScottishPower's U.K. operations to gain experience of ScottishPower's
working practices.
The Merger should enable ScottishPower to apply its proven utility
management skills to PacifiCorp. The Directors believe that these
skills, developed in the competitive U.K. market, will assist
PacifiCorp as competition is introduced into the U.S. generation and
supply businesses.
The Directors also intend to enhance significantly the performance and
service standards of PacifiCorp, and to increase the range of energy
services offered to PacifiCorp customers, by investing in PacifiCorp's
existing U.S. businesses and by applying the best practices drawn from
both ScottishPower and PacifiCorp. ScottishPower and PacifiCorp share a
common commitment to high standards of customer service, to the
environment and to the communities they serve.
Earnings and Dividends
The Merger should, when completed, create one of the largest
international utility companies and open up more growth opportunities
for the Combined Group.
The Merger is expected to be earnings enhancing from the first full
year, before goodwill amortization, compared to the Directors' present
expectations for the existing group.
ScottishPower's stated dividend aim is to achieve 7% to 8% real
dividend growth per annum until at least the U.K. regulatory reviews
which take effect in the year 2000, whilst maintaining a prudent level
of dividend cover. It is ScottishPower's current aim to deliver real
dividend growth thereafter and this will be re-examined once the
outcome of the regulatory reviews is known.
Scheme of Arrangement
The company announced on February 25, 1999 its intention to recommend
to ScottishPower shareholders a proposal to introduce a new holding
company for the group, New ScottishPower (to be renamed Scottish Power
plc upon the scheme becoming effective). The holding company structure
will be effected through a "scheme of arrangement" which must be
sanctioned by a Scottish court and approved by ScottishPower's
shareholders, which approval was recently obtained. Under the scheme,
New ScottishPower will issue one share of New ScottishPower
8 ScottishPower Form 20-F 1999
<PAGE>
in exchange for each outstanding ScottishPower share. As a result, New
ScottishPower will become the holding company for ScottishPower. The
Merger with PacifiCorp is not conditional upon the scheme becoming
effective nor is the scheme conditional upon the Merger becoming
effective.
In addition, ordinary shares of New ScottishPower will be listed on the
London Stock Exchange, New ScottishPower ADSs will be listed on the New
York Stock Exchange and New ScottishPower will be subject to the
registration and information requirements of U.S. securities laws.
The rights attaching to the New ScottishPower ordinary shares will be
substantially the same as those currently attaching to the
ScottishPower ordinary shares. Thus, after the scheme is implemented,
holders of ScottishPower ordinary shares will have their interest in
ScottishPower replaced by an equivalent proportionate interest in New
ScottishPower and, subject to the effect of exercise of options to
subscribe for ScottishPower shares granted under ScottishPower share
schemes, their proportionate interests in the profits, net assets and
dividends in the group will not be affected.
If the scheme of arrangement is not implemented by June 30, 2000, the
holders of ScottishPower shares will remain as such, ScottishPower
ordinary shares will continue to be listed on the London Stock Exchange
and its ADSs will continue to be listed on the New York Stock Exchange.
If the scheme is sanctioned by the court and the conditions to the
scheme are satisfied or waived, it is expected to become effective on
July 30, 1999.
Share Buy-back
The Directors started a share buy-back program of up to (Pounds)500
million following approval of the Merger by both ScottishPower
shareholders and PacifiCorp shareholders. This is intended to achieve
further financial efficiency, with an expected net interest cover of
approximately three times, while targeting an "A" credit rating. The
buy-back is being undertaken through on-market purchases.
Outlook
Apart from the many changes and opportunities which the year ahead
offers in the U.K. operations, it is expected the PacifiCorp merger
will be completed later this year. This would make ScottishPower one of
the top 10 electricity companies in the world and would bring the total
employment complement in the new enlarged group to 25,000.
Looking forward into the new millennium, regulation will continue to
have a significant bearing on the profitability and investment
capability of the group. The Directors believe that the group has high
standards of operation and customer service. Nevertheless, they are
unable to judge accurately the outcome of the current U.K. regulatory
reviews and there can be no assurance that they will not materially
affect the group's profits.
ScottishPower's goal is to provide better service and value to
customers and at the same time enhanced earnings for shareholders. This
must be supported by a process of regulation which takes a balanced
long-term view to reward investment and encourages improvements in
service and efficiency.
ScottishPower will continue its strategy to develop and grow the
business. This will require ongoing revenue and capital investment in
the year ahead. ScottishPower is confident in its strategy for long-
term growth and, given the quality of the company and its people, looks
forward to further success.
Segmental Business Information
An analysis of the group's turnover and operating profit by major
business segment for the last three fiscal years is provided in the
tables on the following page. All material activities were derived from
continuing operations in the United Kingdom. This information is
extracted from the consolidated financial statements of the group which
have been audited by PricewaterhouseCoopers, Chartered Accountants and
Registered Auditors for fiscal 1999 and Coopers & Lybrand, Chartered
Accountants and Registered Auditors for fiscal years 1997 through 1998.
This segmental business information should be read in conjunction with,
and is qualified in its entirety by reference to, such consolidated
financial statements and their accompanying notes located on pages F-1
through F-40, and in particular the definition of the group's business
segments on page F-5.
ScottishPower Form 20-F 1999 9
<PAGE>
Table 1.1 Turnover by business segment
<TABLE>
<CAPTION>
Total turnover Inter-segment turnover External turnover
1999 1998 1997 1999 1998 1997 1999 1998 1997
Note (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy Business
Generation
Wholesale 1 914.3 1,014.3 974.4 695.3 764.8 744.4 219.0 249.5 230.0
Power Systems 470.1 443.0 429.2 416.8 391.1 386.8 53.3 51.9 42.4
Energy Supply 1,434.5 1,336.2 1,270.4 28.8 11.5 0.9 1,405.7 1,324.7 1,269.5
Manweb 614.2 662.5 738.4 18.1 8.6 - 596.1 653.9 738.4
----------------------------------------------------------------------------------------------------------------
Energy Total 3,433.1 3,456.0 3,412.4 1,159.0 1,176.0 1,132.1 2,274.1 2,280.0 2,280.3
Non-energy
business
Manweb - 5.3 20.9 - 5.3 4.2 - - 16.7
Southern Water 440.2 453.0 316.7 0.7 0.4 0.5 439.5 452.6 316.2
Scottish Telecom 219.9 113.3 53.7 39.2 31.2 16.7 180.7 82.1 37.0
Other 1 612.8 410.7 359.2 264.8 97.2 68.7 348.0 313.5 290.5
---------------------------------------------------------------------------------- --------- --------- ---------
Total 3,242.3 3,128.2 2,940.7
---------------------------------------------------------------------------------- --------- --------- ---------
</TABLE>
/1/The Generation Wholesale segment previously included sales from gas
trading activities which are now reported in the Other business segment.
Total turnover for the Generation Wholesale segment for 1998 included
(Pounds)100.5 million of gas trading sales (1997: (Pounds)30.0 million)
of which (Pounds)82.4 million related to internal sales (1997:
(Pounds)16.1 million).
Table 1.2 Operating profit by business segment
<TABLE>
<CAPTION>
Operating profit
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 115.3 130.8 146.1
Power Systems
Transmission 83.5 80.1 77.3
Distribution 178.2 169.4 150.7
Energy Supply
First tier electricity 36.3 38.0 39.4
Second tier electricity - (3.8) (3.2)
Gas and other energy
sales (16.2) (19.1) (3.8)
------- ------- -------
Scottish energy
businesses 397.1 395.4 406.5
Manweb 125.2 131.3 135.0
Southern Water 262.2 240.7 114.4/1/
ScottishTelecom 10.3 4.7 (1.5)
Other 8.0 13.0 9.5
------------------------- ------- ------- -------
Total 802.8 785.1 663.9
------------------------- ------- ------- -------
</TABLE>
/1/Eight months from the date of acquisition and after reorganization
costs of (Pounds)21.2 million.
10 ScottishPower Form 20-F 1999
<PAGE>
Energy Business
Structure of the Electricity Industry in the United Kingdom
The U.K. electricity industry, which was restructured in March 1990 to
introduce competition into the generation and supply of electricity,
consists of the following activities:
Generation: the production of electricity at power stations
Transmission: the bulk transfer of electricity across a high voltage
transmission system
Distribution: the transfer of electricity from the high voltage
transmission system and its delivery, across local low
voltage distribution systems, to customers
Supply: the bulk purchase of electricity by suppliers and its
sale to customers, with the associated customer service
activities including sales and marketing, billing and
income collection
The U.K. has three distinct geographical systems: Scotland, England &
Wales and Northern Ireland, each with a different commercial framework.
The Scottish and English systems are interconnected, and an agreement
has been reached for the construction of a link between Scotland and
Northern Ireland.
In each of Scotland and England & Wales, the electricity industry is
regulated under the Electricity Act 1989 (the "Electricity Act") by the
Secretary of State for Scotland or the Secretary of State for Trade and
Industry, as applicable (collectively, the "Secretary of State"), and
the Director of Electricity Supply (the "DGES"). See "Regulation of the
Electricity Industry". The chart below provides an overview of the
electricity industry in Great Britain.
[CHART APPEARS HERE]
ScottishPower Form 20-F 1999
11
<PAGE>
Industry Structure in Scotland
The electricity industry in Scotland is principally comprised of two
vertically integrated companies, ScottishPower and Scottish & Southern,
each generating, transmitting, distributing and supplying electricity
within their respective franchise areas. A third, Scottish Nuclear, a
subsidiary of British Energy, is primarily a generator selling all the
electricity it generates at its two nuclear power stations in Scotland
to ScottishPower and Scottish & Southern under the Nuclear Energy
Agreement (the "NEA").
Generation ScottishPower and Scottish & Southern generate electricity
from their own portfolio of power stations. In addition the companies
are obliged, under the NEA, to purchase the entire output from Scottish
Nuclear. A number of further contractual relationships exist between
the two companies which involve the sharing of coal-fired, dual oil and
gas-fired and conventional hydro generating capacity by allocating part
of the capacity of certain generating stations operated by one company
to the other company. See "Generation Wholesale--Generation Portfolio"
for further discussion of these contractual arrangements. Currently,
there exists a surplus of generating capacity in Scotland which enables
the companies to sell electricity to England and Wales through the
Interconnector. The quantity of these sales is set to increase as the
current transmission constraints are reduced.
Transmission The transmission systems of ScottishPower and Scottish &
Southern are each made up of a network comprised of overhead lines,
underground cables and associated equipment operating at either 275 kV
or 132 kV and, in the case of ScottishPower, 400 kV. This network
connects the generating stations and distribution entry points
operating at, or below, 33 kV. ScottishPower's transmission system is
connected to the national grid in England and Wales by the
Interconnector. Both companies have access to this link which enables
the companies to export and import electricity from England and Wales.
The available capacity of the Interconnector at any time depends on a
number of variable factors, (e.g., the secure thermal rating of the
Interconnector circuits and the pattern of scheduled generation on
either side of the border). In fiscal 1999, the average level of
exports on the Interconnector was 1,427 MW.
Distribution The distribution systems are each made up of a network of
overhead lines and underground cables operating at either 33 kV, 11 kV,
415 volts or 230 volts. The distribution voltages and equipment used
are determined by end users' requirements and their location and by the
relative economics of transferring electricity at different voltages.
To ensure competition in the supply business, the companies are
required to provide open access to their transmission and distribution
networks on a non-discriminatory basis.
Supply The energy supply business purchases electricity from a range of
sources, including the group's generation business, for sale to
customers both within its home areas and outside them.
Industry Structure in England and Wales
In England and Wales, electricity is produced by generators, the
largest of which are National Power plc, PowerGen plc and Nuclear
Electric plc, a subsidiary of British Energy, and the Energy Group plc.
Electricity is transmitted through the national grid transmission
system by NGC and distributed by the 12 RECs (one of which is Manweb)
in their respective franchise, or authorized, areas. Most customers are
currently supplied with electricity by their local REC, although there
are other suppliers holding second tier supply licenses, including
other generators and RECs, who can also compete to supply customers.
Generation Virtually all electricity generated in England and Wales is
sold by generators and bought by suppliers through the Pool. The Pool
was established at the time of privatization for bulk trading of
electricity in England and Wales between generators and suppliers. All
licensed generators and suppliers must become signatories to the
Pooling and Settlement Agreement governing the constitution and
operation of the Pool and the calculation of payments due to and from
generators and suppliers. The Pool also provides centralized settlement
of accounts and clearing. As discussed above, ScottishPower and
Scottish & Southern can participate in the Pool by exporting
electricity to or importing electricity from England and Wales via the
Interconnector.
Prices for wholesale electricity sales are set by the Pool daily for
each half hour of the following day based on the bids of the generators
and a complex set of calculations matching supply and demand and taking
account of system stability, security and other costs. A computerized
system (the settlement system) is used to calculate prices and to
12 ScottishPower Form 20-F 1999
<PAGE>
process metered, operational and other data and to carry out the other
procedures necessary to calculate the payments due under the Pool
trading arrangements. Because Pool prices tend to be volatile and
difficult to predict, generators and suppliers often enter into
bilateral arrangements, such as contracts for differences, to provide a
degree of protection against such fluctuations.
In October 1997, HM Government requested the DGES carry out a review
into wholesale electricity trading arrangements in England and Wales to
advise on whether, and if so what, changes should be made. Under the
terms of reference of the review, the new trading arrangements being
considered would be required to be transparent, efficient and risk
reducing while meeting customers needs, promoting competition and
avoiding discrimination. The DGES published proposals for new trading
arrangements in July 1998 and these proposals were supported by HM
Government in an Energy White Paper in October 1998. These arrangements
will encompass the development of a balancing market, a short-term bi-
lateral market and a related settlement system. The DGES is due to
publish a further policy report in August 1999 with implementation of
the new arrangements planned for fall 2000.
Transmission NGC owns and operates the high voltage 275 kV and 400 kV
electricity transmission system in England and Wales also known as the
national grid. NGC has a statutory duty to operate a non-discriminatory
policy both in the day-to-day administration of the system, and in the
provision of access to the transmission network.
Distribution The distribution businesses of the RECs operate and
maintain the assets which carry power from grid supply points to
individual customers within their authorized areas. This involves a
network of overhead lines, underground cables, switches and
transformers operating at voltages ranging from 132 kV down to 230
volts in residential premises. To ensure competition in the supply
business, the RECs are required to provide open access to their
distribution networks on a non-discriminatory basis.
Supply The supply business covers the bulk purchase of electricity
through the Pool and the selling on to customers. RECs can supply
customers within their authorized areas and holders of second tier
licenses, subject to meeting certain requirements, can supply any
customer. Second tier licenses are held by all the RECs, National Power
plc, PowerGen plc, Nuclear Electric, ScottishPower, Scottish & Southern
and some new suppliers.
Competitive Framework
Competition in supply has been progressively introduced in Scotland and
in England and Wales. ScottishPower and Scottish & Southern in
Scotland, and the RECs in England and Wales, are subject to competition
from second tier suppliers for the supply of electricity to customers,
including residential customers, in their respective franchise areas.
Generation Wholesale
The group's Generation Wholesale business ("Generation Wholesale")
operates ScottishPower's generating stations and deals in the wholesale
trading of electricity and gas. The business objective is to create
competitive advantage for ScottishPower by optimizing the energy chain.
Generation Portfolio
ScottishPower's owned generation capacity comprises coal, gas, hydro
and wind power and has available more than 3,500 MW after taking into
account the impact of contractual obligations to supply Scottish &
Southern with a proportion of its coal-fired capacity. In addition to
its own capacity, ScottishPower also has access to nuclear energy, from
British Energy Generation (U.K.) Limited, and gas-fired, oil-fired and
hydro power from Scottish & Southern under contracts established in
connection with the restructuring of the U.K. electricity industry in
1990 and 1991. These resources combine to give ScottishPower a flexible
fuel portfolio and result in total available capacity of some 6,400 MW.
ScottishPower's available capacity in Scotland is significantly greater
than the demand it is required to meet. Additional information
concerning the group's generating capacity, either owned or available
under contract, is set out on the following two pages.
ScottishPower Form 20-F 1999 13
<PAGE>
Table 1.3 Sources of Owned Generating Capacity and Output as at March
31, 1999
<TABLE>
<CAPTION>
Number of Generating
Sets and/or Installed Net Output Maximum Capacity
Capacity Capacity Available
Notes MW MW MW
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Coal:
Longannet 4 x 600 2,304
Cockenzie 4 x 300 1,152
-----
3,456 2,880/1/
Methil 2 x 30 57 57
Kincardine 2 2 x 200 Nil Nil
Oil:
Inverkip 3 3 x 676 Nil Nil
Gas Turbine:
Knapton 1 x 42 42 42
Pumped Storage:
Cruachan 4 x 100 400 400
Conventional Hydro:
Galloway Scheme 109 106 106
Lanark Scheme 16 16 16
Windfarms:
Barnesmore 25 x 0.6 15 15
Hagshaw Hill 26 x 0.6 16 16
P & L Windfarm 4 103 x 0.3 31 16
Rigged Hill 10 x 0.5 5 5
Corkey 10 x 0.5 5 5
Elliots Hill 10 x 0.5 5 5
Coal Clough 5 24 x 0.4 10 4
Carland Cross 5 15 x 0.4 6 3
-------------------------- -------------- ----- -----
Total 4,170 3,570
------------------------- -------------- ----- -----
</TABLE>
/1/Scottish & Southern is entitled to a supply of electricity from part
of the capacity of ScottishPower's coal-fired generating stations at
Longannet and Cockenzie.
/2/The IPC consent for Kincardine expired at the end of March 1997, and
the station is now considered to be unavailable for generation.
/3/The installed capacity at Inverkip is currently on long term
preservation and is unavailable for generation.
/4/The P&L Windfarm is owned by CeltPower Limited, with ScottishPower
and Tomen Power Corporation (U.K.) Limited each having a 50% ownership
interest.
/5/The windfarms at Coal Clough and Carland Cross are owned by joint
ventures among Manweb, SWEB and Renewable Energy Systems, with Manweb
having 45% ownership interest.
In addition to the above, the division owns Strathkelvin House,
Kirkintilloch which is the grid control center.
Construction of a 400 MW Combined Cycle Gas Turbine station near
Brighton has commenced, and commercial operation is planned for winter
2000/01. The project is a joint venture, in which ScottishPower has a
50% economic and voting interest, with CSW International Inc., the U.S.
parent company of SEEBOARD.
Investment is being made in ScottishPower's Longannet and Cockenzie
power stations and a major new cost savings initiative has been
launched. Acquisition of additional generation capacity is kept under
consideration.
Progress on developing Hatfield Moors as a gas storage site continues
with all necessary planning and consents for construction obtained. The
(Pounds)17.6 million project remains on target to meet the winter
1999/00 peak demands of some 450,000 customers.
14 ScottishPower Form 20-F 1999
<PAGE>
Table 1.4 Sources of Generating Capacity and Output Available Under
Contract as at March 31, 1999
<TABLE>
<CAPTION>
Number of Generating
Sets and/or Net Output Maximum Capacity
Installed Capacity Capacity Available
Notes MW MW MW
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nuclear:
Torness 1 2 x 660 1,260 944
Hunterston B 1 2 x 660 1,220 914
-----
Total Nuclear 1,858
Dual Oil and Gas Fired:
Peterhead 2 2 x 660 1,284 642
Gas Turbine:
Peterhead 3 2 x 120 232 116
Conventional Hydro:
Scottish & Southern 4 200
----------------------------- ------------ ------- ---------
Total 3,996 2,816
----------------------------- ------------ ------- ---------
</TABLE>
/1/The NEA entitles ScottishPower and Scottish & Southern to 74.9% and
25.1%, respectively, of the electricity generated from British Energy's
Hunterston B and Torness nuclear generating stations. Except in limited
circumstances, the NEA obliges ScottishPower and Scottish & Southern to
pay for all the electricity declared by British Energy to be available
from such nuclear stations, whether or not they take such electricity.
/2/Following the end of the Miller Gas Plateau, ScottishPower is entitled
to 50% of the net output capacity of Scottish & Southern's Peterhead
station (or such lesser part of that capacity as Scottish & Southern
declares to be available to ScottishPower on any day).
/3/The gas turbines installed at Peterhead are primarily for use during an
outage on one of the main units at the station to enable the consumption
of the gas delivered from the Miller gas field. The use of the gas
turbines at other times is subject to agreement with Scottish &
Southern.
/4/The Hydro Agreement entitles ScottishPower to 400 GWh of electricity
from Scottish & Southern's conventional hydro generating capacity during
each contract year (although this amount may be reduced during periods
of unusually low rainfall or unusually low run-off) and requires
ScottishPower to pay for that amount of electricity, irrespective of how
much electricity it actually takes.
Station Performance
Generation Wholesale's goal is to achieve best practice in terms of
generation performance and costs, at the same time maintaining the
flexibility to optimize energy trading.
Generation Wholesale has undertaken extensive benchmarking of all its
activities against an international peer group and undertaken programs
to implement its findings. However, it is the intention of the business
to drive costs down further through continued reductions in fixed costs
and manpower plus improved engineering efficiencies and enhanced
environmental performance. The group has a detailed engineering
strategy to upgrade its existing coal stations. Furthermore, management
believes that, as a result of its ongoing maintenance program,
ScottishPower's portfolio of power stations is in a condition to
support current and expected generation output.
Fuel Strategy and Sourcing
ScottishPower's fuel purchasing strategy is based upon the objective of
achieving competitive fuel prices while balancing the need for security
and flexibility of supply. The major components of the fuel portfolio
are coal, gas and oil.
Coal -- ScottishPower currently purchases the majority of its coal from
Scottish suppliers under long-term contracts, with the principal
supplier being The Scottish Coal (Deep Mine) Limited. Under a six year
deal which
ScottishPower Form 20-F 1999 15
<PAGE>
commenced on April 1, 1998, ScottishPower will take 1.67 million tonnes
per annum of low sulphur coal from Scottish Coal's Longannet Deep Mine
Complex, adjacent to the Longannet Power Station.
Up to a further 1.7 million tonnes of Scottish opencast coal will also
be supplied yearly by other Scottish suppliers under long-term
contracts of between three and five years, which commenced on April 1,
1998.
These purchase commitments secure the major part of ScottishPower's
coal requirements from local sources at competitive prices. The balance
of requirements will be sourced through the exercise of options under
the long term contracts and/or short term competitive tenders,
depending on market conditions.
Gas -- ScottishPower purchases gas to meet the needs of the group's
generation and supply businesses. Balancing and trading of gas is the
responsibility of the Energy Trading Center.
The group's gas purchasing strategy is based upon a combination of
long, medium and short-term contracts. In accordance with this
strategy, the group has agreed contracts direct with gas producers for
the supply of gas on a non-interruptible basis. The group has two long
term contracts (with terms of, respectively, 10 and 15 years, from
1994) for supply from major gas fields. In addition, ScottishPower is
party to agreements which require Scottish & Southern to purchase and
accept delivery of gas from the Miller gas fields at Peterhead power
station. These agreements continue in force until the reserves of the
field have been fully depleted. Latest projections are that this could
occur within the next two to three years. It should be noted that
ScottishPower is continuing to look at opportunities which might be
available for it to participate in the Peterhead repowering project
which will upgrade the station to combined cycle gas turbine status.
Oil -- From time to time, ScottishPower purchases heavy fuel oil on the
international spot market when favorable prices are available. Heavy
fuel oil is therefore an opportunity purchase rather than a firm fuel
source.
Generation Sales
Generation sales totalled 29,679 GWh in fiscal 1999. Approximately
22,246 GWh were attributable to ScottishPower's energy supply business,
with the remaining 7,433 GWh either being sold to other suppliers or
exported via the Interconnector to the Pool in England and Wales.
The average utilization of ScottishPower's two largest coal-fired
stations, Longannet and Cockenzie, in fiscal 1999 was approximately 46%
and 26%, respectively. It is expected that this utilization will
increase as the capacity of the Interconnector is progressively
expanded enabling ScottishPower to sell greater quantities of
electricity into the Pool.
The Pool in England and Wales
ScottishPower has the ability to sell, or purchase electricity through,
the Pool in England and Wales via the Interconnector which is shared by
Scottish & Southern and BNFL under formal agreement. See "Structure of
the Electricity Industry in the United Kingdom--Industry Structure in
England and Wales" for a general discussion of the Pool. The current
maximum capacity of the Interconnector is 1,950 MW with an average in
fiscal 1999 of 1,427 MW. As ScottishPower produces electricity for
significant periods of the year at a cost that is below the price at
which the Pool purchases electricity, ScottishPower is able to take
advantage of the prices at which electricity is purchased and sold by
the Pool.
The ScottishPower network is also connected at several points to the
transmission network of Scottish & Southern. An agreement has been made
with the NGC and Scottish & Southern to upgrade the maximum capacity of
the Interconnector to 2,200 MW. Planning approval has now been granted
by HM Government for the reinforcement necessary in England and Wales
to give full effect to the upgrade. The current completion date for
this project is September 2001. ScottishPower's generation business
will provide 75% of the capital cost of the upgrade. Pursuant to an
agreement with Scottish & Southern, ScottishPower has the contractual
right to 54% of the pre-upgrade capacity and up to 75% of the
additional upgrade capacity of the Interconnector.
ScottishPower's Composite License only entitles it to reserve capacity
to itself with the consent of the DGES, and obliges it to offer to
enter into an agreement with a third party applicant for use of the
Interconnector, except when
16 ScottishPower Form 20-F 1999
<PAGE>
the DGES determines that the capacity of the Interconnector is
insufficient to accommodate the requirements of the applicant having
regard to such amounts of capacity as has already been reserved to
ScottishPower (with the DGES's consent) or a third party. The DGES
determined, in December 1998, that ScottishPower may not reserve any of
its allocated capacity on the Interconnector to its own generation
business. The DGES also determined that capacity was sufficient to
accommodate the requirements of BNFL, and specified that ScottishPower
should make available to BNFL up to 196 MW of capacity for the period
January 1, 1999 to March 31, 2002. In the case of National Power plc,
the DGES declined to make a determination on the grounds that National
Power plc had not provided sufficient information in support of its
application. Following these determinations, ScottishPower has made
applications to the DGES to reserve capacity of 75% of the additional
upgrade capacity to itself and, with respect to the existing capacity,
is in negotiation with the DGES with respect to amendments to the rules
governing the allocation of capacity.
The determinations referred to above resulted from requests to
ScottishPower from BNFL and National Power plc for access to the
Interconnector, and a request by ScottishPower that the whole of the
capacity on the Interconnector to which ScottishPower is contractually
entitled be reserved to ScottishPower's generation business. On March
31, 1999, ScottishPower extended on an interim basis its existing Use
of Interconnector Agreement with BNFL, and negotiations are ongoing to
enter into a new agreement to provide BNFL with access up to 196 MW per
year until March 31, 2002 and potentially beyond to accommodate the
remaining life of the Chapelcross power station. Without negating the
December 1998 determination, ScottishPower contends that, under the
existing contractual arrangements, Scottish & Southern is obliged to
accommodate 46% of BNFL's required access. Scottish & Southern contends
that all of BNFL's required access should be deducted from
ScottishPower's share of access. Following discussions between
ScottishPower and Scottish & Southern a compromise between the two
positions has now been agreed in principle and will be ratified shortly
in a formal agreement.
Trading with Northern Ireland Electricity
ScottishPower has entered into an agreement with Northern Ireland
Electricity, a subsidiary of Viridian Group plc, for the construction
of a Scottish-Northern Irish Interconnector with a transfer capability
of 250 MW and an agreement for the supply by ScottishPower of around
1,095 GWh of electricity per year over a period of 70 months from the
date of commissioning. These agreements amend and restate agreements
originally entered into in 1994. Once completed, the Northern Irish and
marine sections of the Scottish-Northern Irish Interconnector will be
owned by Northern Ireland Electricity, and the Scottish section from
the converter station will be owned by ScottishPower. Northern Ireland
Electricity will provide the full capital cost of this Interconnector.
Approval has been obtained from the Northern Ireland Office for the
Regulation of Electricity and Gas for this agreement although European
Commission approval and U.K. competition clearance are still being
sought. It is anticipated that the Scottish-Northern Irish
Interconnector will commence commercial operation in December 2001.
The capital cost to ScottishPower of both the England and Wales
Interconnector upgrade and the construction of the link between
Scotland and Northern Ireland are not considered material. Costs
incurred will be recouped, by the company, through "use of system'
charges on both projects.
Power Systems
ScottishPower owns and manages a substantial electricity network
comprising both the distribution system to customers in its two
authorized areas and, in Scotland, the high voltage transmission system
(132 kilovolts and above). The latter includes all the assets of the
Anglo-Scottish Interconnector which are in its Scottish authorized
area. The main function of the power systems business ("Power Systems")
is to develop and maintain an efficient, coordinated and economical
network, including high voltage connections to England, and to operate
and develop the distribution system to approved standards of safety and
reliability. Within Power Systems the focus continues to be on reducing
costs and improving service. Its principal business activities involve
the provision of new connections, construction and refurbishment of the
system, maintenance and fault repair, setting tariffs and collecting
revenues for the use of its authorized networks, and all metering
activities, from provision and repair to meter reading. Power Systems
continues to focus strongly on the efficient delivery of electricity to
customers in its franchise areas via its overhead and underground
network. Investment in the business, has included significant upgrades
and refurbishments to the transmission and distribution system.
ScottishPower Form 20-F 1999 17
<PAGE>
Power Systems is divided into three regions in Scotland, three regions
in the Manweb authorized area and a metering business which covers both
areas. It has a distribution/transmission network which extends to
approximately 113,000 kilometers, with 63,000 kilometers of underground
cables and some 50,000 kilometers of overhead lines.
Table 1.5 below sets forth key information with respect to the group's
transmission and distribution services in fiscal 1999.
<TABLE>
<CAPTION>
Note ScottishPower Manweb Total
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Franchise area 22,950 km/2/ 12,200 km/2/ 35,150 km/2/
Number of franchise
customers 1.86m 1.39m 3.25m
Number of employees 1 2,948 1,295 4,243
System maximum demand 4,153 MW 3,212 MW 7,365 MW
Primary substations 447 611 1,058
Secondary substations 39,841 40,943 80,784
Ground mounted 16,186 9,663 25,849
Pole mounted 23,655 31,280 54,935
Transmission network
(km)
Underground 237 213 450
Overhead 3,851 1,299 5,150
Distribution network
(km)
Underground 40,004 23,504 63,508
Overhead 24,392 20,297 44,689
--------------------------- ---------------------------------------
</TABLE>
/1/Full-time equivalent
ScottishPower and Manweb each hold a PES license allowing each company
to undertake electricity distribution activities within its authorized
area. The income derived from the distribution business is dependent on
changes in the demand for electricity by customers in the franchise
area. Demand for electricity is affected by such factors as growth and
movements in population, social trends, economic and business growth or
decline, changes in the mix of energy sources used by customers,
weather conditions and energy efficiency measures. The following tables
set out, by customer type, the levels of electricity distributed in GWh
over ScottishPower and Manweb's distribution systems during the five
most recent fiscal years.
Table 1.6 Total Units Distributed in ScottishPower's Franchise Area
(GWh)
<TABLE>
<CAPTION>
Fiscal
Year Residential % Commercial % Industrial % Other % Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 8,023 38.6% 5,495 26.4% 6,524 31.4% 736 3.6% 20,778
1996 8,076 38.1% 5,558 26.3% 6,765 31.9% 782 3.7% 21,181
1997 8,194 37.8% 5,758 26.6% 6,983 32.2% 751 3.4% 21,686
1998 8,048 37.1% 5,809 26.8% 7,103 32.7% 752 3.4% 21,712
1999 8,345 37.3% 6,041 27.0% 7,217 32.3% 765 3.4% 22,368
-------------------------------------------------------------------------------
Table 1.7 Total Units Distributed in Manweb's Franchise Area (GWh)
<CAPTION>
Fiscal
Year Residential % Commercial % Industrial % Other % Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 4,825 26.1% 3,331 18.0% 9,921 53.7% 408 2.2% 18,485
1996 4,889 26.4% 3,520 19.0% 9,689 52.3% 421 2.3% 18,519
1997 4,930 26.8% 3,594 19.5% 9,476 51.4% 417 2.3% 18,417
1998 4,916 26.5% 3,640 19.7% 9,536 51.5% 430 2.3% 18,522
1999 5,037 29.1% 3,852 22.2% 8,018 46.3% 417 2.4% 17,324
-------------------------------------------------------------------------------
</TABLE>
18 ScottishPower Form 20-F 1999
<PAGE>
The group is committed to providing its customers with an electricity
supply which is safe and reliable. Both ScottishPower and Manweb are
fully compliant with the EU standards for safe and reliable electricity
set forth in the European Standard EN50169 entitled "Voltage
Characteristics of Electricity Supplied by Public Distribution
Systems".
In 1995, the Office of Electricity Regulation ("OFFER") made the
provision of customer connections to the electrical network
competitive. This change, together with similar actions by the Office
of Gas Supply and the Office of Telecommunications, has provided an
opportunity for the group to provide multi-utility connections, a
development which provides benefits both to the group and to customers.
The group has now developed fully integrated, cost effective packages,
providing solutions for inward investors and property developers. Thus,
the group has unrivalled expertise in delivering multi-utility projects
ranging from large scale industrial sites to multi-unit commercial and
housing developments.
In late December 1998 and early January 1999, the group's network in
Scotland sustained damage due to very severe weather conditions,
causing interruptions to supply. ScottishPower is implementing measures
to further improve its ability to deal with such incidents and is
contributing to a review by OFFER of electricity companies' responses
to the bad weather.
Energy Supply
The group's Energy Supply business ("Energy Supply") is responsible for
the sales and marketing of electricity, gas and related products to
customers within ScottishPower's and Manweb's respective home areas and
to the competitive market throughout the rest of Great Britain. At the
end of fiscal 1999, Energy Supply had 3.2 million electricity customers
in Great Britain and an overall market share of 12%.
Energy Supply's strategy is to defend the existing markets, build the
energy customer base, and add value from an extended range of products
and services--all underpinned by high-quality, low-cost service. In
addition the group will continue to meet the electricity supply and
service obligations of Scottish Power and Manweb under their respective
PES licenses. The tables below set forth the relative proportion of
units of electricity supplied by ScottishPower and Manweb to their
residential, commercial and industrial customers over the five most
recent fiscal years.
Table 1.8 Total Units Supplied By ScottishPower (GWh)/1/
<TABLE>
<CAPTION>
Fiscal
Year Residential % Commercial % Industrial % Other % Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 8,023 37.7% 5,672 26.6% 6,718 31.6% 877 4.1% 21,290
1996 8,076 36.8% 5,691 25.9% 7,053 32.1% 1,132 5.2% 21,952
1997 8,194 35.8% 6,610 28.9% 7,200 31.4% 890 3.9% 22,894
1998 7,975 33.4% 6,919 28.9% 8,245 34.5% 761 3.2% 23,900
1999 8,319 35.3% 6,351 26.9% 8,170 34.6% 755 3.2% 23,595
-------------------------------------------------------------------------------
</TABLE>
Table 1.9 Total Units Supplied By Manweb (GWh)/2/
<TABLE>
<CAPTION>
Fiscal
Year Residential % Commercial % Industrial % Other % Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 4,825 42.1% 3,020 26.4% 3,201 28.0% 403 3.5% 11,449
1996 4,889 46.8% 2,997 28.7% 2,142 20.5% 412 4.0% 10,440
1997 4,930 50.3% 2,908 29.7% 1,552 15.8% 408 4.2% 9,798
1998 4,916 55.1% 2,435 27.3% 1,133 12.7% 433 4.9% 8,917
1999 4,999 62.1% 2,229 27.7% 437 5.5% 380 4.7% 8,045
-------------------------------------------------------------------------------
</TABLE>
/1/Covers both first tier (franchise and non-franchise) markets in
ScottishPower's service territory and second tier sales outside
ScottishPower's service territory.
/2/The reduction in Manweb figures in 1997 is attributable to the
continuing combination of the ScottishPower and Manweb sales force which
led to all new second tier customers contracting with ScottishPower.
ScottishPower Form 20-F 1999 19
<PAGE>
Electricity Trading
Electricity trading, within the Energy Trading Center, secures
competitive advantage for the group through being an informed trader
optimizing its position across the electricity value chain and
continuously evaluating and managing trading risk exposure. The risks
identified in electricity trading generally relate to price volatility
arising in the Pool market in England and Wales and the group's overall
exposure as a net generator (seller) or net supplier (purchaser) of
electricity which can (and does) vary over time. Such net exposure can
be managed through trading in contracts for differences with willing
parties such as other generators, suppliers or intermediaries. As an
external member of the Pool of England and Wales since 1990,
ScottishPower has traded principally as an exporter (generator), in
that energy market.
Electricity Markets
Energy Supply purchases electricity from a range of sources, including
the group's generation business, for sale to customers both within its
home areas and outside them. Until September 1998, only public
electricity suppliers were entitled to supply customers in their
franchise areas (now home areas) with demand less than 100 kW. From
September 1998 to May 1999, the franchise areas of all public
electricity suppliers were opened to competition on a phased basis,
with the result that electricity suppliers holding second tier
licenses, including ScottishPower and Manweb, are able to supply
electricity to all customers in the franchise area of a public
electricity supplier. Large industrial or commercial customers with
demand above that threshold have been and continue to be able to seek
supply from other electricity suppliers holding a "second tier"
license. ScottishPower's and Manweb's respective franchises were opened
to competition in three phases, commencing in September 1998 and
running through to February 1999. Since September 1998, the strategic
focus of the energy supply business has been defense of its existing
markets, particularly domestic and small business customers in the
ScottishPower and Manweb areas, while exploiting the opportunity to
expand its customer base outside these regional boundaries. As at March
31, 1999, the energy supply business had retained 96% of domestic
customers in the ScottishPower area and 94% in Manweb. The business had
also signed up 190,000 electricity contracts outside those home areas.
In the highly competitive industrial and commercial energy market the
group has sought to defend market share and has retained 76% of these
volumes in the ScottishPower area. In Manweb, which comprises some of
the largest industrial electricity users in the country, the group has
retained a 27% share of these volumes. Outside the group's home areas,
the group currently supplies around 1,750 GWh of electricity.
As the industrial and commercial energy market has become increasingly
commoditised, the group has continued to develop a presence in the
growing energy services marketplace, focusing mainly on larger
businesses. This involves the outsourcing of energy and utility related
services for on-site generating plant, boiler and steam raising plant
and other energy efficient applications.
Gas Markets
The group has a growing gas supply business, which exploits the
synergies with the generation business and allows value to be created
by profiling gas between supply and generation. The domestic gas supply
market has been open to full competition (i.e., extended to premises
with consumption under 2,500 therms per annum) since late May 1998. The
group has now established itself as one of the leading challengers to
Centrica plc (British Gas Trading) in this market, having already
acquired a total of 760,000 domestic contracts at the end of fiscal
1999, approximately 4.0% of the total U.K. gas supply market.
In the business market, the group has continued to grow, supplying gas
representing approximately 220 million therms per annum to 23,215 sites
across the U.K.
Domestic Energy Contracts
Fiscal 1999 was a very challenging one for the group's energy
businesses as the residential electricity supply market was opened to
competition. At March 31, 1999, new domestic energy contracts secured
since, in the case of gas, the second phase of competition in April
1997 and, in the case of electricity, the introduction of competition
in September 1998, totaled 950,000 (760,000 gas and 190,000 new
electricity contracts). The group's focus is on securing "dual fuel"
electricity and gas customers and to date the group has more than
317,000 dual fuel energy contracts signed. The group's progress has
been achieved in spite of intense competition. Electricity customers
20 ScottishPower Form 20-F 1999
<PAGE>
registered to leave the group at March 31, 1999 were 147,000,
representing 5% of customers in ScottishPower's and Manweb's home
areas.
The group will continue to seek to win further new customers.
Attracting new customers leads to initial costs in sales and marketing,
information systems and new procedures. However, ScottishPower believes
that this investment should contribute to earnings in the medium to
longer term.
Customer Service
ScottishPower has taken steps to improve all aspects of its customer
service within the energy businesses in preparation for full
competition in the domestic electricity supply market, and intends to
continue to treat improving customer service as a priority over the
next year. The businesses' customer service guaranteed standards were
maintained in the year ended March 31, 1999 at the high level set in
the previous year, with over 99.99% of all electricity services
provided currently matching or exceeding regulatory standards.
All service requirements in Scotland are met by a customer service call
center, employing modern communications and information technology,
offering a comprehensive service to customers, including 24 hour faults
and emergency support. In Manweb's home area the group has focused its
activities on improving customer service through the provision of two
regional call centers and a business call center. The group has also
established a gas call center in Warrington servicing domestic and
small business customers.
The performance of ScottishPower and Manweb in the area of Guaranteed
Standards failures over the last seven years as reported to OFFER is
shown below.
[The following is a description of the information that appears in the bar
charts.
Scottish Power-Guaranteed Standards Manweb - Guaranteed
Failures Standards Failure
1992/93 - 1673 1992/93 - 1071
1993/94 - 1051 1993/94 - 253
1994/95 - 249 1994/95 - 181
1995/96 - 145 1995/96 - 242
1996/97 - 150 1996/97 - 81
1997/98 - 117 1997/98 - 62
1998/99 - 89 1998/99 - 40]
Domestic gas suppliers faced increases in complaints during the period
of market liberalization. The most common complaints to the Gas
Consumers' Council have concerned the change of supplier process and
sales and marketing activity. ScottishPower received 2,285 OFGAS and
Gas Consumer Council complaints during fiscal 1999, which equates to
less than 1% of the customer accounts won during the year.
ScottishPower's performance in terms of user complaints was
considerably better than that experienced by some other market
entrants.
ScottishPower is responding to competition by reducing operating costs
and improving customer service. Underlying operating costs within
ScottishPower's home area have declined by an average of 10% per annum
over the last three years. ScottishPower has achieved these reductions
by consolidating customer service operations from nine regional offices
into one Customer Service Call Center; introducing new customer systems
to streamline processes and remove unnecessary manual effort;
introducing more flexible working practices which enabled services to
be expanded at minimum cost. These initiatives have enabled
ScottishPower to match its resources to work profile more efficiently
and to remove "back office" costs. In addition, following the Manweb
acquisition in 1995, the group has continued to exploit opportunities
for synergy savings in common or shared supply functions.
Southern Water
Structure of the Water Industry in the United Kingdom
Prior to privatization of the water industry, the provision of water
supply and wastewater services in England and Wales was split between
twenty-nine statutory water companies, each incorporated by separate
Acts of Parliament
ScottishPower Form 20-F 1999 21
<PAGE>
which could only supply water, and ten water authorities established
under the Water Act 1973 which could provide both water and wastewater
services. Pursuant to the Water Act 1989 (the "WA 1989"), the functions
of each water authority relating to water supply (except in areas where
those functions were carried out through statutory water companies) and
the provision of wastewater services were transferred on September 1,
1989 to a Water and Sewerage Company (a "WaSC"). At privatization,
certain of the water authorities' other functions, including pollution
control, water resource management, fisheries, flood protection and
alleviation and land drainage were transferred to the National Rivers
Authority (the "NRA"). See "Environmental Regulation--Water" for
further discussion.
The relevant provisions of the WA 1989 were consolidated with other
functional legislative provisions into the Water Industry Act of 1991
("WIA 1991"). This provides that each company engaged in public water
supply or wastewater services must be licensed by the Secretary of
State for the Environment or by the Director General of Water Services
(the "DGWS"), in accordance with a general authorization given by the
Secretary of State for the Environment. See "Regulation of the Water
Industry".
Southern Water was acquired by ScottishPower on August 6, 1996. At the
time of its acquisition, Southern Water consisted of the holding
company, an appointed WaSC (Southern Water Services), and a diverse
portfolio of 20 other businesses.
Region
The region in which Southern Water operates occupies an area of
approximately 10,450 square kilometers in the counties of Kent, East
and West Sussex, Hampshire and the Isle of Wight and small parts of
Wiltshire, Berkshire and Surrey. The region's coastline stretches from
Swanscombe on the Thames Estuary to just beyond the Solent at Barton on
Sea, including the Isle of Wight. The region has an estimated
population of approximately 4.2 million. Around half of the resident
population of the region live in urban areas spread along the coastline
and around major estuaries. Approximately one fifth live in
predominantly inland urban areas and the remainder inhabit
predominantly rural areas. The portion of the region to which Southern
Water supplies water covers a total area of some 4,450 square
kilometers, contains approximately 1.0 million premises and has a
resident population of some 2.2 million people. Local water companies
supply the rest of the region's water requirements. Southern Water
provides wastewater services to virtually all of the region, collecting
sewage from around 1.7 million premises.
Water Supply Business
Southern Water supplies on average 600 million liters of water per day
which is distributed through 13,300 kilometers of water main. Southern
Water's 104 water treatment works treat water from 132 water sources in
the region with 70% of water supplied coming from underground sources.
Water is pumped through the water mains by 413 pumping stations.
Southern Water is also responsible for the operation and maintenance of
four impounding reservoirs which have a total storage capacity of
42,390 million liters.
Water put into supply exhibits a pronounced seasonal variation between
summer and winter. Typically the peak seven day demand in the summer is
up to 40% higher than the annual average and stems from increased
residential usage and the influx of tourists to resort towns along the
south coast and on the Isle of Wight.
The bulk of Southern Water's underground sources are located in chalk,
with a small number of abstractions being made from sandstone aquifers.
The water is of high quality and receives various forms of treatment
appropriate to each source. These provide reductions in the level of
pesticides, iron and manganese; the reduction of plumbosolvency; and in
all cases protection against bacteria throughout the distribution
system to the point of use at the customers' taps by a residual level
of chlorine. A single source has treatment to reduce the amount of
nitrates, which is kept elsewhere within acceptable limits by blending
output from various sources where necessary.
The smaller proportion of water from rivers and reservoirs has a more
complex form of treatment. In addition to the processes used for
underground supplies, clarification and filtration processes provide a
similar high quality drinking water. Again, in all cases disinfection
is maintained by a residual level of chlorine.
Southern Water has 13,300 kilometers of water main. In order to
minimize the loss of water through leakage, a leakage control
initiative was introduced following privatization in 1989 and has
reduced water loss by 144 million
22 ScottishPower Form 20-F 1999
<PAGE>
liters per day. Since privatization Southern Water has one of the best
records with respect to water supply leakage among the WaSCs. Losses
through leaks in its distribution system stand at 11.2% in fiscal 1999
compared to 26% just before the time of privatization, with a target to
achieve 11.0% by the year 2000.
Southern Water monitors water quality through a program in which
samples are analyzed regularly for both microbiological and chemical
parameters. In 1998, 99.82% of water sampled passed the EU performance
criteria.
Wastewater Business
Southern Water has 392 wastewater treatment works ("WTWs") which treat
sewage pumped through 20,700 kilometers of sewer by 1,975 pumping
stations. WTWs provide various treatment types as follows: primary,
enhanced primary, secondary biological and tertiary. In addition, as
part of the treatment process to meet current bathing water standards,
Southern Water has 24 long sea outfalls around the coastline of its
region.
Under the Water Resources Act 1991, WTWs are granted consent by the
Environment Agency (the "EA") to discharge sewage effluent to
controlled waters. The conditions attached to each consent can cover
quality, quantity and operational parameters as laid down in the
"Standard Clauses" of the Discharge Consents Manual issued by the EA.
The basis of the EA's policy is to maintain and improve water quality
and the aquatic environment.
In addition to the residential population, the businesses in Southern
Water's region discharge industrial effluent having the equivalent
strength of an additional population of about 486,000.
The disposal of sludge produced by WTWs is strictly controlled.
Disposal to landfill is becoming restricted due to the lack of
available local sites. In addition, all sludge disposed in this way is
subject to a Landfill Tax. Disposal at sea ceased by December 1998. It
is intended that the majority of the sludge produced at Southern
Water's WTWs will be further processed to produce a soil conditioner
which can be recycled and sold to the agricultural industry and any
remaining amount will be incinerated. The recycling of treated sludge
to agricultural land is controlled by an EU directive while
incineration is controlled by licenses issued by the EA. The sludge
produced by Southern Water's WTWs amounts to 77,500 tonnes of dry
solids per year.
In the 1999 bathing season, under the EU Bathing Water Directive, the
EA is testing 79 beaches in the Southern Water region. Under the
directive, the EA takes at least 20 samples during the bathing water
season (May 1 to September 30) at each identified bathing beach and
compliance is assessed on the basis of tests for bacteria. Additional
tests are carried out for 19 physicochemical parameters in addition to
the bacterial test and on two occasions during each season the bathing
water is tested for the presence or absence of enteroviruses. Results
may be published and posted by district councils on the beaches
concerned. In the 1998 bathing season, only 2 beaches out of 77 failed
the compliance tests. Capital schemes are in progress to reduce the
likelihood of failures in future years.
Table 1.10 below sets forth key information with respect to the
Southern Water's activities in fiscal 1999.
<TABLE>
<CAPTION>
Southern Water
--------------------------------------------------------------
<S> <C>
Franchise area (km/2/) 10,450
Water supply services 1 million premises
2.2 million people
Water supply 588 million liters per day
Water main (km) 13,300
Reservoir storage capacity 42,390 million liters
Wastewater treatment works 392
Wastewater treatment services 1.7 million premises
4.2 million people
Wastewater treated 1,300 million liters per day
Capital expenditure fiscal 1999 (Pounds)347 million
</TABLE>
ScottishPower Form 20-F 1999 23
<PAGE>
Business Objectives
Following the acquisition, a new business strategy has been developed
based on maximizing value for ScottishPower shareholders. Under this
new strategy, the group is seeking to radically remodel Southern Water
into one of the U.K.'s most efficient water and wastewater companies.
This has involved shifting the focus firmly back to the core business
where the group's key utilities skills of asset management, customer
service and regulatory management are being exploited to deliver
enhanced value. Non-strategic businesses have been sold and business
processes have been substantially simplified by absorbing certain key
activities from the enterprise businesses back into an expanded core
business. At the same time, head office functions have been
rationalized, with group functions being transferred to Scotland.
Southern Water contributed more than (Pounds)21 million of additional
operating profit, mainly from increased revenues and continued cost
savings of (Pounds)10 million delivered by the acquisition transition
plan during fiscal 1999.
The business strategy is also aimed at building a proactive and co-
operative relationship with the Office of Water Services ("OFWAT"),
including the development of an output driven capital program which
delivers all of the obligations included in fiscal 1996 to fiscal 2000
price determination period at a reduced cost from the agreed funding
level granted by OFWAT. The delivery of obligations at lower cost than
assumed in the price determination will generate efficiencies that will
initially add shareholder value and ultimately result in a more cost-
efficient service to customers.
Investment Program
In common with other WaSCs, Southern Water is faced with a substantial
investment program for the period for 1996 to 2000, estimated to be of
some (Pounds)1.0 billion. This program is largely driven by the EU
Bathing Water Directive, the Urban Waste Water Treatment Directive
("UWWTD"), a sludge strategy to deal with cessation of dumping at sea,
the increase in the volume of sludge due to the UWWTD and the
expectation of more stringent environmental constraints relating to
sludge disposal on land.
The program is dominated by the construction of 24 new WTWs as required
by the EU Directives. In addition, there are required regulations set
by OFWAT, the Drinking Water Inspectorate and the EA to maintain and
improve the security and quality of service provided. These outputs
include projects to address:
. above and below ground asset maintenance;
. water resources and security of water supply;
. reduced leakage and improved water pressure;
. drinking water quality;
. removal of flooding risk; and
. avoidance of storm overflows on combined sewers.
Southern Water was granted implicit funding in the price determination
via an allowed annual rate of return on the OFWAT estimate of
investment of (Pounds)1.0 billion. Southern Water's investment program
has therefore essentially been "funded" upfront. A key aspect of the
group's business strategy is to seek to deliver all of the required
regulatory outputs of the capital program as efficiently as possible.
ScottishTelecom
ScottishPower Telecommunications Limited ("ScottishTelecom"), a
subsidiary of ScottishPower, provides competitive communication
services. Organic growth, coupled with a focused acquisitions policy,
has positioned ScottishTelecom strongly across the breadth of the
communication business since its launch in 1994.
ScottishTelecom now provides, under innovative tariff packages, a wide
portfolio of communication services ranging from fixed voice, data and
mobile telephony services to call center services, on-line information
and Internet access.
In February 1998 ScottishTelecom acquired Pinnacle Cellular and it
acquired Demon Internet for (Pounds)66 million on May 1, 1998.
ScottishTelecom's "Scotland On-Line" and "Prestel" operations combined
with Demon Internet now have in excess of 275,000 customers.
24 ScottishPower Form 20-F 1999
<PAGE>
The business moved into operating profit during fiscal 1998 and
contributed (Pounds)10.3 million to the group's audited consolidated
operating profits for fiscal year 1999. ScottishTelecom's current share
of the overall Scottish telecommunications market in which it operates
is still relatively small, but is increasing. The ScottishPower Board
believes that revenue growth will come from carrying Demon Internet
telecoms traffic following the installation of a network switch and
supporting infrastructure which was completed at the beginning of
February 1999.
The development of the group has caused the Directors to review the
future of ScottishTelecom. ScottishPower is currently evaluating the
strategy of ScottishTelecom and the options available to maximize
shareholder value from its investment in this business, in what is a
rapidly changing and developing sector. This assessment includes a
review of the services provided by ScottishTelecom, its funding needs
and any consequential restructuring. The Directors expect to reach a
decision during the year.
Other Businesses
Electrical Retailing
ScottishPower's electrical retailing business sells electrical products
through a chain of 183 outlets throughout the U.K. In addition to
retail sales, the group's electrical retailing business provides
servicing and repair facilities and delivery and connection facilities.
ScottishPower's electrical retailing business is the third largest
specialist retailer of electrical appliances in the U.K. It now has
5.5% of the U.K. 'white goods' market and 4.0% of the U.K. "brown
goods' market. Electrical white goods (including cookers, washing
machines, refrigerators and small residential appliances) account for
approximately 60% of total appliance sales. Brown goods (including
televisions, stereo equipment, computers and camcorders) account for
approximately 40% of appliance sales.
The business has continued to gain market share through incrementally
increasing the number of new stores and organic growth from existing
stores. During fiscal 1999 it opened 10 new superstores, increasing
selling space by 76,289 square feet.
Contracting Services
The group's contracting services business specializes in niche markets,
including the installation and maintenance of high voltage equipment,
residential heating (electrical and gas installations), street
lighting, security and fire alarms, residential telephone connections,
appliance and installation inspection and pre-planned maintenance, as
well as instrumentation, mechanical and project management along with
property and facilities management.
Technology
The group's Technology business combines a number of groups which
specialize in different areas of engineering consultancy and science,
including mechanical, electrical, civil engineering and environmental
sciences. The range of work undertaken by the business is expansive and
includes most categories of engineering consultancy from design and
construction of buildings, plant and components, to the development of
sophisticated control systems and monitoring devices.
In addition to supporting ScottishPower's operational activities, the
Technology business is closely involved in ScottishPower's capital
investment program in its power stations, in the design and project
management of new generation schemes such as combined cycle gas turbine
plant and wind farms. The business also plays an important role in the
refurbishment of the group's electrical retailing stores and the
development of the telecommunications infrastructure.
Information Systems
The Information Systems Division is heavily involved in helping the
group's other businesses prepare for energy supply liberalization. In
fiscal 1999, expenditure on systems development throughout the group
was (Pounds)51 million.
The group has already made substantial progress towards achieving Year
2000 compliance, investing (Pounds)20 million in fiscal 1999. In
addition, it has achieved the IBM "e-business mark', a fast developing
standard for electronic commerce.
ScottishPower Form 20-F 1999 25
<PAGE>
Year 2000
Potential computer problems associated with the Year 2000 date change
are an issue for users of computer systems throughout the world,
including systems with embedded chips. ScottishPower is dependent on
its own systems and on those of its key suppliers and customers. The
Directors do not believe that ScottishPower faces greater risks from
Year 2000 issues than other comparable utility companies in the U.K.
ScottishPower established its group-wide Year 2000 program in 1997 to
seek to manage the effects that Year 2000 issues may have on the
group's operations. The methodology used builds on practices developed
in conjunction with several user groups, including the Electricity
Association (the trade association for electricity), U.K. Y2K Interest
Group (the largest Year 2000 self-help group in the U.K.) and IMPACT (a
confederation of many of the Top 100 companies in the U.K.). The scope
of ScottishPower's program covers all aspects of the group's business.
ScottishPower's approach concentrates on three main areas which are as
follows:
. working on and testing its own internal systems through gathering
inventory, assessing criticality, prioritization and planning,
testing and remediation;
. understanding the Year 2000 readiness of its suppliers and major
customers; and
. modifying and developing contingency processes to reduce residual
risk.
The program focuses on IT systems, both corporate and desktop, non-IT
systems (embedded chip systems) including process monitoring and
control, business processes and business partners. ScottishPower is
currently reviewing contingency plans, operational procedures, staffing
issues and "worst case" scenarios. A Millenium Operating Regime is
being implemented, and is particularly aimed at enhancing the group's
state of readiness for the rollover period.
Within each of ScottishPower's businesses, the Directors believe that
scheduled remediation projects on the group's systems are well advanced
with 89% of all critical projects substantially complete. The group is
finalizing compliance work on its systems, and this work is planned to
be completed well in advance of the end of 1999.
ScottishPower's systems and operations are also dependent on products
and services provided by others. Since autumn 1997, all orders and
contracts placed by ScottishPower have included a Year 2000 clause
requiring compliance to the BSI standard PD2000-1. As part of the
supply chain management work undertaken, ScottishPower is assessing
critical suppliers and customers for their Year 2000 compliance. The
group has made an initial assessment of all its critical suppliers and
will continue to monitor all of them during 1999. Interdependencies
with other utilities are being reviewed through the U.K. Y2K Utilities
Forum and other forums and one-to-one meetings. All other suppliers are
being treated in accordance to the group's reliance on them. Where
appropriate, alternative suppliers may be appointed.
ScottishPower's Year 2000 program has been carried out using internal
resources where possible, supplier resources where appropriate and
specialist contractors where considered necessary. As at March 31,
1999, the group has already spent approximately (Pounds)22 million on
its Year 2000 program. The Directors estimate, based on the group's
best estimates and, where appropriate, advice from specialist
contractors, that the total cost to ScottishPower of the Year 2000
program will be approximately (Pounds)30 million. This does not include
the cost of certain capital investment programs which are being
accelerated in order to seek to resolve the Year 2000 issues.
The Directors believe that the group's work on its own systems and
equipment and review of critical suppliers means that the group is
taking all reasonable steps to minimize the risks associated with Year
2000 issues. Based on the current state of knowledge on managing Year
2000 issues and the Directors' best estimates, the Directors believe
that, because of the anticipated short-term nature of any potential
interruptions, it is unlikely that Year 2000 issues will have a
material impact on the group's financial condition or operations.
However, there can be no assurance that the steps taken by the group
will successfully minimize vulnerabilities of its software and systems,
or those of its suppliers, to the problems associated with the
transition to the Year 2000, that disruptions to the group's business
will not occur or that the costs associated with the advent of the Year
2000 will not be greater than anticipated.
26 ScottishPower Form 20-F 1999
<PAGE>
Regulation of the Electricity Industry
Introduction
The U.K. electricity industry is regulated under the provisions of the
Electricity Act 1989. The Electricity Act provided for the basis of the
restructuring of the electricity supply industry ("ESI") in England and
Wales and in Scotland in 1990, including the introduction of price
regulation for transmission and distribution and competition in supply
and generation.
Regulation of the ESI
The Electricity Act provides for the appointment of the DGES by the
Secretary of State for Trade and Industry. The DGES holds office for
renewable periods of five years and is the head of OFFER and its staff
of administrators, economists and accountants.
Under the Electricity Act, the Secretary of State and the DGES are
required to exercise their respective functions in the manner best
calculated to achieve various objectives including securing that all
reasonable demands for electricity are satisfied; securing that license
holders are able to finance the carrying on of the activities for which
they are authorized by their licenses; and promoting competition in the
generation and supply of electricity. Subject to these duties, the
Secretary of State and the DGES have a number of other duties,
including protecting the interests of consumers of electricity.
The DGES exercises, concurrently with the Director General of Fair
Trading, certain functions relating to monopoly situations in the
generation, transmission, distribution or supply of electricity under
the Fair Trading Act 1973 and certain functions relating to anti-
competitive conduct under the Competition Act 1980. Under the
Competition Act 1998, the DGES will continue to exercise functions
concurrently with the Director General of Fair Trading.
The Licensing Regime
The Electricity Act prohibits the generation, transmission or supply of
electricity to any premises unless authorized by a license or
exemption. Licenses are granted for generation, transmission, public
electricity supply by a PES and second tier supply.
Under the electricity regime, England and Wales is divided into 12 PES
franchise areas, and Scotland into two additional PES franchise areas,
for the purposes of electricity supply and distribution.
Each of the 14 PES licenses permits its holder to supply electricity to
any premises within its authorized franchise area (first-tier license).
Electricity suppliers which are not the PES license holder for that
franchise area are known as second-tier suppliers and have second-tier
supply licenses (second-tier license).
Each PES licensee distributes electricity for second tier suppliers
whose customers are within that PES licensee's authorized area, as well
as for its own supply business. Charges for distribution are made to
the PES licensee's own supply businesses or to second-tier suppliers as
appropriate. Each PES license prohibits discrimination between its own
supply business and other users of its distribution system.
Each PES licensee is required, among other duties, to develop and
maintain an efficient, coordinated and economical system of electricity
and supply and to offer terms for connection to, and use of its
distribution system on a non-discriminatory basis; in particular, a PES
licensee may not discriminate in favor of its own first- or second-tier
supply businesses.
Each PES license requires the PES licensee to plan and develop its
distribution system to a standard not less than that previously
applicable within the nationalized electricity supply industry and to
report annually to the DGES giving details of the performance of the
licensee in maintaining distribution security and availability and
quality of service during the previous financial year.
ScottishPower Form 20-F 1999 27
<PAGE>
ScottishPower is licensed under the Electricity Act to generate
electricity, transmit electricity within its authorized transmission
area and distribute and supply electricity within its authorized supply
area. This license (a "Composite License") regulates each of its
generation, transmission, distribution and supply businesses and
certain other related aspects of its activities. In addition, it has
second-tier licenses which authorize it to supply electricity to
customers located outside its authorized supply area.
Manweb is licensed under the Electricity Act to distribute and supply
electricity within its authorized supply area pursuant to its PES
license. Manweb also holds three second tier licenses which authorize
it to supply electricity to users located in the authorized areas of
other PESs, in England and Wales, Scotland and Northern Ireland
respectively.
Prior to September 1998, PESs were the only suppliers authorized to
supply electricity to franchise customers (being customers with a
maximum demand of less than 0.1 MW) in their respective authorized
areas. Starting from September 1998, each PES was, at the direction of
the DGES, to open its franchise area progressively to competition from
other suppliers holding second tier licenses. The scope of the second
tier licenses was extended correspondingly at the direction of the
DGES. This process was completed in May 1999.
In addition, in order for a second tier license holder to supply a
"designated customer" (being a domestic customer or a customer
requiring less than 12,000 kWh per year) in the authorized area of a
PES, the second tier license holder must issue a designated supply
notice to OFFER, and have its codes of practice (statements of intent
about how the supplier will interact with customers) approved by OFFER.
Modification of Licenses
The DGES is responsible for monitoring compliance with the conditions
of licenses and, where necessary, enforcing them through procedures
laid down in the Electricity Act. License conditions may be modified,
either in accordance with the terms of the relevant licenses or in
accordance with the procedures laid down in the Electricity Act.
Under the Electricity Act, the DGES may modify a license condition with
the agreement of the license holders after due notice, public
consultation and consideration of any representations or objections. In
the absence of agreement, the only means by which the DGES can secure a
modification is following a modification reference to the Competition
Commission and in the circumstances set out below. A modification
reference requires the Competition Commission to investigate and report
on whether matters specified in the reference relating to the
generation, transmission or supply of electricity in pursuance of a
license operate, or may be expected to operate, against the public
interest and, if so, whether the adverse public interest effect of
those factors could be remedied or prevented by modification of the
conditions of the license. In determining whether any particular matter
operates, or may be expected to operate, against the public interest,
the Competition Commission is to have regard to the matters in relation
to which duties are imposed on the Secretary of State and the DGES.
If there is an adverse finding, the Competition Commission's report
will state whether any adverse effects on the public interest could be
remedied or prevented by modification of the license conditions. If the
Competition Commission so concludes, the DGES must then make such
modifications to the license as appear to him requisite for the purpose
of remedying or preventing the adverse effects specified in the report,
after giving due notice and consideration to any representations and
objections. The Secretary of State has the power to veto any
modification reference.
Modifications to license conditions may also be made in consequence of
a monopoly or merger reference under the Fair Trading Act 1973 or,
until March 2000, a reference under the Competition Act 1980. At that
date, the relevant provisions of the Competition Act 1980 will be
repealed by the Competition Act 1998.
ScottishPower's acquisition of Manweb in 1995 and Southern Water in
1996 involved ScottishPower giving assurances to the Secretary of State
to modify Manweb's PES license and ScottishPower's Composite License
(and Southern Water Services' Water Appointment). These modifications
are discussed in more detail below. See "Principal Conditions of
ScottishPower's Composite License and Manweb's PES License" and
"Principal Conditions of Southern Water Services' Appointment".
28 ScottishPower Form 20-F 1999
<PAGE>
Term and Revocation of Licenses
ScottishPower's Composite License continues until terminated by not
less than 25 years' notice given by the Secretary of State on or after
March 31, 2000. Manweb's PES license also continues until terminated by
not less than 25 years' notice given by the Secretary of State on or
after March 31, 2000.
ScottishPower's and Manweb's second-tier licenses in relation to
second-tier supply in England and Wales continue until terminated by
not less than 25 years' notice given by the Secretary of State for
Trade and Industry on or after November 19, 2000, and April 1, 2001,
respectively. ScottishPower's second-tier license in relation to what
was formerly Scottish Hydro-Electric plc's authorized supply area
continues until terminated by not less than 25 years' notice given by
the Secretary of State for Trade and Industry on or after March 31,
2000. Manweb's second-tier license in relation to Scotland continues
until terminated by not less than 25 years' notice given by the
Secretary of State for Trade and Industry on or after July 1, 2004.
Licenses under the Electricity Act may be revoked in certain
circumstances specified in the licenses, such as the insolvency of the
licensee or the licensee's failure to comply with an enforcement order
made by the DGES. In addition, the Secretary of State for Trade and
Industry may revoke each of ScottishPower's generation, transmission
and PES licenses if ScottishPower ceases to carry on the activities
authorized by the respective license.
Principal Conditions of ScottishPower's Composite License and Manweb's
PES License
ScottishPower's Composite License and Manweb's PES License require
ScottishPower and Manweb respectively to prepare and publish separate
accounts, including on a current cost accounting basis, for each of
ScottishPower's generation, transmission, distribution and supply
businesses (first and second tier and wholesaling business) and
Manweb's distribution and supply businesses.
It is a further license requirement that none of ScottishPower's nor
Manweb's businesses gives any cross-subsidy to, or receives any cross-
subsidy from, any of ScottishPower's or Manweb's other businesses,
whether regulated by the Composite License or not.
A number of Composite License and PES License conditions require
ScottishPower and Manweb, respectively, to be party to certain
agreements or codes which affect their operational activities, for
example, the Grid Code, which includes provisions governing the
technical aspects of connections to, and the operation of, the
transmission systems. Each PES licensee must also draw up, implement
and comply with a Distribution Code, which interacts with the Grid Code
and specifies technical requirements for connection to, and the
operation and use of, its distribution system, and Codes of Practice on
customer relations, which require the approval of the DGES. There are
also Electricity Supply Regulations and certain performance standards
determined by the DGES which must be complied with.
The modifications made upon the acquisition of Manweb were designed to
address the fact that, as a result of the acquisition, Manweb became a
subsidiary of ScottishPower. Broadly, the modifications were designed
to ring-fence Manweb's regulated businesses (distribution, supply and
second-tier supply) from its non-regulated businesses and from
ScottishPower's other businesses, to impose certain information
reporting requirements on Manweb and ScottishPower to assist the DGES
in his ability to carry out his regulatory functions and to address the
fact that ScottishPower and Manweb are both electricity companies.
As a condition for regulatory clearance of ScottishPower's acquisition
of Southern Water, ScottishPower gave assurances to the Secretary of
State that it would not operate any new business which is not regulated
under the Electricity Act and whose annual turnover accounts for more
than 5% of ScottishPower's aggregate annual turnover excluding all
subsidiaries, other than as subsidiary company; ensure that
ScottishPower had sufficient management and financial resources to
fulfill its obligations to enable the introduction of competition in
supply for all customers in its authorized area; and agree to
appropriate modifications to Southern Water's license. These are
discussed in more detail below--see "Principal Conditions of Southern
Water Services' Appointment".
ScottishPower Form 20-F 1999 29
<PAGE>
Price Controls
The primary objective of the regulation of the U.K. electricity
industry is the promotion of competition wherever possible while
ensuring that demand can be met and companies are able to finance their
regulated activities. However, it is recognized that the development of
competitive markets is not appropriate in some areas (such as in the
transmission and distribution of electricity) and that in other areas
it will take time to develop (as in the supply of electricity). In
these areas regulatory controls are deemed necessary to protect
customers in a monopoly market (by determining inflation limited price
caps) and to encourage efficiency.
ScottishPower and Manweb's businesses are subject to a number of price
controls which take the form of a maximum price which can be charged
(price cap). This price cap restricts the average amount charged for a
bundle of services. Since 1995 regulation has tended to restrict price
increases to customers to levels below the increase in the retail price
index through a formula expressed as RPI-X.
The rationale behind the use of the RPI-X formula is that companies are
motivated, during the period of the price control, to maximize
efficiencies knowing that they can retain any element of
overperformance for their shareholders. The price caps are expressed in
terms of an RPI minus X constraint on charges, where RPI represents the
annual percentage change in the U.K.'s retail price index, and X may be
any number determined by the DGES. The X factor is used to reflect
expected efficiency gains and investment requirements. For example,
where RPI is running at 3% and X is 2%, a company would be able to
increase the average charge for a bundle of services by 1%. Since the
controls are forward looking and are based on forecasts (e.g.,
projected electricity sales volumes), correction factors may also be
required to adjust tariffs in subsequent years to account for any
forecasting errors.
The DGES from time to time reviews the price cap formulae applicable to
the transmission, distribution and supply businesses to ensure that
reasonable demands for electricity are satisfied, that license holders
are able to finance the carrying on of their licensed activities
(including the ability to raise capital at reasonable rates), that
competition is promoted in the area of energy supply and that the
interests of consumers of electricity are protected.
ScottishPower and Manweb participate in reviews of price caps
applicable to them by submitting to OFFER their view of what reasonable
efficiency gains and future investment requirements should be built
into the determination of the revised price control.
As with any modification to license conditions, the DGES must undertake
a consultation exercise, inviting comments from PES licensees and third
parties, before modifying licenses to incorporate new price controls.
As described above under "--The Licensing Regime--Modification of
Licenses", license conditions may be modified, either with the consent
of the licensee or, in the absence of consent, following a modification
reference to the Competition Commission. The Competition Commission is
an independent body whose statutory duty is to determine whether the
matters specified in a reference to it operate or may be expected to
operate, against the public interest, and if so whether the adverse
public interest effect of those factors could be remedied or prevented
by modification of the conditions of the license. The Competition
Commission must have regard to the matters in relating to which duties
are imposed on the Secretary of State and the DGES, but will also take
evidence from the electricity companies and third parties before
reaching its conclusion. If the Competition Commission concludes that
adverse effects on the public interest could be remedied or prevented
by modification of the license conditions, the DGES must then make such
modifications to the license as to appear to him to be requisite to
remedy or prevent the adverse effects identified.
Through participation in, and the submission of evidence to, these
price control reviews and, where necessary, through the Competition
Commission modification process described above, companies have the
opportunity to comment on and seek to influence the final outcome of
any price control review.
ScottishPower Transmission Price Control
The permitted maximum average charge per unit transmitted calculated
under the transmission formula, multiplied by a pre-determined number
of units transmitted, including both in area consumption and exports,
determines the maximum transmission revenue that ScottishPower is
permitted to earn in any financial year from these services.
30 ScottishPower Form 20-F 1999
<PAGE>
In September 1993, the DGES announced a revised transmission price
control for ScottishPower, to take effect from April 1, 1994 and to run
for five years. The new control left the X factor unchanged at RPI
minus 1. The major changes to the initial control were: the inclusion
of Interconnector revenue from the link with NGC within the definition
of regulated revenue; the use of a predetermined forecast of units
transmitted (including units transmitted onto another transmission
system) rather than actual numbers transmitted; and the replacement of
forecasts of inflation with actual historic values.
In Spring 1998 ScottishPower agreed with the DGES to a delay of one
year in the ScottishPower transmission price review with the new price
control taking effect from April 1, 2000. For the interim year, fiscal
2000, transmission revenue will be allowed to increase at the rate of
inflation. OFFER is currently reviewing the scope and duration of the
transmission price controls for Scotland thereafter and is expected to
publish draft proposals for revised price controls in August 1999 and
final proposals in November 1999, which will come into effect in April
2000.
Distribution Price Control
The maximum distribution revenue is calculated from a formula that is
based on customer numbers as well as units distributed. The current
value of X for ScottishPower's distribution price control is 2 and will
continue at this level until March 31, 2000. Following a reopening by
the DGES in March 1995 of the five year price control set for RECs in
England and Wales in August 1994 (and due to take effect on April 1,
1995), the DGES imposed a one-off price reduction of 11% for Manweb
from April 1, 1996. The value of X from April 1, 1997 to March 31, 2000
was increased in England and Wales to 3.
OFFER is currently reviewing the distribution price controls for all
PESs and is expected to publish draft proposals in August 1999 and
final proposals in November 1999, to come into effect in April 2000.
Supply Price Control
The value of X for ScottishPower's supply price control from April 1,
1995 to March 31, 1998 was set at 2. The value of X for Manweb's supply
price control from April 1, 1994 to March 31, 1998 was also set at 2.
All customers are now subject to competitive supply, although certain
smaller customers remain protected: for a two-year period from April
1998, the supply price control operates as a maximum price restraint on
tariff increases for ScottishPower's and Manweb's designated customers.
The nature and extent of possible restraints from April 1, 2000 are
being reviewed at the same time as the distribution price controls. By
way of protection of the consumer, PES license conditions prohibit
discriminatory, onerous or predatory pricing in areas in which a PES
has been determined dominant (currently in the PES's authorized area).
Future Regulation
The prices which the group's electricity businesses may charge
customers in their respective authorized areas are controlled by a
formula which is linked to the U.K. RPI. Reviews of the price controls
governing the group's electricity supply activities took effect from
April 1, 1998 with a further review from April 1, 2000. Reviews of the
price controls governing the group's transmission activities and
distribution activities and for the water business will take effect
from April 1, 2000. The effect of the current price controls is
illustrated under "Effect of Price Controls".
In March 1998, the HM Government published a Green Paper "A Fair Deal
for Consumers-Modernising the Framework for Utility Regulation". In
July 1998, the HM Government published a summary of the response to its
consultations and in October 1998 it published a further consultation
paper which contains specific proposals. The main proposals are:
. separate licensing of supply and distribution activities of the PESs
with the licenses to be held by separate legal entities, though not
necessarily in separate ownership; and
ScottishPower Form 20-F 1999 31
<PAGE>
. a new single, primary duty on utility regulators to protect the
interests of consumers, wherever possible and appropriate through the
promotion of effective competition.
Further proposals to revise the regulation of the electricity industry
were published by the HM Government and the DGES in 1998, the most
important of which include the following:
. the DGES published proposals in July 1998 to reform the trading
arrangements in England and Wales along the lines of commodity
markets and other energy markets. The DTI published an Energy White
Paper in October 1998, supporting the DGES's proposals, and setting
out its expectation that wholesale price falls of at least 10% in
real terms, and possibly more, can be expected in the medium term. In
November 1998 a framework document on implementation of the new
trading arrangements was published by the DGES (encompassing the
development of a balancing market, a short-term bilateral market and
a related settlement system). A Development and Implementation
Steering Group has been set up to develop the new trading
arrangements with a target implementation date of fall 2000;
. revision of Scottish trading arrangements from April 2000. OFFER
issued a consultation paper on options for future Scottish trading
arrangements in December 1998, inviting comments on the creation of
either a single trading area in Scotland or unified UK-wide trading
arrangements. Further papers are expected to be published in June and
August 1999 with final proposals in November 1999; and
. separation of the supply, distribution, generation and transmission
activities of ScottishPower and Scottish & Southern into separate
companies. In May 1998, the DGES published a consultation paper on
the separation of the distribution and supply activities of PESs to
facilitate competition. It also considered the interface between
transmission and generation in Scotland. A further consultation paper
was published by OFFER in November 1998 proposing alternative
scenarios for operational separation. Following examination by
consultants of the costs of separation, OFFER published a further
paper in May 1999, proposing new arrangements for metering and new
obligations on PESs to separate their distribution and supply
activities. In addition, the operational separation of transmission
from generation in Scotland is being considered as part of the
reviews of the transmission price controls and Scottish trading
arrangements. A likely outcome will be a requirement for separate
licensed businesses within the same group to operate as separate
legal entities. Detailed proposals are expected in August 1999.
The timing of any potential legislation arising from these proposals
has not been announced. Until then the group will be actively involved
in the consultation process.
Callum McCarthy has been appointed as combined energy regulator, taking
up the post of Director General of Gas Supply in November 1998 and
Director General of Electricity Supply in January 1999.
Regulation of the Water Industry
Introduction
The U.K. Water Industry is principally regulated under the provisions
of WIA 1991 and the Water Resources Act 1991. WIA 1991 consolidates
enactments relating to the supply of water and the provision of
wastewater services, including WA 1989 and other enactments. WA 1989
provided for the privatization process itself and set up the post-
privatization structure and regulation of the industry.
WIA 1991
WA 1989 (now WIA 1991) provided for the appointment by the Secretary of
State for the Environment of an industry regulator, the DGWS. The DGWS
holds office for renewable periods of five years and is the head of
OFWAT and its staff of administrators, economists and accountants. The
current DGWS, Ian Byatt, was appointed as the first DGWS on August 1,
1989 and was subsequently re-appointed for a five-year term to run from
June 30, 1996 to the end of June, 2000.
The EA regulates discharges by water companies into rivers and coastal
waters and the abstraction of water from rivers and ground water; and
the Drinking Water Inspectorate regulates the quality of drinking water
in accordance with EU standards.
32 ScottishPower Form 20-F 1999
<PAGE>
Under WIA 1991, the DGWS and the Secretary of State for the Environment
must exercise or perform their duties in the manner best calculated to
secure that the functions of a water undertaker and of a sewerage
undertaker are properly carried out as respects every area of England
and Wales; and to ensure that companies holding Appointments are able
(in particular, by securing reasonable returns on their capital) to
finance the proper carrying out of their functions.
These powers and duties are also to be exercised in a manner best
calculated to ensure that the interests of the customer in relation to
the fixing and the recovery of charges are protected, and in particular
to ensure that the interests of customers and potential customers in
rural areas are so protected; that no undue preference is shown; and
that there is no undue discrimination in the fixing of those charges.
The DGWS and the Secretary of State for the Environment are also under
a duty to ensure that the interests of customers are protected as
respects benefits that could be secured for them by applying a share of
the proceeds of any disposals of a WaSC's land in future reviews.
The DGWS exercises, concurrently with the Director General of Fair
Trading, certain functions relating to monopoly situations in the
supply of water or the provision of wastewater services under the Fair
Trading Act 1973, and certain functions relating to anti-competitive
conduct in connection with the supply of water or securing a supply of
water or with the provision of, or securing of, wastewater services
under the Competition Act 1980. Under the new U.K. competition
legislation (Competition Act 1998), the DGWS will continue to exercise
functions concurrently with the Director General of Fair Trading.
Duties of Water Undertakers
Under WIA 1991, each water undertaker is under a general duty to
develop and maintain an efficient and economical system of water supply
within its license area. It must also ensure that all such arrangements
have been made for providing supplies of water to premises in its
license area, for making such supplies available to people who demand
them and for maintaining, improving and extending its mains and other
pipes, as are necessary to enable it to meets its water supply
obligations under the Act.
Duties of Sewerage Undertakers
Under WIA 1991, each sewerage undertaker is under a general duty to
provide, improve and extend such a system of public sewers and to
cleanse and maintain those sewers to ensure that its sewerage region is
effectively drained. Sewerage undertakers are required to make
provision for the emptying of sewers and whatever further arrangements
are necessary from time to time for effectively dealing with the
contents of sewers. In addition, discharges from wastewater treatment
works must be consented to by the Environment Agency ("EA"); and
sewerage undertakers are responsible under WIA 1991 for regulating
discharges of industrial effluent into sewers. Contamination of
controlled waters by non-complying effluent being discharged by a
treatment works may involve the sewerage undertaker in liability,
including clean-up costs.
The Licensing Regime
Following privatization of the U.K. water industry in 1989, each of the
water and sewerage undertakers, while maintaining its effective
monopoly supply, became regulated through an instrument of Appointment.
The Appointment confirms the appointment of the water or sewerage
undertaker as supplier in its own area and provides for the monitoring
of its performance by the DGWS and the Secretary of State for the
Environment.
Modification of Licenses
The DGWS is responsible for monitoring compliance with the conditions
of Appointments and, where necessary, enforcing them through procedures
laid down in WIA 1991. Conditions of the Appointment may be modified,
either in accordance with the terms of the relevant licenses or in
accordance with the procedures laid down in WIA 1991. Subject to a
power of veto by the Secretary of State, the DGWS may modify the
conditions in the Appointment with the consent of the licensee. Before
making the modifications, the DGWS must publish the proposed
modifications as part of a consultation process, giving third parties
the opportunity to make representations and objections which the DGWS
must consider.
ScottishPower Form 20-F 1999
33
<PAGE>
In the absence of consent, the only means by which the DGWS can secure
a modification is following a modification reference to the Competition
Commission and in the circumstances set out below. A modification
reference requires the Competition Commission to investigate and report
on whether matters specified in the reference relating to the carrying
out of any function of a company by virtue of its Appointment operate,
or may be expected to operate, against the public interest and, if so,
whether the adverse public interest effect of those factors could be
remedied or prevented by modification of the conditions of the
Appointment. In determining whether any particular matter operates, or
may be expected to operate, against the public interest, the
Competition Commission is to have regard to the matters in relation to
which duties are imposed on the Secretary of State for the Trade and
Industry and the DGWS.
If there is an adverse finding, the Competition Commission's report
will state whether any adverse effects on the public interest could be
remedied or prevented by modification of the license conditions. If the
Competition Commission so concludes, the DGWS must then make such
modifications to the Appointment as appear to him requisite for the
purpose of remedying or preventing the adverse effects specified in the
report, after giving due notice and consideration to any
representations and objections. The Secretary of State for Trade and
Industry has the power to veto any modification by agreement.
Modifications to license conditions may also be made in consequence of
a monopoly or merger reference under the Fair Trading Act 1973 or,
until March 2000, a reference under the Competition Act 1980. At that
date, the relevant provisions of the Competition Act 1980 will be
repealed by the Competition Act 1998.
Southern Water Services' Appointment was modified as a result of
assurances given by ScottishPower as a condition to receiving
regulatory clearance for its acquisition of Southern Water plc in 1996.
These are discussed in more detail below, see "Principal Conditions of
Southern Water Services' Appointment".
Term and Revocation of Licenses
Southern Water Services' Appointment continues until terminated by not
less than 10 years' notice given to Southern Water Services by the
Secretary of State for the Environment, expiring not earlier than 25
years after September 1, 1989, the transfer date. Appointments may also
be revoked or transferred to another company in certain circumstances
specified in WIA 1991 or in the Appointments, such as the appointee
failing to comply with an enforcement order made by the Secretary of
State for the Environment or the DGWS, or the appointee being unable to
pay its debts.
Principal Conditions of Southern Water Services' Appointment
The principal regulatory provisions which apply to the regulated
activities of Southern Water Services are set out in WIA 1991 and
regulations and orders made under it. Other business activities of
Southern Water, such as waste management and other environmental
services, engineering services and systems technology services, if
undertaken, fall outside the direct scope of regulation under WIA 1991.
Southern Water Services is an appointed WaSC and holds an Appointment
regulated under WIA 1991 to supply water and sewerage services within
its authorized area, which regulates its appointed activities. Southern
Water Services' Appointment requires Southern Water Services to prepare
and publish separate accounts, including on a current cost accounting
basis showing separately its appointed business from all other
businesses and activities. It is a further Appointment requirement that
the regulated business neither gives to, nor receives from, any other
business or activity of Southern Water Services, any cross-subsidy,
whether those businesses are regulated by the Appointment or not.
Southern Water Services' Appointment was modified following assurances
given to the Secretary of State for Trade and Industry by ScottishPower
as a condition to regulatory clearance of its acquisition of Southern
Water plc to address regulatory concerns arising out of the merger, in
particular to ensure the management independence of Southern Water
Services and strengthen the ring fencing of its finances.
As a result, the Appointment of Southern Water Services contains an
obligation that it must at all times conduct the businesses regulated
by its Appointment as if such businesses were substantially Southern
Water Services' sole business and Southern Water Services were a
separate public listed company. In particular, Southern Water Services
must ensure that its board of directors is independent of ScottishPower
and includes two non-executive
34 ScottishPower Form 20-F 1999
<PAGE>
Directors of relevant experience and standing. All Directors must
disclose to Southern Water Services and to the DGWS any conflicts with
their duties as Directors of Southern Water Services and have regard
exclusively to the interests of Southern Water Service as a water and
sewage undertaker, in the event of a potential conflict with the
interests of other group companies. The DGWS must be informed of any
change in the identity and functions of the Directors of Southern Water
Services.
In addition, Southern Water Services must not, without the consent of
the DGWS make a loan to or guarantee any liability of any group
company, or make any disposal of any asset of the regulated business.
The payment of dividends by Southern Water Services should not impair
its ability to finance its regulated business. Similarly, any financial
support or transfer of assets from Southern Water Services to a group
company must not adversely affect the former's ability to carry out its
functions.
In March 1998, Southern Water issued a (Pounds)100 million variable
rate bond to help fund capital expenditure. The bond listing provides a
form of Stock Exchange listing for the water business, to compensate
OFWAT for the loss of comparative information (as a result of the
discontinuance of Southern Water's stock exchange listing on the
acquisition by ScottishPower). The bond listing imposes an obligation
on Southern Water Services to comply with financial information
requirements incumbent on a quoted plc and to maintain an investment
grade rating for all its corporate debt.
As a condition for regulatory clearance of ScottishPower's acquisition
of Southern Water, ScottishPower gave assurances to the Secretary of
State that it would not operate any new business which is not regulated
under the Electricity Act and whose annual turnover accounts for more
than 5% of ScottishPower's aggregate annual turnover excluding all
subsidiaries, other than as a subsidiary company; ensure that
ScottishPower had sufficient management and financial resources to
fulfil its obligations to enable the introduction of competition in
supply for all customers in its authorized area; and agree to
appropriate modifications to Southern Water's license.
Price Controls
Southern Water Services' business is subject to price controls.
Southern Water Services is allowed to increase its standard charges for
the provision of water supply and sewerage services by the percentage
change in the RPI plus an adjustment factor K. The value of K is
currently set at 4% for the period ending on March 31, 2000. In 1996,
as a result of the takeover of Southern Water Services by
ScottishPower, ScottishPower undertook that the average price increases
of Southern Water Services in the three charging years commencing April
1, 1997, would be lower than the allowed charging limits. This
undertaking was the subject of a license condition modification which
came into effect on September 28, 1996, requiring Southern Water
Services' average prices to be 1% lower than they would otherwise have
been in 1997 and 3% lower than they would otherwise have been in the
two years from April 1998.
Infrastructure charges, being the amount that Southern Water Services
can charge when new properties are connected for a domestic supply of
water or sewerage services for each service, are also controlled. The
infrastructure charge was set at (Pounds)200 for 1995-96 and is
permitted to rise in line with inflation in subsequent charging years.
The DGWS reviews Southern Water Services' price controls on a five year
basis. The DGWS also has the power to make an interim determination to
adjust price limits between the five yearly periodic reviews. At
present, price limits for the water and sewerage companies are being
examined as part of such a periodic review to be concluded in November
1999, when the DGWS will set new price limits for the period from April
1, 2000 to March 31, 2005. In setting price limits, the DGWS proposes
to take into account compliance with environmental and quality
standards in assessing price limits for the period from 2000 to 2005.
The DGWS will also consult each water company individually to discuss
responses to the review. In July 1999, the DGWS will publish a draft
determination of new price limits to run from 2000 to 2005, and final
decisions will be made in November 1999. The outcome of this price
review and its impact on the group is uncertain.
ScottishPower Form 20-F 1999 35
<PAGE>
As part of the current review process, on October 29, 1998 the DGWS
published a consultation paper setting out proposed ranges for bills
for the period from 2000 to 2005. In this paper, the DGWS has confirmed
that, on the basis of past efficiencies achieved by water companies, he
considers there to be scope for substantial price reductions in April
2000. However, HM Government has proposed a program of capital
expenditure by the water companies aimed at environmental improvements
which was included in the consultation paper. This program is estimated
to cost some (Pounds)8.5 billion in the aggregate. The water companies
would be entitled to pass that cost through to customers with the
effect of increasing bills in the four years after 2000. In the
consultation paper, the DGWS estimated, in the case of Southern Water
Services, that expected average household bills could be reduced by
more than 17.5% (in real terms) in 2000/01 on previous year levels.
However, the DGWS expected there to be an overall increase in the
1999/2000 level of bills in the four year period up to 2005.
ScottishPower has responded to the DGWS's proposals by requesting an
initial price increase of 3.5% and a K factor of + 3% which would
result in an average regulated rate of return of 6.5%.
Large industrial users can now choose their own water and sewerage
suppliers. From April 1, 2000 fifteen water companies including
Southern Water, will not be able to recoup from other customers any
amounts lost by offering lower tariffs to such industrial users. The
regulated charging base to which price limits apply will no longer
include tariffs to large industrial users. Southern Water Services
agreed to this change to its Appointment in February 1999.
Future Regulation
In May 1997, it was reported that the Secretary of State for the
Environment announced a review by the Department of the Environment to
examine ways in which environmentally damaging abstractions can be
equitably curtailed. The review will also include arrangements for
revoking licenses in areas where pumping causes significant
environmental damage. The consultation paper was published on June 19,
1998 and was open for comment until September 17, 1998. The review is
still progressing and it is unlikely that legislation will be
introduced before the 2000/01 Parliamentary session.
Effect of Price Controls
It is expected that regulation will continue to have a material bearing
on the profitability and investment capability of ScottishPower.
ScottishPower's regulated monopoly businesses comprise electricity
transmission and distribution in ScottishPower and electricity
distribution in Manweb (together representing 44% of the 1999 operating
profit) and the water supply and wastewater business in Southern Water
(representing 30% of ScottishPower's 1999 operating profit). The
regulatory price controls relating to these areas of ScottishPower's
business for the five year period commencing April 1, 2000 are
currently being reviewed by regulatory authorities in the U.K., as well
as those relating to supply and generation. ScottishPower believes that
it has high standards of operation and customer service. Nevertheless,
ScottishPower is unable to judge accurately the outcome of these
reviews and there can be no assurance that they will not materially
affect profits. It is expected that all the results of these reviews
will be known by November 1999.
The natural monopoly businesses of the group which are currently
subject to RPI-X price controls in the electricity businesses and RPI +
K for Southern Water Services had a combined total turnover of
(Pounds)1,156.2 million in fiscal 1999, or approximately 25% of group
total turnover of (Pounds)4,706.0 million. However, these businesses
had a combined operating profit of (Pounds)595.4 million in fiscal
1999, or some 74% of the group's total operating profit of
(Pounds)802.8 million. The breakdown of total turnover and operating
profit among the natural monopoly businesses of the group is shown in
the table below:
Table 1.11 Effect of Price Controls
<TABLE>
<CAPTION>
Fiscal 1999 Fiscal 1999
Total Turnover Operating Profit
Business (Pounds)m (Pounds)m
------------------------------------------------------------
<S> <C> <C>
ScottishPower Transmission 136.8 83.5
ScottishPower Distribution 333.3 178.2
Manweb Distribution 246.9 91.9
Southern Water Services 439.2 241.8
------------------------------------------------------------
</TABLE>
36 ScottishPower Form 20-F 1999
<PAGE>
As an example of the effect of an RPI-X price control, the current
transmission price control applicable to ScottishPower was set at RPI-1
to take effect from April 1, 1994 and to run for five years. Had this
control been set at RPI-2 for the same period, then the allowed revenue
for fiscal 1999 would have been 5% lower than the value of
(Pounds)136.8 million above, because of the cumulative effect of the
control. All other things being equal, this would have resulted in a
reduction of operating profit of some (Pounds)6.8 million. A similar
effect would occur with the other price controls dependent on when the
control had been set. For a five year control a tightening of X or K by
1 percentage point would result in average annual allowed revenue over
the five year period being reduced by 2.5% which, all other things
being equal, would be around (Pounds)29 million in total for the four
regulated businesses above.
Each price control is subject to a separate price review undertaken by
the applicable regulator and the setting of a new price control
requires the license to be amended. If ScottishPower, or any of its
subsidiaries, does not agree with the new price control then it is up
to the company to seek a referral to the Competition Commission. Under
such a reference the Competition Commission would be required to
investigate and report on whether the revenues generated under the
control would be sufficient for ScottishPower to finance its activities
covered by the control.
While it is only in these natural monopoly businesses that price
controls (RPI-X and RPI+K) will continue for the foreseeable future, a
supply price restraint will continue for a period of two years from
April 1, 1998. The Supply price restraint takes the form of maximum
tariff levels applying to individual tariffs, or groups of tariffs.
These levels were set to give a reduction of 4.1% in real terms from
April 1, 1998 with a further reduction of 3% in real terms from April
1, 1999. This is an interim measure and the form of constraint is one
setting maximum tariff levels for the two years. The nature and extent
of possible restraints from April 1, 2000 will be reviewed in light of
the experience and prospects at the same time as the distribution price
controls are reviewed.
The Competition Act 1998
The U.K. has enacted new legislation, the Competition Act 1998, which
introduces in the U.K. law prohibitions on anti-competitive agreements
and the abuse of a dominant position. The Competition Act 1998 replaced
the Monopolies and Mergers Commission with a new statutory body to be
known as the Competition Commission with effect from April 1, 1999. The
Competition Act 1998 also provides the Office of Fair Trading with
significant investigative powers and the ability to grant interim
measures.
The Competition Act 1998 will grant the DGES and the DGWS concurrent
powers with the Director General of Fair Trading in relation to,
respectively "commercial activities connected with the generation,
transmission, or supply of electricity" and "commercial activities
connected with the supply (or securing a supply) of water or of
sewerage services".
Environmental Regulation
The group's businesses are subject to numerous regulatory requirements
with respect to the protection of the environment, including
environmental laws which regulate the construction, operation and
decommissioning of power stations, pursuant to legislation implementing
environmental directives adopted by the EU and protocols agreed under
the auspices of international bodies such as the United Nations
Economic Commission for Europe ("UNECE").
Electricity Generation, Transmission and Supply
The Electricity Act obligates the Secretary of State to take into
account the effect of electricity generation, transmission and supply
activities upon the physical environment in approving applications for
the construction of generating facilities and the location of overhead
power lines. This Electricity Act requires the group to take into
account the conservation of natural features of beauty and other items
of particular interest, when it formulates proposals for development in
connection with certain of its activities. The group is required, in
terms of the Environmental Impact Assessment Regulations, to carry out
an environmental assessment when it intends to lay cables, construct
overhead lines or carry out any other development in connection with
its licensed activities. The group also prepares formal statements on
the "Preservation of Amenity and Fisheries' in line with the
requirements of the Electricity Act.
ScottishPower Form 20-F 1999 37
<PAGE>
Possible adverse health effects of electric and magnetic fields
("EMFs") from various sources, including transmission and distribution
lines, have been the subject of a number of studies and increasing
public discussion. The scientific research is currently inconclusive as
to whether EMFs can cause adverse health effects. This uncertainty has
been reinforced by a number of recent studies and as a result a number
of claims which were being brought against other companies within the
electricity business in the U.K. alleging personal injuries caused by
EMFs have been dropped.
The Environmental Protection Act of 1990 (the "EPA") requires that
potentially polluting activities such as the operation of combustion
processes (which includes power plant) requires prior authorization.
These authorizations dictate the control technologies and techniques to
be used to ensure that environmental harm is prevented or minimized.
The Act also provides for the licensing of waste management and imposes
certain obligations and duties on companies which produce, handle and
dispose of waste. Waste generated as a result of the group's
electricity activities is managed to ensure compliance with legislation
and waste minimization is undertaken where possible.
Environmental Regulation of Generation Activities
The EPA is the primary U.K. statute governing the environmental
regulation of power stations. It introduced a system of Integrated
Pollution Control ("IPC") in April 1991 for large scale industrial
processes, including power stations. Under the EPA, the authority for
enforcing IPC with respect to emissions to atmosphere in England and
Wales is the EA, previously Her Majesty's Inspectorate of Pollution
("HMIP"), and in Scotland is the Scottish Environment Protection Agency
("SEPA"), previously Her Majesty's Industrial Pollution Inspectorate
("HMIPI"). Transfer of control from HMIP and HMIPI to EA and SEPA came
into force on April 1, 1996 and was established by the Environment Act
of 1995 (the "1995 Act").
The EU has adopted a framework directive on ambient air quality
assessment and management which came fully into force in May 1998 (the
"EU Directive on Integrated Pollution Prevention and Control"). The
directive defines and fixes objectives for air quality, while
subsidiary directives establish emission limit values for a number of
contaminants. The EU Directive on Integrated Pollution Prevention and
Control is being implemented via modifications to the IPC regime.
The United Nations Framework Convention on Climate Change sets forth
standards regarding emissions of greenhouse gases, the most significant
of which is carbon dioxide (CO\\2\\). Agreement on a Protocol under
this convention was reached in Kyoto in December 1997. This Protocol,
when ratified, calls for mandatory target reductions of "a basket" of
six greenhouse gases, most significantly CO\\2\\, in the commitment
period 2008-2012. The Protocol also provides for Joint Implementation
("JI") between signatories, a Clean Development Mechanism by which
signatories may gain credit for actions in certain non-signatory
countries and a provision which would allow for trading of emissions.
The EU has, under the terms of the Kyoto Protocol, signed up to the
United Nations Framework Convention on Climate Change, under which
Member States are committed to reducing "greenhouse gases" by 8% below
1990 emission levels between the years 2008 and 2012. This reduction
target applies to the EU as a whole, with each individual Member State
being allocated its own target which is 12.5% for the U.K. HM
Government has announced its intention of unilaterally setting itself a
goal of 20% reduction in carbon dioxide emissions by 2010. The UNECE
protocols regarding sulphur dioxide (SO\\2\\) and oxides of nitrogen
(NOx) are currently implemented in the EU by means of the Air Framework
Directive and Large Combustion Plants Directive (the "LCPD"). Emissions
limits for existing and new plants will be introduced via the LCPD, the
Air Framework Directive and, in the future, the EU Directive on
Integrated Pollution Prevention and Control.
The principal emissions from fossil fuelled electricity generation are
SO\\2\\, NOx, CO\\2\\ and particulate matter, such as dust, with the
main waste being ash, namely pulverized fuel ash and furnace bottom
ash. The primary focus of current environmental legislation is to
reduce emissions of SO\\2\\, NOx and particulates, the first two of
which contribute to acid rain. A number of other power station
emissions and discharges are subject to environmental regulation.
38 ScottishPower Form 20-F 1999
<PAGE>
Under the requirements of the LCPD, HM Government has implemented a
national program, the National Plan, to reduce SO\\2\\ and NOx
emissions from power stations in Scotland. ScottishPower and Scottish &
Southern have entered into an agreement providing for the sharing of
limits in emissions of SO\\2\\ and NOx from existing generating
stations in Scotland set out in the National Plan to meet the targets
of the LCPD. It also provides for the sharing of station-specific
limits on emissions of SO\\2\\ and NOx imposed by SEPA at the
Peterhead, Longannet and Cockenzie generating stations where capacity
is shared between ScottishPower and Scottish & Southern. Reductions of
CO\\2\\, SO\\2\\ and NOx per unit of electricity generated have been
achieved as a result of the group's investments in environmental
upgrades, such as low NOx burners and gas reburn, to existing power
stations and in new power stations, together with increases in the
proportion of the group's output generated by more efficient coal-fired
power stations. ScottishPower's emissions of SO\\2\\ and NOx have been
below the limits set by the National Plan for these emissions each year
since its publication.
Each of ScottishPower's power stations is required to have IPC
authorization. Under IPC, each power station has a single authorization
which regulates emissions of certain pollutants and seeks to minimize
pollution of the environment. Each IPC authorization requires that a
power station uses the Best Available Techniques Not Entailing
Excessive Cost ("BATNEEC") to prevent the emissions described above or,
to the extent this is not practicable, to minimize and render harmless
any such emissions. Each authorization also contains an improvement
program. ScottishPower's IPC authorizations do not have an expiry date,
but SEPA is required to review the conditions contained within it at
least once every four years and may impose new conditions to prevent or
reduce emissions of pollutants, subject to the application of BATNEEC.
The EU Directive on Integrated Pollution Prevention and Control
requires that all emission and pollution control measures be placed
upon the best available technique to control impact on the environment.
The IPC authorizations granted in 1993 in respect of ScottishPower's
existing power stations limit the levels of atmospheric emissions of
SO\\2\\ and NOx from each station. A number of minor variations have
taken place with a full four year IPC review now underway with SEPA.
The review commenced in April 1997. Due to continued UK-wide policy
development on the control of SO\\2\\, the review has continued into
1999. The final outcome is awaited. The group is confident that it will
be able to achieve the environmental improvements required by potential
future limits arising from this review without materially constraining
operational and commercial flexibility. In particular, gas reburn
technology offers greater potential to reduce emissions than other
technology in use elsewhere in the U.K. Furthermore, planning consent
has been gained for flue gas desulphurization at Longannet, which will
be installed when emissions levels require its implementation.
Water
Since April 1, 1996, the EA has been responsible in England and Wales
for the control of water pollution and the maintenance and improvement
of the quality of controlled waters, including the regulation of
discharges to those waters; for conserving, redistributing and
augmenting water resources and for securing the proper use of such
resources for land drainage and flood defense. Previously, this was the
responsibility of the NRA in England and Wales. In Scotland, SEPA has
largely replaced the River Purification Boards to fulfil these
responsibilities. The group is also subject to regulations governing
drinking water quality, receiving water quality and wastewater
discharges. Although recent cases have suggested that commercial
enterprises may be fined more heavily for pollution offenses than in
the past, ScottishPower does not believe that the level of fines will
have a materially adverse impact on its operations.
Within its general water resource management role, the EA has a duty to
operate the system under the Water Resources Act 1991, whereby water
undertakers and other abstractors must have a license authorizing each
of their abstractions and other impoundments. It also has a duty to
enter into water resource management arrangements with water
undertakers to secure the proper management and operation of waters,
reservoirs and other works vested in the undertakers. The EA may, and
shall if so directed, consider the setting of minimum acceptable flows
in rivers and make recommendations to the Secretary of State
accordingly.
Under the Water Resources Act 1991 and the Control of Pollution Act
(COPA) 1974, the EA may require persons to take precautions against
pollution, may prohibit or restrict certain activities likely to cause
pollution in areas designated by the Secretary of State, and may impose
a requirement for a consent to discharge matter from a drain or sewer.
When reviewing existing consents and issuing new ones, the EA has said
that it will seek to set contamination which causes, or is likely to
cause, significant harm to the environment or any pollution of
ScottishPower Form 20-F 1999 39
<PAGE>
conditions at the level required to at least maintain and, where
appropriate, improve the quality of the receiving waters.
HM Government's upgrading of minimum levels of wastewater treatment for
coastal works will mean further improvements to recently completed new
works such as Eastbourne and Shoreham, as well as a review of proposed
treatment levels in several long-term investment projects at Dover and
Folkestone, Littlehampton and Bognor, Margate and Broadstairs, and the
Isle of Wight.
Under the EPA, the EA is responsible for maintaining registers
containing details of applications for discharge consents, consents
granted and the results of samples of effluent and receiving waters.
The registers are open to public inspection.
European Legislation
The activities of the WaSCs are affected by the requirements of EU
directives including the Drinking Water Directive, the Bathing Waters
Directive and the Urban Waste Water Treatment Directive. EU directives
are binding on HM Government, not on the Water Service Companies, as to
the result to be achieved within a specified period. It is the
responsibility of European Member States, including the U.K., to bring
into force appropriate national environmental legislation, such as the
Urban Waste Water Treatment Regulations to implement these EU
directives.
New requirements will be binding on the Water Service Companies only
when they are translated into the law of England and Wales. Any
expenditure incurred by a Water Service company necessitated by new
legislation applying to them in their capacity as water or sewerage
undertakers, or by any change in consents as a result of any changes to
existing EU directives, or adoption of future EU directives, would be
eligible for consideration for a specific K adjustment.
The Water Resources Act and the Urban Waste Water Treatment Regulations
are the main U.K. statutes governing water abstraction, receiving water
quality and wastewater discharges. This legislation implements the
Bathing Waters Directive and the Urban Waste Water Treatment Directive
and requires improvements in the treatment of wastewater discharges.
The Water Supply (Water Quality) Regulations introduce the requirements
of the EU Drinking Water Directive into the U.K. and govern drinking
water quality. In fiscal 1999, Southern Water spent approximately
(Pounds)179 million to comply with the relevant statutes. Fines
received by Southern Water in fiscal 1999 for violating water quality
standards and the terms of applicable discharge consents were
immaterial to the results of operations of Southern Water.
Southern Water, like other WaSCs in the U.K., must have a license from
the EA authorizing each of its abstractions and certain impoundments.
For additional obligations of Southern Water affecting the environment,
see the sections of this document entitled "Water Business--Southern
Water" and "Regulation of the Water Industry".
In addition to its other obligations affecting the environment,
Southern Water may be required by the EA to take precautions against
pollution, may be prohibited or restricted by the EA from certain
activities likely to cause pollution in areas designated by the
Secretary of State, and may be required by the EA to obtain a consent
to discharge matter (other than sewage or trade effluent) from a drain
or sewer. Further, in the course of its activities, the EA may carry
out anti-pollution works and may recover the cost of such works from
the person responsible for the pollution.
General
While the nature of developments in environmental regulation and
control cannot be predicted, the group anticipates that the direction
of future changes will be towards tightening controls. In view of the
age and history of many sites owned by the group, the group may incur
liability in respect of sites which are found to be contaminated,
together with increased costs of managing or cleaning up such sites.
Site values could be affected and potential liability and clean-up
costs may make disposal of potentially contaminated sites more
difficult. The Environment Act 1995 (the "1995 Act") requires the
polluter (or if the polluter cannot be found or has legally transferred
its responsibilities by disclosure, the owner or occupant) of
contaminated land to clean up any
40 ScottishPower Form 20-F 1999
<PAGE>
controlled waters, so that environmental compliance is consistent with
the intended use of the site. Although there have been prolonged
consultations, the U.K. Government has yet to bring forward finalized
regulations to implement the appropriate sections of the 1995 Act but
is expected to do so during 1999. Other proposals which may impose
strict liability for environmental damage are also under consideration
by the EU. ScottishPower is not currently aware of any liability which
it may have under the 1995 Act or of proposed EU directives which will
have a materially adverse impact on its operations.
The group believes that it has taken and continues to take measures to
comply with applicable laws and regulations for the protection of the
environment.
Research & Development
The group supports research into development of the generation,
transmission, distribution and supply of electricity and continually
seeks more innovative and cost effective methods of carrying out its
water and wastewater activities. It also continues to contribute, on an
industry-wide basis, towards the cost of research into electricity
utilization, distribution developments and water purification and
wastewater treatment. In fiscal years 1997, 1998, and 1999 the group's
expenditure on research and development was (Pounds)5.6 million,
(Pounds)5.4 million and (Pounds)5.3 million, respectively.
Employees
The group had 15,145 full-time equivalent employees as of March 31,
1999. A breakdown of the number of full-time equivalent employees
employed in the group's main businesses over the last five years is
illustrated in the following table.
Table 1.12 Employees
<TABLE>
<CAPTION>
Business 1999 1998 1997 1996 1995
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Scottish energy businesses 4,823 4,748 4,916 5,215 5,595
Manweb 2,099 2,151 2,757 2,979 -
Southern Water 2,205 2,364 3,526 - -
ScottishTelecom 2,336 1,430 702 191 141
Other 3,682 3,613 2,500 2,388 2,304
-------------------------- ------ ------ ------ ------ -----
Group total 15,145 14,306 14,401 10,773 8,040
-------------------------- ------ ------ ------ ------ -----
</TABLE>
Approximately 45% of group employees are union members and 66% are
covered by collective bargaining arrangements. These reductions by
comparison with previous years largely reflect manpower growth within
ScottishTelecom where union strength is generally low. There are a
number of different collective agreements now in place throughout the
group reflecting differing market conditions in which the group's
businesses operate. Management believes its overall relations with its
employees are good.
In the energy businesses, ongoing integration of Scottish and Manweb
operations has been largely completed. The group continues to benchmark
for further efficiencies and reduced costs which will include ongoing
reduction in manpower numbers. However, these reductions have been
offset in fiscal 1999 by manpower growth within customer-facing
businesses to gain new customers in the fully deregulated market place.
Within Southern Water, manpower reductions have occurred and will
continue as the business is reorganized to focus on core activities,
achieving operating improvements and taking better advantage of
technological advancements. Manpower reductions of approximately 20%
are anticipated over the next two years.
The manpower figure in ScottishTelecom has increased by 63% in fiscal
1999 from fiscal 1998 due to significant growth, both organic and
inorganic, and in particular the group's acquisition of Demon Internet
in 1998. This growth is expected to continue in fiscal 2000.
The other businesses which include electrical retailing, electrical
contracting, engineering consultancy, information systems and corporate
services have remained relatively stable in manpower numbers since
fiscal 1998.
ScottishPower Form 20-F 1999 41
<PAGE>
Item 2. Description of Property
The group's properties consist of generating stations, transmission and
distribution facilities, water supply and wastewater treatment
facilities, telecommunication facilities, retail facilities and certain
non-operational properties in which the group holds freehold or
leasehold interests. The group believes that substantially all of its
facilities are in a condition adequate for their purpose and
utilization according to the individual nature and requirements of
relevant operations. The group has a continuing program of improvements
and maintenance of properties when considered appropriate to meet the
needs of the individual operations. In connection with any of the
group's properties that are held under lease, the group believes that
it will be able to negotiate lease renewals on satisfactory terms or
relocate the relevant facilities without such relocation having a
material adverse impact on the group or its operations.
Generation Facilities
The group owns eight power stations in Scotland, six of which are
operational with a total net output capacity of 4,035 MW, and one in
England. The group also owns three windfarms in Northern Ireland, one
in Scotland and one in the Republic of Ireland. In addition, the
company has joint venture interests in three windfarms, two of which
are in England and one in Wales. All generation plant is owned by the
group, with the exception of the Methil power station, which is held on
a ground lease which expires in 2012 and the windfarms which are
generally held on ground leases of at least 25 years duration. Further
details regarding the generating capacity of ScottishPower's power
stations and windfarms as of March 31, 1999 are contained under "Item
1. Description of Business--Energy Business--Generation Wholesale".
Transmission and Distribution Facilities
As of March 31, 1999, the group's transmission facilities included
approximately 4,000 circuit kms of overhead lines and 240 circuit kms
of underground cable operated at 400 kV, 275 kV and 132 kV.
In addition, as of March 31, 1999, the group's distribution facilities
included approximately 24,000 circuit kms of overhead lines and 40,000
circuit kms of underground cable operated at 33 kV, 11 kV, and 0.4/0.23
kV in Scotland and approximately 20,000km of overhead lines and
23,000km of underground cable operating at 132 kV, 25 kV, 11 kV, 6.6
kV, 6.3 kV, and 0.4/0.23 kV in England and Wales. The group holds
either permanent rights or wayleaves which entitles it to run these
lines and cables through private land. Wayleaves are usually terminable
by either the landowner or the group upon six or twelve months' notice.
The group has statutory rights to seek the compulsory retention of a
wayleave if termination is sought by the landowner. The group owns the
land for in excess of 95% of the transmission substation sites.
Approximately 64% of the distribution substation sites are owned by the
group with the remainder being secured by wayleave lease or local
agreement. Approximately 25% of the leases securing substation sites
expire within five years.
Water Supply and Wastewater Treatment Facilities
Southern Water has freehold and leasehold interest covering a total of
approximately 10,000 acres of land. Of such land, an aggregate of
approximately 9,800 acres are specialized properties, consisting
chiefly of the raw water storage reservoirs with surrounding land,
water and wastewater treatment works and pumping stations listed below.
Approximately 95% of the above-ground water supply and wastewater
assets are on land in Southern Water's freehold ownership including the
assets listed below, with the remainder being located on land subject
to long-leasehold.
Table 2.1 Storage Reservoirs
<TABLE>
<CAPTION>
Approximate
Description Location Capacity (Ml) acreage
-------------------------------------------------
<S> <C> <C> <C>
Bewl Water Kent 31,000 1,200
Darwell Sussex 4,730 913
Powdermill Sussex 1,060 1,171
Weir Wood Sussex 5,600 403
</TABLE>
42 ScottishPower Form 20-F 1999
<PAGE>
Table 2.2 Water Treatment Works
<TABLE>
<CAPTION>
Approximate
Description Location Output (Ml per day) acreage
--------------------------------------------------------
<S> <C> <C> <C>
Beauport Sussex 27.0 4
Burham Kent 48.8 61
Eastling Kent 48.0 2
Easton Hampshire 27.3 25
Hardham Sussex 75.0 35
Otterbourne Hampshire 102.5 367
Sutton Kent 4.4 less than 1
Testwood Hampshire 90.0 152
Twyford Hampshire 23.0 183
Weir Wood Sussex 21.8 70
Wingham Kent 20.0 5
</TABLE>
Table 2.3 Wastewater Treatment Works
<TABLE>
<CAPTION>
Equivalent Population Approximate
Description Location Served acreage
-------------------------------------------------------------------
<S> <C> <C> <C>
Ashford Kent 109,800 90
Aylesford Kent 133,200 40
Brighton Portabello Sussex 268,200 5
Budds Farm Hampshire 173,800 52
Canterbury Kent 113,300 22
Chickenhall Eastleigh Hampshire 102,000 25
Eastbourne Sussex 121,800 5
Eastney Hampshire 235,900 4
Millbrook Hampshire 138,400 17
Motney Hill Kent 286,900 200
Peel Common Hampshire 250,900 77
Worthing East Sussex 136,900 15
</TABLE>
Telecommunication Facilities
As of March 31, 1999, ScottishTelecom operated a network comprising
approximately 2,550 km of optical fiber cable. Installation of the
fiber is subject to wayleaves under the Public Telecommunications
Operator License held by ScottishTelecom. The majority of
ScottishTelecom's telecommunication network switching and transmission
equipment is located in four main operational sites in Glasgow, London,
Edinburgh, and Warrington. Additional telecommunication network
equipment is housed in equipment rooms under the control of the group.
Retail Facilities
As of March 31, 1999, the group operated 183 retail outlets, 24 of
which are owned by the group and 159 are leased. The outlets are
located both on the main street of major metropolitan areas and in out
of town superstores. The group also leases two large retail
distribution depots, one at Castleford in England consisting of
approximately 8,000 square meters; and another facility of
approximately 12,600 square meters at Mossend near Glasgow. The
properties are generally held on leases of 20 to 25 years.
Non-Operational Facilities
In addition to the properties described above, as of March 31, 1999,
the group utilized a number of non-operational properties comprised
primarily of offices, depots, warehouses and workshops. Approximately
50% of these properties are owned by the group with the remainder being
leased. The most significant of these non-operational properties are
Cathcart Business Park, Glasgow (which is the main office for the
electricity businesses in Scotland), the corporate office located at
Atlantic Quay, Glasgow, the Manweb head office at Manweb House, Chester
Business Park and the Southern Water head office at Worthing.
ScottishPower Form 20-F 1999 43
<PAGE>
Item 3. Legal Proceedings
Manweb participates in the industry-wide Electricity Supply Pension
Scheme. Two other members of the scheme, National Power plc and NGC,
have been the subject of legal proceedings in connection with the use
of surplus following an actuarial valuation at March 31, 1992 to fund
early retirement benefits. Manweb also applied surplus following that
valuation and the subsequent valuation at March 31, 1995 ((Pounds)6
million following the 1992 valuation and (Pounds)32 million following
the 1995 valuation) for the same purpose.
In a decision on February 10, 1999, the Court of Appeal decided that,
without a scheme amendment or trustee agreement, employers could not
apply surplus unilaterally to forgive an accrued liability. This could
lead to employers being required to make additional contributions to
the scheme to meet that liability. A further hearing took place in May
1999 which clarified certain aspects of the judgment. The judgment
indicates that Manweb may be liable for additional contribution to the
scheme. Leave to appeal to the House of Lords was given and if an
appeal is made, it is unlikely to be heard before mid-2000.
There is a range of possible outcomes to the current NGC litigation,
any of which could affect Manweb's own potential liability, if any, to
contribute to the scheme. If amendments can be made to the scheme to
perfect the past arrangements to use surplus, no employer contributions
should be required. If the courts in the NGC case ultimately decide
that additional payments are due from employers to the scheme in
respect of all or any part of the surplus used since the 1992
valuation, Manweb may also be required to make payments. However in
this event two further points must be determined before the ultimate
cost to Manweb could be assessed: the effective date for calculating
the amounts due, and whether payments can be spread over a number of
years. Both these issues may affect significantly the ultimate cost to
Manweb.
No proceedings have been commenced against Manweb as at June 30, 1999
(being the latest practicable date prior to the publication of this
document) in respect of the issues raised by the NGC decisions.
Except as discussed above, ScottishPower is not aware of any material
pending legal proceedings, other than ordinary routine litigation
incidental to the business of the group, to which ScottishPower or any
of its subsidiaries is a party, or of which any of their property is
the subject, or any such proceedings known to be contemplated by any
governmental authority.
Item 4. Control of Registrant
(a) As far as is known to ScottishPower, ScottishPower is not directly
or indirectly owned or controlled by another corporation or by any
foreign government.
(b)(i) As of June 30, 1999, no person known to ScottishPower owned more
than ten per cent of any class of the group's voting securities.
(ii) As of June 30, 1999, the total amount of voting securities
owned by Directors and executive officers of ScottishPower as a
group was:
<TABLE>
<CAPTION>
Title of Class Identity of Group Amount Owned Percentage of Class
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ordinary shares Directors and executive officers (16 persons) 237,569 0.02
</TABLE>
In addition, as of June 30, 1999, the Directors and executive officers
of ScottishPower, as a group, held options to purchase 900,559 ordinary
shares, all of which options were issued pursuant to ScottishPower's
Long Term Incentive Plan, ScottishPower's Executive Share Option Scheme
or ScottishPower's Sharesave Scheme. See "Item 12. Options to Purchase
Securities From Registrant or Subsidiaries" and Note 33 to the
Consolidated Financial Statements of the group.
(c) ScottishPower does not know of any arrangements the operation of
which might result in a change in control of the group.
44 ScottishPower Form 20-F 1999
<PAGE>
Item 5. Nature of Trading Market
The principal trading market for the ordinary shares of ScottishPower
is the London Stock Exchange. In addition, American Depositary Shares
("ADSs") (each of which represents four ordinary shares) have been
issued by The Bank of New York, as depositary (the "Depositary"), for
the company's ADSs and are traded on the New York Stock Exchange
following listing on September 8, 1997.
The table below sets forth, for the calendar quarters of the fiscal
years indicated, the highest and lowest middle market quotations for
the ordinary shares, as derived from the Daily Official List of the
London Stock Exchange and the range of high and low closing sale prices
for ADSs, as reported over-the-counter prior to September 8, 1997 and
as reported on the New York Exchange Composite Tape following that
date.
<TABLE>
<CAPTION>
American Depositary
Ordinary Shares/1/ Shares/2/
High (p) Low (p) High ($) Low ($)
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal 1998
First 397.00 352.00 26.03 23.18
Second 480.00 397.00 31.31 26.21
Third 540.00 420.00 35.63 28.13
Fourth 582.00 485.00 38.50 33.00
-------------------------------------------------------------
<CAPTION>
American Depositary
Ordinary Shares/1/ Shares/2/
High (p) Low (p) High ($) Low ($)
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal 1999
First 576.00 521.00 37.50 35.25
Second 620.00 528.00 41.28 35.25
Third 675.00 532.00 44.63 37.00
Fourth 664.00 529.00 44.02 34.13
-------------------------------------------------------------
</TABLE>
/1/The past performance of the ordinary shares is not necessarily
indicative of future performance.
/2/Calculated using a ratio of four ordinary shares to one ADS, the ratio
which took effect on the listing of the ADSs on the New York Stock
Exchange on September 8, 1997. Until that time, each ADS represented ten
ordinary shares.
On March 31, 1999, there were 332 registered holders of 127,842
ordinary shares with addresses in the United States and 13 registered
holders of 1,221,487 ADSs (equivalent to 4,885,948 ordinary shares).
The combined holdings of these shareholders constituted 0.42% of the
total number of ordinary shares outstanding as of March 31, 1999. As
certain of the ordinary shares and ADSs are held by brokers and other
nominees, these numbers may not be representative of the actual number
of beneficial owners in the United States or the number of ordinary
shares or ADSs beneficially held by U.S. persons.
Item 6. Exchange Controls and Other Limitations Affecting Security
Holders
(a) There are currently no U.K. laws, decrees or regulations that
restrict the export or import of capital, including, but not
limited to, foreign exchange capital restrictions, or that affect
the remittance of dividends or other payments to non-U.K. resident
holders of the company's securities except as otherwise set forth
in "Item 7. Taxation" below.
(b) There are no limitations imposed by U.K. law or the company's
Memorandum and Articles of Association that restrict the right of
non-U.K. resident or non-U.K. citizen owners to hold or vote the
ordinary shares other than the restrictions described in "Item 14.
Description of Securities to be Registered--Description of ordinary
ScottishPower Form 20-F 1999 45
<PAGE>
shares--Restrictions on Voting" and "--Limitations on Holding" in
ScottishPower's registration statement on Form 20-F (file no.1-14676)
filed with the U.S. Securities and Exchange Commission in September
1997 and incorporated herein by reference. However, non-U.K.
shareholders are not entitled to receive notices from the company,
including notices of general meetings, unless they have given the
company an address in the U.K. to which such notices may be sent.
Item 7. Taxation
The following discussion of U.K. and U.S. federal income tax
consequences is set forth with respect to U.S. tax considerations in
reliance upon the advice of Milbank, Tweed, Hadley & McCloy LLP,
special U.S. counsel to the company, and with respect to U.K. tax
considerations in reliance upon the advice of the company's internal
taxation adviser. The discussion is intended only as a summary of the
principal U.S. federal income tax and U.K. tax consequences to
investors who hold the ADSs or ordinary shares as capital assets and
does not purport to be a complete analysis or listing of all potential
tax consequences of the purchase, ownership and disposition of ADSs or
ordinary shares. The summary does not discuss special tax rules that
may be applicable to certain classes of investors, including banks,
insurance companies, tax exempt entities, dealers, traders who elect to
mark to market, investors with a functional currency other than the
U.S. dollar, persons who hold the ADSs as part of a hedge, straddle or
conversion transaction, or holders of 10% or more of the voting stock
of the company. The statements of U.K. and U.S. tax laws and practices
set out below are based on the laws in force and as interpreted by the
relevant taxation authorities as of the date of this report. The
statements are subject to any changes occurring after that date in U.K.
or U.S. law or practice, in the interpretation thereof by the relevant
taxation authorities, or in any double taxation convention between the
United States and the United Kingdom. The company believes, and the
discussion therefore assumes, that it is not a passive foreign
investment company for United States federal income tax purposes.
Each investor is urged to consult its own tax adviser regarding the tax
consequences of the purchase, ownership and disposition of ordinary
shares or ADSs under the laws of the United States, the United Kingdom
and their constituent jurisdictions and any other jurisdiction where
the investor may be subject to tax.
If the obligations contemplated by the Deposit Agreement are performed
in accordance with its terms, a beneficial owner of ADSs will be
treated as the owner of the underlying ordinary shares for the purposes
of the current convention between the United States and the United
Kingdom for the avoidance of double taxation with respect to taxes on
income and capital gains (the "Income Tax Convention") and for the
purposes of the U.S. Internal Revenue Code of 1986, as amended (the
"Code").
For the purposes of this summary, the term "U.S. Holder" means a
beneficial owner of the ADSs that is a United States citizen or
resident, a domestic corporation or partnership, a trust subject to the
control of a U.S. person and the primary supervision of a U.S. court,
or an estate the income of which is subject to United States federal
income tax regardless of its source.
For the purposes of this summary, the term "Eligible U.S. Holder" means
a U.S. Holder that is a resident of the United States for the purposes
of the Income Tax Convention and that satisfies the following
conditions:
(i) is not also resident in the United Kingdom for U.K. tax purposes;
(ii) is not a corporation which, alone or together with one or more
associated corporations, controls, directly or indirectly, 10% or
more of the voting stock of the company;
(iii) whose holding of the ADSs is not effectively connected with a
permanent establishment in the United Kingdom through which such
holder carries on a business or with a fixed base in the United
Kingdom from which such holder performs independent personal
services, and;
46 ScottishPower Form 20-F 1999
<PAGE>
(iv) under certain circumstances, is not a company 25% or more of the
capital of which is owned, directly or indirectly, by persons that
are neither individual residents of, nor nationals of, the United
States.
Taxation of Dividends
Individuals and companies who are resident in the United Kingdom and
who receive the dividend on the ordinary shares are entitled to a tax
credit (the "associated U.K. tax credit"). Under the Income Tax
Convention and under current U.K. law, an Eligible U.S. Holder is
entitled to receive, in addition to the dividend paid, an amount equal
to the associated U.K. tax credit, subject to a U.K. withholding tax
equal to 15% of the sum of the dividend and the associated U.K. tax
credit. Beginning April 6, 1999, the rate of the associated U.K. tax
credits for dividends is 1/9 of the dividend (i.e. the equivalent of
10% of the sum of the dividend and the associated tax credit). As a
result, Eligible U.S. Holders generally will not receive additional
payments in respect of associated U.K. tax credits. Instead, payments
to Eligible U.S. Holders will be reduced by the excess of the U.K.
withholding tax over the associated U.K. tax credit.
If ScottishPower paid a dividend of $90, for example, for U.S. federal
income tax purposes an Eligible U.S. Holder would recognize ordinary
income of $90 plus the $10 U.K tax credit, or a total of $100. The
gross payment would be subject to a U.K. withholding tax of $10. The
income is recognized when the dividend is actually or constructively
received by the Eligible U.S. Holder, in the case of ordinary shares,
or by the Depository, in the case of ADSs. The dividend will not be
eligible for the dividends-received deduction generally allowed to
United States corporations in respect of dividends received from other
United States corporations. Distributions in excess of current and
accumulated earnings and profits, as determined for United States
federal income tax purposes, will be treated as a return of capital to
the extent of the Eligible U.S. Holder's basis in the ordinary shares
or ADSs and thereafter as capital gain. In determining the amount of
dividend income, an Eligible U.S. Holder will use the spot currency
exchange rate on the date the dividend is included in income. Any
difference between that amount and the dollars actually received may
constitute foreign currency gain or loss, which is ordinary gain or
loss. Individual Eligible U.S. Holders, however, are not required to
recognize gain of less than $200 from the exchange of foreign currency
in a "personal transaction" as defined in Section 988(e) of the Code.
Subject to certain limitations and requirements, an Eligible U.S.
Holder will be entitled under the Income Tax Convention to credit the
U.K. withholding tax against the Eligible U.S. Holder's United States
federal income tax liability. Claiming a U.S. foreign tax credit with
respect to the U.K. withholding tax imposed under the Income Tax
Convention upon the refunded U.K. tax credit may result in a lower
effective U.S. federal income tax rate on dividends paid by
ScottishPower for certain Eligible U.S. Holders. It is not clear
whether inclusion on the U.K tax credit in income and entitlement to
the U.S. foreign tax credit are dependent on the Eligible U.S. Holder
filing a claim with the U.K. Inland Revenue. Eligible U.S. Holders that
do not elect to claim foreign tax credits may instead claim a deduction
for U.K. withholding tax. For foreign tax credit limitation purposes,
the dividend will be income from sources without the United States. The
rules relating to the computation of foreign taxes are complex and
Eligible U.S. Holders should consult their own tax advisors to
determine whether and to what extent a credit would be available and
whether any filings or other actions may be required to substantiate an
Eligible U.S. Holder's foreign tax credit claim.
If, at some point in the future, ScottishPower is at least 50% owned by
United States persons, then under Section 904(g) of the Code, dividends
paid by a foreign corporation that is at least 50% owned by United
States persons may be treated as United States source income (rather
than foreign source income) for foreign tax credit purposes to the
extent the foreign corporation has more than an insignificant amount of
United States source income, and the effect of this rule may be to
treat a portion of the dividends paid by ScottishPower as United States
source income. Under the Income Tax Convention, Section 904(g)(10) of
the Code would permit an Eligible U.S. Holder to elect to treat
ScottishPower dividends as foreign source income for foreign tax credit
limitation purposes, if the dividend income is separated from other
income items for purposes of calculating the holder's foreign tax
credit.
If the U.S. Holder is a U.S. partnership, trust or estate, the
associated U.K. tax credit will be available only to the extent that
the income derived by such partnership, trust or estate is subject to
United States federal income tax as the income of a resident either in
its hands or in the hands of its partners or beneficiaries, as the case
may be.
ScottishPower Form 20-F 1999 47
<PAGE>
Whether holders of ADSs who reside in countries other than the United
States are entitled to a tax credit in respect of dividends on ADSs
depends in general upon the provisions of conventions or agreements, if
any, as may exist between such countries and the United Kingdom.
Taxation of Capital Gains
In general, for U.S. tax purposes, U.S. Holders of ADSs will be treated
as the owners of the underlying ordinary shares that are represented by
such ADSs and deposits and withdrawals of ordinary shares by U.S.
Holders in exchange for ADSs will not be treated as a sale or other
disposition for U.S. federal income tax purposes.
Upon a sale or other disposition of ordinary shares or ADSs, an
Eligible U.S. Holder will recognize gain or loss for United States
federal income tax purposes in an amount equal to the difference
between the U.S. dollar value of the amount realized and the Eligible
U.S. Holder's tax basis (determined in U.S. dollars) in such ordinary
shares or ADSs. Generally, such gain or loss will be a long-term
capital gain or loss if the Eligible U.S. Holder's holding period for
such ordinary shares or ADSs exceeds one year any such gain and loss
generally will be income from sources within the United States for
foreign tax credit limitation purposes. Long-term capital gain for a
non-corporate Eligible U.S. Holder is generally subject to a maximum
tax rate of 20%.
A U.S. Holder who is not resident or ordinarily resident for U.K. tax
purposes in the United Kingdom will not be liable for U.K. tax on
capital gains recognized on the sale or other disposition of ADSs,
unless the ADS holder carries on a trade, profession or vocation in the
United Kingdom through a branch or agency and the ADSs are or have been
used, held or acquired for the purposes of such trade, profession or
vocation or such branch or agency.
U.S. citizens resident or ordinarily resident in the United Kingdom,
U.S. corporations resident in the United Kingdom by reason of their
business being managed or controlled in the United Kingdom and U.S.
citizens who or U.S. corporations which, are trading or carrying on a
trade, profession or vocation in the United Kingdom through a branch or
agency and who or which have used, held or acquired the ADSs for the
purposes of such trade, profession or vocation or such branch or agency
may be liable for both U.K. and U.S. tax in respect of a gain on the
disposal of the ADSs. Such holders may not be entitled to a tax credit
against their United States federal income tax liability for the amount
of U.K. capital gains tax or U.K. corporation tax on chargeable gains,
as the case may be, paid in respect of such gain unless the holder
appropriately can apply the credit against tax due on income from
foreign sources.
United States Information Reporting and Backup Withholding
In general, information reporting requirements will apply to dividend
payments (or other taxable distributions) in respect of ordinary shares
or ADSs made within the United States to a non-corporate United States
person. Accordingly, individual U.S. Holders will receive an annual
statement showing the amount of taxable dividends paid to them during
the year. "Backup withholding " at the rate of 31% will apply to such
payments (i) if the holder or beneficial owner fails to provide an
accurate taxpayer identification number in the manner required by
United States law and applicable regulations, (ii) if there has been
notification from the Internal Revenue Service of a failure by the
holder or beneficial owner to report all interest or dividends required
to be shown on its federal income tax returns or, (iii) in certain
circumstances, if the holder or beneficial owner fails to comply with
applicable certification requirements.
In general, payment of the proceeds from the sale of ordinary shares or
ADSs to or through a United States office of a broker is subject to
both United States backup withholding and information reporting
requirements, unless the holder or beneficial owner establishes an
exemption. Different rules apply to payments made outside the United
States through an office outside the United States.
U.K. Inheritance Tax
An individual who is domiciled in the United States for the purposes of
the convention between the United States and the United Kingdom for the
avoidance of double taxation with respect to estate and gift taxes (the
"Estate Tax Convention") and who is not a national of the United
Kingdom for the purposes of the Estate Tax Convention generally will
not be subject to U.K. inheritance tax in respect of the ADSs on the
individual's death or on a gift of the ADSs during the individual's
lifetime, unless the ADSs are part of the business property of a
permanent establishment of the individual in the United Kingdom or
pertain to a fixed base in the United Kingdom of an individual who
performs independent personal services. Special rules apply to ADSs
held in trust. In the
48 ScottishPower Form 20-F 1999
<PAGE>
exceptional case where the shares are subject both to U.K. inheritance
tax and to U.S. federal gift or estate tax, the Estate Tax Convention
generally provides for the tax paid in the United Kingdom to be
credited against tax paid in the United States.
U.K. Stamp Duty and Stamp Duty Reserve Tax
No U.K. stamp duty will be payable on the acquisition or transfer of
ADSs provided that the instrument of transfer is executed outside the
United Kingdom and subsequently remains at all times outside the United
Kingdom. An agreement to transfer ADSs in the form of ADRs settled
within or reported through any system approved under U.K. Treasury
Regulations will give rise to a liability to stamp duty reserve tax at
the rate of 0.5%. Transfers between non-residents not settled or
reported through any system approved under U.K. Treasury regulations
are exempt from stamp duty reserve tax.
An agreement to purchase ordinary shares, as opposed to ADSs, will
normally give rise to a charge to U.K. stamp duty or stamp duty reserve
tax at the rate of 0.5% of the price. Stamp duty reserve tax is
generally the liability of the purchaser and is usually paid by the
purchaser. Where such ordinary shares are later transferred to the
Depository's nominee, further stamp duty or stamp duty reserve tax will
normally be payable at the rate of (Pounds)1.50 per (Pounds)100 (or
part thereof) of the value of the ordinary shares at the time of the
transfer. However, where ordinary shares being acquired are transferred
directly to the Depositary's nominee, the only charge will generally be
the higher charge of (Pounds)1.50 per (Pounds)100 (or part of the price
payable for the ordinary shares so acquired) and the stamp duty reserve
tax generally will not apply.
Prior to April 6, 1999, a transfer of ordinary shares by the Depositary
or its nominee to the relative ADS holder when the ADS holder is not
transferring beneficial ownership gave rise to a U.K. stamp duty at the
rate of 50p per transfer. On April 6, 1999, this rate increased to
(Pounds)5 per transfer.
Item 8. Selected Financial Data
The selected financial data set out below are extracted or derived from
the consolidated financial statements of the group which have been
audited by PricewaterhouseCoopers, Chartered Accountants and Registered
Auditors, for fiscal 1999 and Coopers & Lybrand, Chartered Accountants
and Registered Auditors, for fiscal years 1995 to 1998. This selected
financial data should be read in conjunction with, and is qualified in
its entirety by reference to, such consolidated financial statements
and their accompanying notes located on pages F-1 through F-40.
ScottishPower prepares the consolidated financial statements of the
group in accordance with accounting principles generally accepted in
the U.K. ("U.K. GAAP"), which differs in certain significant respects
from accounting principles generally accepted in the United States
("U.S. GAAP"). A description of the significant differences between
U.K. GAAP and U.S. GAAP applicable to ScottishPower and a
reconciliation of profit after taxation (or net income) and equity
shareholders' funds (or shareholders' equity) under U.K. GAAP to those
under U.S. GAAP are set out in Note 34 to the consolidated financial
statements of the group.
In the table below, amounts for fiscal 1999 have been translated,
solely for the convenience of the reader, at $1.61 to (Pounds)1.00, the
Noon Buying Rate in effect on March 31, 1999.
The earnings per ScottishPower ADS have been calculated based on a
ratio of four ScottishPower ordinary shares to one ScottishPower ADS.
Dividends per ScottishPower ordinary share and per ScottishPower ADS
exclude any associated U.K. tax credit available to certain holders of
ScottishPower ordinary shares and ScottishPower ADS. See "Item 7.
Taxation--Taxation of Dividends".
ScottishPower Form 20-F 1999 49
<PAGE>
Other than turnover, U.S. GAAP information for the year ended March 31,
1995 has not been published by ScottishPower.
<TABLE>
<CAPTION>
Fiscal Years
1999 1999 1998 1997 1996 1995
Notes $m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.K. GAAP Information:
Profit and Loss Account
information:
Turnover 2 5,220 3,242 3,128 2,941 2,271 1,716
Operating profit 2 1,293 803 785 664 434 380
Profit before taxation 1,037 644 640 558 404 375
Ordinary taxation (229) (142) (152) (137) (109) (101)
Windfall tax - - (317) - - -
Profit after taxation 808 502 171 421 295 274
Dividends (431) (268) (243) (218) (146) (112)
Earnings per ordinary
share 1 $0.6830 42.42p 14.41p 38.11p 33.12p 32.88p
Earnings per ordinary
share (as adjusted) 1 $0.6846 42.52p 41.28p 38.11p 33.12p 32.88p
Earnings per
ScottishPower ADS 1 $ 2.74 (Pounds)1.70 (Pounds)0.58 (Pounds)1.52 (Pounds)1.32 (Pounds)1.32
Earnings per
ScottishPower ADS (as
adjusted) 1 $ 2.74 (Pounds)1.70 (Pounds)1.65 (Pounds)1.52 (Pounds)1.32 (Pounds)1.32
Dividend per
ScottishPower ordinary
share, net $0.3623 22.50p 20.40p 18.50p 15.50p 13.65p
Dividend per
ScottishPower ADS, net $ 1.45 (Pounds)0.90 (Pounds)0.82 (Pounds)0.74 (Pounds)0.62 (Pounds)0.55
U.K. GAAP Information:
Balance Sheet
information:
Total assets 10,034 6,232 5,577 4,848 2,861 1,844
Long term liabilities 3,394 2,108 1,435 1,076 785 313
Equity shareholders'
funds 3,133 1,946 1,708 1,523 1,208 1,106
U.S. GAAP information:
Turnover 2 5,220 3,242 3,128 2,941 2,271 1,716
Profit after taxation 732.6 455.0 129.8 352.9 271.1 -
Earnings per ordinary
share 1 $0.6181 38.39p 11.00p 31.94p 30.39p -
Earnings per ADS 1 $ 2.48 (Pounds)1.54 (Pounds)0.44 (Pounds)1.28 (Pounds)1.22 -
Diluted earnings per
ordinary share 1 $0.6120 38.01p 10.89p 31.62p 30.14p -
Diluted earnings per ADS 1 $ 2.45 (Pounds)1.52 (Pounds)0.44 (Pounds)1.26 (Pounds)1.21 -
Total assets 11,590 7,199 6,550 6,065 3,480 -
Equity shareholders'
funds 3,962 2,461 2,253 2,340 1,510 -
---------------------------------------------------------------------------------------------------------------
</TABLE>
/1/As permitted under U.K. GAAP, earnings per share has been presented
above including and excluding the impact of the windfall tax and
goodwill amortization, to provide an additional measure of underlying
performance. In accordance with U.S. GAAP, earnings per share has been
presented above based on U.S. GAAP earnings, without adjustments for the
impact of windfall tax and goodwill amortization. As such additional
measures of underlying performance are not permitted under U.S. GAAP,
the inclusion of windfall tax in the determination of earnings for the
purpose of computation of earnings per share in accordance with U.S.
GAAP decreased earnings by (Pounds)317.0 million or 26.86 pence per
share/(Pounds)1.07 per ADS for the year ended March 31, 1998. The
inclusion on goodwill amortization decreased earnings by (Pounds)31.2
million or 2.63 pence per share/(Pounds)0.11 per ADS for the year ended
March 31, 1999, by (Pounds)29.8 million or 2.53 pence per
share/(Pounds)0.10 per ADS for the year ended March 31, 1998, by
(Pounds)23.7 million or 2.14 pence per share/(Pounds)0.09 per ADS for
the year ended March 31, 1997 and by (Pounds)7.5 million or 0.84 pence
per share/(Pounds)0.03 per ADS for the year ended March 31, 1996.
/2/In fiscal 1996, the results included turnover of (Pounds)439.4 million
and operating profit of (Pounds)37.7 million (net of reorganization
costs of (Pounds)42.7 million explained below) in respect of Manweb for
the period of the year following its acquisition on October 6, 1995. In
September 1994, the Accounting Standards Board issued Financial
Reporting Standard No. 7 on fair values in acquisition accounting. To
comply with that reporting standard, reorganization and integration
costs must be charged against post acquisition profits, and must not be
reflected in the acquisition balance sheet. Accordingly, in line with
the company's announcement in January 1996, the severance and
reorganization costs of (Pounds)42.7 million associated with the
acquisition of Manweb were charged against profits in the second half of
fiscal 1996. (Pounds)28.2 million of the (Pounds)42.7 million represents
accrual for severance costs (including
50 ScottishPower Form 20-F 1999
<PAGE>
Directors' severance costs) and (Pounds)14.5 million represents
reorganization costs in areas such as contracting and retail. In fiscal
1997, the results include turnover of (Pounds)316.2 million and
operating profit of (Pounds)114.4 million (net of reorganization costs
of (Pounds)21.2 million) in respect of Southern Water, for the period
of the year following its acquisition on August 6, 1996.
Dividends
An interim dividend in respect of each fiscal year is normally declared
by ScottishPower in November for payment in the following March. The
final dividend in respect of each fiscal year is normally recommended
by Directors in May and paid in October, following approval by
ScottishPower's shareholders. A final dividend in respect of fiscal
1999 of 15.00p net per ordinary share will be paid on October 4, 1999,
making a total dividend of 22.50p net for fiscal 1999. The total
dividend payable per ADS for fiscal 1999 was approximately $1.45 net
based on the Noon Buying Rate in effect on March 31, 1999. The
following table sets out the dividends paid on ordinary shares and ADSs
in respect of the past five fiscal years, excluding any associated U.K.
tax credit in respect of such dividends.
<TABLE>
<CAPTION>
Fiscal Years
Notes 1999 1998 1997 1996 1995
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pence per ordinary share: 1
Interim 7.50p 6.80p 6.17p 5.17p 4.55p
Final 15.00p 13.60p 12.33p 10.33p 9.10p
------------------------------- ------ ------ ------ ------ ------
Total 22.50p 20.40p 18.50p 15.50p 13.65p
------------------------------- ------ ------ ------ ------ ------
Pence per ADS 2
Interim 30.00p 27.20p 24.68p 20.68p 18.20p
Final 60.00p 54.40p 49.32p 41.32p 36.40p
------------------------------- ------ ------ ------ ------ ------
Total 90.00p 81.60p 74.00p 62.00p 54.60p
------------------------------- ------ ------ ------ ------ ------
U.S. dollars per ADS 2,3
Interim $ 0.48 $ 0.46 $ 0.40 $ 0.34 $ 0.30
Final $ 0.97 $ 0.91 $ 0.81 $ 0.68 $ 0.60
------------------------------- ------ ------ ------ ------ ------
Total $ 1.45 $ 1.37 $ 1.21 $ 1.02 $ 0.90
------------------------------- ------ ------ ------ ------ ------
</TABLE>
/1/Dividends per share and per ADS are shown net of any associated U.K. tax
credit available to certain holders of ordinary shares and ADSs. See
"Item 7. Taxation--Taxation of Dividends". Dividends paid by the
Depositary in respect of ADSs are paid in U.S. dollars based on a market
rate of exchange that differs from the Noon Buying Rate.
/2/Calculated based on a ratio of four ordinary shares for one ADS.
/3/Dividends have been translated from pounds sterling into U.S. dollars,
solely for the convenience of the reader, at $1.61 to (Pounds)1.00, the
Noon Buying Rate in effect on March 31, 1999. As dividends paid by
ScottishPower are in pounds sterling, exchange rate fluctuations will
affect the U.S. dollar amounts received by holders of ADSs on conversion
by the Depositary of such cash dividends. See "--Exchange Rates" below.
Future dividends will be dependent upon the group's earnings, financial
condition and other factors. Although dividends have historically been
declared and paid semi-annually, following completion of the merger
with PacifiCorp, ScottishPower intends to move to quarterly reporting
and payment of quarterly dividends. It is expected that a dividend will
be paid in February, May, August and November of each year, which is
consistent with the current timing of PacifiCorp's dividend payments.
Interim and final dividends paid in the past are not necessarily
indicative of future dividends. A person resident in the U.K. for tax
purposes who receives a dividend from ScottishPower is generally
entitled to a tax credit, currently at a rate of 1/9th of the dividend
(the "associated U.K. tax credit"). For further information, see "Item
7. Taxation--Taxation of Dividends".
ScottishPower Form 20-F 1999 51
<PAGE>
Exchange Rates
Cash dividends are paid by ScottishPower in pounds sterling. Exchange
rate fluctuations will affect the U.S. dollar amounts received by
owners of the ADSs on conversion by the Depositary of such cash
dividends paid. In addition, fluctuations in the exchange rate between
pounds sterling and U.S. dollars will affect the U.S. equivalent of the
quoted pound sterling price of ordinary shares on the London Stock
Exchange, and as a result, will likely affect the market price of ADSs
in the United States.
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This management's discussion and analysis is based on the Consolidated
Financial Statements of the group prepared in accordance with U.K. GAAP
and should be read in conjunction with the Consolidated Financial
Statements of the group and Notes thereto included in Item 19 of this
report.
Results of Operations
The results for the last three fiscal years are set out below. This
data should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included in Item 19 of this report.
Results for Fiscal 1999 Compared With Fiscal 1998
Group Financial Results
Table 9.1 Group Financial Results
<TABLE>
<CAPTION>
1999 1998 Change
(Pounds)m (Pounds)m (Pounds)m %
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Turnover 3,242.3 3,128.2 114.1 3.6
Operating profit 802.8 785.1 17.7 2.3
Profit before tax 643.8 639.6 4.2 0.7
Free cash flow before windfall tax 702.2 733.8 (31.6) (4.3)
Earnings per share before windfall
tax 42.42p 41.28p 1.14p 2.8
Earnings per share before goodwill
amortization and windfall tax 42.52p 41.28p 1.24p 3.0
Dividend per share 22.50p 20.40p 2.10p 10.3
-------------------------------------------------------------------------
</TABLE>
Group turnover grew during the year by (Pounds)114 million to
(Pounds)3,242 million, an increase of 3.6%. This was due mainly to
growth in the developing domestic gas area and telecommunications
business. Gas and other energy sales were up by (Pounds)77 million to
(Pounds)240 million, reflecting our continuing success in gaining new
customers in the domestic market, and the total sales of
ScottishTelecom were almost doubled at (Pounds)220 million.
The rise in overall turnover, together with continued strong control
over operating costs, led to good growth in earnings before interest,
tax, depreciation and amortization (EBITDA), up (Pounds)66 million to
(Pounds)1,017 million, and higher operating profit of (Pounds)803
million, up (Pounds)18 million.
The net interest charge increased by (Pounds)14 million to (Pounds)161
million, mainly due to the impact on debt of the two windfall tax
payments in December 1997 and December 1998, totaling (Pounds)317
million, and the continued capital expenditure program.
Profit before tax grew by (Pounds)4 million to (Pounds)644 million. At
(Pounds)142 million, the ordinary tax charge represented an effective
tax rate of 22.0%, reduced from 23.7% in the previous year.
Earnings per share amounted to 42.42p, a rise of 2.8% on a comparable
basis. One further measure of earnings per share in the financial
statements is before windfall tax and amortization of goodwill. This
amounted to 42.52p, an increase of 3% on the equivalent figure last
year. The recommended final dividend of 15.00p net per share brought
the total dividend per share for the year to 22.50p net, an increase of
10.3%. This is in line with our aim of 7% to 8% real dividend growth
per annum until at least the regulatory reviews in the year 2000,
whilst
52 ScottishPower Form 20-F 1999
<PAGE>
maintaining a prudent level of dividend cover. The dividend cover
reduced marginally to 1.9 times from 2.0 times the previous year.
Free cash flow for the year, before windfall tax, was (Pounds)702
million (as defined on page F-12), a reduction of (Pounds)32 million,
reflecting working capital increases in our developing gas and
telecommunications businesses. The group invested (Pounds)754 million
in capital projects during the year, (Pounds)97 million more than in
the previous year. This investment was primarily to improve the quality
of the infrastructure assets in our electricity, and water and
wastewater services businesses, and to support the growth of our
telecommunications business.
Net debt increased from (Pounds)1,953 million to (Pounds)2,421 million,
mainly due to the continuing capital investment program. Gearing at
March 31, 1999 increased to 124% compared to 114% a year ago. Interest
cover remained prudent at 5.0 times.
Group Turnover
Table 9.2 Turnover by business segment
<TABLE>
<CAPTION>
Total turnover Inter-segment turnover External turnover
1999 1998 Change 1999 1998 Change 1999 1998 Change
Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy business
Generation
Wholesale 1 914.3 1,014.3 (100.0) 695.3 764.8 (69.5) 219.0 249.5 (30.5)
Power Systems 470.1 443.0 27.1 416.8 391.1 25.7 53.3 51.9 1.4
Energy Supply 1,434.5 1,336.2 98.3 28.8 11.5 17.3 1,405.7 1,324.7 81.0
Manweb 614.2 662.5 (48.3) 18.1 8.6 9.5 596.1 653.9 (57.8)
---------------------- ------- ------- ------ ------- ------- ----- ------- ------- -----
Energy Total 3,433.1 3,456.0 (22.9) 1,159.0 1,176.0 (17.0) 2,274.1 2,280.0 (5.9)
---------------------- ----------------------------------------------------------
Non-energy
business
Manweb - 5.3 (5.3) - 5.3 (5.3) - - -
Southern Water 440.2 453.0 (12.8) 0.7 0.4 0.3 439.5 452.6 (13.1)
ScottishTelecom 2 219.9 113.3 106.6 39.2 31.2 8.0 180.7 82.1 98.6
Other 1,2 612.8 410.7 202.1 264.8 97.2 167.6 348.0 313.5 34.5
---------------------- ---------------------------------------------------------- ------- ------- -----
Total 3,242.3 3,128.2 114.1
---------------------- ---------------------------------------------------------- ------- ------- -----
</TABLE>
/1/The Generation Wholesale segment previously included sales from gas
trading activities which are now reported in the Other business segment.
Total turnover for the Generation Wholesale segment for 1998 included
(Pounds)100.5 million of gas trading sales of which (Pounds)82.4 million
related to internal sales.
/2/The ScottishTelecom business segment and the Other business segment were
previously combined as the Developing business and ancillary services
segment. The ScottishTelecom business segment has been separately
identified due to its increased significance to the group. Prior year
figures have been restated accordingly.
Table 9.3 External Energy Turnover
<TABLE>
<CAPTION>
1999 1998
Generation Power Energy Generation Power Energy
Wholesale Systems Supply Total Wholesale Systems Supply Total
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First tier electricity - - 1,115.6 1,115.6 - - 1,111.0 1,111.0
Second tier electricity - - 136.6 136.6 - - 152.4 152.4
Wholesale electricity 185.4 - - 185.4 199.4 - - 199.4
Gas and other energy
sales 33.6 53.3 153.5 240.4 50.1 51.9 61.3 163.3
----- ---- ------- ------- ----- ---- ------- -------
ScottishPower sub total 219.0 53.3 1,405.7 1,678.0 249.5 51.9 1,324.7 1,626.1
Manweb 596.1 653.9
----------------------------------------------------------------- ------------------------------ ---------
Total 2,274.1 2,280.0
----------------------------------------------------------------- ------------------------------ ---------
</TABLE>
ScottishPower Form 20-F 1999 53
<PAGE>
Group turnover of (Pounds)3,242 million was (Pounds)114 million higher
than fiscal 1998, an increase of 3.6%. Total energy sales across the
group were (Pounds)2,274 million, a reduction of (Pounds)6 million on
the previous year. Higher sales volumes in the ScottishPower franchise
area and further growth in our share of the domestic gas market were
more than offset by lower revenues in Manweb and in the ScottishPower
second tier and large business markets, due to competitive pricing.
Southern Water's contribution to group turnover reduced by (Pounds)13
million, reflecting the full-year impact of the disposal of non-core
businesses in the prior year, with underlying business turnover
increasing by (Pounds)19 million year-on-year. Scottish Telecom
increased its total turnover by (Pounds)107 million to (Pounds)220
million, with external sales rising by (Pounds)99 million to
(Pounds)181 million. The group's other businesses increased their
turnover by (Pounds)35 million.
ScottishPower energy sales are divided into four market segments: first
tier sales, which represent the sale of electricity to customers in the
Scottish franchise area; second tier sales by ScottishPower to
customers outside the Scottish franchise area; wholesale, which is the
sale of electricity to other electricity companies and to the Pool in
England and Wales; and gas and other energy sales, which include the
sale of gas by ScottishPower in both the established commercial and
industrial market and in the emerging domestic gas market in the U.K.
First tier sales were (Pounds)1,116 million, an increase of (Pounds)5
million on the previous year. Volumes increased in the year by 1.4% to
19,831 GWh, primarily due to more normal winter weather following the
unusually mild winter in 1997-98. Sales in the first tier competitive
market were broadly in line with the previous year, despite prices
being lower in the domestic and commercial sectors, and because of
continued competition in the industrial sector.
Sales of electricity in the second tier market sector reduced by
(Pounds)16 million to (Pounds)137 million, with lower sales volumes
outside our home territories as a result of exiting from loss-making
business in this area.
Wholesale turnover reduced in the year, down 7% to (Pounds)185 million,
with higher export volumes, up by 442 GWh to 6,049 GWh, offset by lower
Pool prices. Agency sales were 2.7% lower at 1,010 GWh.
Gas and other energy sales increased by (Pounds)77 million to
(Pounds)240 million, mainly as a result of our success in winning
customers in the new domestic gas markets.
Manweb's energy turnover for the year was (Pounds)596 million, a fall
of (Pounds)58 million or 9% compared to the previous year. Distribution
revenues increased by (Pounds)8 million, principally as a result of the
regulatory pricing formula. The benefits of lower costs were passed on
to domestic and business customers through reduced tariffs. The effect
on profit from tariff reductions to the domestic and small business
sectors, some (Pounds)20 million, was more than offset by improved
performance elsewhere in the commercial and industrial sector, arising
from exiting from loss-making business.
Southern Water's contribution to group turnover fell by (Pounds)13
million to (Pounds)440 million, due entirely to the previous year's
disposal of the non-core businesses. Turnover in the regulated business
increased to (Pounds)439 million, a rise of (Pounds)19 million compared
to the previous year, due to higher prices to fund the capital
expenditure program.
Total sales in ScottishTelecom increased by (Pounds)107 million to
(Pounds)220 million, including a contribution to group turnover of
(Pounds)49 million from Demon Internet for the period since
acquisition. Total turnover in Telecommunication Services increased by
(Pounds)41 million to (Pounds)126 million, with total turnover in The
CallCentre Service rising by (Pounds)3 million to (Pounds)12 million
and in Information Services by (Pounds)14 million to (Pounds)33
million. External turnover in ScottishTelecom increased by (Pounds)99
million to (Pounds)181 million.
The group's other businesses increased their turnover by (Pounds)35
million to (Pounds)348 million. The Retail business, despite the poor
market conditions during the year, increased its turnover to
(Pounds)287 million due to new store openings, with like-for-like sales
falling by 5.7%.
Group Operating Costs
The 0.5% increase in cost of sales to (Pounds)1,861 million compared
favorably with the 3.6% increase in turnover. Cost of sales in the
energy businesses increased due to the higher gas sales volumes.
54 ScottishPower Form 20-F 1999
<PAGE>
Transmission and distribution costs increased by (Pounds)39 million
year-on-year, largely due to customer capture costs in the growing
electricity and gas supply businesses, together with costs of the
severe winter storms in Scotland. Administrative expenses increased by
(Pounds)46 million in the year, due to the expansion of our developing
businesses, especially telecommunications, and increased rates and
depreciation charges in our wires and pipes businesses.
The group has continued to use benchmarking as a tool to reduce
substantially underlying operating costs and improve performance during
the year.
In the Scottish energy businesses, Generation Wholesale announced a
major new cost savings initiative, while Power Systems' continued
reduction of core business costs has been achieved, principally through
benchmarking and continued transfer of best practices--specifically by
comparing performance between regions. Energy Supply achieved
significant efficiency improvements through best practice transfer
between ScottishPower and Manweb and from external benchmarking of cost
and service performance.
In Manweb further cost savings have been identified through best
practice transfers with both the Power Systems and Energy Supply
businesses.
Cost reduction initiatives in Southern Water have achieved significant
improvements in OFWAT ratings of cost performance in water and drainage
businesses. Transition plan savings totaled (Pounds)10 million in the
year, bringing total savings to (Pounds)41 million since acquisition.
Further initiatives announced in September 1998 to build on the success
of the transition plan will deliver additional cost savings.
Group Operating Profit
Table 9.4 Group operating profit by business segment
<TABLE>
<CAPTION>
1999 1998 Change
(Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 115.3 130.8 (15.5)
Power Systems
Transmission 83.5 80.1 3.4
Distribution 178.2 169.4 8.8
Energy Supply
First tier electricity 36.3 38.0 (1.7)
Second tier electricity - (3.8) 3.8
Gas and other energy sales (16.2) (19.1) 2.9
------- ----- -----
Scottish energy businesses 397.1 395.4 1.7
Manweb 125.2 131.3 (6.1)
Southern Water 262.2 240.7 21.5
ScottishTelecom 10.3 4.7 5.6
Other 8.0 13.0 (5.0)
-------------------------- ------- ----- -----
Total 802.8 785.1 17.7
-------------------------- ------- ----- -----
</TABLE>
Group operating profit amounted to (Pounds)803 million, an increase of
2.3% or (Pounds)18 million compared with fiscal 1998. This increase in
group operating profit is after absorbing an additional (Pounds)28
million of costs compared to the previous year, for capturing new
energy and telecom customers, marketing the ScottishPower brand, and
depreciation of new systems required to operate in the competitive
electricity and gas markets.
Operating profit in the Scottish energy businesses increased by
(Pounds)2 million to (Pounds)397 million. Reduced Generation Wholesale
profit from lower sales prices was more than offset by increased profit
in Power Systems from higher distribution revenues and in Energy Supply
from increasing domestic gas margins and improved performance in the
second tier market.
The profit in Generation Wholesale was (Pounds)115 million in the year,
down (Pounds)16 million compared with fiscal 1998. Higher electricity
volumes were sold at lower prices, both to our Energy Supply business
and to the wholesale
ScottishPower Form 20-F 1999 55
<PAGE>
market. In addition there were higher capacity and transmission
charges. Interconnector capacity was increased in the year, with
volumes up by 7.9%, but with contribution unchanged due to reductions
in Pool prices.
Power Systems increased profit by more than (Pounds)12 million to
(Pounds)262 million. Transmission increased operating profit by
(Pounds)3 million to (Pounds)84 million, due to price increases allowed
under the regulatory formula. Distribution profits improved by
(Pounds)9 million, as a result of higher distribution revenues from
allowed price increases, higher sales volumes and a more favorable mix
of units sold. Further business cost reductions were achieved, which
partially offset increased depreciation charges and new industry costs
associated with the operation of the competitive electricity market.
In Energy Supply, first tier profit reduced by (Pounds)2 million to
(Pounds)36 million, with lower generation costs more than offset by
price reductions to customers and the costs of operating in the
competitive electricity market. The impact of competition on financial
performance in our first tier market has not been significant. The
second tier segment recorded a break-even result, despite absorbing
(Pounds)3 million of capture costs for new domestic electricity
customers won in this market. Margins have been improved despite the
competitive pressures in the large business sector of this market,
primarily as a result of lower Pool prices and exit from loss-making
contracts.
In the commercial and domestic gas markets the operating loss of
(Pounds)16 million reflects customer capture costs of (Pounds)17
million this year, increased costs from serving the expanded customer
base, in part offset by the margins obtained from supplying new gas
customers in the domestic sector. Payback on our initial investment in
acquiring a domestic gas customer is currently being achieved in 18
months. Overall, Energy Supply profits increased by (Pounds)5 million
to (Pounds)20 million.
Operating profit in Manweb decreased by (Pounds)6 million to
(Pounds)125 million. Increased depreciation charges and marketing costs
in the competitive electricity market contributed to the reduction in
profit, with price reductions passed on to customers offset by lower
generation prices.
Southern Water contributed more than (Pounds)21 million of additional
operating profit, mainly from increased revenues and continuing cost
savings of (Pounds)10 million delivered by the acquisition transition
plan during fiscal 1999. These savings offset the additional (Pounds)7
million costs of new obligations arising from the construction and
operation of new wastewater treatment plants. Year-on-year, Southern
Water's operating profit increased by 8.9% from (Pounds)241 million to
(Pounds)262 million. All non-core businesses have been sold and,
together with property sales, have realized (Pounds)129 million,
(Pounds)29 million ahead of the target set at acquisition.
ScottishTelecom's contribution to group operating profit was (Pounds)10
million, up from (Pounds)5 million in fiscal 1998, with EBITDA higher
by (Pounds)15 million to (Pounds)26 million. The improvement in
operating profit reflects the increased volume of network traffic and
growth in the provision of Internet services, resulting from our
acquisition of Demon Internet on May 1, 1998. Operating profit for
Demon totaled (Pounds)12 million including increased ingress receipts,
with the Information Services business recording a profit of (Pounds)7
million and The CallCentre Service (Pounds)2 million. Telecommunication
Services recorded a loss of (Pounds)11 million, primarily from one-off
customer capture costs and increased depreciation.
Profits in the other businesses were (Pounds)8 million, (Pounds)5
million lower than the previous year due to a fall in Retail's profits,
as a result of difficult market conditions in this sector throughout
fiscal 1999. Performance in the other businesses was in line with the
prior year.
Interest and Taxation
The net interest charge of (Pounds)161 million was (Pounds)14 million
higher than in fiscal 1998. This was due mainly to the full-year effect
of increased debt on payment of the first installment of the windfall
tax in December 1997, and part-year impact from the second installment,
paid in December 1998. Changes to the group's debt portfolio were made
during the year to take advantage of falling interest rates and to
extend the maturity profile of the group's borrowings. As a result, the
average interest rate for the group during the year was 8.0%, versus
8.4% in fiscal 1998. Interest cover remained prudent at 5.0 times,
against 5.3 times in the prior year. The effective tax rate was reduced
to 22.0% from 23.7% in the previous year largely due to higher capital
allowances on the current mix and level of capital expenditure.
56 ScottishPower Form 20-F 1999
<PAGE>
Earnings and Dividends
The profit after ordinary tax for the year amounted to (Pounds)502
million, an increase of (Pounds)14 million or 2.9%. With a weighted
average 1,185 million shares in issue during the year, earnings per
share were 42.42p before windfall tax, an increase of 2.8% on a
comparable basis.
The proposed final dividend of 15.00p net per share brings the total
dividend per share for the year to 22.50p net, an increase of 10.3%.
The full-year dividend was covered 1.9 times by earnings, versus 2.0
times in fiscal 1998. This increase in dividend is in line with our
stated aim of achieving 7% to 8% real dividend growth until at least
the regulatory reviews in the year 2000, whilst maintaining a prudent
level of dividend cover. It is ScottishPower's current aim to deliver
real dividend growth thereafter and this will be re-examined once the
outcome of the regulatory reviews is known.
Results for Fiscal 1998 Compared With Fiscal 1997
Group Financial Results
Table 9.5 Group Financial Results
<TABLE>
<CAPTION>
1998 1997 Change
(Pounds)m (Pounds)m (Pounds)m %
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Turnover 3,128.2 2,940.7 187.5 6.4
Operating profit 785.1 663.9 121.2 18.3
Profit before tax 639.6 558.4 81.2 14.5
Free cash flow before windfall tax 733.8 583.4 150.4 25.8
Earnings per share before windfall
tax 41.28p 38.11p 3.17p 8.3
Dividend per share 20.40p 18.50p 1.90p 10.3
-----------------------------------------------------------------------
</TABLE>
Group turnover of (Pounds)3,128 million in fiscal 1998 was (Pounds)187
million higher than in fiscal 1997, an increase of 6.4%. This was due
mainly to a full year's revenue from Southern Water and growth in
ScottishTelecom where sales more than doubled. Sales in our energy
businesses were maintained, despite lower prices to our customers due
to tariff reductions, competitive pricing outside ScottishPower's
franchise area and lower volumes which resulted from the exceptionally
mild winter. Offsetting this, gas sales were up by over 200% to
(Pounds)60 million, reflecting our continuing success in gaining new
customers in that market. Total domestic gas customers acquired at
March 31, 1998 were 320,000.
The rise in overall turnover together with continued strong control
over operating costs led to good growth in EBITDA, up (Pounds)150
million to (Pounds)951 million, and higher operating profit of
(Pounds)785 million, up (Pounds)121 million.
The net interest charge increased by (Pounds)39 million to (Pounds)147
million, mainly due to the full year effect of additional borrowings
associated with the acquisition of Southern Water in August 1996 and
the payment of the first installment of the windfall tax in December
1997.
Profit before tax grew by 14.5% to (Pounds)640 million. At (Pounds)152
million, the ordinary tax charge represented an effective tax rate of
23.7%, down from 24.5% in the previous year. Provision has been made in
full for the windfall tax on utilities announced in the July 1997
budget; the liability for the group has been assessed at (Pounds)317
million.
Earnings per share before the windfall tax amounted to 41.28p, an
increase of 8.3% compared to fiscal 1997. The recommended final
dividend of 13.60p net per share brought the total dividend per share
for fiscal 1998 to 20.40p net, an increase of 10.3% compared to fiscal
1997. This is in line with ScottishPower's stated aim of 7% to 8% real
dividend growth per annum, until at least the regulatory reviews in the
year 2000, while maintaining a prudent level of dividend cover. The
dividend cover remained at just over two times earnings before the
windfall tax.
Free cash flow for the year before windfall tax was (Pounds)734
million, an increase of (Pounds)150 million compared to fiscal 1997,
reflecting the improved operating performance and good control of
working capital. The group invested (Pounds)657
ScottishPower Form 20-F 1999 57
<PAGE>
million in capital projects during the year, (Pounds)186 million more
than in the previous year. This investment was primarily to improve the
quality of the infrastructure assets in the group's electricity and
water and wastewater services businesses, and to grow the group's
telecommunications business. The figures also reflect a full year of
expenditure at Southern Water.
Net debt increased from (Pounds)1,790 million to (Pounds)1,953 million,
mainly due to payment of the first installment of the windfall tax of
(Pounds)158 million.
Gearing at March 31, 1998 reduced to 114% compared to 118% a year ago,
despite the impact of part of the windfall tax. Excluding the effect of
the windfall tax, gearing would have been 100%. Interest cover remained
prudent at 5.3 times.
Group Turnover
Table 9.6 Turnover by business segment
<TABLE>
<CAPTION>
Total turnover Inter-segment turnover External turnover
1998 1997 Change 1998 1997 Change 1998 1997 Change
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy business
Generation Wholesale 1,014.3 974.4 39.9 764.8 744.4 20.4 249.5 230.0 19.5
Power Systems 443.0 429.2 13.8 391.1 386.8 4.3 51.9 42.4 9.5
Energy Supply 1,336.2 1,270.4 65.8 11.5 0.9 10.6 1,324.7 1,269.5 55.2
Manweb 662.5 738.4 (75.9) 8.6 - 8.6 653.9 738.4 (84.5)
------- ------- ----- ------- ------- ---- ------- ------- -----
Energy Total 3,456.0 3,412.4 43.6 1,176.0 1,132.1 43.9 2,280.0 2,280.3 (0.3)
-------------------------------------------------------------------------
Non-energy business
Manweb 5.3 20.9 (15.6) 5.3 4.2 1.1 - 16.7 (16.7)
Southern Water 453.0 316.7 136.3 0.4 0.5 (0.1) 452.6 316.2 136.4
ScottishTelecom 113.3 53.7 59.6 31.2 16.7 14.5 82.1 37.0 45.1
Other 410.7 359.2 51.5 97.2 68.7 28.5 313.5 290.5 23.0
-------------------------------------------------
Total 3,128.2 2,940.7 187.5
------------------------------------------------- ------- ------- -----
</TABLE>
Table 9.7 External energy turnover
<TABLE>
<CAPTION>
1998 1997
Generation Power Energy Generation Power Energy
Wholesale Systems Supply Total Wholesale Systems Supply Total
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First tier electricity - - 1,111.0 1,111.0 - - 1,150.3 1,150.3
Second tier electricity - - 152.4 152.4 - - 101.8 101.8
Wholesale electricity 199.4 - - 199.4 195.6 - - 195.6
Gas and other energy 50.1 51.9 61.3 163.3 34.4 42.4 17.4 94.2
----- ---- ------- ------- ----- ---- ------- -------
ScottishPower sub total 249.5 51.9 1,324.7 1,626.1 230.0 42.4 1,269.5 1,541.9
----- ---- -------
Manweb 653.9 738.4
------------------------------------ ------- ------------------------- -------
Total 2,280.0 2,280.3
------------------------------------ ------- ------------------------- -------
</TABLE>
Group turnover of (Pounds)3,128 million was (Pounds)187 million higher
than fiscal 1997, an increase of 6.4%. Total energy sales across the
group were (Pounds)2,280 million, the same as in the previous year.
Lower sales as a result of the exceptionally mild winter, combined with
competitive pricing in the second tier market and lower prices in the
domestic market, were offset by increased sales in the emerging gas
markets. Southern Water's contribution to group turnover increased by
(Pounds)136 million, mainly reflecting the inclusion of the first full
year's trading. ScottishTelecom turnover was (Pounds)45 million higher
compared to fiscal 1997.
58 ScottishPower Form 20-F 1999
<PAGE>
In the first tier market, sales were (Pounds)1,111 million, down
(Pounds)39 million on the previous year. Volumes were reduced (down
3.0% to 19,622 GWh) by the unusually mild Winter in fiscal 1998 and
lower sales in the competitive part of this market. In addition, prices
were lower due to tariff reductions in the domestic sector and
competition in the commercial and industrial sector.
In contrast, second tier volumes continued to grow with volumes
increasing by 54%; turnover was (Pounds)51 million higher at
(Pounds)153 million, reflecting our success in winning new customers.
In addition, the further combination of the ScottishPower and Manweb
sales forces led to all new customers contracting with ScottishPower.
Wholesale electricity sales also increased in the year, up 2% to
(Pounds)199 million, where the effect of lower export volumes, down 4%
to 5,607 GWh due to system constraints in the first half of the year,
was offset by higher agency sales.
Gas and other energy sales increased by (Pounds)69 million to
(Pounds)163 million in fiscal 1998, mainly as a result of the group's
success in winning customers in the new domestic gas markets.
Manweb's energy turnover for fiscal 1998 was (Pounds)654 million, a
fall of (Pounds)84 million or 11% compared to the previous year.
Distribution income reduced as a result of the regulatory pricing
formula and the benefits of lower costs were passed on to domestic and
business customers through reduced tariffs. In addition, the continued
combination of the ScottishPower and Manweb sales forces led to further
new industrial and commercial customers contracting with ScottishPower.
Southern Water's contribution to group turnover increased by
(Pounds)136 million to (Pounds)453 million primarily as a result of the
full year effect. Turnover in the core business increased to
(Pounds)420 million, an increase of (Pounds)21 million compared to the
equivalent full year in fiscal 1997, due to higher prices to fund the
capital expenditure program. In the non-core businesses, turnover for
the full year fell by (Pounds)43 million, as expected, due to the
business disposals achieved during the year.
Turnover in ScottishTelecom increased by (Pounds)45 million in fiscal
1998 to (Pounds)82 million reflecting the continued expansion through
further organic growth and acquisitions. External turnover increased by
122% to (Pounds)82 million and total turnover by 111% to (Pounds)113
million.
Turnover in the other businesses increased by (Pounds)23 million in
fiscal 1998 to (Pounds)314 million. The Retail business, despite the
poor market conditions experienced during the year, increased its
turnover by (Pounds)7 million to (Pounds)274 million due to new store
openings and increased sales of multimedia; however like-for-like sales
fell by 4%.
Group Operating Costs
The 6.1% increase in cost of sales to (Pounds)1,851 million in fiscal
1998 compared favorably with the 6.4% increase in turnover, reflecting
the continued focus in the group on cost control and improved
efficiency. Cost of sales in the energy businesses increased due to the
higher gas and second tier sales volumes, offset by reduced other costs
arising from benchmarking and cost initiatives.
Operating costs at Manweb were (Pounds)24 million less than the
previous year, beating the original target by (Pounds)6 million. In
Southern Water on a full year basis, after allowing for higher costs
from new environmental obligations and capital schemes, operating costs
fell by (Pounds)28 million, (Pounds)3 million better than target. These
operating cost reductions have been achieved principally as a result of
synergies following acquisition and through the sale of non-core
Southern Water businesses.
Costs in Scottish Telecom increased due to business expansion.
Transmission and distribution costs fell by (Pounds)3 million year-on-
year despite the impact of initial domestic gas customer capture costs
in the gas business and the repair costs necessary as a result of the
severe Winter storms.
Allowing for restructuring costs in the prior year arising on the
acquisition of Southern Water, administrative expenses reduced due to
savings which offset increases arising through the expansion in
telecommunications. As with cost of sales, there is a continued drive
on improving cost efficiency across all areas of the group.
ScottishPower Form 20-F 1999 59
<PAGE>
Group Operating Profit
Table 9.8 Group operating profit by business segment
<TABLE>
<CAPTION>
1998 1997 Change
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 130.8 146.1 (15.3)
Power Systems
Transmission 80.1 77.3 2.8
Distribution 169.4 150.7 18.7
Energy Supply
First tier electricity 38.0 39.4 (1.4)
Second tier electricity (3.8) (3.2) (0.6)
Gas and other energy
sales (19.1) (3.8) (15.3)
----- ----- -----
Scottish energy
businesses 395.4 406.5 (11.1)
Manweb 131.3 135.0 (3.7)
Southern Water 240.7 114.4/1/ 126.3
ScottishTelecom 4.7 (1.5) 6.2
Other 13.0 9.5 3.5
----------------------- ----- ----- -----
Total 785.1 663.9 121.2
----------------------- ----- ----- -----
</TABLE>
/1/Eight months from date of acquisition and after reorganization costs
of (Pounds)21.2 million.
Group operating profit was (Pounds)785 million in fiscal 1998, an
increase of 18% compared to fiscal 1997. Operating profit in the
Scottish Energy businesses fell by (Pounds)11 million to (Pounds)395
million, due mainly to reduced generation profits and customer capture
costs in the emerging gas markets. These were offset in part by lower
costs and increased profit in Power Systems, mainly due to lower costs
and increased distribution revenues.
The profit in Generation Wholesale was (Pounds)131 million in fiscal
1998, down (Pounds)15 million from fiscal 1997. The generation
profitability was down (Pounds)9 million due to reduced volumes, higher
depreciation and a greater volume of "must take' nuclear purchases. In
wholesale, profit fell by (Pounds)6 million reflecting lower export
volumes, as a result of system constraints, and reduced margins.
The Power Systems business increased profit by (Pounds)22 million to
(Pounds)250 million. Within this business, transmission increased
operating profit by (Pounds)3 million to (Pounds)80 million with higher
National Grid costs being more than offset by increased exit charges
and savings from operating cost initiatives. The distribution profit
increased by (Pounds)19 million as a result of higher distribution
revenues and operating cost savings.
In Energy Supply, first tier profit fell by (Pounds)1 million due to
reductions in prices and the impact of lower volumes as a result of the
mild Winter. Losses in the second tier market increased modestly to
(Pounds)4 million due to the competitive pressures in this sector.
Actions to stem further second tier losses have been taken and much of
the unprofitable business has now been surrendered. In other energy
sales, the operating loss of (Pounds)19 million reflects initial
domestic customer gas capture costs of approximately (Pounds)12
million, principally in the second half of the year.
Operating profit in Manweb decreased slightly by (Pounds)4 million to
(Pounds)131 million. A fall in turnover was offset by a reduction in
costs due to the implementation of the last stage of the acquisition
transition plan. Total operating cost savings arising from the
acquisition of Manweb now total (Pounds)98 million compared to cost
levels pre-acquisition of (Pounds)176 million, and ongoing cost savings
are (Pounds)6 million better than the transition plan target.
Southern Water contributed an additional (Pounds)126 million of
operating profit arising mainly from the inclusion of results for a
full year and cost savings of (Pounds)28 million delivered by the
acquisition transition plan in fiscal 1998, (Pounds)3 million ahead of
plan. Year-on-year, Southern Water's operating profit increased by 21%
to (Pounds)241 million from (Pounds)200 million. All enterprise
businesses are now sold and will realize (Pounds)90 million, (Pounds)20
million ahead of target. Property disposal proceeds have already
reached just under the target of (Pounds)30 million, with further sales
scheduled in the year ahead.
60 ScottishPower Form 20-F 1999
<PAGE>
Profits in ScottishTelecom were (Pounds)5 million for the year, an
increase of (Pounds)6 million meeting the previously announced target
of (Pounds)4 million for the year from a (Pounds)1 million loss in the
previous year.
Profits in the other businesses were (Pounds)13 million for the year, a
decrease of (Pounds)3 million after removing the effect of (Pounds)7
million of gas capture costs included in this segment last year.
Retail's profit fell from (Pounds)14 million to (Pounds)9 million due
to the difficult market conditions in this sector throughout fiscal
1998. The operating profits of the Contracting Services, Technology and
other businesses improved from the prior year.
Interest
The net interest charge of (Pounds)147 million was (Pounds)39 million
higher than in fiscal 1997 due mainly to the full year effect of
increased debt following the acquisition of Southern Water in 1996 and
the payment of the first installment of the windfall tax of (Pounds)158
million in December 1997. Changes to the group's debt portfolio were
made during the year to manage the increasing trend of interest rates
and extend the maturity profile of the group's borrowings. As a result,
the average interest rate for the group during the year was 8.4%,
slightly below that for fiscal 1997. Interest cover remained prudent at
5.3 times.
Taxation
Profit before tax grew by 14.5% to (Pounds)640 million, while the
effective tax rate was reduced to 23.7% from 24.5% in the previous
year. The decrease was mainly due to the reduction in the corporation
tax rate arising from the July 1997 budget and the write back of
Advance Corporation Tax, offset in part by the previous Chancellor's
decision to reduce capital allowances on long life assets. Provision
has been made in full for the windfall tax on utilities announced in
the July 1997 budget. The liability for the group has been assessed at
(Pounds)317 million.
Earnings and Dividends
The profit after ordinary tax for fiscal 1998 amounted to (Pounds)488
million, an increase of (Pounds)66 million or 15.7%. With a weighted
average 1,180 million shares in issue during the year, earnings per
share before windfall tax were 41.28p, an increase of 8.3%.
The recommended final dividend of 13.60p net per share brought the
total dividend per share for the year to 20.40p net, an increase of
10.3%. The full year dividend was covered just over two times by
earnings excluding the effects of the windfall tax. This increase in
dividend is in line with our stated aim of achieving 7% to 8% real
dividend growth per annum until at least the regulatory reviews in the
year 2000, while maintaining a prudent level of dividend cover.
Liquidity and Capital Resources
Capital Expenditure
Table 9.9 Net Capital Expenditure/1/
<TABLE>
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 42.5 43.7 77.2
Power Systems 127.5 142.1 102.8
Energy Supply 23.9 29.6 7.2
Manweb 85.5 74.7 75.1
Southern Water 346.6 284.4 129.5
ScottishTelecom 103.2 58.2 48.8
Other 25.0 24.2 29.7
------------------------ ----- ----- -----
Total 754.2 656.9 470.3
------------------------ ----- ----- -----
</TABLE>
/1/After deducting customer contributions.
ScottishPower Form 20-F 1999 61
<PAGE>
The group continued to increase investment in its businesses, with net
capital expenditure for fiscal 1999 of (Pounds)754 million, an increase
of (Pounds)97 million over fiscal 1998. This reflected increased
expenditure on the capital program in Southern Water and the continued
emphasis on growth of ScottishTelecom.
Capital expenditure in Generation Wholesale was (Pounds)42 million,
with investment directed towards efficiency and environmental
improvements and development of gas storage facilities at Hatfield
Moors. Further expenditure was incurred at Longannet and Cockenzie
power stations to extend station lives.
In Power Systems, net capital expenditure for the year amounted to
(Pounds)128 million, a decrease of (Pounds)14 million. The distribution
business spent (Pounds)36 million to improve the quality and
reliability of the electricity supply to customers, and (Pounds)22
million on expanding the network to meet demand for new electricity
supply. More than (Pounds)42 million was invested in new systems for
improved network management, the opening up of the electricity market
to full competition, and on enhancing customer service.
In transmission, (Pounds)28 million was invested to reinforce and
refurbish specific parts of the overhead line system, and on network
expansion to support new business opportunities.
In Energy Supply, capital expenditure of (Pounds)24 million mainly
reflected further investment in new systems for the liberalization of
the electricity market, and in the development of Energy Services
products for large business customers.
Manweb capital expenditure amounted to (Pounds)86 million. (Pounds)26
million was spent on modernizing the network to improve reliability and
quality of electricity supply to customers. Net expenditure on
expanding the network to meet demand growth and on providing new
connections to customers was (Pounds)37 million. The balance was
invested in enhancing customer service and business systems for the
competitive market.
Capital expenditure in Southern Water, including infrastructure renewal
expenditure, amounted to (Pounds)347 million, compared with (Pounds)285
million in the previous year. The amount included (Pounds)197 million
as part of the ongoing program to ensure compliance with the higher
standards set by European Union Directives on the quality of bathing
water, urban wastewater discharges and sludge disposal. Investment was
also undertaken to improve security of supply, increase the
availability of water resources and reduce leakage in line with Water
Summit commitments.
Capital expenditure in ScottishTelecom amounted to (Pounds)103 million,
with (Pounds)48 million associated with the expansion of network reach
and capacity, including (Pounds)16 million in the north of Scotland and
(Pounds)5 million for expansion in the Manweb territory. A further
(Pounds)29 million of spending was attributable to Demon Internet,
including expenditure related to the migration of Demon customers to
the ScottishTelecom network and to acquiring increased transatlantic
capacity.
In the other businesses, Retail's capital expenditure totaled (Pounds)8
million, most of which related to the opening of new stores.
Cash Flow
Net cash inflow from operations decreased from (Pounds)1,014 million to
(Pounds)945 million. This reflected the group's investment in working
capital, primarily in the growing gas and telecommunications
businesses.
Net interest paid of (Pounds)150 million was (Pounds)3 million higher
than the equivalent figure in fiscal 1998, with increases due to the
higher debt level, partly offset by a change in the mix of our debt
portfolio. Ordinary tax paid decreased by (Pounds)41 million. Free cash
flow for the group, before windfall tax, was (Pounds)702 million,
(Pounds)32 million lower than in fiscal 1998. The payment of the final
installment of windfall tax amounted to (Pounds)158 million and capital
expenditure was (Pounds)683 million, up (Pounds)90 million on last
year.
Business acquisitions in the year totaled (Pounds)77 million, all of
which were undertaken by ScottishTelecom. Of this total, (Pounds)66
million related to Demon Internet, (Pounds)2 million to Watermark Games
and the remainder comprised
62 ScottishPower Form 20-F 1999
<PAGE>
deferred consideration for prior year acquisitions of Megafone and
Teledata. Dividends paid to shareholders amounted to (Pounds)253
million, up from (Pounds)226 million last year.
Net debt at March 31, 1999 was (Pounds)2,421 million, an increase of
(Pounds)468 million compared with a year ago, principally due to
payments of windfall tax and the increased program of capital
expenditure. Gearing at March 31, 1999 was 124%, up from 114% at March
31, 1998.
Treasury
Financing
The treasury focus during the year was on further refinancing of the
group's debt to minimize interest payments and reduce risk. The group
continues to ensure that borrowings are financed from a variety of
competitive sources and that committed facilities are available both to
cover uncommitted borrowings and to meet the financing needs of the
group in the future.
Under the Euro-Medium Term Note (EMTN) Program, established in November
1997, several issues were undertaken during the financial year. These
included a (Pounds)250 million, 25 year, 6.75% issue in May 1998 and a
DM725 million, 5.25%, 10-year issue in August 1998, providing a fixed
rate in sterling of 6.79%. In addition to these, there were nine other
smaller issues with maturities between two and ten years. Cumulative
issues under the program reached a peak during the year of $1,870
million and, as a result, the program limit was increased from $2,000
million to $4,000 million. This increase will allow the group continued
access to a variety of funding sources and the ability to tap market
demand as and when appropriate. As part of the group's strategy to
develop new funding sources, a (Pounds)150 million facility with the
European Investment Bank was completed in December. Drawings under the
facility as at the balance sheet date totaled (Pounds)51 million.
On March 12, 1999 the company's (Pounds)2,600 million revolving credit
facility was renegotiated in order to allow for the merger with
PacifiCorp. In effect this meant reducing it to (Pounds)2,000 million,
incorporating the creation of a new holding company and raising the
margin. At the same time a new facility of (Pounds)600 million was
arranged in order to finance maximum working capital requirements
during the next 12 to 18 months. This facility has a 364-day life with
an option to extend it to June 2001, the same maturity date as the
(Pounds)2,000 million facility.
The group continues to manage interest rate exposure by maintaining the
majority of its debt at fixed rates of interest. This is achieved by a
combination of fixed rate debt issues and the conversion of floating
rate issues into fixed rate obligations by the use of interest rate
swaps, interest rate caps and forward rate agreements. The use of
financial instruments relates directly to underlying indebtedness; no
speculative or trading transactions are undertaken. The group treasury
operates strictly within policies set out by the Board and is subject
to regular examination by internal and external audit. At March 31,
1999, the interest rate on some 77% of debt was fixed and the interest
rate on a further 8% of borrowings was capped.
Risk Management
The main financial risks faced by the group are exchange rate risk,
interest rate risk and Pool price risk. The Board has reviewed and
agreed policies for managing each of these risks as summarized below.
The use of all classes of financial instruments to manage these risks
has been approved by the Board. The group treasury, which is authorized
to conduct the day-to-day treasury activities of the group, reports at
least annually to the Board and is subject to examination by internal
audit. The Energy Trading Center, which is authorized to carry out
activities to manage the group's Pool price risk, reports monthly to a
risk committee which is comprised of two executive Directors and an
external consultant. The Energy Trading Center also reports at least
annually to the Board and is subject to examination by internal audit.
The weighted average period of maturity of year-end fixed debt and
swaps was nine years, while the forward cover on capped debt was for an
average period of some three years. Accordingly, changes in floating
interest rates will have a limited impact on interest payable by the
group.
ScottishPower Form 20-F 1999 63
<PAGE>
In order to reduce the weighted average cost of capital by improving
the efficiency of the balance sheet, the group is targeting an "A'
credit rating, which implies a minimum interest cover of approximately
3.0 times. It is expected that the merger with PacifiCorp will be
structured in order to achieve this aim. As a result, the group's long-
term credit ratings may decline from the current levels of Aa3 (Moody's
Investors Service) and A+ (Standard & Poor's), both of which are under
review for possible downgrade. The short-term credit ratings of P1/A1
are not under review.
The group has limited exposure to foreign currencies. Commercial paper
and EMTNs issued in currencies other than sterling are fully covered by
forward contracts or swaps to convert the debt into sterling. Certain
limited imports of capital equipment and fuel are denominated in
foreign currencies and the sterling cost of these is fixed by means of
forward contracts as soon as the company's contractual commitments are
known.
The group has procedures in place to minimize exposure to Pool price
variations, being the possibility that a change in Pool prices will
reduce the proceeds of electricity sold to the Pool or increase the
cost of electricity purchased from the Pool. These involve
ScottishPower and its subsidiary Manweb entering into contracts for
differences (CfDs). CfDs are contracts which fix the price of
electricity for an agreed quantity and duration by reference to an
agreed strike price. The group's use of such derivative instruments
relate directly to the underlying purchase and sale of electricity to
and from the Pool.
In ScottishPower, the risk management efforts of the energy businesses
are focused on electricity supply and generation, which are exposed to
Pool price volatility.
On the supply side, the group sells predominantly fixed price contracts
to customers and buys output from the Pool to meet the demand of these
customers. Since the price of electricity purchased from the Pool can
be volatile, the group is exposed to risk arising from differences
between the fixed price at which it sells electricity and the
fluctuating prices at which it purchases electricity, unless it can
effectively hedge such exposure.
The group's generation business is also exposed to fluctuations in Pool
price. It sells electricity through the Pool, via the Anglo-Scottish
Interconnector. Sales of electricity to other suppliers in Scotland are
also made at a price related to the Pool price. In addition, the
generation business purchases electricity from Scottish Nuclear under
the terms of the Nuclear Energy Agreement, at a Pool-related price.
The group's exposure to Pool price risk is managed by its Energy
Trading Center. The role of the Energy Trading Center is to monitor the
group's overall energy price exposure and hedge this risk where
appropriate. In the electricity market the primary hedging tool is
CfDs.
The Energy Trading Center manages CfDs by reference to its own internal
forecasts of customer demand, volume available for Pool trading and
Pool prices and bases its choices on the interpretation of these
forecasts and market intelligence.
Bilateral contracts are then entered into with RECs, generators and
other large electricity consumers to mitigate Pool price risk. These
contracts are typically settled monthly for cash, based on the actual
variance of Pool prices to the agreed CfD strike price. Therefore,
these contracts do not involve actual delivery of the underlying
commodity. These CfDs involve a degree of credit risk. This is the risk
that the counterparty to the CfD defaults on settlement. The group
controls credit risk arising from holding the CfDs through credit
approvals, limits and monitoring procedures.
The operation of the Energy Trading Center is carried out under strict
guidelines which are agreed and monitored by the Risk Management
Committee, whose membership includes the Executive Finance Director and
the Executive Director, U.K. Power Operations. In addition, the
operation of the Energy Trading Center is monitored by internal audit.
The group's ability to manage both its purchase price risk and its
sales price risk depends, in part, on the continuing availability of
properly priced risk management mechanisms such as CfDs. However,
because the CfD market in electricity is very illiquid, no assurance
can be given that an adequate, transparent market for such products
will in fact be available.
64 ScottishPower Form 20-F 1999
<PAGE>
Recent Developments
ScottishPower has announced proposals for the creation of a new holding
company for the group, subject to Court approval. A new holding company
will be introduced to formalize the separation between the ultimate
holding company, the existing trading activities of the group and
PacifiCorp. These changes, expected to take effect at the end of July,
are in line with the position held by both the U.K. and U.S. Federal
regulatory authorities, who favor the corporate structure of a "non-
trading" holding company.
The first sitting of both the Scottish Parliament and the Welsh
Assembly took place on May 12, 1999 with devolved powers being assumed
from July 1, 1999. No party gained overall control in either the
Scottish Parliament or the Welsh Assembly. The Rt. Hon Donald Dewar MSP
has been elected First Minister of the Scottish Parliament. In
Scotland, a coalition agreement has been formed between the Scottish
Labour Party and the Scottish Liberal Democrats. The Rt. Hon Alun
Michael AM has been elected First Minister of the Welsh Assembly and
the Labour Party has formed a minority administration.
The group has continued to make a very positive contribution to the
devolution process, which it believes will offer opportunities for
business. The retention of a "level playing field" across the industry
in the U.K. remains a centrally important issue. Given that regulatory
control and macro economic policy is to be retained by Westminster,
parity is expected to continue. Powers to control and even further
legislate on local planning, business rates and environmental issues
will be devolved to the new Parliament as will power to implement EU
directives and legislation. The Welsh Assembly does not have the power
to introduce primary legislation and will act as an administrative body
for the implementation of those powers historically held by the
Secretary of State for Wales. However, the Assembly will have a large
scope to concentrate on areas such as economic development, which have
been expanded through the enhanced operation of a central development
agency, planning issues and education, again providing positive
business opportunities.
In line with ScottishPower's commitment to develop effective working
relationships with all political audiences, a full contact program
strategy has been developed and will be implemented in both the
Scottish Parliament and the Welsh Assembly. Close monitoring of
developments in Scotland and Wales is also essential to ensure that the
group identifies positive opportunities as they arise.
Outlook
Apart from the many changes and opportunities which the year ahead
offers in the U.K. operations, it is expected the PacifiCorp merger
will be completed later this year. This would make ScottishPower one of
the top 10 electricity companies in the world and would bring the total
employment complement in the new enlarged group to 25,000.
Looking forward into the new millennium, regulation will continue to
have a significant bearing on the profitability and investment
capability of the group. The Directors believe that the group has high
standards of operation and customer service. Nevertheless, they are
unable to judge accurately the outcome of the current U.K. regulatory
reviews and there can be no assurance that they will not materially
affect the group's profits.
ScottishPower's goal is to provide better service and value to
customers and at the same time enhanced earnings for shareholders. This
must be supported by a process of regulation which takes a balanced
long-term view to reward investment and encourages improvements in
service and efficiency.
ScottishPower will continue its strategy to develop and grow the
business. This will require ongoing revenue and capital investment in
the year ahead. ScottishPower is confident in its strategy for long-
term growth and, given the quality of the company and its people, looks
forward to further success.
European Economic and Monetary Union and the impact of the euro
European Economic and Monetary Union (EMU) commenced on January 1, 1999
with the introduction of a new currency, the euro.
The group's businesses are almost totally domestic in nature, with very
few sales denominated in currencies other than sterling, and relatively
few purchases. As a result, while the United Kingdom remains outside
EMU, the group
ScottishPower Form 20-F 1999 65
<PAGE>
will be affected to only a very minor extent by the introduction of the
euro. A project team has been established to review the impact of the
first wave of EMU on customers and suppliers and to formulate the
group's response. The project group is also considering the
implications of potential U.K. membership of EMU.
The benefits of a new integrated capital market have been recognized
and the group has already issued commercial paper denominated in euros
and will consider issuing bonds in euros in due course.
Year 2000
Please refer to "Item 1--Description of Business--Year 2000".
U.K. GAAP to U.S. GAAP Reconciliation
Under U.S. GAAP, profit after ordinary and windfall taxation for fiscal
1999 and fiscal 1998 was (Pounds)455.0 million and (Pounds)129.8
million, respectively, compared with (Pounds)502.8 million and
(Pounds)170.1 million under U.K. GAAP. Equity shareholders' funds under
U.S. GAAP at the end of fiscal 1999 and fiscal 1998 were
(Pounds)2,460.8 million and (Pounds)2,252.6 million compared with
(Pounds)1,945.9 million and (Pounds)1,707.8 million under U.K. GAAP.
Differences result principally from the differing accounting treatment
of pension costs, goodwill, deferred taxation and the recognition of
dividend payments. For details of these differences, see Note 34 to the
Consolidated Financial Statements of the group.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995
Certain matters discussed in this Form 20-F are "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 and any rules, regulations or releases of
the Securities and Exchange Commission with respect thereto (the
"PSLRA"). Forward-looking statements in this Form 20-F include, but are
not limited to, statements in: Item 1. Description of Business under
the captions "Business Strategy" relating to cost savings after fiscal
1999 from the Scottish energy businesses, Southern Water and Manweb;
"Proposed ScottishPower PacifiCorp Merger" with respect to the Merger
(i) permitting the best practices of the two companies to reduce costs
and increase operating efficiencies with the goal of enhancing
shareholder value, (ii) enabling PacifiCorp to achieve more quickly its
stated aim of earning the authorized regulatory rate of return in each
U.S. state in which it conducts business and (iii) bringing
PacifiCorp's non-generation costs per customer in the U.S. in line with
some of the most efficient comparable utilities; "Earnings and
Dividends" relating to the company's aim to deliver 7% to 8% real
dividend growth per annum until at least the regulatory reviews in the
year 2000, while maintaining a prudent level of dividend cover; "Energy
Business--Generation Wholesale--Station Performance" with respect to
ScottishPower's portfolio of power stations being in a condition to
support current and expected generation output; "Energy Business--
Generation Wholesale--Trading with Northern Ireland Electricity"
regarding the expectation that the Scottish-Northern Irish
Interconnector will commence commercial operation in December 2001;
"ScottishTelecom" with respect to the Board's belief that revenue
growth will come from carrying Demon Internet telecoms traffic
following the installation of a network switch and supporting
infrastructure; "Year 2000" with respect to (i) the Directors' belief
that ScottishPower does not face greater risks from Year 2000 issues
than other comparable utility companies in the U.K., (ii) the
completion of compliance work well in advance of the end of 1999 at an
estimated total cost of approximately (Pounds)30 million; (iii) the
Directors' belief that it is unlikely that Year 2000 issues will have a
material impact on the group's financial condition or operations, and
(iv) the Director's belief that no integration problems relating to
Year 2000 issues will arise as a result of the merger with PacifiCorp;
"Regulation of the Electricity Industry--Future Regulation" with
respect to the likely outcome of the HM Government and DGES proposals
being a requirement for separate licensed businesses within the same
group to operate as separate legal entities; "Environmental Regulation
of Generation Activities" with respect to the group's ability to
achieve the environmental improvements required by potential future
limits arising from the pending IPC review without materially
constraining operational and commercial flexibility; and "Employees"
regarding the manpower reduction of approximately 20% over the next two
years within Southern Water and the expectation of manpower growth in
the group's developing businesses; and a statement in Item 2.
Description of Property with respect to the group's belief that it will
be able to negotiate lease renewals on satisfactory terms or relocate
relevant facilities without such relocation having a materially adverse
impact on the group or its operations.
ScottishPower wishes to caution readers, and others to whom forward-
looking statements are addressed, that any such forward-looking
statements are not guarantees of future performance and that actual
results may differ materially from estimates in the forward-looking
statements. In addition to the important factors described elsewhere in
this Form 20-F, the following important factors, among others, could
affect the group's actual future
66 ScottishPower Form 20-F 1999
<PAGE>
results and could cause such results to differ materially from
estimates expressed in any forward-looking statements made by, or on
behalf of the group:
. the level of competition within ScottishPower's and Manweb's
franchise electricity supply markets, including without limitation
competition from other RECs and generators, the level of competition
in the Pool, the level of competition in ScottishTelecom's market and
the overall demand for services.
. any regulatory changes (including changes in environmental
regulations) that may increase the operating costs of the company,
may require the company to make unforeseen capital expenditures or
may prevent the regulated businesses of the group from achieving
acceptable returns.
. future levels of industry generation and supply, demand and pricing,
political stability and economic growth in the relevant areas in
which the group has operations.
. the availability of acceptable quality coal at favorable prices.
. the ability of ScottishPower and PacifiCorp to integrate their
businesses successfully following the merger.
. development and use of technology, the actions of competitors,
natural disasters and other changes to business conditions.
Item 9A. Quantitative and Qualitative Disclosures About Market Risk
Market Rate Sensitive Instruments and Risk Management
The following discussion about the group's risk management activities
includes "forward looking" statements that involve risk and
uncertainties. Actual results could differ materially from those
projected in the forward looking statements.
The following tables summarize the financial instruments, derivative
instruments and derivative commodity instruments held by the group at
March 31, 1999, which are sensitive to changes in interest rates,
foreign exchange rates and commodity prices. The group uses interest
rate swaps, forward foreign exchange contracts and other derivative
instruments to manage the primary market exposures associated with the
underlying assets, liabilities and committed transactions. The group
uses these instruments to reduce risk by essentially creating
offsetting market exposures. The instruments held by the group are not
leveraged and are not held for financial trading purposes.
Financial Instruments and Risk Management
Overview
The main financial risks faced by the group are exchange rate risk,
interest rate risk and Pool price risk. The Board has reviewed and
agreed policies for managing each of these risks as summarised below.
In order to mitigate the risks identified the Board has endorsed the
use of financial instruments. The financial instruments endorsed for
use by the Board include swaps, both interest rate and cross currency,
caps, forward rate agreements, forward contracts and contracts for
differences. The group treasury, which is authorized to conduct the
day-to-day treasury activities of the group, reports annually to the
Board and is subject to both internal and external audit. The Energy
Trading Center, which is authorized to carry out activities to manage
the group's Pool price risk reports monthly to a risk committee which
is comprised of two executive directors and an external consultant.
Pool price risk is defined as the possibility that a change in the cost
of electricity from the Pool will either reduce the proceeds of
electricity sold to the Pool or increase the cost of electricity
purchased from the Pool.
ScottishPower Form 20-F 1999 67
<PAGE>
Interest rate risk management
The group continues to access funding opportunities in the major global
markets in a range of currencies at both fixed and floating rates of
interest, using derivatives where appropriate, to convert the
obligations and payments into fixed or floating rate sterling.
The exposure to fluctuating interest rates is managed by using a
spectrum of financial instruments to maintain a majority of the group's
debt portfolio at fixed rates. This involves either issuing fixed rate
debt or swapping floating rate debt obligations into fixed rates by
either interest rate swaps or a string of forward rate agreements
("FRA"). Flexibility in the fixed/floating mix is maintained by using
interest rate caps that protect the group should rates rise, i.e. above
the strike price, while maintaining the potential benefit should
interest rates fall. The overall policy framework with regards to the
fixed/floating debt mix has been approved by the Board. At March 31,
1999, 77% (1998:81%) of the group's debt was either issued as fixed or
converted to fixed rates using interest rates swaps. No FRAs were
outstanding as at March 31, 1999.
All transactions are undertaken to manage the risks arising from
underlying activities and no speculative trading is undertaken. The
counterparties to these instruments generally consist of financial
institutions and other bodies with good credit ratings, i.e. "AA" rated
by any one of the following, Standard & Poor's, Moody's or Duff &
Phelps. Although the group is potentially exposed to credit risk in the
event of non-performance by counterparties, such credit risk is
controlled through credit rating reviews of the counterparties and by
limiting the total amount of exposure to any one party to levels agreed
by the Board. The group does not believe that it is exposed to any
material concentration of credit risk.
The following table indicates the type of swaps used, their duration,
their respective interest rates, the maturity profile of the foreign
currency denominated borrowings and the currency of issue. Average
variable rates are based on rates that are implied by the yield curve
at March 31, 1999. These may change significantly, affecting future
cash flows. The information is presented in pounds sterling
equivalents, the reporting currency of the group. For avoidance of
doubt, reference to "m" in "m LIBOR" represents months, not millions.
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 Thereafter Total Fair Value
Liabilities (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term debt
Fixed rate (GBP) 11.0 165.8 14.4 15.5 41.6 646.0 894.3 1,009.4
Average interest rate
(GBP) 9.9% 11.0% 9.8% 9.9% 7.6% 7.5% 8.3%
Fixed rate ($US) - - - 183.0 - - 183.0 185.0
Average interest rate
($US) - - - 5.9% - - 5.9%
Fixed rate (CHF) - - - - 4.1 - 4.1 4.2
Average interest rate
(CHF) - - - - 2.5% - 2.5%
Fixed rate (JPY) 9.7 - 16.9 - - 46.9 73.5 76.7
Average interest rate
(JPY) 0.0% - 0.5% - - 2.1% 1.5%
Fixed rate (EUR) - - 21.4 - 7.0 282.3 310.7 328.9
Average interest rate
(EUR) - - 5.0% - 4.9% 5.2% 5.2%
Fixed rate (SEK) - - - - - 9.8 9.8 10.4
Average interest rate
(SEK) - - - - - 5.4% 5.4%
Variable rate (GBP) 547.3 - - 23.0 16.0 133.5 719.8 726.8
Average interest rate
(GBP) 3m LIBOR - - 3m LIBOR 4m LIBOR 6m LIBOR -
Variable rate ($US) 138.7 - - - - 21.2 159.9 158.3
Average interest rate
($US) 3m LIBOR - - - - 3m LIBOR -
Variable rate (CHF) 90.4 - - 5.0 - - 95.4 94.6
Average interest rate
(CHF) 4m LIBOR - - 6m LIBOR - - -
Variable rate (EUR) 44.5 - 8.6 16.7 - 5.8 75.6 76.6
Average interest rate
(EUR) 3m LIBOR - 3m LIBOR 3m LIBOR - 3m LIBOR -
Variable rate (CAD) 2.0 - - - - - 2.0 2.0
Average interest rate
(CAD) 3m LIBOR - - - - - -
--------------------------------------------------------------------------------------- ------- -------
2,528.1 2,672.9
--------------------------------------------------------------------------------------- ------- -------
</TABLE>
68 ScottishPower Form 20-F 1999
<PAGE>
<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 Thereafter Total Fair Value
Liabilities: (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest rate derivatives/1/
Interest rate swaps
Variable to fixed (GBP) - 50.0 100.0 75.0 150.0 325.0 700.0 81.3
Average pay rate - 7.9% 7.4% 8.1% 7.7% 8.0% 7.8%
Average receive rate - 6m LIBOR 6m LIBOR 6m LIBOR 6m LIBOR 6m LIBOR -
Fixed to variable (GBP) - 100.0 - - - - 100.0 (1.3)
Average pay rate - 6m LIBOR - - - - -
Average receive rate - 6.2% - - - - 6.2%
Interest rate caps
Notional amount 50.0 - 100.0 - 50.0 - 200.0 (0.6)
Strike price 7.0% - 7.0% - 7.0% - 7.0%
Cross currency swaps long term/1/
Receive variable $US pay fixed GBP 6.1 - - - - 21.2 27.3 -
Average pay rate (GBP) 7.0% - - - - 4.9% 5.4%
Average receive rate ($US) 3m LIBOR - - - - 3m LIBOR -
Receive fixed $US pay fixed GBP - - - 183.0 - - 183.0 3.9
Average pay rate (GBP) - - - 6.9% - - 6.9%
Average receive rate ($US) - - - 5.9% - - 5.9%
Receive fixed CHF pay variable GBP - - - - 4.1 - 4.1 (0.1)
Average pay rate (GBP) - - - - 3m LIBOR - -
Average receive rate (CHF) - - - - 2.7% - 2.7%
Receive variable CHF pay variable GBP 62.7 - - 5.0 - - 67.7 0.6
Average pay rate (GBP) 3m LIBOR - - 6m LIBOR - - -
Average receive rate (CHF) 4m LIBOR - - 3m LIBOR - - -
Receive fixed JPY pay variable GBP 9.7 - 16.9 - - 46.9 73.5 (3.7)
Average pay rate (GBP) 6m LIBOR - 6m LIBOR - - 6m LIBOR -
Average receive rate (JPY) 0.0% - 0.5% - - 2.1% 1.5%
Receive fixed EUR pay fixed GBP - - - - - 245.5 245.5 7.0
Average pay rate (GBP) - - - - - 6.8% 6.8%
Average receive rate (EUR) - - - - - 5.3% 5.3%
Receive fixed EUR pay variable GBP - - 21.4 - 7.0 36.8 65.2 (4.9)
Average pay rate (GBP) - - 6m LIBOR - 6m LIBOR 6m LIBOR -
Average receive rate (EUR) - - 5.0% - 4.9% 5.0% 5.0%
Receive variable EUR pay variable GBP - - 8.6 16.7 - 5.8 31.1 (0.6)
Average pay rate (GBP) - - 3m LIBOR 3m LIBOR - 6m LIBOR -
Average receive rate (EUR) - - 3.1% 3.5% - 4.9% 3.7%
Receive fixed SEK pay variable GBP - - - - - 9.8 9.8 (0.6)
Average pay rate (GBP) - - - - - 6m LIBOR -
Average receive rate (SEK) - - - - - 5.4% 5.4%
------------------------------------------------------------------------------------------------------------------ --------
81.0
------------------------------------------------------------------------------------------------------------------ --------
</TABLE>
/1/The average variable rates, LIBOR, above exclude margins.
LIBOR is the London Inter Bank Offer Rate.
GBP - Pounds sterling, $US - American Dollars, CHF - Swiss Francs, JPY
- Japanese Yen, EUR - euros, SEK - Swedish Kronor, CAD - Canadian
Dollars
ScottishPower Form 20-F 1999 69
<PAGE>
The assumptions used to estimate current fair values of debt and other
financial instruments are summarized below:
(i) For cash, short-term deposits and short-term borrowings (uncommitted
borrowing, commercial paper, and short-term borrowings under the
committed facilities) the book value approximates to fair value
because of their short maturities.
(ii) The fair values of all quoted euro bonds are based on their
closing clean market price converted at the spot rate of exchange
as appropriate.
(iii) The fair values of the sterling bond 2001 and the European
Investment Bank loans have been calculated by discounting their
future cash flows at market rates adjusted to reflect the
redemption adjustments allowed under each agreement.
(iv) The fair values of the sterling interest rate swaps and sterling
interest rate caps have been estimated by calculating the present
value of estimated cash flows.
(v) The fair values of the cross currency interest rate swaps have been
estimated by adding the present values of the two sides of each
swap. The present value of each side of the swap is calculated by
discounting the estimated future cash flows for that side, using
the appropriate market discount rates for that currency in effect
at the balance sheet date.
(vi) The fair values of unquoted debt have been calculated by
discounting the estimated cash flows for each instrument at the
appropriate market discount rate in the currency of issue in
effect at the balance sheet date.
(a) Foreign exchange risk management
The primary source of foreign exchange risk is from the foreign
exchange risk associated with the issue of debt sourced in a foreign
currency, i.e. debt issued in currencies other than sterling. The
foreign exchange exposure on the debt is eliminated entirely by the use
of cross currency interest rate swaps. The group has a policy to hedge
all contractually committed income/expenditure denominated in
currencies other than sterling into sterling by the use of spot and
forward contracts.
(b) Commodity price risk management
Almost all electricity generated in England and Wales must be sold to
the Pool. Electricity suppliers including Manweb and ScottishPower must
buy electricity from the Pool for resale to their customers in England
and Wales. The Pool was established at the time of privatization in
England and Wales for bulk electricity trading between generators and
suppliers. ScottishPower participates in the Pool by
exporting/importing electricity to/from England and Wales via the
interconnector and purchasing electricity from the Pool to meet the
requirements of its customers in England and Wales. The Pool is
operated under a Pooling and Settlement Agreement to which all licensed
generators and suppliers of electricity in Great Britain are party.
The group has procedures in place to minimize exposure to Pool price
variations, that is, the possibility that a change in Pool prices will
reduce the proceeds of electricity sold to the Pool or increase the
cost of electricity purchased from the Pool. These procedures involve
ScottishPower and its subsidiary Manweb entering into contracts for
differences (CfDs) with third parties. In general, the terms of CfDs
are such that contracts are settled monthly (or more frequently) in
arrears by reference to actual half hourly Pool prices.
A CfD is a contract between two parties (e.g. a generator and a public
electricity supplier) that requires each party to either make or
receive monthly payments over a specific term based on the difference
between an agreed price (i.e. the bilaterally determined strike price)
and a price that varies with a specified commodity index (i.e. the
Pool), applied to an agreed quantity (i.e. number of MWhs). The group's
policy is to hedge the net electricity sales to or purchases from the
Pool.
During the year ended March 31, 1999, more than 90% of the group
exposure to Pool prices was hedged in this way. Cover is built up
throughout the year and at March 31, 1999 a significant proportion of
the group's exposure to Pool price variations for the following
financial year is covered.
The group has also entered into some longer term (in excess of one
year) arrangements to protect against the volatility of Pool prices.
These arrangements have the potential to be increased at
ScottishPower's discretion as the business grows and the time period
covered will be reviewed on an ongoing basis. The contracts specify the
price indexation that applies.
70 ScottishPower Form 20-F 1999
<PAGE>
CfDs involve a degree of credit risk. This is the risk that the
counterparty to the CfD defaults on settlement. The counterparties
dealt with include generators, suppliers and financial institutions.
The group controls credit risk arising from holding the CfDs through
credit approvals, limits and monitoring procedures.
<TABLE>
<CAPTION>
Fair
Contracts for differences 2000 2001 2002 2003 2004 Thereafter Total Value
Maturity Profile (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Notional amount 416 32 20 - - - 468 1.5
-------------------------------------------------------------------------------------------------------------
</TABLE>
The notional amount represents the gross volume covered under the
contracts multiplied by the respective strike prices. The fair value
represents the forecast future cash flows at current market prices.
CfDs are both bought and sold depending on whether ScottishPower is
exposed as a buyer from or seller to the Pool.
The difference between these figures and those reported last year is
due to the inclusion of new CfDs which were entered into during fiscal
1999.
It is difficult to estimate the long term level of Pool prices with
reasonable accuracy and there is no readily identifiable market through
which the CfDs could be realized in an exchange. However, based on
management projections of the future prices of electricity, and
considering the outcome under several future price scenarios, the group
has determined that the fair value amount of CfDs, outstanding at the
year end, is not material to the group's Accounts. The fair value
amount is the difference between the strike price of the contract and
the estimated Pool price for the relevant half hourly periods.
Item 10. Directors and Officers of Registrant
The business of ScottishPower is managed by the Board of Directors.
ScottishPower's Articles of Association provide that at every Annual
General Meeting of ScottishPower one third (or the number nearest to
but not exceeding one third) of the Directors shall retire from office.
The Directors to retire in each year are the Directors who have been
longest in office since their appointment or re-appointment. A retiring
Director is eligible for re-appointment. The Directors may, at any
time, appoint any person to be a Director. Any person so appointed will
hold office until the next Annual General Meeting and shall then be
eligible for election. The Directors may appoint one or more of their
number to the office of Managing Director or to any other executive
office for such period and on such terms as the Directors think fit.
The executive Directors have two year rolling employment contracts with
ScottishPower, other than Charles Berry and Alan Richardson who have
service contracts terminable on one year's notice. The executive
officers have contracts that are terminable by the company on the
serving of one year's notice.
The non-executive Directors, the executive Directors and the executive
officers of ScottishPower are as follows:
<TABLE>
<CAPTION>
Name Notes Title Age/1/ Date appointed to Board
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Non-Executive Directors: 2
Murray Stuart Chairman 65 March 30, 1990
Mair Barnes Director 54 April 1, 1998
Sir Peter Gregson Director 62 December 13, 1996
Ewen Macpherson Director 57 September 1, 1996
John Parnaby Director 61 September 30, 1994
Executive Directors: 3
Ian Robinson Chief Executive 56 March 1, 1995
Charles Berry Executive Director - Customer Sales & Services 46 April 1, 1999
Alan Richardson PacifiCorp CEO Designate 52 April 1, 1999
Ian Russell Deputy Chief Executive and Finance Director 46 April 5, 1994
Ken Vowles Executive Director - U.K. Power Operations 57 September 30, 1994
--------------------------------------------------------------------------------------------------------------
</TABLE>
/1/As at March 31, 1999.
/2/It was announced on January 27, 1999 that Murray Stuart had postponed
his retirement and will continue as Chairman of ScottishPower while
the merger with PacifiCorp is being completed. ScottishPower announced
the retirement of Sir Ronald Garrick as a non-executive Director on
April 26, 1999, which took effect on April 30, 1999.
/3/Duncan Whyte, who was an executive Director of ScottishPower with
responsibility for Multi-Utility, resigned as a Director and left the
group on May 31, 1999.
ScottishPower Form 20-F 1999 71
<PAGE>
The Directors of ScottishPower are currently Directors of New
ScottishPower in the same capacities. See "Item 1. Description of
Business--Introduction--Scheme of Arrangement."
It is proposed that Keith McKennon, currently Chairman, Chief Executive
Officer and President of PacifiCorp, will join the New ScottishPower
board as Deputy Chairman, together with Nolan Karras and Robert Miller,
two non-executive Directors from PacifiCorp, in each case with effect
from the effective date of the Merger.
<TABLE>
<CAPTION>
Name Note Title Age/1/ Date appointed to current post
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Executive Officers: 2
Sue Clark Director Corporate Affairs 34 January 1, 1996
David Jones Managing Director Information Systems 55 June 19, 1995
Bill Landels Managing Director Manweb 56 June 26, 1995
Andrew Mitchell Secretary 47 July 1, 1993
Paul Pagliari Group Human Resources Director 39 January 11, 1999
James Stanley Group Legal Director 44 March 1, 1996
-------------------------------------------------------------------------------------------------------
</TABLE>
/1/As at March 31, 1999.
/2/On March 1, 1999, Rod Matthews resigned as Chief Executive
ScottishTelecom.
The non-executive Directors and executive Directors were appointed to
the Board of Directors on the dates shown above. The executive officers
were appointed to the positions shown on the dates above.
There are no arrangements or understandings between any Director or
executive officer and any other person pursuant to which such Director
or executive officer was selected to serve. There are no family
relationships between any of the Directors or executive officers of
ScottishPower.
<TABLE>
<CAPTION>
Members of the Members of the Members of the
Audit Committee Remuneration Committee Nomination Committee/1/
------------------------------------------------------------------------
<S> <C> <C>
John Parnaby, Ewen Macpherson, Chairman Murray Stuart, Chairman
Chairman/2/
Sir Peter Gregson Mair Barnes Mair Barnes
Ewen Macpherson Sir Peter Gregson Sir Peter Gregson
Murray Stuart John Parnaby Ian Robinson
------------------------------------------------------------------------
</TABLE>
/1/Formed February 19, 1999.
/2/Appointed to the Audit Committee on February 19, 1999 and Chairman on
May 1, 1999.
On April 30, 1999, Sir Ronald Garrick retired as chairman of the Audit
Committee and member of the Remuneration Committee.
Item 11. Compensation of Directors and Officers
See Note 33 to the Consolidated Financial Statements of the group for
fiscal 1999 for specific information regarding individual Directors'
emoluments and interests. The figure given at (a) below includes
executive officers and is to June 30, 1999 and therefore does not
correspond to figures shown in Note 33. There is no equivalent figure
for (b) in Note 33.
(a) During fiscal 1999 and through to June 30, 1999, the aggregate
amount of compensation paid by the group to all Directors and
executive officers of ScottishPower, as a group, was
(Pounds)3,714,058.
(b) During fiscal 1999 and through to June 30, 1999, the aggregate
amount set aside or accrued by the group to provide pension,
retirement or similar benefits for Directors and executive officers
of ScottishPower pursuant to any existing plan provided or
contributed to by the group was (Pounds)994,988.
72 ScottishPower Form 20-F 1999
<PAGE>
Item 12. Options to Purchase Securities from Registrant or Subsidiaries
1. See Note 33 for specific information with respect to individual
Directors' options. The figures given in 2(c) below include
information relating to executive officers and therefore do not
correspond to figures in Note 33.
2. (a) The company replaced its Executive Share Option Scheme with a
Long Term Incentive Plan, which was approved by shareholders at the
company's Annual General Meeting in July 1996. Under the Long Term
Incentive Plan, the following awards to acquire shares in
ScottishPower at zero cost were made to plan participants up to a
maximum value equal to 60% of base salary:
<TABLE>
<CAPTION>
Date of Grant of Award Date when Award expires Number of Shares under Award
------------------------------------------------------------------------------
<S> <C> <C>
August 9, 1996 August 8, 2003 664,440
May 16, 1997 May 15, 2004 719,547
May 7, 1998 May 6, 2005 526,512
------------------------------------------------------------------------------
</TABLE>
Awards will vest only if the Remuneration Committee is satisfied that
certain performance measures related to the sustained underlying
financial performance of the company and improvements in certain OFFER
published Customer Service Standards and OFWAT published levels of
service (in the case of awards granted in 1997 and 1998) are achieved
over a period of three financial years commencing with the financial
year preceding the date an award is made.
Assuming that such targets have been achieved, the number of shares
that can be acquired will depend upon how the company ranks in terms of
its total shareholder return performance over a three year period, in
comparison to the constituent companies of the FTSE 100 Index and the
electricity and water sectors.
(b) The following table sets forth certain information with respect to
options to purchase ordinary shares which were outstanding as of
March 31, 1999.
<TABLE>
<CAPTION>
Number of
Date when Ordinary Shares
Date of Grant Option Expires Option Price under Option
-----------------------------------------------------------------------
<S> <C> <C> <C>
Executive Share Option
Scheme
December 18, 1991 December 17, 2001 227.4p 128,303
June 25, 1992 June 24, 2002 237.7p 22,554
July 1, 1993 June 30, 2003 310.0p 59,641
December 17, 1993 December 16, 2003 454.8p 60,766
May 27, 1994 May 26, 2004 354.0p 18,191
November 18, 1994 November 17, 2004 352.1p 22,039
May 12, 1995 May 11, 2005 335.0p 72,026
November 10, 1995 November 9, 2005 357.5p 47,534
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Number of
Date when Ordinary Shares
Date of Grant Option Expires Option Price under Option
------------------------------------------------------------------------
<S> <C> <C> <C>
ScottishPower Sharesave
Scheme
June 22, 1994 February 29, 2000 273.8p 1,296,233
June 20, 1995 February 28, 2001 262.1p 1,171,521
June 20, 1996 February 29, 2000 263.1p 2,017,169
June 20, 1996 February 28, 2002 263.1p 7,878,787
June 20, 1997 February 28, 2001 307.0p 1,522,379
June 20, 1997 February 28, 2003 307.0p 3,169,875
June 12, 1998 February 28, 2002 440.0p 1,445,360
June 12, 1998 February 29, 2004 440.0p 2,770,151
------------------------------------------------------------------------
</TABLE>
ScottishPower Form 20-F 1999 73
<PAGE>
Following the acquisition of Southern Water, participants in the
Southern Water Sharesave Scheme were offered the opportunity to
exchange existing options over Southern Water shares on the basis of
3.3514 ScottishPower shares under replacement options for every one
Southern Water share under option. Consequently, the number of shares
under options and the option prices were adjusted on this basis for
participants exchanging options.
<TABLE>
<CAPTION>
Number of
Date when ordinary shares
Date of Grant Option Expires Option Price under Option
--------------------------------------------------------------------------
<S> <C> <C> <C>
Southern Water Sharesave
Scheme
February 3, 1992 September 30, 1999 74.00p 249,044
January 26, 1993 September 30, 2000 111.00p 214,610
January 25, 1994 September 30, 1999 154.87p 369,543
January 25, 1994 September 30, 2001 154.87p 116,208
January 25, 1995 September 30, 2000 136.07p 844,875
January 25, 1995 September 30, 2002 136.07p 142,334
January 26, 1996 September 30, 2001 160.24p 653,509
January 26, 1996 September 30, 2003 160.24p 109,190
--------------------------------------------------------------------------
</TABLE>
(c) As of June 30, 1999 the total number of ordinary shares issuable or
transferable upon exercise of all options held by the Directors and
executive officers of the registrant, as a group, was 900,559.
Item 13. Interest of Management in Certain Transactions
(a) There have been no material transactions during the group's three
most recent fiscal years, nor are there presently proposed to be
any material transactions to which ScottishPower or any of its
subsidiaries was or is a party and in which any Director or
executive officer, or 10% shareholder, or any relative or spouse
thereof or any relative of such a spouse, who had the same home as
such person or who is a Director or executive officer of any parent
or subsidiary of ScottishPower has or is to have a direct or
indirect material interest.
(b) During the group's three most recent fiscal years there has been
no, and at present there is no, outstanding indebtedness to
ScottishPower or any of its subsidiaries owed or owing by any
Director or executive officer of the group or any associate
thereof.
PART II
Item 14. Description of Securities to be Registered
Not applicable
PART III
Item 15. Defaults Upon Senior Securities
(a) There has been no material default in the payment of principal,
interest, a sinking or purchase fund installment, or any other
material default not cured within 30 days, with respect to any
indebtedness of the company or any of its significant subsidiaries
exceeding 5 percent of the total assets of the company and its
consolidated subsidiaries.
(b) There has been no material delinquency (including a material
arrearage in the payment of dividends) not cured within 30 days
with respect to any class of preferred stock of the company which
is registered or which ranks prior to any class of registered
securities or with respect to any class of preferred stock of any
significant subsidiary of the company.
74 ScottishPower Form 20-F 1999
<PAGE>
Item 16. Changes in Securities and Changes in Security for Registered
Securities
(a) Ordinary shares 50p each/American Depositary Shares
For a discussion of the proposed scheme of arrangement whereby New
ScottishPower will become the new holding company for the group, see
"Item 1. Description of Business--Introduction--Scheme of
Arrangement." If this occurs, in exchange for ADSs or ordinary
shares of ScottishPower, shareholders will receive ADSs or ordinary
shares of New ScottishPower, with the same economic and voting
rights as the ADSs and ordinary shares of ScottishPower.
The rights attaching to the New ScottishPower ordinary shares will
be substantially the same as those attaching to the ScottishPower
ordinary shares. A copy of the Memorandum and Articles of
Association of New ScottishPower was previously filed with the
registrant's Form F-4, file no. 333-77877, exhibit 3(i)(a), filed
with the U.S. Securities and Exchange Commission in May 1999.
The principal differences between the New ScottishPower Articles and
the ScottishPower Articles are explained below. The numbering of the
New ScottishPower Articles (each an "article") referred to below
corresponds to the numbering of the ScottishPower Articles, other
than article 6(E) which is a new article and has no equivalent in
the ScottishPower Articles.
(1) Article 6(E) (The Redeemable Shares)
This article was inserted to set out the rights attaching to the
49,998 redeemable shares of (Pounds)1 each in New ScottishPower (the
"Redeemable Shares") issued to ScottishPower in order for it to
obtain a trading certificate under section 117 of the Companies Act
1985 (as amended). By virtue of a special resolution of New
ScottishPower passed on April 29, 1999, this article will
automatically be deleted from the New ScottishPower Articles
following redemption of all of the Redeemable Shares.
(2) Article 7 (The New ScottishPower Special Share)
This article sets out the rights attaching to the New ScottishPower
Special Share and has been amended so that in addition to those
matters which are currently deemed in the ScottishPower Articles to
be a variation of the rights attaching to the ScottishPower Special
Share and as such only effective with the prior consent in writing
of the Special Shareholder, the rights attaching to the New
ScottishPower Special Share provide that each of the following
matters is also deemed to be a variation requiring the prior consent
of the Special Shareholder in writing:
(i) the giving by New ScottishPower of any consent or agreement to
any amendment, removal or alteration of the effect of article 7
of the ScottishPower Articles (as amended in connection with the
scheme of arrangement);
(ii) the giving by New ScottishPower of any consent or agreement to
the creation or issue of any shares in the capital of
ScottishPower other than an issue of shares following which New
ScottishPower will own the full legal and beneficial interest
in, and control, shares in the capital of ScottishPower carrying
at least 85% of the voting rights exercisable on a poll at
general meetings of ScottishPower;
(iii) the disposal by New ScottishPower of any of the shares in
ScottishPower held by it or of any rights or interest in such
shares or the entering into by New ScottishPower of any
agreement or arrangement with respect to such shares or to the
exercise of any voting or other rights attaching to such
shares, such that New ScottishPower would cease to own the
full legal and beneficial interest in, and control, shares in
the capital of ScottishPower carrying at least 85% of the
voting rights exercisable on a poll at general meetings of
ScottishPower;
ScottishPower Form 20-F 1999 75
<PAGE>
(iv) the giving by New ScottishPower of any consent or agreement to
any abrogation, variation, waiver or modification of any of the
rights or privileges attaching to any shares in ScottishPower
such that New ScottishPower would cease to own the full legal
and beneficial interest in, and control, shares in the capital
of ScottishPower carrying at least 85% of the voting rights
exercisable on a poll at general meetings of ScottishPower; and
(v) any other act or omission to act by New ScottishPower or the
Directors of New ScottishPower which results in New ScottishPower
ceasing to own the full legal and beneficial interest in, and
control, shares in the capital of ScottishPower carrying at least
85% of the voting rights exercisable on a poll at general
meetings of ScottishPower.
(3)Article 98 (Number of Directors to retire)
This article relates to the number of Directors to retire from
office by rotation and has been amended in accordance with the new
London Stock Exchange requirement that all Directors shall retire by
rotation at least every three years.
(4)Article 123 (Borrowing powers)
This article relates to the borrowing powers of New ScottishPower
and has been amended to include an interim borrowing limit of
(Pounds)8 billion up to the date of publication of the audited
accounts of New ScottishPower for the year ended March 31, 2000, and
to delete the provision which required goodwill and intangible
assets to be deducted from the Adjusted Capital and Reserves (as
defined in the New ScottishPower Articles). This deletion reflects
the U.K. Financial Reporting Standard FRS10.
(5)Article 130 (Interim dividends)
This article relates to the ability of the Directors to pay interim
dividends and has been amended to provide that the Directors may
declare and pay any dividends, including final dividends, and not
just interim dividends. This is in order to facilitate the proposed
move to quarterly dividend payments.
(6)CREST
Articles 2 ("Definitions") and 51 ("Limitations on Shareholdings")
have been amended to reflect the introduction of CREST.
(7)Removal of interim privatization arrangements
Articles 2 ("Definitions"), 50 ("Disclosure of interests in shares")
and 51 ("Limitations on Shareholdings") have been amended to remove
references to certain interim arrangements originally included in
relation to the privatization of ScottishPower.
Future Proposals
The Directors intend pursuant to the Merger agreement with
PacifiCorp to propose a resolution at the 2000 Annual General
Meeting of New ScottishPower to amend the New ScottishPower Articles
in order to provide (to the extent reasonably possible) for the
holders of ADSs to attend, vote and speak at general meetings. It is
intended that the amendments to be proposed will provide for the
appointment of multiple proxies by approved depositories, for such
proxies themselves to be able to appoint a proxy, for the holding of
special and extraordinary resolutions on a poll and for certain
other minor amendments to the New ScottishPower Articles.
The Merger with PacifiCorp is not conditional upon the passing of
this resolution although the Merger agreement requires that the
resolution, if not passed, would again be put forward for
consideration at the next annual general meeting.
New ScottishPower also intends to seek to amend its depository
agreement to reflect the changes proposed to be made to the New
ScottishPower Articles and to make certain other amendments.
76 ScottishPower Form 20-F 1999
<PAGE>
(b) No rights evidenced by any class of registered securities have been
materially limited or qualified by the issuance or modification of
any other class of securities.
(c) There are no assets securing any class of registered securities of
the company.
(d) There are no trustees or paying agents for any registered
securities of the company.
PART IV
Item 17. Financial Statements and Exhibits
Not applicable
Item 18. Financial Statements and Exhibits
The Consolidated Financial Statements of Scottish Power plc are
included herein on pages F-1 through F-41.
Item 19. Financial Statements and Exhibits
(a)Financial Statements
<TABLE>
<CAPTION>
Page
-------------------------------------------------------------------------
<S> <C>
Consolidated Financial Statements of Scottish Power plc for Fiscal
1999/1/
Accounting Policies and Definitions F-1
Group Profit and Loss Account F-7
Statement of Total Recognized Gains and Losses F-8
Note of Historical Cost Profits and Losses F-8
Reconciliation of Movement in Shareholders' Funds F-8
Notes to the Group Profit and Loss Account F-9
Group Cash Flow Statement F-12
Reconciliation of Net Cash Flow to Movement in Net Debt F-12
Notes to the Group Cash Flow Statement F-13
Balance Sheets F-16
Notes to the Balance Sheets F-17
Principal Subsidiary Undertakings and Other Investments F-40
Directors' Responsibilities for the Preparation of the Financial
Statements F-41
Report of the Independent Accountants F-41
-------------------------------------------------------------------------
</TABLE>
/1/The following financial statements and schedules, together with the
report of PricewaterhouseCoopers, have been reconciled to generally
accepted accounting principles in the United States and are filed as
part of this report statement.
The attached financial statements include certain U.K. accounting
terminology which may not be familiar to a U.S. reader. The following
glossary is provided to assist in interpreting these financial
statements.
<TABLE>
<CAPTION>
U.K. Term U.S. Term
------------------------------------------------------
<S> <C>
Turnover Sales
Profit before taxation Income before taxes
Profit after taxation Net income
Earnings per share Net income per share
Stocks Inventories
Tangible fixed assets Property, plant and equipment
Gearing Leverage
------------------------------------------------------
</TABLE>
ScottishPower Form 20-F 1999 77
<PAGE>
(b)Exhibits
1a. Memorandum of Association of New Scottish Power plc. (Previously
filed with the registrant's Form F-4, file no. 333-77877, exhibit
3(i)(a), filed with the U.S. Securities and Exchange Commission in
May 1999).
1b. Form of Amended and Restated Deposit Agreement among New Scottish
Power plc, Scottish Power plc, The Bank of New York, as depository
and the holders from time to time of New Scottish Power American
Depository Receipts and/or Scottish Power American Depository
Receipts. (Previously filed with the registrant's Form F-6, file
no. 333-10322, exhibit A, filed with the Securities and Exchange
Commission in May 1999).
1c. Revised Scottish Power plc -- Generation, Transmission and Public
Electricity Supply Licence document dated August 1998, as amended
and modified.
1d. Revised Public Electricity Supply Licence for Manweb plc, dated
July 1998 including amendments and modifications thereto.
2a. Amended and Restated Agreement and Plan of Merger dated as of
December 6, 1998, as amended as of January 29, 1999 and February 9,
1999, and amended and restated as of February 23, 1999, by and
among New Scottish Power plc, Scottish Power plc, NA General
Partnership, Scottish Power NA1 Limited, Scottish Power NA2 Limited
and PacifiCorp. (Previously filed with the registrant's Form F-4,
file no. 333-77877, exhibit no. 2(b), filed with the U.S.
Securities and Exchange Commission in May 1999).
2b. Agreement and Plan of Merger, dated as of December 6, 1998, as
amended as of January 29, 1999 and February 9, 1999, by and among
Scottish Power plc, NA General Partnership, Scottish Power NA1
Limited, Scottish Power NA2 Limited and PacifiCorp. (Previously
filed with the registrant's Form F-4, file no. 333-77877, exhibit
no. 2(a), filed with the U.S. Securities and Exchange Commission in
May 1999).
2c. 364 day multi-currency revolving credit facility with term-out
option dated March 12, 1999 among (1) ScottishPower as borrower,
(2) The Royal Bank of Scotland ("RBS") as arranger, (3) RBS as
agent and (4) various banks, for up to (Pounds)600,000,000.
2d. Supplemental agreement dated March 12, 1999 among (1) ScottishPower
as borrower and (2) RBS as agent which amends the terms of the
five-year revolving credit facility dated June 24, 1996 among (1)
ScottishPower as borrower, (2) RBS and Union Bank of Switzerland as
joint arrangers, (3) ING Barings as co-arrangers, (4) various banks
and (5) RBS as agent.
2e. Trust Deed dated November 4, 1997 related to ScottishPower's $2
billion debt issuance programme.
2f. Supplemental Trust Deed dated November 6, 1998 related to
ScottishPower's $2 billion debt issuance programme.
The registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument which defines the
rights of holders of long-term debt of ScottishPower and its
consolidated subsidiaries.
78 ScottishPower Form 20-F 1999
<PAGE>
Signatures
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this annual
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SCOTTISH POWER PLC
/s/ Ian Simon MacGregor Russell
By:____________________________________________
Ian Simon MacGregor Russell
Deputy Chief Executive and Finance
Director
Date: July 15, 1999
ScottishPower Form 20-F 1999 79
<PAGE>
Consolidated Financial Statements of Scottish Power plc
for the year ended March 31, 1999
Accounting Policies and Definitions
Basis of accounting
The Accounts have been prepared under the historical cost convention,
modified to include the revaluation of certain tangible fixed assets,
and in accordance with applicable accounting standards in the U.K. and,
subject to the treatment of water infrastructure grants and
contributions described under "Grants and contributions" below, comply
with the requirements of the Companies Act 1985.
In preparing these Accounts, certain reclassifications and changes in
presentation have been made to the Accounts previously presented in
ScottishPower's published U.K. Annual Report and Accounts, with the
exception of the consolidated cash flow statements, in order to comply
with accounting presentation and disclosure requirements applicable in
the United States. A reconciliation to U.S. GAAP is set out in Note 34.
Basis of consolidation
The group Accounts include the Accounts of the company and its
principal subsidiary undertakings together with the group's share of
results and net assets of associated undertakings and joint ventures.
For commercial reasons one subsidiary has a different year end. The
consolidation includes the Accounts of this subsidiary as adjusted for
material transactions in the period between its year end and March 31.
Use of estimates
The preparation of Accounts in conformity with generally accepted
accounting principles 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
Accounts and the reported amounts of revenues and expenses during the
reporting period. Actual results can differ from those estimates.
Turnover
Turnover comprises the sales value of energy, goods, water, wastewater
and other services supplied to customers during the year and excludes
Value Added Tax and intra-group sales. Income from the sale of energy
and measured water is the value of units supplied during the year and
includes an estimate of the value of units supplied to customers
between the date of their last meter reading and the year end.
Under/over recovery of regulated income
Under the licences issued to Scottish Power plc and Manweb plc which
permit them to operate as public electricity companies, price control
formulae determine the regulated allowable maximum unit revenues of the
transmission and distribution businesses, as appropriate. If actual
revenue for the year exceeds the regulated allowable maximum, the
excess is deducted from turnover and included in creditors where
amounts are due to be returned to customers. Where there is an under
recovery compared with the regulated allowable maximum no anticipation
of any potential future recovery is made.
Research and development
Expenditure on research and development is charged to the profit and
loss account as it is incurred.
Interest
Interest on the funding attributable to major capital projects is
capitalized gross of tax relief during the period of construction and
written off as part of the total cost over the operational life of the
asset. All other interest payable and receivable is reflected in the
profit and loss account as it arises.
F-1 ScottishPower Form 20-F 1999
<PAGE>
Financial instruments
Debt instruments
All borrowings are stated at the fair value of consideration received
after deduction of issue costs. The issue costs and interest payable on
bonds are charged to the profit and loss account at a constant rate
over the life of the bond.
Interest rate swaps
Interest rate swap agreements are used to manage interest rate
exposures and are accounted for using hedge accounting. In order to
qualify for hedge accounting, the company's notional amount of interest
rate swaps and caps must be less than or equal to existing variable
rate debt. Amounts payable or receivable in respect of these agreements
are recognized as adjustments to interest expense over the period of
the contracts. The cash flows from interest rate swaps and gains and
losses arising on terminations of interest rate swaps are recognized as
returns on investments and servicing of finance. Where associated debt
is not retired in conjunction with the termination of an interest swap,
gains and losses are deferred and are amortized to interest expense
over the remaining life of the associated debt to the extent that such
debt remains outstanding.
Interest rate caps
Interest rate caps are used to limit interest rate exposures. The
premiums on these contracts are amortized over the period of the
contracts and are disclosed as interest expense.
Forward contracts
The company enters into forward contracts for the purchase and/or sale
of foreign currencies in order to manage its exposure to fluctuations
in currency rates. Unrealized gains and losses on contracts are not
accounted for until the maturity of the contract. The cash flows from
forward purchase contracts are classified in a manner consistent with
the underlying nature of the hedged transaction.
Premiums and discounts
Premiums and discounts arising on the early repayment of borrowings are
written off to the profit and loss account as incurred.
Contracts for Differences (CfDs)
The company uses CfDs to minimize exposure to Pool price variations.
The cost or the income attributable to CfDs is recorded in the
accounting records when settlement is made. Where delivery under the
CfD has taken place prior to the period end, adjustments are made to
account for the known variances between the contract strike price and
the Pool price on the date of delivery.
Goodwill
Purchased goodwill represents the excess of the fair value of the
purchase consideration over the fair value of the net assets acquired.
Goodwill arising from the purchase of trading entities in accounting
periods prior to March 31, 1998 has been written off on acquisition
against the merger reserve to reduce it to zero and thereafter has been
offset against the profit and loss reserve. On disposal of trading
entities, the goodwill previously included in reserves is charged to
the profit and loss account matched by an equal credit to reserves.
Goodwill arising on acquisitions since April 1, 1998 is capitalized and
amortized through the profit and loss account over its useful economic
life.
ScottishPower Form 20-F 1999 F-2
<PAGE>
Tangible fixed assets
Accounting for non-water infrastructure assets
Tangible fixed assets are stated at cost or valuation and are
depreciated on the straight line method over their estimated
operational lives. Tangible fixed assets include capitalized employee
costs which are directly attributable to construction of fixed assets.
Land is not depreciated. The main depreciation periods used by the
group are as set out below:
<TABLE>
<CAPTION>
Years
------------------------------------------------------
<S> <C>
Coal and oil-fired generating stations 35-40
Hydro plant and machinery 20-40
Other buildings 40
Transmission and distribution plant 30-40
Towers, lines and underground cables 40-60
Vehicles, miscellaneous equipment and fittings 3-15
</TABLE>
Infrastructure accounting
Water infrastructure assets, being mains and sewers, reservoirs, dams,
sludge pipelines and sea outfalls comprise a network of systems.
Expenditure on water infrastructure assets relating to increases in
capacity or enhancement of the network and on maintaining the operating
capability of the network in accordance with defined standards of
service is treated as an addition to fixed assets.
The depreciation charge for water infrastructure assets is the
estimated level of annualised expenditure required to maintain the
operating capability of the network and is based on the asset
management plan agreed with the water industry regulator as part of the
price regulation process.
The asset management plan is developed from historical experience
combined with a rolling program of reviews of the condition of the
infrastructure assets.
The method of accounting for water infrastructure renewals has been
revised following the introduction of FRS 12 "Provisions, contingent
liabilities and contingent assets' and the infrastructure renewals
accounting basis as set out in FRS 15 "Tangible fixed assets'. As a
consequence the balance sheet has been restated to take account of the
necessary changes since the date of acquisition of Southern Water in
August 1996. Further information is given in Note 16. The change of
accounting policy has no effect on the profit and loss account other
than to reclassify the renewals charge as depreciation.
Comparative figures have been restated in the cash flow statement, the
balance sheet, Notes 2, 9(b), 10, 16, 19 and 34.
Leased assets
As lessee
Assets leased under finance leases are capitalized and depreciated in
line with the group depreciation policy. The interest element of the
finance lease repayments is charged to the profit and loss account in
proportion to the balance of the capital repayments outstanding.
Rentals payable under operating leases are charged to the profit and
loss account as incurred.
As lessor
Rentals receivable under finance leases are allocated to accounting
periods to give a constant periodic rate of return on the net cash
investment in the lease in each period. The amounts due from lessees
under finance leases are recorded in the balance sheet as a debtor at
the amount of the net investment in the lease after making provisions
for bad and doubtful rentals receivable.
Property clawback
A debenture has been issued to the Secretary of State for Scotland
which entitles HM Government to a proportion of any property gain
(above certain thresholds and after deducting an amount representing
corporation tax thereon) accruing or treated as accruing to
ScottishPower as a result of the disposal or deemed disposal after
March 31, 1991 of certain property held at March 31, 1990. These
arrangements last until March 31, 2001.
F-3 ScottishPower Form 20-F 1999
<PAGE>
In the case of Manweb, if properties are disposed of, or are deemed to
have been disposed of prior to April 1, 2000, a part of the gain over
the value at March 31, 1990 (as adjusted for inflation and taxation)
will become payable to HM Government.
In the case of both companies, a liability for clawback in respect of
property disposals is recognized only when an actual or a deemed
disposal occurs.
Investments
Investments in subsidiary and associated undertakings and joint
ventures are stated in the balance sheet of the parent company at cost,
or nominal value of shares issued as consideration where applicable,
less provision for any impairment in value. The group profit and loss
account includes the group's share of the operating profits less
losses, net interest charge and taxation of associated undertakings and
joint ventures. The group balance sheet includes the investment in
associated undertakings and joint ventures at the group's share of
their net assets. Other fixed asset investments are carried at cost
less provision for diminution in value.
Stocks
Stocks are valued at the lower of cost and net realizable value.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at
the date of the transaction. At the year end, monetary assets and
liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date or, where applicable,
at the contracted rate. Any gain or loss arising on the restatement of
such balances is taken to the profit and loss account.
Taxation
The charge for ordinary taxation is based on the profits for the year
and takes into account deferred taxation, using the liability method,
in respect of timing differences to the extent that it is probable that
a liability will crystallize in the foreseeable future. Such timing
differences arise primarily from the differing treatment for taxation
and accounting purposes of provisions and the depreciation of fixed
assets.
Pensions
The group provides pension benefits through both defined benefit and
defined contribution arrangements. The regular cost of providing
pensions and related benefits and any variations from regular cost
arising from the actuarial valuations for defined benefit schemes are
charged to the profit and loss account over the expected remaining
service lives of current employees following consultations with the
actuary. Any difference between the charge to the profit and loss
account and the actual contributions paid to the Pension Schemes is
included as an asset or liability in the balance sheet. Payments to the
defined contribution schemes are charged against profits as incurred.
Grants and contributions
Capital grants and customer contributions in respect of additions to
non-water infrastructure fixed assets are treated as deferred income
and released to the profit and loss account over the estimated
operational lives of the related assets. Grants and contributions
receivable relating to water infrastructure assets have been deducted
from the cost or valuation of those assets. While this treatment is in
accordance with Statement of Standard Accounting Practice (SSAP) 4, it
is not in accordance with the Companies Act 1985. The Act requires
capital grants and contributions to be shown as deferred income rather
than offset against the cost or valuation of tangible fixed assets.
This departure from the requirements of the Act is, in the opinion of
the directors, necessary for the Accounts to give a true and fair view
as, while provision is made for depreciation of water infrastructure
assets, these assets do not have determinable finite lives and
therefore no basis exists on which to recognise grants and
contributions as deferred income. The effect of this treatment on the
value of tangible fixed assets is disclosed in Note 16.
ScottishPower Form 20-F 1999 F-4
<PAGE>
Own shares held under trust
The amount recorded in the balance sheet for shares in the company
purchased for employee sharesave schemes represents the amounts
receivable from option holders on exercise of the options.
Long Term Incentive Plan
Shares in the company purchased for the Long Term Incentive Plan are
held under trust and are recorded within investments in the balance
sheet at cost. The cost of awards made by the trust under the Long Term
Incentive Plan, being the difference between the fair value of the
shares and the option price at the date of grant, is taken to the
profit and loss account on a straight line basis over the period in
which performance is measured.
Business segment definitions
ScottishPower defines business segments based on a combination of
factors, principally differences in products and services and the
regulatory environment in which the businesses operate.
The business segments of the group are defined as follows:
Generation Wholesale
The generation of electricity from the company's own power stations,
the purchase of external supplies of energy for sale to other business
segments of the company and the sale of electricity to other public
electricity suppliers and to the Pool in England and Wales.
Power Systems
The transmission and distribution businesses in Scotland and,
specifically, the transportation of units of electricity from the power
stations through the transmission and distribution networks to
customers in Scotland and to customers in England and Wales through the
Anglo-Scottish Interconnector.
Energy Supply
The sale of energy to customers, together with related billing and
collection activities for customers contracted to Scottish Power plc.
Manweb
The distribution and supply businesses operating in Merseyside and
North Wales and, specifically, the purchase, distribution and sale of
electricity to customers, together with related billing and collection
activities within that licensed area.
Southern Water
The provision of water and wastewater services in the south-east of
England, together with related billing and collection activities.
ScottishTelecom
The provision of telecommunications services, Internet access and
information services to national corporates, small and medium-sized
enterprises and residential customers.
Other
The retailing and servicing of domestic electrical goods and home
entertainment appliances, the provision of electrical contracting,
consultancy and corporate services, gas trading and the businesses of
the company's other subsidiary and associated undertakings.
In the segmental analyses on pages F-9 and F-17, all material
activities are derived from continuing operations in the U.K.
F-5 ScottishPower Form 20-F 1999
<PAGE>
Revenue cost definitions
Cost of sales
The cost of sales for the group, excluding Southern Water, reflect the
direct costs of the generation and purchase of electricity, the
purchase of natural gas, retail trading, telecommunication services,
electrical contracting and consultancy services. For Southern Water,
cost of sales represents the cost of extracting water from underground
and raw water surface reservoirs and of its treatment and supply to
customers and the subsequent collection of wastewater and its treatment
and disposal.
Transmission and distribution costs
The cost of transmitting units of electricity from the power stations
through the transmission and distribution networks to customers. It
includes the costs of metering, billing and debt collection. This
heading is considered more appropriate to the electricity industry than
the standard Companies Act heading of distribution costs.
Administrative expenses
The indirect costs of businesses, the costs of centralised services and
rates.
Other definitions
Company or ScottishPower
Scottish Power plc.
Group
Scottish Power plc and its consolidated subsidiaries.
Associated undertakings
Entities in which the company holds a long-term participating interest
and exercises significant influence.
Joint ventures
Entities in which the company holds a long-term interest and shares
control with another company external to the group.
Subsidiary undertakings
Entities in which the company holds a long-term controlling interest.
ScottishPower Form 20-F 1999 F-6
<PAGE>
Group Profit and Loss Account
for the year ended March 31, 1999
<TABLE>
<CAPTION>
1999 1998 1997
Notes (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Turnover: group and share of joint ventures
and associates 3,251.5 3,134.1 2,947.4
Less: share of turnover in joint ventures (7.3) (3.8) (4.6)
Less: share of turnover in associates (1.9) (2.1) (2.1)
---------------------------------------------------- -------- -------- --------
Group turnover from continuing operations 1 3,242.3 3,128.2 2,940.7
Cost of sales (1,860.5) (1,850.7) (1,743.5)
---------------------------------------------------- -------- -------- --------
Gross profit from continuing operations 1,381.8 1,277.5 1,197.2
Transmission and distribution costs (258.1) (219.1) (222.8)
Administrative expenses (348.8) (303.0) (331.1)
Other operating income 27.9 29.7 20.6
---------------------------------------------------- -------- -------- --------
Operating profit from continuing operations 1,2 802.8 785.1 663.9
Share of operating profit in joint ventures 2.1 1.6 1.8
Share of operating profit in associates 0.2 0.3 0.9
---------------------------------------------------- -------- -------- --------
Profit on ordinary activities before interest 805.1 787.0 666.6
Net interest charge
-- Group (160.8) (147.1) (107.5)
-- Joint ventures (0.5) (0.2) (0.5)
-- Associates - (0.1) (0.2)
4 (161.3) (147.4) (108.2)
---------------------------------------------------- -------- -------- --------
Profit on ordinary activities before taxation 643.8 639.6 558.4
Ordinary taxation
-- Group (141.0) (151.5) (135.7)
-- Joint ventures (0.5) (0.4) (0.7)
-- Associates (0.1) 0.3 (0.4)
5 (141.6) (151.6) (136.8)
---------------------------------------------------- -------- -------- --------
Profit after ordinary taxation 502.2 488.0 421.6
Exceptional taxation -- windfall tax 6 - (317.0) -
---------------------------------------------------- -------- -------- --------
Profit after taxation 502.2 171.0 421.6
Minority interests 27 0.6 (0.9) (0.5)
---------------------------------------------------- -------- -------- --------
Profit for the financial year 502.8 170.1 421.1
Dividends 8 (267.9) (243.3) (218.1)
---------------------------------------------------- -------- -------- --------
Profit/(loss) retained 26 234.9 (73.2) 203.0
---------------------------------------------------- -------- -------- --------
Earnings per ordinary share 7 42.42p 14.41p 38.11p
Adjusting items -- goodwill amortization 0.10p - -
-- windfall tax - 26.87p -
---------------------------------------------------- -------- -------- --------
Earnings per ordinary share before goodwill
amortization and windfall tax 7 42.52p 41.28p 38.11p
---------------------------------------------------- -------- -------- --------
Diluted earnings per ordinary share 7 42.00p 14.27p 37.73p
Adjusting items -- goodwill amortization 0.10p - -
-- windfall tax - 26.60p -
---------------------------------------------------- -------- -------- --------
Diluted earnings per ordinary share before
goodwill amortization and windfall tax 7 42.10p 40.87p 37.73p
---------------------------------------------------- -------- -------- --------
Dividends per ordinary share 8 22.50p 20.40p 18.50p
---------------------------------------------------- -------- -------- --------
</TABLE>
The Accounting Policies and Definitions on pages F-1 to F-6, together
with the Notes on pages F-9 to F-11, F-13 to F-15 and F-17 to F-40
form part of these Accounts.
F-7 ScottishPower Form 20-F 1999
<PAGE>
Statement of Total Recognized Gains and Losses
for the year ended March 31, 1999
<TABLE>
<CAPTION>
1999 1998 1997
Note (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Profit for the financial year 502.8 170.1 421.1
Surplus on revaluation of
assets 16 - 229.0 -
----------------------------------- ------- ------- -------
Total recognized gains and
losses for the financial year 502.8 399.1 421.1
----------------------------------- ------- ------- -------
Note of Historical Cost Profits and Losses
for the year ended March 31, 1999
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Profit on ordinary activities
before taxation 643.8 639.6 558.4
Difference between historical
cost depreciation charge and
actual depreciation charge
for the year calculated on
the revalued amount of fixed
assets 3.4 1.7 -
----------------------------------- ------- ------- -------
Historical cost profit on
ordinary activities before
taxation 647.2 641.3 558.4
----------------------------------- ------- ------- -------
Historical cost profit/(loss)
retained for the financial
year after taxation,
minority interests and
dividends 238.3 (71.5) 203.0
----------------------------------- ------- ------- -------
Reconciliation of Movements in Shareholders' Funds
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Profit for the financial year 502.8 170.1 421.1
Dividends (267.9) (243.3) (218.1)
----------------------------------- ------- ------- -------
Profit/(loss) retained 234.9 (73.2) 203.0
Share capital issued (net of
costs) 3.2 45.5 633.2
Shares to be issued - - 13.4
Revaluation of fixed assets - 229.0 -
Goodwill written off - (16.2) (534.6)
----------------------------------- ------- ------- -------
Net movement in shareholders'
funds 238.1 185.1 315.0
Opening shareholders' funds 1,707.8 1,522.7 1,207.7
----------------------------------- ------- ------- -------
Closing shareholders' funds 1,945.9 1,707.8 1,522.7
----------------------------------- ------- ------- -------
</TABLE>
for the year ended March 31, 1999
The Accounting Policies and Definitions on pages F-1 to F-6, together
with the Notes on pages F-9 to F-11, F-13 to F-15 and F-17 to F-40 form
part of these Accounts.
ScottishPower Form 20-F 1999 F-8
<PAGE>
Notes to the Group Profit and Loss Account
for the year ended March 31, 1999
1 Segmental business information
------------------------------------------------------------------------
(a) Turnover by business segment
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Total turnover Inter-segment turnover External turnover
1999 1998 1997 1999 1998 1997 1999 1998 1997
Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Generation
Wholesale (iii) 914.3 1,014.3 974.4 695.3 764.8 744.4 219.0 249.5 230.0
Power Systems 470.1 443.0 429.2 416.8 391.1 386.8 53.3 51.9 42.4
Energy Supply 1,434.5 1,336.2 1,270.4 28.8 11.5 0.9 1,405.7 1,324.7 1,269.5
Manweb 614.2 667.8 759.3 18.1 13.9 4.2 596.1 653.9 755.1
Southern Water (ii) 440.2 453.0 316.7 0.7 0.4 0.5 439.5 452.6 316.2
ScottishTelecom (iv),(v) 219.9 113.3 53.7 39.2 31.2 16.7 180.7 82.1 37.0
Other (iii),(iv) 612.8 410.7 359.2 264.8 97.2 68.7 348.0 313.5 290.5
-------------------------------------------------------------------------------------------- ------- ------- -------
Total 3,242.3 3,128.2 2,940.7
-------------------------------------------------------------------------------------------- ------- ------- -------
(b) Operating profit/(loss) by business segment
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Generation Wholesale 115.3 130.8 146.1
Power Systems 261.7 249.5 228.0
Energy Supply 20.1 15.1 32.4
Manweb (vi) 125.2 131.3 135.0
Southern Water (ii) 262.2 240.7 135.6
ScottishTelecom (iv),(v) 10.3 4.7 (1.5)
Other (iv) 8.0 13.0 9.5
-------------------------------------------------------------------------------------------- ------- ------- -------
Sub total 802.8 785.1 685.1
Reorganization costs - - (21.2)
-------------------------------------------------------------------------------------------- ------- ------- -------
Total 802.8 785.1 663.9
-------------------------------------------------------------------------------------------- ------- ------- -------
(c) Depreciation by business segment
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Generation Wholesale 29.9 19.8 14.5
Power Systems 53.8 44.0 43.5
Energy Supply 4.8 3.7 2.0
Manweb 43.4 37.1 36.6
Southern Water (ii) 59.9 59.7 43.0
ScottishTelecom (iv) 15.3 6.1 3.1
Other (iv) 17.1 14.2 13.4
-------------------------------------------------------------------------------------------- ------- ------- -------
Total 224.2 184.6 156.1
-------------------------------------------------------------------------------------------- ------- ------- -------
</TABLE>
(i) In fiscal 1999, ScottishPower adopted FAS 131, Disclosures about
Segments of an Enterprise and Related Information. This standard
establishes a new framework for segment reporting where the management
reporting structure forms the basis of external disclosures. The
accounting policies of the segments are the same as those described in
the "Accounting Policies and Definitions' on pages F-1 to F-6.
(ii) The 1997 figures for Southern Water cover the post-acquisition
period from August 6, 1996 to March 31, 1997.
(iii) The Generation Wholesale segment previously included sales from
gas trading activities which are now reported in the Other business
segment. Total turnover for the Generation Wholesale segment for 1998
included (Pounds)100.5 million and for 1997 (Pounds)30.0 million of gas
trading sales of which (Pounds)82.4 million and (Pounds)16.1 million
related to internal sales.
(iv) The ScottishTelecom business segment and the Other business
segment were previously combined as the Developing businesses and
ancillary services segment. The ScottishTelecom business segment has
been separately identified due to its increased significance to the
group. Prior year figures have been restated accordingly.
(v) Within the ScottishTelecom business segment, Demon Internet Limited
contributed external turnover of (Pounds)48.5 million and operating
profit before goodwill amortization of (Pounds)12.4 million since its
acquisition on May 1, 1998. The turnover and operating profit of
Watermark Games Limited are not material to the ScottishTelecom
business segment.
(vi) Operating profit for Manweb comprises distribution operating
profit of (Pounds)91.9 million (1998 (Pounds)95.4 million, 1997
(Pounds)112.0 million) and supply and other operating profit of
(Pounds)33.3 million (1998 (Pounds)35.9 million, 1997 (Pounds)23.0
million).
F-9 ScottishPower Form 20-F 1999
<PAGE>
2 Operating profit
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
1999 1998 1997
Operating profit is stated after charging/(crediting): (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation and amortization 225.4 184.6 156.1
Release of customer contributions/grants (13.6) (20.6) (22.5)
Research and development 5.3 5.4 5.6
Hire of plant and equipment -- operating leases 4.6 2.6 2.6
Hire of other assets -- operating leases 31.0 25.0 20.6
Auditors' remuneration for audit of
-- group 0.7 0.6 0.6
-- company 0.4 0.3 0.3
------------------------------------------------------------- ------- ------- -------
Non-audit fees paid to auditors:
Regulatory advice 0.9 0.6 0.4
Advice on new financial systems - 0.2 0.4
U.S. Listing - 0.2 -
General consultancy 0.9 0.2 0.5
Due diligence reporting and other services 3.6 - 0.1
Total 5.4 1.2 1.4
------------------------------------------------------------- ------- ------- -------
</TABLE>
Fees of (Pounds)3.1 million, paid to the auditors in respect of due
diligence reporting and other services in connection with the proposed
acquisition of PacifiCorp, have been included within prepayments and
accrued income. Non-audit fees of (Pounds)5.4 million for
PricewaterhouseCoopers in 1999 include (Pounds)0.7 million paid to
Coopers & Lybrand and (Pounds)0.4 million paid to Price Waterhouse
prior to the date of appointment of PricewaterhouseCoopers as auditors.
Non-audit fees in 1997 and 1998 comprise solely amounts paid to the
previous auditors Coopers & Lybrand.
3 Employee information
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
1999 1998 1997
(a) Employee costs (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C>
Wages and salaries 329.3 304.6 277.1
Social security costs 25.9 24.0 22.7
Pension costs 18.0 18.1 24.7
-------------------------------------- ------- ------- -------
Total employee costs 373.2 346.7 324.5
Less: charged as capital expenditure (71.8) (67.8) (48.0)
-------------------------------------- ------- ------- -------
Charged to the profit and loss account 301.4 278.9 276.5
-------------------------------------- ------- ------- -------
</TABLE>
(b) Employee numbers
The year end and average numbers of employees (full-time and part-time)
employed by the group, including executive directors, were:
<TABLE>
<CAPTION>
At March 31, Annual average
1999 1998 1997 1999 1998 1997
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Generation Wholesale 913 1,020 1,054 1,009 1,068 1,094
Power Systems 2,675 2,736 2,684 2,708 2,757 2,831
Energy Supply 1,388 1,139 797 1,318 982 810
Manweb 2,201 2,248 2,830 2,245 2,330 2,975
Southern Water 2,262 2,406 3,618 2,352 2,856 4,006
ScottishTelecom 2,383 1,481 706 2,410 1,147 320
Other 4,210 4,069 3,329 4,133 3,939 3,267
----------------------- ------- ------- ------- ------- ------- -------
16,032 15,099 15,018 16,175 15,079 15,303
----------------------- ------- ------- ------- ------- ------- -------
The number of full-time
equivalent staff was: 15,145 14,306 14,401 15,196 14,356 14,657
----------------------- ------- ------- ------- ------- ------- -------
</TABLE>
4 Net interest charge
<TABLE>
-------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
(a) Analysis of net interest charge (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C>
Interest on overdrafts, bonds and
other borrowings:
Repayable wholly within five years 35.1 41.6 65.4
Not wholly repayable within five years 90.2 33.8 12.6
Repaid during the year 54.6 84.7 33.0
-------------------------------------- ------- ------- -------
179.9 160.1 111.0
On finance leases - 0.4 0.5
-------------------------------------- ------- ------- -------
Total interest payable 179.9 160.5 111.5
Interest receivable (3.8) (3.1) (3.3)
Capitalized interest (14.8) (10.0) -
-------------------------------------- ------- ------- -------
Net interest charge 161.3 147.4 108.2
-------------------------------------- ------- ------- -------
Interest cover (times) 5.0 5.3 6.2
-------------------------------------- ------- ------- -------
</TABLE>
Interest cover is calculated by dividing profit on ordinary activities
before interest by the net interest charge.
ScottishPower Form 20-F 1999 F-10
<PAGE>
Note 4 continued
------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
(b) Analysis of total interest
payable (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------
<S> <C> <C> <C>
Bank loans and overdrafts 35.5 45.0 65.5
Government borrowings 16.3 16.3 16.3
Loan notes 1.3 1.6 2.7
Commercial paper 33.4 73.3 24.3
Medium-term notes/private placements 31.9 4.5 -
Euro bonds 61.5 19.4 2.2
Finance leases - 0.4 0.5
------------------------------------ ------- ------- -------
179.9 160.5 111.5
------------------------------------ ------- ------- -------
</TABLE>
5 Ordinary taxation
------------------------------------------------------------------------
Reconciliation of tax charge to standard rate of U.K. Corporation Tax
<TABLE>
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C>
Tax on profit before tax at standard
rate of 31% (1998 31%, 1997 33%) 199.6 198.2 184.2
Timing differences between taxable and
accounting profit:
-- accelerated capital allowances (40.6) (35.8) (49.7)
-- other timing differences (0.2) 1.1 4.5
Permanent differences (4.3) 27.0 9.5
Advance corporation tax written back (12.9) (38.9) (11.7)
-------------------------------------- ------- ------- -------
Ordinary taxation charged to profit
and loss account 141.6 151.6 136.8
-------------------------------------- ------- ------- -------
Effective tax rate 22.0% 23.7% 24.5%
-------------------------------------- ------- ------- -------
</TABLE>
The effective tax rate is calculated by dividing ordinary taxation by
profit on ordinary activities before taxation.
6 Exceptional taxation -- windfall tax
------------------------------------------------------------------------
Exceptional taxation in 1997-98 related to the group's share of the
windfall tax according to the formula contained within the Finance (No.
2) Act 1997. The first of two equal installments was paid on December
1, 1997 and the second installment was paid on December 1, 1998.
7 Earnings per ordinary share
------------------------------------------------------------------------
(a) Earnings per ordinary share have been calculated in accordance with
FRS 14 "Earnings per share' for all years by dividing the profit for
the financial year by the weighted average number of ordinary shares in
issue during the financial year, based on the following information:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------------------------
<S> <C> <C> <C>
Profit for the financial year ((Pounds)
million) 502.8 170.1 421.1
Basic weighted average share capital (number
of shares, million) 1,185.2 1,180.1 1,104.9
Diluted weighted average share capital (number
of shares, million) 1,197.2 1,191.9 1,116.0
---------------------------------------------- ------- ------- -------
</TABLE>
The difference between the basic and the diluted weighted average share
capital is wholly attributable to outstanding share options.
(b) The calculation of earnings per ordinary share, on a basis which
excludes goodwill amortization and the windfall tax, is based on the
following adjusted earnings:
<TABLE>
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Profit for the financial year 502.8 170.1 421.1
Adjusting items -- goodwill amortization 1.2 - -
-- windfall tax - 317.0 -
---------------------------------------- ------- ------- -------
Adjusted earnings 504.0 487.1 421.1
---------------------------------------- ------- ------- -------
</TABLE>
Adjusted earnings per share has been presented in addition to earnings
per share calculated in accordance with FRS 14 in order that more
meaningful comparisons of financial performance can be made. The
figures for the years ended March 31, 1997 and March 31, 1998 do not
contain goodwill amortization as the group has adopted the transitional
provisions of FRS 10 and only capitalized goodwill arising on
acquisitions since April 1, 1998.
<TABLE>
<CAPTION>
8 Dividends per
ordinary share
----------------------------------------------------------------------------------
1999 1998 1997
pence pence pence
per per per
ordinary ordinary ordinary 1999 1998 1997
share share share (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interim dividend paid 7.50 6.80 6.17 89.9 80.4 72.6
Proposed final dividend 15.00 13.60 12.33 178.0 162.9 145.5
----------------------- ------- ------- ------- ------- ------- -------
Total dividends 22.50 20.40 18.50 267.9 243.3 218.1
----------------------- ------- ------- ------- ------- ------- -------
</TABLE>
F-11 ScottishPower Form 20-F 1999
<PAGE>
Group Cash Flow Statement
for the year ended March 31, 1999
<TABLE>
<CAPTION>
1999 1998 1997
Notes (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash inflow from continuing
operating activities 10 944.9 1,014.1 801.9
Dividends received from
associates and joint
ventures 0.9 0.9 -
Returns on investments and
servicing of finance 9 (149.9) (146.7) (101.1)
Ordinary taxation (93.7) (134.5) (117.4)
----------------------------------- -------- -------- --------
Free cash flow before
windfall tax 702.2 733.8 583.4
Exceptional taxation --
windfall tax 6 (157.8) (157.8) -
----------------------------------- -------- -------- --------
Free cash flow 544.4 576.0 583.4
Capital expenditure and
financial investment 9 (683.0) (592.7) (392.1)
----------------------------------- -------- -------- --------
Cash flow before
acquisitions and disposals (138.6) (16.7) 191.3
Acquisitions and disposals 9 (77.4) 67.9 (1,234.6)
Equity dividends paid (252.8) (226.0) (170.0)
----------------------------------- -------- -------- --------
Cash outflow before use of
liquid resources and
financing (468.8) (174.8) (1,213.3)
Management of liquid
resources 9,13 (12.1) (17.5) (21.0)
Financing
-- Issue of ordinary share
capital 9 3.2 8.9 238.0
-- Increase in debt 9,13 451.0 252.6 1,048.6
454.2 261.5 1,286.6
----------------------------------- -------- -------- --------
(Decrease)/increase in cash
in year 13 (26.7) 69.2 52.3
----------------------------------- -------- -------- --------
Free cash flow represents cash flow from continuing operating
activities after adjusting for dividends received from associates and
joint ventures, returns on investments and servicing of finance and
taxation.
<CAPTION>
1999 1998 1997
Note (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(Decrease)/increase in cash
in year (26.7) 69.2 52.3
Cash inflow from increase in
debt (451.0) (252.6) (1,048.6)
Cash outflow from movement
in liquid resources 12.1 17.5 21.0
----------------------------------- -------- -------- --------
Change in net debt resulting
from cash flows (465.6) (165.9) (975.3)
Net debt acquired (2.7) (0.1) (168.6)
Net debt disposed - 6.7 -
Loan notes issued - (3.0) (14.3)
Other non-cash movements (0.3) - -
----------------------------------- -------- -------- --------
Movement in net debt in year (468.6) (162.3) (1,158.2)
Net debt at end of previous
year (1,952.6) (1,790.3) (632.1)
----------------------------------- -------- -------- --------
Net debt at end of year 13 (2,421.2) (1,952.6) (1,790.3)
----------------------------------- -------- -------- --------
</TABLE>
Reconciliation of Net Cash Flow to Movement in Net Debt
for the year ended March 31, 1999
The Accounting Policies and Definitions on pages F-1 to F-6, together
with the Notes on pages F-9 to F-11, F-13 to F-15 and F-17 to F-40 form
part of these Accounts.
ScottishPower Form 20-F 1999 F-12
<PAGE>
Notes to the Group Cash Flow Statement
for the year ended March 31, 1999
9 Analysis of cash flows
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C>
(a) Returns on investments and
servicing of finance
Interest received 3.5 2.7 3.3
Interest paid (153.4) (149.0) (103.9)
Interest element of finance lease
rental payments - (0.4) (0.5)
-------------------------------------- ------- ------- --------
Net cash outflow for returns on
investments and servicing of finance (149.9) (146.7) (101.1)
-------------------------------------- ------- ------- --------
(b) Capital expenditure and financial
investment
Purchase of tangible fixed assets (745.1) (664.6) (448.0)
Deferred income received 47.8 57.9 46.6
Sale of tangible fixed assets 20.4 26.4 13.9
Purchase of fixed asset investments (6.1) (12.4) (4.6)
-------------------------------------- ------- ------- --------
Net cash outflow for capital
expenditure and financial investment (683.0) (592.7) (392.1)
-------------------------------------- ------- ------- --------
(c) Acquisitions and disposals
Purchase of subsidiary undertakings (77.4) (0.4) (1,234.6)
Sale of subsidiary businesses - 68.3 -
-------------------------------------- ------- ------- --------
Net cash (outflow)/inflow from
acquisitions and disposals (77.4) 67.9 (1,234.6)
-------------------------------------- ------- ------- --------
(d) Management of liquid resources *
Cash outflow in relation to short-term
deposits and other short-term
investments (12.1) (17.5) (21.0)
-------------------------------------- ------- ------- --------
Net cash outflow for management of
liquid resources (12.1) (17.5) (21.0)
-------------------------------------- ------- ------- --------
(e) Financing
Issue of ordinary share capital 3.2 8.9 263.0
Expenses paid in connection with share
issue - - (25.0)
3.2 8.9 238.0
Debt due within one year:
-- net (repayment)/drawdown of
uncommitted facilities (39.1) (81.8) 252.9
-- net commercial paper
(redeemed)/issued (174.9) (31.0) 700.5
-- medium-term notes/private
placements (62.5) 62.5 -
-- redemption of loan notes (1.1) (39.4) (0.4)
-- European Investment Bank loans (10.0) 1.3 8.7
Debt due after one year:
-- net drawdown of uncommitted
facilities - - 3.8
-- net repayment of committed
facilities - (200.6) (100.0)
-- medium-term notes/private
placements 197.5 240.9 -
-- European Investment Bank loans 51.2 20.0 (11.6)
-- 5.875% euro-US dollar bond issue - 182.9 -
-- Variable coupon bond issue - 99.6 -
-- 8.375% euro-sterling bond issue - 0.2 196.6
-- 6.750% euro-sterling bond issue 247.0 - -
-- 5.250% deutschmark bond issue 245.5 - -
Capital element of finance lease
rental payments (2.6) (2.0) (1.9)
Increase in debt 451.0 252.6 1,048.6
-------------------------------------- ------- ------- --------
Net cash inflow from financing 454.2 261.5 1,286.6
-------------------------------------- ------- ------- --------
</TABLE>
* Liquid resources include term deposits of less than one year,
commercial paper and other short-term investments.
F-13 ScottishPower Form 20-F 1999
<PAGE>
10 Reconciliation of operating profit to net cash inflow from
continuing operating activities
------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Operating profit 802.8 785.1 663.9
Acquisition reorganization accruals
and provisions - - 15.2
Depreciation and amortization 225.4 184.6 156.1
Profit on sale of tangible fixed
assets and disposal of businesses (18.6) (21.7) (2.4)
Release of deferred income (13.6) (20.6) (22.5)
Movements in provisions for
liabilities and charges (7.3) (5.1) (17.0)
Decrease/(increase) in stocks 18.4 (32.0) (31.1)
(Increase)/decrease in debtors (68.7) 81.9 38.7
Increase in creditors 6.5 41.9 1.0
------------------------------------- ------- ------- --------
Net cash inflow from continuing
operating activities 944.9 1,014.1 801.9
------------------------------------- ------- ------- --------
The acquisition reorganization accruals and provisions for 1997 relate
to the cost of implementing the post-acquisition plans for Southern
Water.
11 Effect of acquisitions and disposals on cash flows
------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flow from operating activities 21.1 10.0 140.3
Returns on investments and servicing
of finance 0.3 (0.7) (5.6)
Taxation (0.1) - (18.0)
Capital expenditure and financial
investment (10.6) (5.3) (93.2)
Management of liquid resources (9.2) - 49.0
Financing (1.6) 2.1 (2.8)
------------------------------------- ------- ------- --------
(Decrease)/increase in cash (0.1) 6.1 69.7
------------------------------------- ------- ------- --------
12 Analysis of cash flows in respect of acquisitions and disposals
------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Cash consideration including expenses (69.7) 70.2 (1,290.8)
Cash at bank and in hand
acquired/(disposed) 1.4 (1.9) 58.6
Bank overdrafts acquired - - (2.4)
Deferred consideration in respect of
prior year acquisitions (9.1) - -
------------------------------------- ------- ------- --------
(77.4) 68.3 (1,234.6)
------------------------------------- ------- ------- --------
</TABLE>
The analysis of cash flows on acquisitions in 1999 relate to the post-
acquisition cash flows of Demon Internet Limited and Watermark Games
Limited. The analysis of cash flows from disposals in 1998 relates to
the cash flows during the period for the Southern Water non-core
businesses that were sold during the year. The cash flows from the
acquisitions in 1998 were not material to the group. There were no
disposals in 1997. The analysis of cash flows on acquisitions in 1997
principally relate to the post-acquisition cash flows of Southern
Water.
ScottishPower Form 20-F 1999 F-14
<PAGE>
13 Analysis of net debt
------------------------------------------------------------------------
1997/98 analysis
<TABLE>
<CAPTION>
Acquisitions Disposals Other
At April 1, (excl. cash & (excl. cash & non-cash At March 31,
1997 Cash flow overdrafts) overdrafts) changes 1998
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash at bank 2.5 56.3 - - - 58.8
Overdrafts (22.2) 12.9 - - - (9.3)
69.2
Debt due after 1 year (689.4) (343.0) - - - (1,032.4)
Debt due within 1 year (1,111.7) 88.4 (0.1) - (3.0) (1,026.4)
Finance leases (8.7) 2.0 - 6.7 - -
(252.6)
Other deposits 39.2 17.5 - - - 56.7
---------------------- -------- ------- ------- ------- ------- --------
Total (1,790.3) (165.9) (0.1) 6.7 (3.0) (1,952.6)
---------------------- -------- ------- ------- ------- ------- --------
</TABLE>
"Other non-cash changes' to net debt represents loan notes issued as
part of the consideration for Pinnacle Cellular Limited.
------------------------------------------------------------------------
1998/99 analysis
<TABLE>
<CAPTION>
At Acquisitions Other
April 1, (excl. cash & non-cash At March 31,
1998 Cash flow overdrafts) changes 1999
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash at bank 58.8 (20.7) - - 38.1
Overdrafts (9.3) (6.0) - - (15.3)
(26.7)
Debt due after 1 year (1,032.4) (741.2) (0.1) 89.2 (1,684.5)
Debt due within 1 year (1,026.4) 287.6 - (89.5) (828.3)
Finance leases - 2.6 (2.6) - -
(451.0)
Other deposits 56.7 12.1 - - 68.8
---------------------- -------- ------- ------- ------- --------
Total (1,952.6) (465.6) (2.7) (0.3) (2,421.2)
---------------------- -------- ------- ------- ------- --------
</TABLE>
"Other non-cash changes' to net debt represents the movement in debt of
(Pounds)89.5 million due after more than one year to due within one
year and amortization of finance costs of (Pounds)0.3 million.
F-15 ScottishPower Form 20-F 1999
<PAGE>
Balance Sheets
as at March 31, 1999
<TABLE>
<CAPTION>
Group Company
1999 1998 1999 1998
Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets
Intangible assets 15 71.3 - - -
Tangible assets 16 5,295.1 4,723.9 1,893.3 1,755.1
Investments
-- Investments in joint
ventures:
Share of gross assets 54.2 23.8
Share of gross
liabilities (29.8) (8.0)
24.4 15.8 21.1 13.6
-- Investments in
associates 5.9 7.4 - -
-- Other investments 43.4 44.1 1,731.3 1,731.2
17 73.7 67.3 1,752.4 1,744.8
------------------------------ -------- -------- -------- --------
5,440.1 4,791.2 3,645.7 3,499.9
------------------------------ -------- -------- -------- --------
Current assets
Stocks 18 125.8 144.2 105.6 128.9
Debtors 19 559.3 525.9 1,910.1 1,811.1
Short-term bank and
other deposits 106.9 115.5 29.2 48.6
------------------------------ -------- -------- -------- --------
792.0 785.6 2,044.9 1,988.6
------------------------------ -------- -------- -------- --------
Creditors: amounts
falling due within one year
Loans and other
borrowings 20 (843.6) (1,035.7) (826.5) (1,031.1)
Other creditors 21 (1,332.8) (1,396.3) (1,196.6) (1,455.5)
------------------------------ -------- -------- -------- --------
(2,176.4) (2,432.0) (2,023.1) (2,486.6)
------------------------------ -------- -------- -------- --------
Net current
(liabilities)/assets (1,384.4) (1,646.4) 21.8 (498.0)
------------------------------ -------- -------- -------- --------
Total assets less
current liabilities 4,055.7 3,144.8 3,667.5 3,001.9
Creditors: amounts
falling due after more
than one year
Loans and other
borrowings 20 (1,684.5) (1,032.4) (1,584.8) (932.8)
Provisions for
liabilities and charges 23 (30.8) (38.1) (11.9) (10.4)
Deferred income 24 (393.2) (364.6) (196.2) (179.9)
------------------------------ -------- -------- -------- --------
Net assets 14 1,947.2 1,709.7 1,874.6 1,878.8
------------------------------ -------- -------- -------- --------
Called up share capital 25,26 599.4 598.4 599.4 598.4
Share premium 26 394.0 388.7 394.0 388.7
Merger reserve 26 - - 5.1 8.2
Revaluation reserve 26 223.9 227.3 - -
Profit and loss account 26 728.6 493.4 876.1 883.5
------------------------------ -------- -------- -------- --------
Equity shareholders'
funds 26 1,945.9 1,707.8 1,874.6 1,878.8
Minority interests 27 1.3 1.9 - -
------------------------------ -------- -------- -------- --------
Capital employed 1,947.2 1,709.7 1,874.6 1,878.8
------------------------------ -------- -------- -------- --------
</TABLE>
The Accounting Policies and Definitions on pages F-1 to F-6, together
with the Notes on pages F-9 to F-11, F-13 to F-15 and F-17 to F-40 form
part of these Accounts.
ScottishPower Form 20-F 1999 F-16
<PAGE>
Notes to the Balance Sheets
as at March 31, 1999
14 Segmental business information
<TABLE>
<CAPTION>
-------------------------------------------------------------------
1999 1998
(a) Net assets/(liabilities) by
business segment Notes (Pounds)m (Pounds)m
-------------------------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 322.7 361.2
Power Systems 1,234.7 1,136.4
Energy Supply 97.8 45.2
Manweb 672.4 607.3
Southern Water 1,612.4 1,222.4
ScottishTelecom (ii) 307.6 151.0
Other (ii),(iii) 69.9 69.4
-------------------------------------------- --------- ---------
Sub total 4,317.5 3,592.9
Unallocated net liabilities (iv) (2,370.3) (1,883.2)
-------------------------------------------- --------- ---------
Total 1,947.2 1,709.7
-------------------------------------------- --------- ---------
<CAPTION>
1999 1998
(b) Capital expenditure by
business segment (v) (Pounds)m (Pounds)m
-------------------------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 42.5 43.8
Power Systems 149.8 163.2
Energy Supply 24.1 21.1
Manweb 101.2 108.9
Southern Water 356.0 294.8
ScottishTelecom (ii) 103.2 58.3
Other (ii) 25.2 23.9
-------------------------------------------- --------- ---------
Total 802.0 714.0
-------------------------------------------- --------- ---------
<CAPTION>
1999 1998
(c) Total assets by business
segment (Pounds)m (Pounds)m
-------------------------------------------------------------------
<S> <C> <C> <C>
Generation Wholesale 489.4 564.0
Power Systems 1,511.1 1,395.3
Energy Supply 321.5 267.1
Manweb 1,051.7 1,003.1
Southern Water 2,291.1 2,013.2
ScottishTelecom (ii) 412.0 212.2
Other (ii) 155.3 121.9
-------------------------------------------- --------- ---------
Total 6,232.1 5,576.8
-------------------------------------------- --------- ---------
</TABLE>
(i) In fiscal 1999, ScottishPower adopted FAS 131, Disclosures about
Segments of an Enterprise and Related Information. This standard
establishes a new framework for segment reporting where the management
reporting structure forms the basis of external disclosures.The
accounting policies of the segments are the same as those described in
the "Accounting Policies and Definitions' on pages F-1 to F-6.
(ii) The ScottishTelecom business segment and the Other business
segment were previously combined as the Developing businesses and
ancillary services segment.
(iii) The net assets of the Retail business, included within the Other
business segment, excluding short-term bank and other deposits of
(Pounds)37.2 million (1998 (Pounds)19.7 million), are (Pounds)18.6
million (1998 (Pounds)35.6 million).
(iv) Unallocated net liabilities include net debt, dividends payable,
tax liabilities and fixed asset investments.
(v) Capital expenditure by business segment is stated gross of capital
grants and customer contributions.
F-17 ScottishPower Form 20-F 1999
<PAGE>
15 Intangible fixed assets
<TABLE>
---------------------------------------
<CAPTION>
Goodwill
Group (Pounds)m
---------------------------------------
<S> <C>
Cost:
At April 1, 1998 -
Additions 72.5
------------------------- --------
At March 31, 1999 72.5
------------------------- --------
Amortization:
At April 1, 1998 -
Amortization for the year 1.2
------------------------- --------
At March 31, 1999 1.2
------------------------- --------
Net book value:
At March 31, 1999 71.3
At March 31, 1998 -
------------------------- --------
</TABLE>
Demon Internet Limited was acquired on May 1, 1998 for cash
consideration of (Pounds)66 million. On May 18, 1998 Watermark Games
Limited was acquired for (Pounds)2.9 million cash including deferred
consideration of (Pounds)1.0 million. Details of the adjustments made
in respect of these acquisitions are shown below:
<TABLE>
<CAPTION>
Net book
value Adjustments Fair value
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Tangible fixed assets 9.4 (2.4) 7.0
Stocks 0.1 - 0.1
Debtors 5.8 - 5.8
Short-term bank and other
deposits 1.4 - 1.4
Creditors: amounts falling due
within one year (13.7) (2.3) (16.0)
Creditors: amounts falling due
after more than one year (0.1) - (0.1)
------------------------------------ ------- ------- ---------
2.9 (4.7) (1.8)
------------------------------------ ------- -------
Consideration 70.7
------------------------------------------------------- ---------
Goodwill on acquisition 72.5
------------------------------------------------------- ---------
Analysis of consideration (Pounds)m
------------------------------------------------------------------------
Cash paid 67.9
Expenses paid 1.8
Deferred consideration 1.0
------------------------------------------------------- ---------
70.7
------------------------------------------------------- ---------
</TABLE>
The adjustments relate to alignment of fixed asset capitalization
policies and recognition of unrecorded liabilities.
The acquisition method of accounting has been adopted in respect of
both acquisitions. The results of these companies for the periods
before and since acquisition are not material to the group.
Goodwill on these acquisitions is being amortized over 15 years. The
directors have estimated the useful economic life of goodwill acquired
after assessment of trade barriers and technology and rate of market
change.
ScottishPower Form 20-F 1999 F-18
<PAGE>
16 Tangible fixed assets
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Water
(a) Group Land and infrastructure Plant and Vehicles and
Year ended March 31, buildings assets machinery equipment Total
1998 Note (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cost or valuation:
At April 1, 1997 785.3 697.8 3,236.6 420.5 5,140.2
Additions 73.5 128.3 335.4 176.8 714.0
Acquisitions 0.4 - 1.2 0.2 1.8
Revaluation (i) 9.4 34.4 108.2 - 152.0
Grants and contributions - (8.0) - - (8.0)
Disposals (21.1) (0.3) (36.7) (86.8) (144.9)
------------------------------ ------- ------- ------- ------- -------
At March 31, 1998 847.5 852.2 3,644.7 510.7 5,855.1
------------------------------ ------- ------- ------- ------- -------
Depreciation:
At April 1, 1997 139.7 10.4 867.6 72.8 1,090.5
Charge for the year 14.9 19.0 88.6 62.1 184.6
Revaluation (i) - - (77.0) - (77.0)
Disposals (2.0) (0.3) (21.9) (42.7) (66.9)
------------------------------ ------- ------- ------- ------- -------
At March 31, 1998 152.6 29.1 857.3 92.2 1,131.2
------------------------------ ------- ------- ------- ------- -------
Net book value:
At March 31, 1998 694.9 823.1 2,787.4 418.5 4,723.9
At March 31, 1997 645.6 687.4 2,369.0 347.7 4,049.7
------------------------------ ------- ------- ------- ------- -------
Year ended March 31,
1999
----------------------------------------------------------------------------------------------
Cost or valuation:
At April 1, 1998 847.5 852.2 3,644.7 510.7 5,855.1
Additions 100.2 145.2 392.8 163.8 802.0
Acquisitions - - 6.0 1.0 7.0
Grants and contributions - (5.6) - - (5.6)
Disposals (7.0) (0.4) (11.4) (16.8) (35.6)
------------------------------ ------- ------- ------- ------- -------
At March 31, 1999 940.7 991.4 4,032.1 658.7 6,622.9
------------------------------ ------- ------- ------- ------- -------
Depreciation:
At April 1, 1998 152.6 29.1 857.3 92.2 1,131.2
Charge for the year 20.3 19.7 119.4 64.8 224.2
Disposals (2.0) (0.4) (9.7) (15.5) (27.6)
------------------------------ ------- ------- ------- ------- -------
At March 31, 1999 170.9 48.4 967.0 141.5 1,327.8
------------------------------ ------- ------- ------- ------- -------
Net book value:
At March 31, 1999 769.8 943.0 3,065.1 517.2 5,295.1
At March 31, 1998 694.9 823.1 2,787.4 418.5 4,723.9
------------------------------ ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
1999 1998
Historical cost analysis (Pounds)m (Pounds)m
----------------------------------------------------
<S> <C> <C>
Cost 6,470.9 5,703.1
Depreciation based on cost (1,399.7) (1,206.5)
---------------------------- -------- --------
Net book value based on cost 5,071.2 4,496.6
---------------------------- -------- --------
</TABLE>
F-19 ScottishPower Form 20-F 1999
<PAGE>
Note 16 continued
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Water Vehicles
(b) Company Land and infrastructure Plant and and
Year ended March 31, buildings assets machinery equipment Total
1998 (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost:
At April 1, 1997 279.9 - 2,114.1 198.3 2,592.3
Additions 9.1 - 138.8 111.2 259.1
Disposals (0.7) - (3.9) (1.7) (6.3)
------------------------ ------- ------- -------- ------- --------
At March 31, 1998 288.3 - 2,249.0 307.8 2,845.1
------------------------ ------- ------- -------- ------- --------
Depreciation:
At April 1, 1997 130.5 - 816.5 67.5 1,014.5
Charge for the year 1.4 - 44.0 34.4 79.8
Disposals (0.2) - (2.8) (1.3) (4.3)
------------------------ ------- ------- -------- ------- --------
At March 31, 1998 131.7 - 857.7 100.6 1,090.0
------------------------ ------- ------- -------- ------- --------
Net book value:
At March 31, 1998 156.6 - 1,391.3 207.2 1,755.1
At March 31, 1997 149.4 - 1,297.6 130.8 1,577.8
------------------------ ------- ------- -------- ------- --------
Year ended March 31,
1999
--------------------------------------------------------------------------------------
Cost:
At April 1, 1998 288.3 - 2,249.0 307.8 2,845.1
Additions 17.4 - 139.7 85.1 242.2
Disposals (0.3) - (8.4) (3.5) (12.2)
------------------------ ------- ------- -------- ------- --------
At March 31, 1999 305.4 - 2,380.3 389.4 3,075.1
------------------------ ------- ------- -------- ------- --------
Depreciation:
At April 1, 1998 131.7 - 857.7 100.6 1,090.0
Charge for the year 6.2 - 61.8 35.4 103.4
Disposals (0.2) - (8.0) (3.4) (11.6)
------------------------ ------- ------- -------- ------- --------
At March 31, 1999 137.7 - 911.5 132.6 1,181.8
------------------------ ------- ------- -------- ------- --------
Net book value:
At March 31, 1999 167.7 - 1,468.8 256.8 1,893.3
At March 31, 1998 156.6 - 1,391.3 207.2 1,755.1
------------------------ ------- ------- -------- ------- --------
<CAPTION>
Group Company
Included in the cost or
valuation of tangible 1999 1998 1999 1998
fixed assets above are: Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Major assets in the
course of construction 537.2 277.3 109.9 12.9
Grants and contributions
in respect of water
infrastructure assets (18.0) (12.4) - -
Capitalized interest (ii) 32.8 18.0 8.0 8.0
Assets not subject to
depreciation (iii) 60.6 71.8 19.0 29.2
---------------------------------- ------- -------- ------- --------
</TABLE>
(i) The Manweb distribution and Southern Water operational assets were
revalued by the directors on September 30, 1997 by assessing discounted
estimated future cash flows. These revaluations followed the imposition
of the windfall tax which reduced significantly uncertainties taken
into account in assessing the values ascribed to these assets at their
respective dates of acquisition. In view of the isolated nature of the
reason for the revaluation, the valuations have not been and will not
be updated, as permitted under the transitional provisions of FRS 15
"Tangible fixed assets'. The net book value of tangible fixed assets
included at valuation at March 31, 1999 was (Pounds)2,311.2 million
(1998 (Pounds)2,373.9 million).
(ii) Interest on the funding attributable to major capital projects was
capitalized during the year at a rate of 9% (1998 10%).
(iii) Assets not subject to depreciation are land. Land and buildings
held by the group and company are predominantly freehold.
(iv) The opening balances in respect of cost or valuation and
depreciation of water infrastructure assets have been restated as a
result of implementing the infrastructure renewals accounting basis as
set out in FRS 15 "Tangible fixed assets'. The effect of the adjustment
has been to increase tangible fixed assets and reduce prepayments and
accrued income by (Pounds)15.7 million (1998 (Pounds)5.4 million).
There is no effect on the profit and loss account other than to
reclassify the renewals charge as depreciation.
(v) The historical cost of fully depreciated tangible fixed assets
still in use was (Pounds)241.2 million (1998 (Pounds)234.6 million).
ScottishPower Form 20-F 1999 F-20
<PAGE>
17 Fixed asset investments
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Subsidiary Associated
undertakings Joint ventures undertakings Own
shares held Other
Shares Loans Shares Loans Shares Loans under trust investments Total
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Group (a)
Cost or valuation:
At April 1, 1997 - - 1.6 4.4 6.0 1.9 2.2 1.6 17.7
Additions - - - 9.9 0.7 - 39.4 0.9 50.9
Share of retained
profit - - 1.0 - 0.5 - - - 1.5
Disposals and
other - - (0.4) (0.7) (0.5) (1.2) - - (2.8)
------------------ ------- ------- ------- ------- ------- ------- ------- -------- -------
At March 31, 1998 - - 2.2 13.6 6.7 0.7 41.6 2.5 67.3
Additions - - - 7.5 - - 2.8 0.1 10.4
Share of retained
profit - - 1.1 - 0.1 - - - 1.2
Disposals and
other - - - - (0.9) (0.7) (2.8) (0.8) (5.2)
------------------ ------- ------- ------- ------- ------- ------- ------- -------- -------
At March 31, 1999 - - 3.3 21.1 5.9 - 41.6 1.8 73.7
------------------ ------- ------- ------- ------- ------- ------- ------- -------- -------
Company
Cost or nominal
value:
At April 1, 1997 1,504.4 - - 4.4 - - 2.2 - 1,511.0
Additions - 176.2 - 9.9 - - 39.4 0.5 226.0
Acquisitions 8.5 - - - - - - - 8.5
Disposals and
other - - - (0.7) - - - - (0.7)
------------------ ------- ------- ------- ------- ------- ------- ------- -------- -------
At March 31, 1998 1,512.9 176.2 - 13.6 - - 41.6 0.5 1,744.8
Additions - - - 7.5 - - 2.8 0.1 10.4
Disposals and
other - - - - - - (2.8) - (2.8)
------------------ ------- ------- ------- ------- ------- ------- ------- -------- -------
At March 31, 1999 1,512.9 176.2 - 21.1 - - 41.6 0.6 1,752.4
------------------ ------- ------- ------- ------- ------- ------- ------- -------- -------
</TABLE>
The principal subsidiary undertakings, joint ventures and associated
undertakings are listed on page F-40.
The company is currently evaluating the strategy of ScottishTelecom and
the options to maximize shareholder value from its investment in this
business. This assessment includes a review of services provided by
ScottishTelecom, its funding needs and any consequential restructuring.
The company has agreed to indemnify its subsidiary in respect of any
costs and losses which may result.
(a) Shares in the company held under trust during the year are as
follows:
<TABLE>
<CAPTION>
Shares held Shares Shares Shares held Market value
at April 1, acquired transferred at March 31, at March 31,
Dividends 1997 during year during year 1998 1998
Notes waived (000s) (000s) (000s) (000s) (Pounds)m
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Long Term Incentive Plan (i) no 678 716 - 1,394 7.8
ScottishPower Sharesave
Scheme (ii) yes - 16,457 (2,539) 13,918 78.3
------------------------------------- ------- ------- ------- ------- -------
678 17,173 (2,539) 15,312 86.1
------------------------------------- ------- ------- ------- ------- -------
<CAPTION>
Shares held Shares held Market value
at April 1, Shares acquired Shares transferred at March 31, at March 31,
Dividends 1998 during year during year 1999 1999
Notes waived (000s) (000s) (000s) (000s) (Pounds)m
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Long Term Incentive Plan (i) no 1,394 483 - 1,877 10.1
ScottishPower Sharesave
Scheme (ii) yes 13,918 - (1,128) 12,790 69.1
------------------------------------- ------- ------- ------- ------- -------
15,312 483 (1,128) 14,667 79.2
------------------------------------- ------- ------- ------- ------- -------
</TABLE>
(i) Shares of the company are held under trust as part of the Long Term
Incentive Plan for executive directors and other senior managers (see
Note 32 for details of the plan).
(ii) Shares of the company are held in a Qualifying Employee Share
Ownership Trust as part of the ScottishPower Sharesave Scheme. Holders
of options granted under the scheme between June 22, 1994 and June 20,
1996 will be awarded shares by the Trust following the completion of
savings contracts and upon exercise of the options. Details of options
granted under the scheme are disclosed in Note 32.
18 Stocks
<TABLE>
-------------------------------------------------------------------------
<CAPTION>
Group Company
1999 1998 1999 1998
<S> <C> <C> <C> <C>
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
Raw materials and
consumables 44.8 50.1 31.1 41.5
Gas stocks 30.0 48.3 30.0 48.3
Work in progress 10.2 7.3 6.7 3.1
Finished goods and goods
for resale 40.8 38.5 37.8 36.0
------------------------ --------- --------- --------- ---------
125.8 144.2 105.6 128.9
------------------------ --------- --------- --------- ---------
</TABLE>
Gas stocks include gas delivered to third parties under sale and
repurchase agreements to match gas usage requirements with existing gas
purchase obligations. Under the provisions of FRS 5, the cost under
such agreements of gas delivered to third parties is shown as gas
stocks and amounts payable to third parties totaling (Pounds)17.4
million (1998 (Pounds)29.4 million) are included in accrued expenses in
Note 21.
F-21 ScottishPower Form 20-F 1999
<PAGE>
19 Debtors
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Group Company
1999 1998 1999 1998
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(a) Amounts falling due
within one year:
Trade debtors 260.1 255.5 123.0 127.3
Amounts owed by subsidiary
undertakings - - 530.6 428.6
Amounts receivable under
finance leases 0.2 0.2 - -
Prepayments and accrued
income 227.8 153.9 154.9 102.3
Other debtors 64.7 68.7 35.3 33.0
-------------------------- --------- --------- --------- ---------
552.8 478.3 843.8 691.2
(b) Amounts falling due
after more than one year:
Amounts owed by subsidiary
undertakings - - 1,066.3 1,079.2
Amounts receivable under
finance leases 2.7 3.0 - -
Advance corporation tax
recoverable on proposed
dividend - 40.7 - 40.7
Other debtors 3.8 3.9 - -
-------------------------- --------- --------- --------- ---------
559.3 525.9 1,910.1 1,811.1
-------------------------- --------- --------- --------- ---------
</TABLE>
Amounts receivable under finance leases relate to ScottishPower Leasing
Limited, one of the company's subsidiaries (see page F-40). The total
cost of assets acquired by ScottishPower Leasing Limited for letting
under leases is (Pounds)3.6 million (1998 (Pounds)3.7 million). Total
amounts receivable during the year under finance leases were
(Pounds)0.4 million (1998 (Pounds)0.4 million).
20 Loans and other borrowings
<TABLE>
---------------------------------------------------------------------------------------------
<CAPTION>
Weighted
average Group Company
interest rate 1999 1998 1999 1998
(a) Analysis by
instrument Notes 1999 1998 (Pounds)m (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bank overdraft - - 15.3 9.3 - 8.4
Uncommitted bank loan 7.0% 7.0% 172.7 211.7 171.9 211.1
Commercial paper (ii) 7.1% 6.9% 553.4 728.3 553.4 728.3
Medium-term
notes/private placements (iii) 7.1% 7.6% 438.4 303.4 438.4 303.4
Loan notes (iv) 6.8% 6.2% 16.6 17.7 15.5 14.6
European Investment Bank
loans (v) 9.1% 10.0% 217.6 176.4 217.6 176.4
11.457% sterling bond
2001 (held by HM
Treasury) 11.5% 11.5% 142.0 142.0 142.0 142.0
5.875% euro-US dollar
bond 2003 6.9% 6.9% 183.0 182.9 183.0 182.9
Variable coupon bond
2008 6.8% 6.8% 99.6 99.6 - -
5.250% deutschmark bond
2008 6.8% - 245.5 - 245.5 -
8.375% euro-sterling
bond 2017 8.4% 8.4% 197.0 196.8 197.0 196.8
6.750% euro-sterling
bond 2023 6.8% - 247.0 - 247.0 -
---------------------------------------------------- ------- ------- ------- -------
2,528.1 2,068.1 2,411.3 1,963.9
---------------------------------------------------- ------- ------- ------- -------
</TABLE>
All borrowings are unsecured.
(i) Committed bank loan
As at March 31, 1999 there were no amounts drawn under the new
committed facilities totaling (Pounds)2.6 billion. There were no
drawings under the previous (Pounds)2.6 billion facility as at March
31, 1998. The company canceled during this financial year (Pounds)100
million of committed bilateral facilities that were outstanding,
undrawn as at March 31, 1998.
(ii) Commercial paper
The company has an established US$2.0 billion (1998 US$2.0 billion)
euro-commercial paper program. Paper is issued in a range of currencies
and swapped back into sterling. Amounts borrowed under the commercial
paper program are repayable in less than one year.
(iii) Medium-term notes/private placements
The company has an established US$4.0 billion euro-medium term note
program. Paper is issued in a range of currencies and swapped back into
sterling. As at March 31, 1999, maturities range from 1 to 9 years.
(iv) Loan notes
All loan notes are redeemable at the holders discretion. Ultimate
maturity dates range from 1999 to 2006.
(v) European Investment Bank loans
These loans incorporate agreements with various interest rates and
maturity dates. The maturity dates of these arrangements range from
2006 to 2011.
ScottishPower Form 20-F 1999 F-22
<PAGE>
Note 20 continued
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Group Company
1999 1998 1999 1998
(b) Maturity analysis (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Repayments fall due as follows:
Within one year, or on demand 843.6 1,035.7 826.5 1,031.1
After more than one year 1,684.5 1,032.4 1,584.8 932.8
------------------------------- ------- ------- ------- -------
2,528.1 2,068.1 2,411.3 1,963.9
------------------------------- ------- ------- ------- -------
Repayments due after more than one year are analyzed as follows:
Between one and two years 165.8 89.5 165.8 89.5
Between two and three years 61.3 165.8 61.3 165.8
Between three and four years 243.2 31.4 243.2 31.4
Between four and five years 68.7 243.0 68.7 242.9
More than five years 1,145.5 502.7 1,045.8 403.2
------------------------------- ------- ------- ------- -------
1,684.5 1,032.4 1,584.8 932.8
------------------------------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Weighted average interest rate at
Borrowings at March which borrowings are fixed/capped Weighted average period for which
31, at March 31, interest rate is fixed/capped
1999 1998 1999 1998 1999 1998
(c) Interest rate
analysis (Pounds)m (Pounds)m % % Years Years
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fixed rate borrowings 1,944.1 1,668.6 7.9 8.2 9 7
Capped rate borrowings 200.0 200.0 7.0 7.0 3 4
Floating rate borrowings 384.0 199.5
------------------------ ------- -------
2,528.1 2,068.1
------------------------ ------- ------- -------------------------------------------------------------------
</TABLE>
All amounts in the analysis above are payable in sterling and take into
account the effect of interest rate swaps and caps and currency swaps.
Floating rate borrowings bear interest at rates based on LIBOR.
Based on the floating rate net debt of (Pounds)384.0 million at March
31, 1999 (1998 (Pounds)199.5 million), a 1% change in interest rates
would result in a (Pounds)3.8 million change in profit before tax for
the year (1998 (Pounds)2.0 million change).
(d) Borrowing facilities
The group has the following undrawn committed borrowing facilities at
March 31 in respect of which all conditions precedent have been met.
The (Pounds)600 million committed facility that expires within one year
has a term out option that allows the facility to be extended until
June 2001.
<TABLE>
<CAPTION>
Floating rate Total Total
1999 1999 1998
(Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------
<S> <C> <C> <C>
Expiring within one year 600.0 600.0 -
Expiring between one and two years - - 700.0
Expiring in more than two years 2,000.0 2,000.0 2,000.0
----------------------------------------------------------------------
</TABLE>
(e) Financial instruments and risk management
(i) Overview
The main financial risks faced by the group are exchange rate risk,
interest rate risk and Pool price risk. The Board has reviewed and
agreed policies for managing each of these risks as summarized below.
The use of all classes of financial instruments to manage these risks
has been approved by the Board. The group treasury, which is authorized
to conduct the day-to-day treasury activities of the group, reports at
least annually to the Board and is subject to examination by internal
audit. The Energy Trading Center, which is authorized to carry out
activities to manage the group's Pool price risk, reports monthly to a
risk committee which is comprised of two executive directors and an
external consultant. The Energy Trading Center also reports at least
annually to the Board and is subject to examination by internal audit.
(ii) Treasury strategy
The group treasury aims to obtain finance at the lowest possible cost
by borrowing in the global financial markets in a range of different
instruments. Debt is sourced in a range of different currencies,
maturities and interest terms, primarily by means of a US$4,000 million
debt issuance program and a US$2,000 million euro-commercial paper
program. These are supported by committed and uncommitted bank
facilities and funds from the European Investment Bank.
Treasury strategy is regularly reviewed by the Board, which sets
parameters for the maturity and interest profiles of the group's debt.
Borrowings sourced in currencies other than sterling are swapped back
to sterling by means of cross currency swaps and the approved balance
between fixed and floating rate debt is achieved by means of interest
rate swaps and caps. This means that the group has a substantial
portfolio of derivative contracts which help to increase flexibility
and reduce cost. The credit risk associated with such derivative
contracts is approved by the Board and is limited by reference to
credit ratings published by the international credit rating agencies.
These limits also apply to any credit risk associated with cash
deposits. The group does not believe that it is exposed to any material
concentration of credit risk.
All derivative contracts are undertaken as hedging arrangements;
speculative trades are not undertaken. In view of the long life of some
of these contracts the effect of marking them to market can give rise
to substantial present value opportunity profits or losses as is the
case for medium and long-term primary instruments. These present value
opportunity profits and losses are not recognized in the profit and
loss account in the current year since they relate to future periods
and are matched by cash flows in those periods.
F-23 ScottishPower Form 20-F 1999
<PAGE>
Note 20 continued
------------------------------------------------------------------------
(iii) Energy trading strategy
Almost all electricity generated in England and Wales must be sold to
the Pool, and electricity suppliers including Manweb must likewise buy
electricity from the Pool for resale to their customers. The Pool was
established at the time of privatization in England and Wales for bulk
electricity trading between generators and suppliers. ScottishPower
participates in the Pool by exporting/importing electricity to/from
England and Wales via the Interconnector. The Pool is operated under a
Pooling and Settlement Agreement to which all licensed generators and
suppliers of electricity in Great Britain are party.
The group has procedures in place to minimize exposure to Pool price
variations, that is, the possibility that a change in Pool prices will
reduce the proceeds of electricity sold to the Pool or increase the
cost of electricity purchased from the Pool. These procedures involve
ScottishPower and its subsidiary Manweb entering into contracts for
differences (CfDs). In general, the terms of CfDs are such that
contracts are settled monthly (or more frequently) in arrears by
reference to actual half hourly Pool prices.
During the year ended March 31, 1999, more than 90% of the group's
exposure to Pool prices was hedged in this way. Cover is built up
throughout the year and at March 31, 1999 a significant proportion of
the group's exposure to Pool price variations for the following
financial year is covered.
The group has also entered into some longer term (in excess of one
year) arrangements to protect against the volatility of Pool prices.
These arrangements have the potential to be increased as the business
grows and the time period covered will be reviewed on an ongoing basis.
These CfDs involve a degree of credit risk. This is the risk that the
counterparty to the CfD defaults on settlement. The group controls
credit risk arising from holding the CfDs through credit approvals,
limits and monitoring procedures.
(iv) Principal financial instruments used by the group
Interest rate swaps
Interest rate swaps are used mainly to convert floating rate borrowings
to fixed rates to reduce the financial risk to the group from potential
future increases in interest rates.
Cross currency swaps
Cross currency swaps are used to convert liabilities for borrowings in
currencies other than sterling into sterling liabilities.
Interest rate caps
Interest rate caps are used solely to limit the group exposure to
possible future increases in interest rates.
Forward contracts
The group generally hedges foreign exchange transaction exposures up to
one year forward. Hedges are put in place using forward contracts at
the time that the forecast exposure becomes reasonably certain. Gains
and losses resulting from changes in exchange rates on contracts
designated as hedges of forecast foreign exchange transactions are
deferred and included in the measurement of the related foreign
currency transaction in the period they occur.
Commercial paper is issued in several different foreign currencies.
Forward contracts are taken out solely to convert the debt to sterling
to eliminate the financial risk to the group of currency movements. As
at the year end, the group had outstanding forward foreign exchange
contracts, the majority of which were for periods of three months or
less, denominated in U.S. Dollars, Canadian Dollars, Swiss Francs,
German Marks, and Euros.
Contracts for differences (CfDs)
A CfD is a contract between two parties (e.g. a generator and a public
electricity supplier) that requires each party to either make or
receive monthly payments over a specific term based on the difference
between an agreed price (i.e. the bilaterally determined strike price)
and a price that varies with a specified commodity index (i.e. the
Pool), applied to an agreed quantity (i.e. number of kWs). The average
duration for these contracts is approximately one year. The group's use
of such derivative instruments relates directly to the underlying
purchase and sale of electricity to and from the Pool.
It is difficult to estimate the long-term level of Pool prices with
reasonable accuracy and there is no readily identifiable market through
which the CfDs could be realized in an exchange. However, based on
management projections of the future prices of electricity, and
considering the outcome under several future price scenarios, the group
has determined that the fair value amount of CfDs, outstanding at the
year end, is not material to the group's Accounts. The fair value
amount is the difference between the strike price of the contract and
the estimated Pool price for the relevant half hourly periods.
The gross value of outstanding CfDs as at March 31, 1999 was
(Pounds)467.8 million (1998 (Pounds)781.2 million).
ScottishPower Form 20-F 1999 F-24
<PAGE>
Note 20 continued
------------------------------------------------------------------------
<TABLE>
<CAPTION>
At March 31, 1999 At March 31, 1998
Book Current Book Current
(f) Current value of amount value amount value
financial instruments (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-term debt and current
portion of long-term debt 843.6 843.6 1,035.7 1,035.7
Long-term debt 1,684.5 1,829.3 1,032.4 1,101.4
--------------------------- ------- ------- ------- -------
Total debt 2,528.1 2,672.9 2,068.1 2,137.1
Interest rate swaps - 80.0 - 51.7
Interest rate caps (3.4) (0.6) (4.7) (3.0)
Cross currency interest
rate swaps - 1.6 - 13.1
--------------------------- ------- ------- ------- -------
Total financial instruments 2,524.7 2,753.9 2,063.4 2,198.9
--------------------------- ------- ------- ------- -------
</TABLE>
The assumptions used to estimate current fair values of debt and other
financial instruments are summarized below:
(i) For cash, short-term deposits and short-term borrowings
(uncommitted borrowing, commercial paper, and short-term borrowings
under the committed facilities) the book value approximates to fair
value because of their short maturities.
(ii) The fair values of all quoted euro bonds are based on their
closing clean market price converted at the spot rate of exchange as
appropriate.
(iii) The fair values of the sterling bond 2001 and the European
Investment Bank loans have been calculated by discounting their future
cash flows at market rates adjusted to reflect the redemption
adjustments allowed under each agreement.
(iv) The fair values of the sterling interest rate swaps and sterling
interest rate caps have been estimated by calculating the present value
of estimated cash flows.
(v) The fair values of the cross currency interest rate swaps have been
estimated by adding the present values of the two sides of each swap.
The present value of each side of the swap is calculated by discounting
the estimated future cash flows for that side, using the appropriate
market discount rates for that currency in effect at the balance sheet
date.
(vi) The fair values of unquoted debt have been calculated by
discounting the estimated cash flows for each instrument at the
appropriate market discount rate in the currency of issue in effect at
the balance sheet date.
(g) Hedges
The group's policy is to hedge the following exposures:
-- interest rate risk using interest swaps, both sterling and cross
currency, caps, collars, and forward foreign currency contracts;
-- currency exposures on foreign denominated debt and future
purchases/sales using currency swaps and forwards and spot foreign
currency contracts.
Gains and losses on instruments used for hedging are not recognized
until the exposure that is being hedged is itself recognized.
Unrecognized gains and losses on instruments used for hedging, and the
movements therein, are as follows:
<TABLE>
<CAPTION>
Total net
gains/
Gains Losses losses
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Unrecognized (losses) on hedges at
April 1, 1998 (1.6) (60.2) (61.8)
Losses arising in previous years that
were recognized in 1998-99 9.7 6.5 16.2
-------------------------------------- ------- ------- -------
Gains and (losses) arising before
April 1, 1998 that were not recognized
in 1998-99 8.1 (53.7) (45.6)
Gains and (losses) arising in 1998-99
that were not recognized in 1998-99 2.6 (38.0) (35.4)
-------------------------------------- ------- ------- -------
Unrecognized gains and (losses) on
hedges at March 31, 1999 10.7 (91.7) (81.0)
-------------------------------------- ------- ------- -------
Gains and (losses) expected to be
recognized in 1999-00 (4.6) (23.6) (28.2)
-------------------------------------- ------- ------- -------
Gains and (losses) expected to be
recognized in 2000-01 or later 15.3 (68.1) (52.8)
-------------------------------------- ------- ------- -------
</TABLE>
The total net unrecognized loss of (Pounds)81.0 million principally
represents the opportunity cost of protecting the group's interest
charge against movements
in interest rates at a time when interest rates were higher than at
March 31, 1999.
The analyses of financial instruments in this Note do not include
short-term debtors and creditors as permitted by FRS 13.
21 Other creditors
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Group Company
1999 1998 1999 1998
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amounts falling due within one
year:
Trade creditors 181.4 204.6 99.5 122.7
Amounts owed to subsidiary
undertakings - - 462.0 689.7
Corporation tax 210.8 164.1 95.0 74.2
Windfall tax - 159.2 - 47.4
Advance corporation tax 22.1 60.8 22.1 60.8
Other taxes and social security 9.3 7.3 13.7 12.4
Payments received on account 35.0 32.7 1.7 3.2
Capital creditors and accruals 221.6 183.8 55.3 62.6
Other creditors 80.2 65.7 31.1 27.9
Accrued expenses 394.4 355.2 238.2 191.7
Proposed dividend 178.0 162.9 178.0 162.9
------------------------------- ------- ------- ------- -------
1,332.8 1,396.3 1,196.6 1,455.5
------------------------------- ------- ------- ------- -------
</TABLE>
F-25 ScottishPower Form 20-F 1999
<PAGE>
22 Deferred taxation
------------------------------------------------------------------------
No provision for deferred taxation is considered necessary at March 31,
1999, since future taxation depreciation is expected to exceed
accounting depreciation and therefore no deferred taxation liabilities
are expected to crystallize in the foreseeable future. Total potential
deferred liabilities computed at the future rate of corporation tax of
30% (1998 30%) are as follows:
<TABLE>
<CAPTION>
Group Company
1999 1998 1999 1998
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accelerated capital
allowances 631.6 609.4 307.3 303.5
Other timing differences (37.4) (35.8) (16.8) (7.3)
Advance corporation tax - (12.9) - -
------------------------ ------- ------- ------- -------
594.2 560.7 290.5 296.2
------------------------ ------- ------- ------- -------
</TABLE>
23 Provisions for liabilities and charges
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
On acquisition Charged to the Utilized Released to
At April 1, of Southern profit and during profit and At March 31,
1996 Water loss account year loss account 1997
Group Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Reorganization and
restructuring (a) 17.7 - - - - 17.7
Environmental and health (b) 17.7 - - (5.1) - 12.6
Other (c) 21.4 3.4 - (6.1) (5.8) 12.9
------------------------------ ------- ------- ------- ------- ------- -------
56.8 3.4 - (11.2) (5.8) 43.2
------------------------------ ------- ------- ------- ------- ------- -------
<CAPTION>
Charged to the Utilized Released to
At April 1, profit and during profit and At March 31,
1997 loss account year loss account 1998
Group Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reorganization and
restructuring (a) 17.7 2.5 (2.5) (1.0) 16.7
Environmental and health (b) 12.6 - (2.6) - 10.0
Other (c) 12.9 4.0 (0.9) (4.6) 11.4
----------------------------------------- ------- ------- ------- ------- -------
43.2 6.5 (6.0) (5.6) 38.1
----------------------------------------- ------- ------- ------- ------- -------
<CAPTION>
Charged to the Utilized
At April 1, Transferred profit and during At March 31,
1998 to creditors loss account year 1999
Group Notes (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reorganization and
restructuring (a) 16.7 (6.8) - (0.4) 9.5
Environmental and health (b) 10.0 - 1.5 (1.4) 10.1
Other (c) 11.4 - 2.1 (2.3) 11.2
----------------------------------------- ------- ------- ------- ------- -------
38.1 (6.8) 3.6 (4.1) 30.8
----------------------------------------- ------- ------- ------- ------- -------
Company
Environmental and health (b) 6.6 - 1.5 (1.3) 6.8
Other (c) 3.8 - 1.5 (0.2) 5.1
----------------------------------------- ------- ------- ------- ------- -------
10.4 - 3.0 (1.5) 11.9
----------------------------------------- ------- ------- ------- ------- -------
</TABLE>
(a) This provision comprises redundancy costs, including enhanced
pension benefit, in relation to the group's Voluntary Selective
Severance arrangements. These costs are expected to be incurred by
March 31, 2000.
(b) The environmental and health provisions include:
(i) Costs which will be incurred in complying with Health and Safety
requirements. It is anticipated that most of this expenditure will be
incurred during the period to March 31, 2002.
(ii) Obligations to ensure certain former operational sites remain in
an environmentally safe state. The costs are expected to be incurred
during the period to March 31, 2003.
(c) The Other category comprises various provisions which are not
individually sufficiently material to warrant separate disclosure.
24 Deferred income
<TABLE>
--------------------------------------------------------------------------
<CAPTION>
Receivable Released to
At April 1, during profit and loss At March 31,
1997 year account 1998
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Grants and customer
contributions:
-- Group 335.3 49.9 (20.6) 364.6
-- Company 172.0 20.0 (12.1) 179.9
------------------- ------- ------- ------- -------
<CAPTION>
Receivable Released to
At April 1, during profit and loss At March 31,
1998 year account 1999
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Grants and customer
contributions:
-- Group 364.6 42.2 (13.6) 393.2
-- Company 179.9 22.1 (5.8) 196.2
------------------- ------- ------- ------- -------
</TABLE>
Deferred income excludes grants and contributions received in respect
of water infrastructure assets.
ScottishPower Form 20-F 1999 F-26
<PAGE>
25 Share capital
---------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Note (Pounds)m (Pounds)m
---------------------------------------------------------------
<S> <C> <C> <C>
Authorized:
1,700,000,000 (1998 1,700,000,000)
ordinary shares of 50p each 850.0 850.0
One Special Share of (Pounds)1 (a) - -
----------------------------------------- ------- -------
850.0 850.0
----------------------------------------- ------- -------
Allotted, called up and fully paid:
1,198,678,222 (1998 1,196,752,324)
ordinary shares of 50p each 599.4 598.4
One Special Share of (Pounds)1 (a) - -
----------------------------------------- ------- -------
599.4 598.4
----------------------------------------- ------- -------
</TABLE>
(a) Special Share
The "Special Share', which can be held only by one of the Secretaries
of State or any other person acting on behalf of HM Government, does
not carry rights to vote at the general or separate meetings but
entitles the holder to attend and speak at such meetings. Written
consent of the Special Shareholder is required before certain
provisions of the company's Articles of Association or certain rights
attaching to the Special Share are varied. This share shall confer no
rights to participate in the capital or profits of the company, except
that in a winding up the Special Shareholder shall be entitled to
repayment in priority to the other shareholders. The Special Share is
redeemable at par at any time by the Special Shareholder after
consultation with the company.
26 Analysis of movements in shareholders' funds
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Profit
Number of Share Share Merger Revaluation and loss
shares Capital premium reserve reserve account Total
Notes 000s (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------------------------------------------------
Group
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 1, 1996
(as published) 942,426 471.2 122.0 (230.2) - 844.7 1,207.7
Prior period
reclassification - - - 230.2 - (230.2) -
------------------------------ --------- ------- ------- ------- ------- ------- -------
Balance at April 1, 1996
(as restated) 942,426 471.2 122.0 - - 614.5 1,207.7
Retained profit for the
year - - - - - 203.0 203.0
Share capital issued
-- As part of funding
for an acquisition 126,387 63.2 - 332.0 - - 395.2
-- Rights issue for an
acquisition 95,961 48.0 191.9 - - - 239.9
-- Employee sharesave
scheme 12,473 6.2 16.6 - - - 22.8
-- Executive share
option scheme 119 0.1 0.2 - - - 0.3
Shares to be issued - - - 13.4 - - 13.4
Share issue expenses - - (25.0) - - - (25.0)
Goodwill written off (a) - - - (345.4) - (189.2) (534.6)
------------------------------ --------- ------- ------- ------- ------- ------- -------
At April 1, 1997 1,177,366 588.7 305.7 - - 628.3 1,522.7
Retained loss for the
year - - - - - (73.2) (73.2)
Share capital issued
-- Employee sharesave
scheme 18,687 9.3 81.1 (5.2) - (42.0) 43.2
-- Executive share
option scheme 699 0.4 1.9 - - - 2.3
Revaluation of fixed
assets (see Note 16) - - - - 229.0 - 229.0
Revaluation surplus
realized - - - - (1.7) 1.7 -
Goodwill written off (a) - - - 5.2 - (21.4) (16.2)
------------------------------ --------- ------- ------- ------- ------- ------- -------
At April 1, 1998 1,196,752 598.4 388.7 - 227.3 493.4 1,707.8
Retained profit for the
year - - - - - 234.9 234.9
Share capital issued
-- Employee sharesave
scheme (b) 1,554 0.8 4.2 (3.1) - - 1.9
-- Executive share
option scheme 372 0.2 1.1 - - - 1.3
Revaluation surplus
realized - - - - (3.4) 3.4 -
Transfers - - - 3.1 - (3.1) -
------------------------------ --------- ------- ------- ------- ------- ------- -------
Balance at March 31,
1999 1,198,678 599.4 394.0 - 223.9 728.6 1,945.9
------------------------------ --------- ------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Company
At April 1, 1998 1,196,752 598.4 388.7 8.2 - 883.5 1,878.8
Retained loss for the
year (c) - - - - - (7.4) (7.4)
Share capital issued
-- Employee sharesave
scheme (b) 1,554 0.8 4.2 (3.1) - - 1.9
-- Executive share
option scheme 372 0.2 1.1 - - - 1.3
--------------------------- --------- ------- ------- ------- ------- ------- -------
Balance at March 31,
1999 1,198,678 599.4 394.0 5.1 - 876.1 1,874.6
--------------------------- --------- ------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
(a)
Cumulative
goodwill 1999 1998 1997
written off (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------
<S> <C> <C> <C>
Merger reserve 574.2 574.2 579.4
Profit and loss account 462.5 462.5 441.1
-------------------------------------- ------- -------
Total 1,036.7 1,036.7 1,020.5
-------------------------------------- ------- -------
</TABLE>
F-27 ScottishPower Form 20-F 1999
<PAGE>
Note 26 continued
------------------------------------------------------------------------
(b) Share capital issued
The movement on the merger reserve reflects the reduction in shares
which were to be issued following the acquisition of Southern Water plc
in August 1996. It represented the cost to ScottishPower of
transferring existing options over Southern Water plc shares to the
Scottish Power plc Share Option Scheme. As these options are exercised,
the merger reserve is reduced for the attributable cost of the option.
(c) Profit and loss account of the company
As permitted by Section 230 of the Companies Act 1985, the company has
not presented its own profit and loss account. The company's profit and
loss account was approved by the Board on May 6, 1999. The profit for
the financial year per the Accounts of the company was (Pounds)260.5
million (1998 (Pounds)219.1 million).
27 Minority interests
------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
(Pounds)m (Pounds)m
-------------------------------------------------
<S> <C> <C>
Equity minority interests:
At April 1 1.9 0.4
Additions - 0.6
Profit and loss account (0.6) 0.9
-------------------------- ------- -------
At March 31 1.3 1.9
-------------------------- ------- -------
</TABLE>
28 Pensions
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Pension charge Prepayment
for the year as at March 31,
Scheme Funded or 1999 1998 1997 1999 1998
Pension fund type unfunded (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ScottishPower Defined benefit funded 6.9 6.5 13.6 5.0 11.9
Manweb Defined benefit funded 5.8 5.8 6.0 - -
Southern Water Defined benefit funded 5.3 5.8 5.1 - -
Final Salary LifePlan Defined benefit funded - - - - -
Money Purchase LifePlan Defined contribution funded - - - - -
----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal actuarial assumptions
Value of Value of fund
Latest full Valuation assets based Valuation Average Average Average assets/
actuarial carried on valuation method investment salary pension accrued
Pension fund valuation out by (Pounds)m adopted rate of return increases increases benefits
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ScottishPower December 31, 1997 William M Mercer 1,292.0 projected unit 8.5% 6.5% 4.5% 123%
Manweb March 31, 1998 Bacon & Woodrow 467.6 projected unit 8.5% 6.5% 4.5% 105%
Southern Water March 31, 1998 Watson Wyatt 231.1 projected unit 8.5% 6.5% 4.5% 108%
-------------- ----------------- ---------------- ------- -------------- ------- ------- ------- -------
</TABLE>
(a) Group pension arrangements
Following a review of the group's pension arrangements, the
ScottishPower Pension Scheme, Manweb Pension Scheme and Southern Water
Pension Scheme were closed to new members from December 31, 1998.
The company has introduced two new group pension plans for new
employees effective from January 1, 1999. The new plans are a defined
benefit plan and a defined contribution plan. The defined benefit plan
has an initial employer's contribution of 10% of pensionable salary and
the employer's contributions to the defined contribution plan vary,
dependent on age, between 3-5%. The pension charge in respect of these
schemes since their introduction is (Pounds)30,000.
(b) ScottishPower
The company operates a funded pension scheme providing defined benefits
based on final pensionable salary for eligible employees of the
company. The assets of the Scheme are held separately from those of the
company in a separate trustee administered fund. The pension charge for
the year is based on the advice of the Scheme's independent qualified
actuary. The prepayment included in the balance sheet represents the
accumulated excess of the actual contributions paid to the Scheme over
the pension accounting charge. The outcome of the valuation mentioned
in the table above resulted in the accounting rate used for the
calculation of the 1998-99 pension charge remaining at 4.8% of
pensionable salaries.
(c) Manweb
Most of the Manweb employees are entitled to join the Electricity
Supply Pension Scheme which provides pension and other related benefits
based on final pensionable pay to employees throughout the Electricity
Supply Industry in England and Wales. The assets are held in a separate
trustee administered fund. The pension charge for the year, of 12% of
pensionable salaries, is based on the advice of the Scheme's
independent qualified actuary.
(d) Southern Water
The Southern Water group operates a number of pension schemes. The
Scheme details above relate to the principal defined benefit scheme
which covers the majority of the Southern Water employees. The assets
are held in a separate trustee administered fund. Southern Water's
other schemes are not material to the group. The pension charge for the
year, of 12.8% of pensionable salaries, is based on the advice of the
scheme's independent qualified actuary.
29 Contingent liabilities
------------------------------------------------------------------------
(a) The group has contingent liabilities under performance bonds and
actual and potential claims, none of which, in the opinion of the
directors, is material to the group.
(b) The company has guaranteed the overdrafts of three subsidiary
undertakings up to an amount of (Pounds)0.7 million (1998 one
subsidiary undertaking for (Pounds)0.5 million).
(c) The company has guaranteed Manweb's liabilities to the Pool in
England and Wales. At March 31, 1999 these liabilities were
(Pounds)30.9 million (1998 (Pounds)37.4 million).
(d) Under the terms of the merger agreement between ScottishPower and
PacifiCorp dated December 6, 1998 (as amended), if the merger agreement
is terminated by PacifiCorp following a change in control of
ScottishPower, other than through a Scheme of Arrangement under Section
425 of the Companies Act 1985, ScottishPower would be required to pay
PacifiCorp a termination fee of US$250 million.
If the merger agreement is terminated by ScottishPower due to the
failure to obtain the requisite vote of its shareholders and the
termination fee described above is not payable, ScottishPower would be
required to pay PacifiCorp US$10 million if the merger agreement is
approved by the PacifiCorp shareholders.
ScottishPower Form 20-F 1999 F-28
<PAGE>
30 Financial commitments
<TABLE>
<CAPTION>
---------------------------------------------------------
1999 1998
(a) Group analysis of annual
commitments under operating
leases (Pounds)m (Pounds)m
---------------------------------------------------------
<S> <C> <C>
Leases of land and buildings
Expiring during year ending March 31:
2000 1.0 0.5
2001 0.2 0.4
2002 0.3 0.6
2003 0.2 0.1
2004 0.2 0.2
thereafter 20.4 16.2
------------------------------------- ------- -------
22.3 18.0
------------------------------------- ------- -------
Other operating leases
Expiring during year ending March 31:
2000 2.2 4.5
2001 0.6 2.4
2002 3.5 3.7
2003 0.7 0.9
2004 0.8 0.8
thereafter - 0.6
------------------------------------- ------- -------
7.8 12.9
------------------------------------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Group Company
1999 1998 1999 1998
(b) Capital commitments (Pounds)m (Pounds)m (Pounds)m (Pounds)m
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracted but not provided 315.8 262.0 54.2 70.3
--------------------------- ------- ------- ------- -------
</TABLE>
(c) Other contractual commitments
Under contractual commitments the group has rights and obligations in
relation to the undernoted contracts. The annual value of the purchases
and sales arising from these contracts is provided below:
<TABLE>
<CAPTION>
Purchases / sales in year
under group commitments
Commitment
entered Commitment 1999 1998 1997
Note into expires (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The purchase of
electricity from British
Energy Generation (UK)
Limited 1990 2005 367.7 365.8 373.2
------------------------------ ------- --------- ------- ------- -------
The purchase of
electricity from
Scottish and Southern
Energy plc (i) 1990 see below 78.8 100.5 120.5
------------------------------ ------- --------- ------- ------- -------
The supply of
electricity to Scottish
and Southern Energy plc 1990 2004 18.2 16.8 15.7
------------------------------ ------- --------- ------- ------- -------
Revenue from the
operation of the
company's transmission
system and access by
Scottish and Southern No fixed
Energy plc to the Anglo- date of
Scottish Interconnector 1990 expiry 27.7 26.1 24.7
------------------------------ ------- --------- ------- ------- -------
Purchase of coal from
the Scottish Coal
Company Limited 1998 2003 22.0 76.9 75.5
------------------------------ ------- --------- ------- ------- -------
Purchase of coal from
the Scottish Coal (Deep
Mine) Company Limited 1998 2004 50.5 - -
------------------------------ ------- --------- ------- ------- -------
Purchase of gas from
various fields in the
North Sea 1994 2010 123.6 81.8 50.4
------------------------------ ------- --------- ------- ------- -------
</TABLE>
(i) There are two agreements relating to the purchase of electricity
from Scottish and Southern Energy plc. These expire in 2012 and 2039.
F-29 ScottishPower Form 20-F 1999
<PAGE>
31 Related party transactions
------------------------------------------------------------------------
Related party transactions and balances with joint ventures and
associated undertakings
(a) Trading transactions and balances arising in the normal course of
business
<TABLE>
<CAPTION>
Amounts due
Sales/(purchases) from/ (to)
to/(from) other group other group companies
companies during the year as at March 31,
1999 1998 1997 1999 1998
Related party Related party relationship to group (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales by related parties
Scottish Electricity
Settlements Limited 50% owned joint venture 5.8 - - 2.3 -
Purchases by related
parties
Scottish Electricity
Settlements Limited 50% owned joint venture (0.9) (1.3) (1.2) (0.8) (0.3)
South Coast Power
Limited 50% owned joint venture (8.1) - - (0.1) -
CeltPower Limited 50% owned joint venture (0.1) - - (0.1) -
------------------------ ----------------------------------------------------------------------------------------------
</TABLE>
Southern Water non-core businesses
In the year ended March 31, 1998 the group made purchases of (Pounds)18
million on normal trading terms from the Southern Water non-core
businesses subsequent to their disposal.
(b) Funding transactions and balances arising in the normal course of
business
<TABLE>
<CAPTION>
Interest payable to Amounts due to
other group other group
companies during companies as at
the year March 31,
Related party relationship to 1999 1998 1999 1998
Related party group (Pounds)m (Pounds)m (Pounds)m (Pounds)m
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Scottish Electricity
Settlements Limited 50% owned joint venture (1.5) (0.6) (19.1) (11.8)
South Coast Power
Limited 50% owned joint venture (0.2) - - -
CeltPower Limited 50% owned joint venture - - (2.0) (2.0)
Wind Resources Limited 45% owned associated undertaking - - - (0.7)
---------------------- ---------------------------------------------------------------------------
</TABLE>
32 Employee Share Schemes
------------------------------------------------------------------------
The group has three types of share scheme for employees. Options have
been granted and awards made to eligible employees to subscribe for
ordinary shares in Scottish Power plc in accordance with the rules of
each scheme. The ScottishPower and Southern Water Sharesave Schemes are
savings related and under normal circumstances share options are
exercisable on completion of a three, five or seven year save-as-you-
earn contract as appropriate. The Executive Share Option Scheme applied
to executive directors and certain senior managers. However, this
Scheme has been replaced with the Long Term Incentive Plan and,
although it will not affect options already granted, this plan
supersedes executive share options. Options granted under the Long Term
Incentive Plan will vest only if the Remuneration Committee is
satisfied that certain performance measures related to the sustained
underlying financial performance of the group and improvements in
customer service standards are achieved over a period of three
financial years commencing with the financial year preceding the date
an award is made.
(a) Summary of movements in share options in ScottishPower shares
<TABLE>
Southern Executive
ScottishPower Weighted Manweb Weighted Water Weighted Share
Sharesave average Sharesave average Sharesave average Option
Scheme exercise Scheme exercise Scheme exercise Scheme
(number of price (number of price (number of price (number of
shares 000s) (pence) shares 000s) (pence) shares 000s) (pence) shares 000s)
- ------------------------------------------------------------------------------------------------------------------------
Outstanding at April 1, 1996 18,237 203.3 436 60.8 - - 1,703
Granted 11,187 263.1 - - 7,885 108.3 -
Exercised (10,993) 175.2 (436) 60.8 (1,044) 54.0 (119)
Lapsed (917) 234.8 - - (149) 94.0 (31)
- ---------------------------- ------------- -------- ----------- -------- ----------- -------- -----------
Outstanding at April 1, 1997 17,514 252.8 - - 6,692 117.1 1,553
Granted 5,268 307.0 - - - - -
Exercised (2,813) 202.6 - - (1,956) 87.2 (699)
Lapsed (974) 264.9 - - (487) 151.7 -
- ---------------------------- ------------- -------- ----------- -------- ----------- -------- -----------
Outstanding at April 1, 1998 18,995 274.6 - - 4,249 126.9 854
Granted 4,284 440.0 - - - - -
Exercised (1,224) 252.6 - - (1,458) 102.9 (372)
Lapsed (783) 295.7 - - (91) 166.6 (50)
- ----------------------------- ------------- -------- ----------- -------- ----------- -------- -----------
Outstanding at March 31, 1999 21,272 308.4 - - 2,700 138.5 432
- ----------------------------- ------------- -------- ----------- -------- ----------- -------- -----------
<CAPTION>
Weighted
average
exercise Total
price (number of
(pence) shares 000s)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at April 1, 1996 328.9 20,376
Granted - 19,072
Exercised 246.7 (12,592)
Lapsed 350.1 (1,097)
- ------------------------------ --------- ---------------
Outstanding at April 1, 1997 326.4 25,759
Granted - 5,268
Exercised 323.3 (5,468)
Lapsed - (1,461)
- ------------------------------ --------- ---------------
Outstanding at April 1, 1998 328.6 24,098
Granted - 4,284
Exercised 338.1 (3,054)
Lapsed 380.2 (924)
- ------------------------------ --------- ---------------
Outstanding at March 31, 1999 314.4 24,404
- ------------------------------ --------- ---------------
</TABLE>
ScottishPower Form 20-F 1999 F-30
<PAGE>
Note 32 continued
------------------------------------------------------------------------
(b) Analysis of share options outstanding at March 31, 1999
<TABLE>
<CAPTION>
Number of Option
Date of Number of shares price Normal
grant participants (000s) (pence) exercisable date
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ScottishPower Sharesave Scheme 22.06.94 1,029 1,296 273.8 6 months to March 2000
20.06.95 958 1,172 262.1 6 months to March 2001
20.06.96 5,098 9,896 263.1 6 months to March 2000 or 2002
20.06.97 4,646 4,692 307.0 6 months to March 2001 or 2003
12.06.98 5,849 4,216 440.0 6 months to March 2002 or 2004
-----------------------------------------------------------------------------------------------------------------------
Southern Water Sharesave Scheme 03.02.92 63 249 74.0 6 months to September 1999
26.01.93 76 215 111.0 6 months to September 2000
25.01.94 302 486 154.9 6 months to September 1999 or 2001
25.01.95 398 987 136.1 6 months to September 2000 or 2002
25.01.96 437 763 160.2 6 months to September 2001 or 2003
-----------------------------------------------------------------------------------------------------------------------
Executive Share Option Scheme 18.12.91 8 128 227.4 1994-2001
25.06.92 14 23 237.7 1995-2002
01.07.93 4 60 310.0 1996-2003
17.12.93 35 61 454.8 1996-2003
27.05.94 11 18 354.0 1997-2004
18.11.94 3 22 352.1 1997-2004
12.05.95 19 72 335.0 1998-2005
10.11.95 1 48 357.5 1998-2005
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
All options are exercisable over Scottish Power plc shares. Where
reference is made to Southern Water, this is to identify the Sharesave
Scheme under which the options over Scottish Power plc shares have been
granted. The exercise prices of options granted prior to the rights
issue on August 30, 1996 were adjusted to reflect the bonus element
inherent in the rights issue.
For the Southern Water Sharesave Scheme, the date of grant refers to
the date the original Southern Water share options were granted. These
options were exchanged for options over ScottishPower shares following
acquisition in 1996.
33 Directors' emoluments and interests
------------------------------------------------------------------------
(a) Policy
The Remuneration Committee is responsible for making recommendations to
the Board on the company's remuneration policy. The objective of
ScottishPower's remuneration policy is to ensure that the rewards for
executives and directors attract and retain executives of high quality,
who are incentivised to achieve performance which exceeds that of
competitors. Furthermore, the objective is to ensure that incentive
schemes are in line with best practice and promote the interests of the
shareholders. The Remuneration Committee determines the detail of each
executive's remuneration package.
(b) Total emoluments
------------------------------------------------------------------------
The following table provides a breakdown of the total emoluments of the
Chairman and all directors in office during the year ended March 31,
1999.
<TABLE>
<CAPTION>
Basic Benefits Total Total Total
salary Bonuses in kind 1999 1998 1997
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chairman and executive
directors
C M Stuart 200,000 - 16,863 216,863 194,294 154,665
I Robinson 390,000 109,200 16,093 515,293 487,345 397,256
M J Kinski (resigned
April 7, 1998) 13,195 - 81 13,276 335,470 267,716
I M Russell 295,000 85,550 46,435 426,985 356,078 333,706
K L Vowles 210,000 60,900 9,293 280,193 253,501 210,576
D Whyte (resigned May
31, 1999) 235,000 65,800 16,120 316,920 305,976 279,169
Non-executive directors
(fees and expenses)
M Barnes 22,708 - 5,754 28,462 - -
Sir Ronald Garrick
(retired April 30, 1999) 30,000 - 555 30,555 31,889 25,449
Sir Peter Gregson 25,208 - 8,167 33,375 24,960 7,999
Baroness Jay of
Paddington (resigned May
13, 1997) - - - - 3,497 13,038
N C D Kuenssberg
(retired July 23, 1997) - - - - 10,000 25,540
E C S Macpherson 30,000 - 6,412 36,412 30,022 13,421
J Parnaby 22,708 - 9,007 31,715 26,645 23,825
J A Scott (retired July
24, 1996) - - - - - 7,028
------------------------ --------- ------- ------- --------- --------- ---------
1,473,819 321,450 134,780 1,930,049 2,059,677 1,759,388
Relocation expenses - - - - 14,358 6,368
------------------------ --------- ------- ------- --------- --------- ---------
Total 1,473,819 321,450 134,780 1,930,049 2,074,035 1,765,756
------------------------ --------- ------- ------- --------- --------- ---------
</TABLE>
Other emoluments--executive directors
The emoluments of the highest paid director (Mr Robinson) excluding
pension contributions were (Pounds)515,293 (1998 (Pounds)487,345, 1997
(Pounds)397,256). In addition, gains on exercise of share options
during the year by Mr Robinson amounted to (Pounds)592,966 (1998
(Pounds)nil, 1997 (Pounds)nil). Pension contributions made by the
company under approved pension arrangements for Mr Robinson amounted to
(Pounds)nil (1998 (Pounds)nil, 1997 (Pounds)10,138). Mr Robinson also
has an entitlement under the unapproved pension benefits described
further in Note c(iii) below. The total of the liabilities for the 15
executives and senior employees arising in relation to unapproved
benefits for service for the year to March 31, 1999 was (Pounds)448,600
(1998 (Pounds)432,676, 1997 (Pounds)305,952). All benefits for the
above are provided on a defined benefit basis.
F-31 ScottishPower Form 20-F 1999
<PAGE>
Note 33 continued
------------------------------------------------------------------------
(c) Directors' pension benefits
Details of pension benefits earned by the executive directors are shown
below:
<TABLE>
<CAPTION>
Transfer value of
Additional increases after
pension indexation
Transferred in earned in Accrued (net of directors'
benefits the year entitlement contribution)
Defined benefits pension scheme (Pounds) (Pounds) (Pounds) (Pounds)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Chairman and executive directors
C M Stuart - - - -
I Robinson 108,808 30,041 180,080 540,333
M J Kinski (resigned
April 7, 1998) 29,367 473 61,340 5,153
I M Russell 8,098 14,823 52,460 160,830
K L Vowles 89,467 17,644 122,500 272,592
D Whyte (resigned May 31, 1999) 66,035 10,796 113,664 144,024
---------------------- ------- ------ ------- -------
</TABLE>
(i) The accrued entitlement of the highest paid director (Mr Robinson)
was (Pounds)180,080 (1998 (Pounds)141,348, 1997 (Pounds)101,762).
(ii) The pension entitlement shown is that which would be paid annually
on retirement based on service to the end of the year assuming normal
retirement at age 63. Members of the scheme have the option to pay
additional voluntary contributions; neither the contributions nor the
resulting benefits are included in the above table.
(iii) Executives who joined the company on or after June 1, 1989 are
subject to the earnings cap introduced in the Finance Act 1989. Pension
entitlements which cannot be provided through the company's approved
schemes due to the earnings cap are provided through unapproved pension
arrangements. The pension benefits disclosed above include approved and
unapproved pension arrangements.
(iv) The increase in accrued pension during the year allows for an
increase in inflation of RPI as measured at December 1998 (2.8%) except
in the case of Mr. Kinski who left service on April 19, 1998.
(v) The transfer value has been calculated on the basis of actuarial
advice in accordance with Actuarial Guidance Note GN11, less directors'
contributions.
(vi) Transferred in benefits represent pension rights accrued in
respect of previous employments.
(d) Directors' interests in share options
<TABLE>
<CAPTION>
Option Market price
exercise at date of Date
Executive At April 1, At March 31, price Date exercise from which Expiry
director 1998 Granted Exercised 1999 (pence) exercised (pence)exercisable date
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum contingent awards under
Long Term Incentive Plan
I Robinson 51,533 - - 51,533 nil 09.08.2000 08.08.2003
53,846 - - 53,846 nil 16.05.2001 15.05.2004
- 41,916 - 41,916 nil 07.05.2002 06.05.2005
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
105,379 41,916 - 147,295
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
I M Russell 38,650 - - 38,650 nil 09.08.2000 08.08.2003
36,923 - - 36,923 nil 16.05.2001 15.05.2004
- 31,706 - 31,706 nil 07.05.2002 06.05.2005
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
75,573 31,706 - 107,279
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
K L Vowles 27,607 - - 27,607 nil 09.08.2000 08.08.2003
27,692 - - 27,692 nil 16.05.2001 15.05.2004
- 22,570 - 22,570 nil 07.05.2002 06.05.2005
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
55,299 22,570 - 77,869
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
D Whyte
(resigned May
31, 1999) 35,889 - - 35,889 nil 09.08.2000 08.08.2003
32,307 - - 32,307 nil 16.05.2001 15.05.2004
- 25,257 - 25,257 nil 07.05.2002 06.05.2005
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
68,196 25,257 - 93,453
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
Executive Share Option Scheme
I Robinson
286,457 - (286,457) - 335.0 15.05.1998 542.0 12.05.1998 11.05.2005
---------------------- ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
Sharesave Scheme
I Robinson
6,581 - - 6,581 262.1 01.09.2000 28.02.2001
--------------------- ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
I M Russell 6,300 - - 6,300 273.8 01.09.1999 29.02.2000
------------------------- ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
K L Vowles 3,933 - - 3,933 263.1 01.09.2001 28.02.2002
- 1,568 - 1,568 440.0 01.09.2003 29.02.2004
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
3,933 1,568 - 5,501
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
D Whyte
(resigned May
31, 1999) 2,223 - - 2,223 263.1* 01.09.1999 29.02.2000
- 886 - 886 440.0* 01.09.2001 28.02.2002
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
2,223 886 - 3,109
------------------ ------- ------ -------- ------- ----- ---------- ----- ---------- ----------
</TABLE>
* Denotes options granted under a three year scheme.
Awards made to directors under the Long Term Incentive Plan on May 11,
1999 were as follows: I Robinson 46,927; C A Berry 18,994; A V
Richardson 18,994; I M Russell 37,988; and K L Vowles 27,932.
Options granted to directors under the ScottishPower Sharesave Scheme
on June 11, 1999 were as follows: C A Berry 903; and A V Richardson
1,573.
ScotishPower Form 20-F 1999 F-32
<PAGE>
Note 33 continued
------------------------------------------------------------------------
Notes
(i) The market price of the shares at March 31, 1999 was 540.0p and the
range during 1998-99 was 521.0p to 675.0p.
(ii) The Long Term Incentive Plan supersedes the Executive Share Option
Scheme, and annual awards to acquire shares in ScottishPower at nil or
nominal cost are made to the plan participants up to a maximum value
equal to 60% of base salary. The award will vest only if the
Remuneration Committee is satisfied that certain performance measures
related to the sustained underlying financial performance of the
company and improvements in certain OFFER published Customer Service
Standards and OFWAT published levels of service (in the case of awards
granted in 1997 and 1998) are achieved over a period of three financial
years commencing with the financial year preceding the date an award is
made. Assuming that such targets have been achieved, the number of
shares that can be acquired will be dependent upon how the company
ranks in terms of its total shareholder return performance over a three
year period, in comparison to the constituent companies of the FTSE 100
Index and the electricity and water sectors. A percentage of each half
of the award will vest depending upon the company's ranking within each
of the relevant comparator groups. The plan participant may acquire the
shares in respect of the percentage of the award which has vested at
any time after the fourth year up to the seventh year after the grant
of the award. No dividends accrue to participants prior to vesting.
(iii) The option price of executive share options was based on the
middle-market share price on the day immediately preceding the date of
grant. For Sharesave options, the option price is calculated in the
same way at the date of invitation and discounted by 20% in accordance
with the Inland Revenue rules for such schemes.
(iv) The options initially granted to each executive director under the
Executive Share Option Scheme were based on a multiple of four times
salary in respect of the Chief Executive, Mr Robinson, and three times
in respect of the other executive directors, which is in accordance
with the limits set out in current guidelines. Subsequent grant of
options were made to reflect increases in directors' basic salary
levels, following periodic review by the Remuneration Committee of the
performance of the company and the executive directors individually.
Executive options are normally exercisable in a manner which does not
attract an income tax liability provided that exercise occurs between
three and ten years after the date of grant and at least three years
have elapsed from the date of the last "tax relieved' exercise. Total
gains made on exercise of directors' share options during the year were
(Pounds)592,966 (1998 (Pounds)424,097, 1997 (Pounds)16,979).
(v) The number of options granted to a director under the Sharesave
Scheme is calculated by reference to the total amount which the
director agrees to save for a period of three or five years under an
Inland Revenue approved savings contract, subject to a current maximum
of (Pounds)250 per month. Options under the Sharesave Scheme are,
subject to a few exceptions, exercisable within a period of six months
from the date of completion of the savings contract.
34 Summary of differences between U.K. and U.S. Generally Accepted
Accounting Principles ("GAAP')
------------------------------------------------------------------------
The consolidated Accounts of the group are prepared in accordance with
U.K. GAAP which differs in certain significant respects from U.S. GAAP.
The effect of the U.S. GAAP adjustments to profit for the financial
year and equity shareholders' funds are set out in the tables below.
<TABLE>
<CAPTION>
(a) Reconciliation of profit for 1999 1998 1997
the financial year to U.S. GAAP: Notes (Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Profit for the financial year
under U.K. GAAP 502.8 170.1 421.1
U.S. GAAP adjustments:
Amortization of goodwill (i) (30.0) (29.8) (23.7)
Deferred tax (ii) (33.5) (28.1) (55.2)
Pensions (iii) 17.6 22.7 16.0
Depreciation on revaluation
uplift (iv) 3.4 1.7 -
--------------------------------------------------- ------- -------
460.3 136.6 358.2
Deferred tax effect of U.S. GAAP
adjustments:
Pensions (5.3) (6.8) (5.3)
--------------------------------------------------- ------- -------
Profit for the financial year
under U.S. GAAP 455.0 129.8 352.9
--------------------------------------------------- ------- -------
Earnings per share under U.S.
GAAP (viii) 38.39p 11.00p 31.94p
--------------------------------------------------- ------- -------
Diluted earnings per share under
U.S. GAAP (viii) 38.01p 10.89p 31.62p
--------------------------------------------------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
(b) Effect on equity shareholders' funds
of differences between U.K. GAAP and U.S. 1999 1998
GAAP: Notes (Pounds)m (Pounds)m
----------------------------------------------------------------------
<S> <C> <C> <C>
Equity shareholders' funds under U.K. GAAP 1,945.9 1,707.8
U.S. GAAP adjustments for:
Goodwill (i) 1,036.7 1,036.7
Business combinations (i) 163.1 163.1
Amortization of goodwill (i) (92.1) (62.1)
ESOP shares held in trust (vii) (33.8) (36.6)
Pensions (iii) 116.8 99.2
Dividends (vi) 178.0 162.9
Revaluation of fixed assets (iv) (229.0) (229.0)
Depreciation on revaluation uplift (iv) 5.1 1.7
Deferred tax:
Effect of U.S. GAAP adjustments (ii) (35.7) (30.4)
Effect of differences in methodology (ii) (594.2) (560.7)
---------------------------------------------------------- -------
Equity shareholders' funds under U.S. GAAP 2,460.8 2,252.6
---------------------------------------------------------- -------
</TABLE>
(i) Goodwill and business combinations
Goodwill
Under U.K. GAAP, goodwill arising from the purchase of operating
entities before March 31, 1998 has been written off directly against
the merger reserve to reduce the merger reserve to zero and thereafter
has been offset against the profit and loss reserve. Goodwill arising
on acquisitions after March 31, 1998 is capitalized and amortized
through the income statement over its useful economic life. Under U.S.
GAAP, goodwill arising from the purchase of operating entities should
be held as an intangible asset in the balance sheet and amortized over
its expected useful life.
The goodwill adjustment is made to recognize goodwill previously
written off to reserves under U.K. GAAP, as an intangible asset under
U.S. GAAP.
This goodwill, which is capitalized under U.S. GAAP, is then amortized
on a straight line basis over its useful economic life of 40 years with
the effect being a reduction in profit reflecting the amortization
charge for the period.
F-33 ScottishPower Form 20-F 1999
<PAGE>
Note 34 continued
------------------------------------------------------------------------
Business combinations
In addition to re-instating the goodwill calculated under U.K. GAAP as
described above, goodwill must also be recalculated in accordance with
U.S. GAAP. This is required due to differences between U.K. GAAP and
U.S. GAAP in the determination of acquisition price and valuation of
assets and liabilities at the acquisition date. The adjustment referred
to as business combinations reflects principally the impact of
recalculating the goodwill arising on the acquisitions of Manweb and
Southern Water under U.S. GAAP.
(ii) Deferred taxation
Under U.K. GAAP, provision for deferred tax is only required to the
extent that it is probable that a taxation liability or asset will
crystallize, in the foreseeable future, as a result of timing
differences between taxable profit and accounting profit. Provision is
made at known rates of tax.
Under U.S. GAAP, full provision for deferred tax is required to the
extent that accounting profit differs from taxable profit due to
temporary timing differences. Provision is made at future enacted
rates.
The item "effect of U.S. GAAP adjustments' reflects the additional
impact of making full provision for deferred tax in respect of
adjustments made in restating the balance sheet to U.S. GAAP.
The item "effect of differences in methodology' reflects the impact of
making full provision for deferred tax.
(iii) Pension costs
The fundamental differences between U.K. GAAP and U.S. GAAP are as
follows:
(a) Under U.K. GAAP, the annual pension charge is determined so that it
is a substantially level percentage of the current and expected future
payroll.
Under U.S. GAAP, the aim is to accrue the cost of providing pension
benefits in the year in which the employee provides the related service.
(b) Under U.K. GAAP, pension liabilities are usually discounted using an
interest rate that represents the expected long-term return on plan
assets. Under
U.S. GAAP, pension liabilities are discounted using the current rates at
which the pension liability could be settled.
(c) Under U.K. GAAP, variations from plan can be aggregated and
amortized over the remaining employee service lives. Under U.S. GAAP,
variations from
plan must be amortized separately over remaining service lives.
(d) Under U.K. GAAP, alternative bases can be used to value plan assets.
Under U.S. GAAP, plan assets should be valued at market or at market
related values.
(iv) Revaluation of fixed assets
The revaluation of Manweb distribution assets and Southern Water
operational assets is not permitted under U.S. GAAP. Accordingly, the
reconciliation restates fixed assets to historical cost and the
depreciation charge has been adjusted. Refer to Note 16 (i) for further
information relating to the fixed assets revaluation.
(v) Comprehensive income
As of April 1, 1998 ScottishPower adopted FAS 130, Reporting
Comprehensive Income. FAS 130 established new rules for the reporting
and display of comprehensive income and its components; however, the
adoption of this statement has no impact on ScottishPower's net income
or shareholders' equity under U.S. GAAP.
(vi) Ordinary dividends
Under U.K. GAAP, final ordinary dividends are recognized in the
financial year in respect of which they are recommended by the Board of
Directors for approval by shareholders. Under U.S. GAAP, such dividends
are not recognized until they are formally declared by the Board of
Directors.
(vii) ESOP shares held in trust
Under U.K. GAAP, shares held by an Employee Share Ownership Plan
("ESOP') are recorded as fixed asset investments at cost less amounts
written off. Under U.S. GAAP, shares held in trust are recorded at cost
in the balance sheet as a deduction from shareholders' funds. No
dividends have been paid on the shares held by the ScottishPower ESOP
and future dividends have been waived.
(viii) Earnings per share
Under U.K. GAAP, earnings per share is calculated by dividing the net
profit or loss for the period by the weighted average number of shares
(for basic and diluted number of shares) outstanding for the period.
U.K. GAAP permits the presentation of more than one measure of earnings
per share provided that all such measures are clearly explained and are
given equal prominence on the face of the income statement.
Under U.S. GAAP, earnings per share is calculated by dividing earnings
from continuing operations, excluding extraordinary items, by the
weighted average number of shares (for basic and diluted number of
shares) outstanding for the period. U.S. GAAP permits only one measure
of earnings per share as a performance measure.
(a) Earnings per ordinary share have been calculated by dividing the
profit for the financial year under U.S. GAAP by the weighted average
number of ordinary shares in issue during the financial year, based on
the following information:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------------------------------------------------------
<S> <C> <C> <C>
Profit for the financial year under U.S. GAAP
((Pounds) million) 455.0 129.8 352.9
Basic weighted average share capital (number
of shares, millions) 1,185.2 1,180.1 1,104.9
Diluted weighted average share capital
(number of shares, millions) 1,197.2 1,191.9 1,116.0
-------------------------------------------------------------------------
</TABLE>
The difference between the basic and the diluted weighted average share
capital is wholly attributable to outstanding share options.
(b) As permitted under U.K. GAAP, earnings per share have been
presented including and excluding the impact of the windfall tax and
goodwill amortization, to provide an additional measure of underlying
performance. In accordance with U.S. GAAP, earnings per share have been
presented above based on U.S. GAAP earnings, without adjustments for
the impact of windfall tax and goodwill amortization. As such
additional measures of underlying performance are not permitted under
U.S. GAAP, the inclusion of windfall tax in the determination of
earnings for the purpose of computation of earnings per share in
accordance with U.S. GAAP decreased earnings by (Pounds)317.0 million
or 26.86 pence per share for the year ended March 31, 1998. The
inclusion on goodwill amortization decreased earnings by (Pounds)31.2
million or 2.63 pence per share for the year ended March 31, 1999, by
(Pounds)29.8 million or 2.53 pence per share for the year ended March
31, 1998 and by (Pounds)23.7 million or 2.14 pence per share for the
year ended March 31, 1997.
ScottishPower Form 20-F 1999 F-34
<PAGE>
Note 34 continued
------------------------------------------------------------------------
Consolidated statement of Cash Flows
The consolidated statement of cash flows prepared in accordance with
FRS 1 (Revised) presents substantially the same information as that
required under U.S. GAAP. Under U.S. GAAP, however, there are certain
differences from U.K. GAAP with regard to the classification of items
within the cash flow statement and with regard to the definition of
cash and cash equivalents.
Under U.K. GAAP, cash flows are presented separately for operating
activities, dividends received from associates and joint ventures,
returns on investments and servicing of finance, taxation, capital
expenditure and financial investment, acquisition and disposals, equity
dividends paid, management of liquid resources, and financing. Under
U.S. GAAP, only three categories of cash flow activity are reported;
operating activities, investing activities and financing activities.
Cash flows from dividends received from associates and joint ventures,
returns on investments and servicing of finance and taxation would be
included as operating activities under U.S. GAAP. Equity dividends paid
would be included under financing activities under U.S. GAAP.
Under U.S. GAAP, cash and cash equivalents are not offset by bank
overdrafts repayable within twenty four hours from the date of the
advance, as is the case under U.K. GAAP and instead such bank
overdrafts are classified within financing activities.
The consolidated cash flow statement prepared in conformity with U.K.
GAAP is set out on page F-12. In this statement an additional measure,
free cash flow, is included which is not an accepted measure under U.S.
GAAP. This measure represents cash flow from operations after adjusting
for dividends received from associates and joint ventures, returns on
investments and servicing of finance and taxation. U.K. investors
regard free cash flow as the money available to management annually to
be allocated among a number of options including capital expenditure,
payments of dividends and the financing of acquisitions.
Set out below is a consolidated statement of cash flows under U.S. GAAP
<TABLE>
------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
Cash inflow from continuing operating
activities 944.9 1,014.1 801.9
Dividends received from associates and
joint ventures 0.9 0.9 -
Returns on investments and servicing of
finance (149.9) (146.7) (101.1)
Ordinary taxation (93.7) (134.5) (117.4)
Exceptional taxation -- windfall tax (157.8) (157.8) -
--------------------------------------- ------- ------- ---------
Net cash provided by operating
activities 544.4 576.0 583.4
--------------------------------------- ------- ------- ---------
Capital expenditure and financial
investment (683.0) (592.7) (392.1)
Acquisitions and disposals (77.4) 67.9 (1,234.6)
--------------------------------------- ------- ------- ---------
Net cash used in investing activities (760.4) (524.8) (1,626.7)
--------------------------------------- ------- ------- ---------
Financing 454.2 261.5 1,286.6
Add: movement in bank overdrafts 6.0 (12.9) (51.9)
Equity dividends paid (252.8) (226.0) (170.0)
--------------------------------------- ------- ------- ---------
Net cash provided by financing
activities 207.4 22.6 1,064.7
--------------------------------------- ------- ------- ---------
Net increase/(decrease) in cash and
cash equivalents (8.6) 73.8 21.4
Cash and cash equivalents at beginning
of financial year 115.5 41.7 20.3
--------------------------------------- ------- ------- ---------
Cash and cash equivalents at end of
financial year 106.9 115.5 41.7
--------------------------------------- ------- ------- ---------
<CAPTION>
1999 1998 1997
Significant non-cash investing or
financing activities (Pounds)m (Pounds)m (Pounds)m
------------------------------------------------------------------------
<S> <C> <C> <C>
On acquisition of subsidiaries:
Shares allotted as part of purchase
consideration - - 397.9
Loan notes - 3.0 10.3
------------------------------------------------------------------------
</TABLE>
Additional information required under U.S. GAAP
------------------------------------------------------------------------
(a) Group profit and loss account
For the purposes of U.S. GAAP, transmission and distribution costs
would be included in cost of sales, and gross profit from continuing
operations would be calculated after deducting these expenses.
(b) Infrastructure accounting
The group's accounting policy in respect of Southern Water's
infrastructure assets and related maintenance and renewals expenditure,
as set out and explained in the accounting policies, is not generally
accepted under U.S. GAAP which requires historical cost depreciation
accounting for these assets. The difference between the infrastructure
renewals depreciation charge and depreciation accounting under U.S.
GAAP is not material to profit and equity shareholders' funds.
F-35 ScottishPower Form 20-F 1999
<PAGE>
Note 34 continued
------------------------------------------------------------------------
(c) Share option schemes
Under U.S. GAAP, the group applies Accounting Principles Board Opinion
No. 25 (APB 25), Accounting for Stock Issued to Employees, and related
interpretations in accounting for its plans. Accordingly, compensation
expense has been recognized for its variable plan (ie long term
incentive plan). As the group applies APB 25 in accounting for its
plans, it is permitted, under FAS 123, Accounting for Stock-Based
Compensation, to adopt the disclosure only option in relation to its
share option schemes. However, if the accounting provisions of the
statement had been adopted, the effect on 1999 net earnings would have
been immaterial (1998: immaterial, 1997: immaterial) and accordingly no
additional disclosures have been provided.
(d) Deferred taxation
U.K. GAAP requires provision for deferred taxation only when it is
expected that a liability will become payable or an asset will
crystallize in the foreseeable future and then at the known future
rates of tax. U.S. GAAP requires full provision for deferred taxes to
be made using enacted future tax rates.
The components of the estimated net deferred tax liability that would
be recognized under U.S. GAAP are as follows:
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Group
1999 1998
(Pounds)m (Pounds)m
---------------------------------------------------------------------------
<S> <C> <C>
Deferred taxation liabilities
Excess of book value over taxation value of fixed
assets 631.6 609.4
Other temporary differences 39.5 36.1
-------------------------------------------------- ------- -------
671.1 645.5
Deferred taxation assets
Other temporary differences (41.2) (54.4)
-------------------------------------------------- ------- -------
Net deferred tax liability 629.9 591.1
-------------------------------------------------- ------- -------
Analyzed as follows:
Current (24.8) (31.2)
Non-current 654.7 622.3
-------------------------------------------------- ------- -------
629.9 591.1
-------------------------------------------------- ------- -------
</TABLE>
ScottishPower Form 20-F 1999 F-36
<PAGE>
Note 34 continued
------------------------------------------------------------------------
(e) Pensions
As at March 31, 1999 ScottishPower had six statutorily approved defined
benefit pension plans. One of these plans, together with a statutorily
approved defined contribution pension plan, was established with effect
from January 1, 1999.
Benefits under the defined benefit plans reflect each employee's basic
earnings, years of service and age at retirement. Funding of the
defined benefit plans is based upon actuarially determined
contributions, with members paying contributions at fixed rates and the
employers meeting the balance of cost as determined by the scheme
actuaries.
Under the defined contribution plan, contributions are paid by the
member and employer at a fixed rate. Benefits under the defined
contribution plan reflect each employee's fund at retirement and the
cost of purchasing benefits at that time.
ScottishPower does not provide any non-pension post-retirement benefits
for employees.
Reconciliations of the beginning and ending balances of the projected
pension benefit obligation and the funded status of these plans for the
years ending March 31, 1999 and March 31, 1998 are as follows:
------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
Change in benefit obligation (Pounds)m (Pounds)m
---------------------------------------------------------------
<S> <C> <C>
Benefit obligation at beginning of year 1,882.4 1,847.6
Service cost (excluding plan participants
contributions) 36.4 29.5
Interest cost 149.6 144.6
Plan participants' contributions 13.0 13.2
Actuarial loss/(gain) 97.2 (57.3)
Benefits paid (104.4) (95.2)
----------------------------------------- ------- -------
Benefit obligation at end of year 2,074.2 1,882.4
----------------------------------------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
1999 1998
Change in plans' assets (Pounds)m (Pounds)m
----------------------------------------------------------------------
<S> <C> <C>
Fair value of plans' assets at beginning of year 2,372.1 2,045.1
Actual return on plans' assets 488.7 395.8
Employer contributions 12.0 13.2
Plan participants' contributions 13.0 13.2
Benefits paid (104.4) (95.2)
------------------------------------------------ ------- -------
Fair value of plans' assets at end of year 2,781.4 2,372.1
------------------------------------------------ ------- -------
</TABLE>
<TABLE>
<CAPTION>
1999 1998
(Pounds)m (Pounds)m
-----------------------------------------------------
<S> <C> <C>
Funded status 707.2 489.7
Unrecognized net actuarial gain (600.0) (393.3)
Unrecognized transition asset (4.2) (5.0)
------------------------------- ------- -------
Prepaid benefit cost 103.0 91.4
------------------------------- ------- -------
</TABLE>
The components of pension benefit costs for the years ended March 31,
1999, 1998 and 1997 were as follows:
------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
(Pounds)m (Pounds)m (Pounds)m
----------------------------------------------------------------
<S> <C> <C> <C>
Service cost 49.4 42.7 38.8
Interest cost 149.6 144.6 132.8
Expected return on plans' assets (184.4) (181.7) (162.1)
Amortization of transition asset (0.8) (0.8) (0.8)
Amortization of experience gains (13.4) (0.2) -
-------------------------------- ------- ------- -------
Net periodic benefit cost 0.4 4.6 8.7
-------------------------------- ------- ------- -------
</TABLE>
The actuarial assumptions adopted in arriving at the above figures are
as follows:
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assumptions at year end 1999 1998 1997
----------------------------------------------------------
<S> <C> <C> <C>
Expected return on plans' assets 8% p.a. 8% p.a. 9% p.a.
Discount rate 6% p.a. 8% p.a. 8% p.a.
Rate of earnings increase 5% p.a. 7% p.a. 7% p.a.
Pension increases 3% p.a. 5% p.a. 5% p.a.
-------------------------------- ------- ------- -------
</TABLE>
These plans' assets are invested in an appropriate diversified range of
equities, bonds, property and cash. The investments are managed by
independent appointed management firms. Included within the plans'
assets are 888,065 (1998: 1,019,606, 1997: 1,111,925) ScottishPower
shares, purchased by some of the Investment Managers only as part of a
pooled strategy to match the relative weightings in the U.K. Stock
Exchange index.
F-37 ScottishPower Form 20-F 1999
<PAGE>
Note 34 continued
------------------------------------------------------------------------
(f) Joint ventures and associates
Under U.S. GAAP, the investor's interest in the net results of joint
ventures and associates is disclosed as a single line in the income
statement net of interest and taxation.
Under U.K. GAAP, the investor's interest in the turnover and results of
a joint venture or associate are disclosed gross. The investor's share
of the interest and taxation are disclosed separately as a component of
the group interest and taxation lines. The directors do not regard this
as a material classification difference and there is no impact on net
income.
(g) Acquisition of Southern Water
In accordance with the disclosure requirement of the APB Opinion Number
16 paragraphs 95 and 96, the following is included relating to the
acquisition of Southern Water in 1996:
In August 1996, ScottishPower acquired Southern Water, a U.K. water
company, for a total consideration of (Pounds)1,716.5 million which
included a share issue of (Pounds)397.9 million (including 126.4
million shares). As part of the acquisition agreement, deferred
contingent consideration of (Pounds)13.4 million was included and
related to the election made by participants of the Southern Water
Sharesave Scheme to be granted options over ScottishPower shares in
place of options previously granted over Southern Water shares. The
acquisition method of accounting was used and the goodwill arising on
the acquisition was written off to reserves in the year to March 31,
1997 in accordance with the accounting policy adopted at that time.
Southern Water contributed operating profit, before reorganization
costs, of (Pounds)135.6 million in the eight months from the date of
acquisition to March 31, 1997 and operating profit of (Pounds)240.7
million in the year ended March 31, 1998. Had the acquisition taken
place on April 1, 1996, Southern Water would have contributed turnover
of (Pounds)474.5 million, operating profit of (Pounds)200.0 million and
profit after ordinary tax of (Pounds)139.3 million in the year to March
31, 1997. For the year to March 31, 1996, Southern Water recorded
turnover of (Pounds)424.7 million, operating profit of (Pounds)170.6
million and profit on ordinary activities after tax of (Pounds)144.8
million. Had the acquisition taken place on April 1, 1996, the
contribution to earnings per share from Southern Water's operations
would have been 12.60p in the year to March 31, 1997 and 16.20p in the
year to March 31, 1996.
New U.S. accounting standards adopted
Reporting Comprehensive Income
FAS 130: Statement of Financial Accounting Standard 130, Reporting
Comprehensive Income. This statement was issued in June 1997 and
establishes standards for the reporting and display of comprehensive
income and its components. FAS 130 is effective for fiscal years
beginning after December 15, 1997. The standard requires financial
statements provided for earlier periods to be reclassified.
Segmental Information
FAS 131: Statement of Financial Accounting Standard 131, Disclosures
About Segments of an Enterprise and Related Information. This statement
was issued in June 1997 and establishes standards for the reporting of
information about operating segments in financial statements issued to
shareholders. It also establishes standards for related disclosure of
products and services, geographic areas, and major customers. The
information set out in Note 1 and Note 14 to the financial statements
reflects the requirements of FAS 131.
Employers' Disclosures about Pensions
FAS 132: Statement of Financial Accounting Standard 132, Employers'
Disclosures about Pensions and Other Post-retirement Benefits was
issued in February 1998 and revises employers' disclosures about
pensions. The information set out above reflects the requirements of
FAS 132.
Recent U.S. accounting pronouncements
Accounting for Derivative Instruments and Hedging Activities
FAS 133: Statement of Financial Accounting Standard 133, Accounting for
Derivative Instruments and Hedging Activities has been issued and is
effective for fiscal periods beginning after June 15, 2000 with earlier
application permitted. This standard establishes accounting and
reporting standards for derivative instruments and for hedging
activities. Management is currently reviewing the standard to assess
the impact on ScottishPower. Implementation of FAS 133 will result in
financial instruments being included in the balance sheet and carried
at fair market value, including hedging activities.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
SOP 98-1: Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use was issued
during January 1998 by the American Institute of Certified Public
Accountants (AICPA). This becomes effective for all fiscal years
beginning after December 15, 1998 and provides guidance on when costs
incurred for internal use computer software are and are not
capitalized. ScottishPower does not expect adoption of SOP 98-1 to have
a material impact on ScottishPower's financial statements.
Accounting for Contracts Involved in Energy Trading and Risk Management
Activities
In December 1998 the FASB Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 98-10, Accounting for Contracts Involved in
Energy Trading and Risk Management Activities. The guidance comes into
effect for ScottishPower for the year ended March 31, 2000 and is
expected to have minimal impact as the majority of ScottishPower's
energy contracts fall outside the scope of this consensus.
Accounting for Plant Decommissioning Costs
The FASB is currently reviewing the utility industry's accounting
treatment of certain plant decommissioning costs. In an exposure draft
issued in February 1996, the FASB concluded that decommissioning costs
should be accounted for as a liability at expected present value, with
a corresponding asset in utility plant. The FASB expects to issue a new
exposure draft in 1999 and ScottishPower will assess the impact at that
time.
ScottishPower Form 20-F 1999 F-38
<PAGE>
Note 34 continued
------------------------------------------------------------------------
Summary U.K. GAAP financial information
Set out below is summary financial information on the group which has
been extracted from ScottishPower's audited consolidated financial
statements.
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year
ended ended
March 31, March 31,
1999 1998
Balance sheet data (Pounds)m (Pounds)m
-------------------------------------------------------------
<S> <C> <C>
Total assets 6,232.1 5,576.8
Current assets 792.0 785.6
Non-current assets 5,440.1 4,791.2
Current liabilities (2,176.4) (2,432.0)
Shareholders' equity -
Common stock, par value 50p per share 599.4 598.4
-------------------------------------------------------------
</TABLE>
F-39 ScottishPower Form 20-F 1999
<PAGE>
Principal Subsidiary Undertakings and Other Investments
<TABLE>
<CAPTION>
Proportion
of shares
Subsidiary undertakings Class of share capital held Activity
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Caledonian Gas Limited Ordinary shares (Pounds)1 100% Gas retailing
CRE Energy Limited* Ordinary shares (Pounds)1 100% Wind-powered electricity generation
Demon Internet Limited* Ordinary shares 10p 100% Internet service provider
Domestic Appliance
Insurance Limited* (Isle
of Man) Ordinary shares (Pounds)1 100% Insurance
Genscot Limited* Ordinary shares (Pounds)1 100% Holding of investments
Lancastrian Holdings
Limited* Ordinary shares (Pounds)1 100% Premium rate service company
Manweb Energy
Consultants Limited* Ordinary shares (Pounds)1 100% Provision of energy services
Manweb Gas Limited* Ordinary shares (Pounds)1 100% Gas retailing
Manweb Generation
Holdings Limited* Ordinary shares (Pounds)1 100% Holding company
Manweb plc* Ordinary shares 50p 100% Regional electricity company
Pinnacle Cellular
Limited* Ordinary shares (Pounds)1 100% Specialist communication retailer
Scotland On-Line
Limited* Ordinary shares (Pounds)1 50% Internet service provider
ScottishPower Inc
(USA)** Common stock 100% Holding of investments
ScottishPower Insurance
Limited* (Isle of Man) Ordinary shares (Pounds)1 100% Insurance
ScottishPower
Investments Limited (a) Ordinary shares (Pounds)1 100% Holding of investments
ScottishPower Leasing
Limited* Ordinary shares (Pounds)1 100% Leasing company
ScottishPower NA1
Limited Ordinary shares (Pounds)1 100% Holding of investments
ScottishPower NA2
Limited Ordinary shares (Pounds)1 100% Holding of investments
ScottishPower
Telecommunications
Limited* Ordinary shares (Pounds)1 100% Telecommunications
ScottishPower
Telecommunications
(Services) Limited Ordinary shares (Pounds)1 50% Mobile telecommunications
Southern Water plc Ordinary shares (Pounds)1 100% Holding company
Southern Water Services
Finance plc* Ordinary shares (Pounds)1 100% Finance company
Southern Water Services
Limited* Ordinary shares (Pounds)1 100% Water supply and wastewater services
Teledata (Holdings)
Limited Ordinary shares (Pounds)1 100% Telecommunications
Telephone Information
Services plc* Ordinary shares (Pounds)1 100% Telecommunications
Telephone International
Media Limited* Ordinary shares (Pounds)1 100% Telecommunications
Watermark Games Limited* Ordinary shares 1p 100% Promotive printing
----------------------------------------------------------------------------------------------------------------------
Fixed asset investments
Joint ventures
CeltPower Limited Ordinary shares (Pounds)1 50% Wind-powered electricity generation
Scottish Electricity
Settlements Limited Ordinary shares (Pounds)1 50% Scottish electricity settlements
Shoreham Operations
Company Limited Ordinary shares (Pounds)1 50% Management services
South Coast Power
Limited Ordinary shares (Pounds)1 50% Electricity generation
Associated undertakings
Coastal Wastewater
Consultants Limited* Ordinary shares (Pounds)1 50% Marine treatment, engineering design and consultancy
Wind Resources Limited* Ordinary shares (Pounds)1 45% Wind-powered electricity generation
Other investments
Folkestone & Dover Water
Services Limited* Ordinary shares (Pounds)1 25% Water supply
Preference shares (Pounds)1 22%
Deferred shares (Pounds)1 12%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes
*The investments in these companies are indirect holdings.
**The common stock of ScottishPower Inc (USA) has no denomination.
(a)The year end of ScottishPower Investments Limited is 28 February.
The directors consider that to give full particulars of all subsidiary
undertakings would lead to a statement of excessive length. The
information above includes the subsidiary undertakings whose results or
financial position, in the opinion of the directors, principally affect
the results or financial position of the group.
All companies are incorporated in Great Britain, unless otherwise
stated.
ScottishPower Form 20-F 1999 F-40
<PAGE>
Directors' Responsibilities for the Preparation of the Financial
Statements
The directors are required to prepare financial statements for each
fiscal year which present fairly, in all material aspects, the
consolidated financial position of the group at the fiscal year end and
the consolidated results of operations and cash flows of the group for
that period.
The directors are also required to consider whether in preparing the
financial statements for the fiscal years shown on pages F-1 to F-40,
the group has used appropriate accounting policies, consistently
applied and supported by reasonable and prudent judgments and
estimates. They also consider whether all accounting principles which
they consider to be applicable have been followed and ascertain whether
it is appropriate for the financial statements to be prepared on the
going concern basis.
The directors are responsible for ensuring that the company keeps
accounting records which disclose with reasonable accuracy the
financial position of the group and which enable them to ensure that
the financial statements comply with the U.K. Companies Act 1985. They
are also responsible for taking such steps that are reasonably open to
them to safeguard the assets of the group and to prevent and detect
fraud and other irregularities.
Report of the Independent Accountants
To the board of directors and members of Scottish Power plc
We have audited the consolidated balance sheets of Scottish Power plc
as at March 31, 1999 and March 31, 1998 and the related consolidated
statements of income, cash flows and changes in shareholders' funds for
the years ended March 31, 1999, March 31, 1998 and March 31, 1997.
These financial statements are the responsibility of the company's
directors, as set out above. Our responsibility is to express an
opinion on these financial statements based on our audits. Our
examinations of these statements were made in accordance with auditing
standards generally accepted in the United States and in the United
Kingdom and, accordingly, included such tests of the accounting records
and such other auditing procedures as we considered necessary in the
circumstances.
Opinion
In our opinion the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Scottish Power plc as at March 31, 1999 and March 31, 1998
and the results of its operations and cash flows for the years ended
March 31, 1999, March 31, 1998 and March 31, 1997 in conformity with
accounting principles generally accepted in the United Kingdom.
Accounting principles in the United Kingdom vary in certain specific
respects from accounting principles generally accepted in the United
States. Application of generally accepted accounting principles in the
United States would have affected the determination of profit for the
financial year and shareholders' funds as at and for the years ending
March 31, 1999 and March 31, 1998 to the extent summarized in Note 34
to the financial statements.
/s/pricewaterhouseCoopers
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
Glasgow
Date: July 15, 1999
F-41 ScottishPower Form 20-F 1999
<PAGE>
EXHIBIT 1(c)
L/SC/028/GTP
Includes all modifications to August 1998
GENERATION, TRANSMISSION AND
PUBLIC ELECTRICITY SUPPLY
LICENCE
-for-
SCOTTISH POWER PLC
(Pounds)34.00
<PAGE>
L/SC/028/GTP
Uncertified copies of this licence are available price (Pounds)34.00 payment
with order from:
Library
Office of Electricity Regulation
Hagley House
Hagley Road
Birmingham
B16 8QG
Cheques and postal orders should be made payable to:
Office of Electricity Regulation.
(C) Crown Copyright
<PAGE>
THE COMPETITIVE ELECTRICITY
MARKET FROM 1998:
GENERATION, TRANSMISSION
AND PUBLIC ELECTRICITY SUPPLY
LICENCES
for
SCOTTISH POWER plc
Scottish Power August 1998
<PAGE>
PREFACE
1. This document illustrates the licence obligations which presently apply
under the Generation, Transmission and Public Electricity Supply Licences
held by Scottish Power plc (excluding only the schedules relating to
transmission price restraints). The document comprises conditions
contained in the original Licence Document granted on 28 March 1990 and
subsequent modifications made to that Licence Document.
2. OFFER wishes to make clear that this is not a legally binding document but
has been produced as a working copy of Scottish Power plc's Generation,
Transmission and PES Licences. It is hoped that this document accurately
reflects the present Licence Document, but it is not a substitute for the
original Licence Document and the subsequent schedules of modifications
issued to Scottish Power plc and held by OFFER's library.
Scottish Power August 1998
<PAGE>
TABLE OF CONTENTS
(Schedules marked * are not fully reproduced in this document)
PART I. TERMS OF THE LICENCES 1
PART II. CONDITIONS APPLICABLE TO EACH LICENCE 3
Condition 1. Scope of application of Part II 3
Condition 2. Interpretation and construction 4
Condition 3. Separate Accounts for Separate Businesses 28
Condition 3A. Restriction on activity 34
Condition 4. Prohibition of cross-subsidies 35
Condition 5. Security arrangements 36
Condition 6. Health and safety of employees 37
Condition 7. Submission of certain agreements 38
Condition 8. Provision of information to the Director 43
Condition 9. Payment of fees 44
PART III. CONDITIONS APPLICABLE TO THE GENERATION LICENCE 47
Condition 1. Scope of application of Part III 47
Condition 2. Compulsory acquisition of land 48
Condition 3. Power to carry out road works etc. 50
Condition 4. Planning of Licensee's ancillary system 53
Condition 5. Compliance with Scottish Grid codes 55
Condition 6. Compliance with Scottish Distribution Codes 56
Condition 7. Compliance with Trading Code 57
Condition 8. Connection to and use of ancillary system - requirement
to offer terms 58
Condition 8A. Connection to and use of ancillary system - functions
of the Director 63
Condition 9. Generation outages 65
Condition 10. Supplementary Conditions in relation to England and Wales 66
PART IV. CONDITIONS APPLICABLE TO THE TRANSMISSION LICENCE 67
Condition 1. Scope of application of Part IV 67
Condition 2. Transmission charge restriction conditions 68
Condition 3. Grid Code 69
Condition 4. Transmission System security standard and quality
of service 73
Condition 5. Trading Code 76
Scottish Power August 1998
<PAGE>
Condition 6. Compliance with Distribution Codes 83
Condition 7. Disposal of relevant assets 84
Condition 8. Restriction on use of certain information 87
Condition 9. Transmission System outages 91
PART V. CONDITIONS APPLICABLE TO THE PUBLIC ELECTRICITY SUPPLY
LICENCE 92
SECTION A. GENERAL OBLIGATIONS 92
Condition 1. Scope of application of Part V 92
Condition 2. Public electricity supply charge restriction Conditions 93
Condition 3. Prohibition of discrimination in electricity sale
contracts 94
Condition 3A. Prohibition of discrimination in supply 95
Condition 3B. Duration of discrimination conditions 101
Condition 4. Tariffs 103
Condition 4A. Arrangements for informing customers on revocation of
Licence 104
Condition 4B. The Programme Implementation Agreement 106
Condition 5. Generation security standard 110
Condition 6. Obligation on economic purchasing 117
Condition 7. Distribution System planning standard and quality
of service 120
Condition 7A. Security and safety of supplies 121
Condition 7B. Procedures for the detection and prevention
of theft, damage and meter interference 124
Condition 7C. Provisions relating to the connection of metering
equipment 126
Condition 7D. Agreements for the provision of meters 128
Condition 8. Distribution Code 129
Condition 8A. The Metering Point Administration Service and
the Master Registration Agreement 133
Condition 8B. Establishment of a Data Transfer Service 136
Condition 8C. Requirement to offer terms for the provision of
Metering and Data Services 139
Condition 8D. Non-discrimination in the provision of Metering and
Data Services 143
Condition 8E. Basis of charges for Metering and Data Services:
requirements for transparency 144
Condition 8F. Functions of the Director 146
Condition 9. Restriction on use of certain information 148
Condition 10. Conditions of supply affecting customers'
statutory rights 153
Condition 11. Licensee's apparatus on customers' side of meter 155
Scottish Power August 1998
<PAGE>
Condition 12. Code of practice on payment of bills and guidance for
dealing with customers in difficulty 156
Condition 13. Record of and report on performance 158
Condition 14. Provision of services for persons who are of
pensionable age or disabled or chronically sick 160
Condition 14A. Code of practice on procedures with respect to site
access 162
Condition 15. Standards of performance 163
Condition 16. Efficient use of electricity 164
Condition 17. Complaint handling procedure 166
Condition 17A. Preparation, review of and compliance with customer
service codes 167
Condition 17B. Information given to Designated Customers 169
Condition 17C. Publication of information to customers 170
Condition 18. Relations with the Relevant Consumers' Committee 171
Condition 19. Provision of information to the Director and provision
of comments to the Director on information and advice 172
Condition 20. Disposal of relevant assets 174
Condition 21. Compliance with Grid Codes 177
Condition 22. Compliance with Trading Code 178
Condition 23. Arrangements relating to supplies to premises within
the Licensee's authorised supply area by persons other than the Licensee 179
Condition 24. The Settlement Agreement for Scotland 182
Condition 25. Designated Premises 185
Condition 26. Terms for supply of electricity incompatible with
Licence Conditions 187
Condition 27. Limitation on requirements for termination fees 188
Condition 28. Revision of the Contract Terms Conditions 189
SECTION B. THE CONTRACT TERMS CONDITIONS 193
Condition 29. Designated Supply Contracts 193
Condition 30. Contractual terms 195
Condition 31. Notification of terms 197
Condition 32. Security deposits 199
Condition 33. Termination of contracts on notice 201
Condition 34. Termination of contracts in specified circumstances 203
Condition 35. Assignment of outstanding charges 205
Condition 36. Modification of provisions under Conditions 33 and 35 207
Condition 37. Marketing of electricity to Designated Customers 209
Scottish Power August 1998
<PAGE>
PART VI. CONDITIONS APPLICABLE TO THE TRANSMISSION LICENCE AND
THE PUBLIC ELECTRICITY SUPPLY LICENCE 215
Condition 1. Scope of application of Part VI 215
Condition 2. Basis of charges for top-up and standby supplies or
sales of electricity, exempt supply services, use of system
and connection to system: requirements for transparency 217
Condition 2A. Non-discrimination in the provision of top-up or standby
supplies or sales of electricity, exempt supply services, use of
system and connection to system 226
Condition 2B. Requirement to offer terms 228
Condition 2C. Requirement to offer Standard Terms of Connection 235
Condition 2D. Functions of the Director 237
Condition 3. Basis of charges for use of the Scottish
interconnection 240
Condition 3A. Non-discrimination in the provision of use of
the Scottish interconnection 248
Condition 3B. Requirement to offer terms 251
Condition 3C. Functions of the Director 255
Condition 4. Requests for Transit 256
SCHEDULE 1 258
Authorised transmission area 258
SCHEDULE 2 259
Authorised supply area 259
SCHEDULE 3 260
Revocation 260
SCHEDULE 4 263
Supplementary conditions in relation to England and Wales 263
SCHEDULE 5* 269
Transmission charge restriction conditions 269
SCHEDULE 6 270
Public electricity supply charge restriction conditions 270
Scottish Power August 1998
<PAGE>
PART I. TERMS OF THE LICENCES
1. The Secretary of State, in exercise of the powers conferred by Sections
6(1), 6(6), 7 and 10 of the Electricity Act 1989 (hereinafter referred to
as "the Act") hereby grants to Scottish Power plc:
(a) a licence to generate electricity for the purpose of giving a supply
to any premises or enabling a supply to be so given, during the
period specified in paragraph 3, subject to the Conditions set out
in Parts II and III and Schedule 4;
(b) a licence to transmit electricity for the purpose of giving a supply
to any premises or enabling a supply to be so given in the
authorised transmission area designated in paragraph 1 of Schedule
1, during the period specified in paragraph 3, subject to the
Conditions set out in Parts II, IV and VI and Schedule 5;
(c) a licence as public electricity supplier to supply electricity to
any premises in the authorised supply area designated in paragraph 1
of Schedule 2, during the period specified in paragraph 3, subject
to the Conditions set out in Parts II, V and VI and Schedule 6.
2. The Conditions referred to above are subject to modification or amendment
in accordance with their terms or with Sections 11, 14 or 15 of the Act.
Each of the licences hereby granted is further subject to the terms as to
revocation specified in Schedule 3.
3. Each of the licences hereby granted shall come into force on the transfer
date appointed under Section 67(3) of the Act and, unless revoked in
accordance with the terms specified in Schedule 3, shall continue in force
until determined by not less than 25
Scottish Power 1 August 1998
<PAGE>
years' notice in writing given by the Secretary of State to the Licensee
in relation to that licence, such notice not to be served earlier than the
tenth anniversary of the transfer date appointed under Section 67(3) of
the Act.
28 March 1990 Secretary of State for Scotland
Scottish Power 2 August 1998
<PAGE>
PART II. CONDITIONS APPLICABLE TO EACH LICENCE
Condition 1. Scope of application of Part II
1. Each of the licences granted by this Licence Document is subject to the
Conditions in Part II (including where such Conditions relate to
activities other than those authorised by such licences) but so that:
(a) where any provision in Part II is expressed as relating to each of
such licences, it shall be construed as applying separately to each
such licence and shall not impose any obligation on the Licensee as
holder of any such licence to comply with that provision as it
applies to any other such licence; and
(b) to the extent that any provision in Part II is expressed as relating
to any one licence specified in that provision, such provision shall
be given effect in relation to that licence only.
Scottish Power 3 August 1998
<PAGE>
Condition 2. Interpretation and construction
1. Unless the contrary intention appears, words and expressions used in this
or any of the following Parts of this document or in the Schedules below
shall be construed as if they were in an Act of Parliament and the
Interpretation Act 1978 applied to them and references to an enactment
shall include any statutory modification or re-enactment thereof after the
date when the licences granted by this Licence Document come into force.
2. Any word or expression defined for the purposes of any provision of Part I
of the Act shall, unless the contrary intention appears, have the same
meaning when used in this or any of the following Parts of this document
or in the Schedules below.
3. In this or any of the following Parts of this document and in the
Schedules below, unless otherwise specified or the context otherwise
requires:
"Act" means the Electricity Act 1989.
"affiliate" in relation to the Licensee means any
holding company of the Licensee, any
subsidiary of the Licensee or any
subsidiary of a holding company of the
Licensee.
"ancillary lines" means any electric lines of the
Licensee except (a) electric lines
which are comprised in the Licensee's
Transmission System or Distribution
System and (b) electric lines through
which the Licensee supplies
electricity to premises pursuant to a
Licence granted under Section 6(2)(a)
of the Act.
Scottish Power 4 August 1998
<PAGE>
"ancillary system" means ancillary lines and any
electrical plant and meters of the
Licensee which are used in connection
with the transport of electricity
through ancillary lines.
"Auditors" means the Licensee's auditors for the
time being holding office in
accordance with the requirements of
the Companies Act 1985.
"authorised" in relation to any business or
activity means authorised by licence
granted under Section 6 or by
exemption granted under Section 5 of
the Act.
"Authorised Electricity Operator" means any person (other than the
Licensee) who is authorised to
generate, transmit or supply
electricity and for the purposes of
Conditions 2A to 2C inclusive of Part
VI shall include any person who has
made an application to be so
authorised which has not been refused.
"authorised supply area" in relation to the Licensee means the
area from time to time comprised in
paragraph 1 of Schedule 2; and in
relation to any other person means the
authorised area of that person under
any licence held by that person under
Section 6(1)(c) of the Act.
"authorised transmission area" in relation to the Licensee means the
area from time to time comprised in
paragraph 1 of Schedule 1; and in
relation to any other person means the
authorised area of that person under
any Licence held by that person under
Section 6(1)(b) of the
Scottish Power 5 August 1998
<PAGE>
Act.
"Condition" means a Condition set out in Parts II,
III, IV, V and VI of this Licence.
"connection charges" means charges made or levied or to be
made or levied for the carrying out
(whether before or after the date on
which the licences granted by this
Licence Document come into force) of
works and provision and installation
of electrical plant, electric lines
and ancillary meters in constructing
or modifying entry and exit points on
the Licensee's Transmission System or
Distribution System together with
charges in respect of maintenance and
repair of such items insofar as not
otherwise recoverable as use of system
charges and in respect of
disconnection and the removal of
electrical plant, electric lines and
ancillary meters following
disconnection, all as more fully
described in paragraphs 9 and 10 of
Condition 2 of Part VI, whether or not
such charges are annualised.
"contract" in relation to the supply of
electricity by the Licensee to a
customer at premises, means a special
agreement in accordance with Section
22 of the Act.
"Contract Terms Conditions" means, as the context requires, either
the Conditions contained in Section B
of Part V of this Licence Document or
those Conditions together with the
equivalent Conditions contained in the
Scottish Power 6 August 1998
<PAGE>
licences of all other Electricity
Suppliers.
"customer" means any person supplied or requiring
to be supplied with electricity at
premises within the authorised area
whether by the Licensee (including any
affiliate or related undertaking of
the Licensee) or, where the context
requires, by another Electricity
Supplier, but shall not include any
Authorised Electricity Operator in its
capacity as such.
"data aggregation services" has the meaning given at sub-paragraph
1(e) of Condition 8C of Part V.
"data processing services" has the meaning given at sub-paragraph
1(d) of Condition 8C of Part V.
"data retrieval services" has the meaning given at sub-paragraph
1(c) of Condition 8C of Part V.
"Data Transfer Catalogue" has the meaning given at sub-paragraph
6(c) of Condition 8A of Part V.
"Data Transfer Service" means the service to be established,
operated and maintained by the
Licensee, in conjunction and
cooperation with all other public
electricity suppliers, in accordance
with Condition 8B of Part V.
"data transfer services" means the services of the Data
Transfer Service established in
accordance with Condition 8B of Part
V.
Scottish Power 7 August 1998
<PAGE>
"date of the contract" means, in respect of any contract, the
date on which that contract is entered
into.
"deposit" means a deposit of money by way of
security for the payment of charges
for the supply of electricity.
"designated by the Secretary of in respect of any agreement or notice,
State" means designated by or on behalf of
the Secretary of State by such means
as he may consider appropriate, but so
that any such agreement or notice may
at the discretion of the Secretary of
State cease to be so designated if
amended or modified in any material
respect.
"Designated Customer" means a customer supplied or requiring
to be supplied with electricity at
Designated Premises (but excluding
such customer in so far as he is
supplied or requires to be supplied at
premises other than Designated
Premises).
"Designated Premises" has the meaning determined in
accordance with Condition 25 of Part
V.
"Designated Supply Contract" has the meaning given in Condition 29
of Part V.
"distribution by any person" means the distribution of electricity
through that person's Distribution
System (whether for its own account or
that of third parties).
"Distribution Business" means the business of the Licensee or
any affiliate or related undertaking
comprising or ancillary to:
Scottish Power 8 August 1998
<PAGE>
(a) the distribution (whether for
its own account or that of third
parties) of electricity through
the Licensee's Distribution
System, including any business
in providing connections to such
system; and
(b) the provision of Metering and
Data Services (other than
prepayment services),
but shall not include any other
business of the Licensee or any
affiliate or related undertaking of
the Licensee in the provision of
services to or on behalf of any one or
more persons.
"Distribution Code" means the Distribution Code required
to be prepared pursuant to Condition 8
of Part V and approved by the
Director, as from time to time revised
with the approval of the Director,
except that where the expression is
used in relation to any public
electricity supplier (other than the
Licensee), it shall mean the
Distribution Code required to be
prepared by such supplier and approved
by the Director as from time to time
revised with the approval of the
Director.
"Distribution System" in relation to the Licensee means all
electric lines of the Licensee within
the Licensee's authorised supply area
(excepting lines forming part of the
Licensee's Transmission System) and
any other electric lines which the
Director may specify as forming part
of the Licensee's Distribution System,
and includes any electrical plant and
meters of the
Scottish Power 9 August 1998
<PAGE>
Licensee which are used in connection
with the distribution of electricity
by the Licensee; and, in relation to
any other public electricity supplier,
it shall have the same meaning as it
has in the licence held by such
supplier under Section 6(1)(c) of the
Act (and so that for this purpose the
Licensee shall be deemed to be another
public electricity supplier in
relation to any authorised area not
included in the Licensee's authorised
supply area for which the Licensee is
the public electricity supplier).
"Domestic Customer" means a customer supplied or requiring
to be supplied with electricity at
Domestic Premises (but excluding such
customer in so far as he is supplied
or requires to be supplied at premises
other than Domestic Premises).
"Domestic Premises" means premises at which a supply is
taken wholly or mainly for domestic
purposes.
"electricity purchase contract" includes any contract or arrangement,
other than for the supply of
electricity to a customer at premises,
under which provision is made for the
making or receipt of payments by
reference to the difference between
(a) an amount specified or
ascertainable under the terms of
such contract or arrangement;
and
(b) the price at which electricity
is sold or purchased under the
Pooling and Settlement
Scottish Power 10 August 1998
<PAGE>
Agreement or the trading system
established by the Trading Code
or any component of any of such
prices; and
"electricity sale contract" shall be construed accordingly.
"Electricity Supplier" means either a Second Tier Supplier or
a public electricity supplier.
"equivalent megawatt" in circumstances where demand is
measured only in megavolt amperes
means megavolt amperes converted into
megawatts using for this purpose a
power factor of 0.9 megawatts per
megavolt ampere or such other factor
as may with the approval of the
Director be taken as being appropriate
having regard to electrical
characteristics of the supply, and
cognate expressions shall be construed
accordingly.
"established connection" means, in relation to any premises, an
existing connection to the Licensee's
Distribution System which does not
require modification, or a new or
modified connection to such system in
respect of which all works have been
completed, such that in either case
electricity is able to be supplied to
the premises in accordance with the
terms of the relevant supply
agreement.
"Exempt Supplier" means a person who is authorised to
supply electricity by virtue of an
exemption granted under Section 5 of
the Act.
Scottish Power 11 August 1998
<PAGE>
"exempt supply services" means the services detailed at
paragraph 5 of Condition 2B of Part
VI, as provided by the Licensee to
Exempt Suppliers in respect of
premises within the authorised area.
"financial year" bears the meaning given to it at
paragraph 1 of Condition 3 of Part II.
"fixed term period" means, in relation to any Designated
Supply Contract, a specified period of
more than 12 months during which the
Principal Terms of that contract may
not be varied by the Licensee other
than by agreement with the customer.
"Generation Business" means the business (if any) of the
Licensee (as holder of the Generation
Licence), or any affiliate or related
undertaking of the Licensee, in the
generation of electricity, other than
the Manweb Generation Business.
"Generation Licence" means the Licence granted in
sub-paragraph 1(1) of Part I.
"generation set" means any plant or apparatus for the
production of electricity and shall
where appropriate include a generating
station comprising more than one
generation set.
"goods or services" includes electric lines and electric
plant, and goods or services designed
or calculated to promote the efficient
use of electricity, but excludes
meters, meter operation and prepayment
systems, and data
Scottish Power 12 August 1998
<PAGE>
retrieval and related services.
"Grid Code" means the Grid Code required to be
prepared pursuant to Condition 3 of
Part IV and approved by the Director
as from time to time revised with the
approval of the Director, except that
where the expression is used in
relation to any Transmission Licensee
(other than the Licensee) it shall
mean the Grid Code required to be
prepared by such Transmission Licensee
and approved by the Director as from
time to time revised with the approval
of the Director.
"half-hourly metering means metering equipment which is
equipment" configured to record the quantity of
electricity (to be calculated in kWh)
supplied to premises during each half
hour period of supply
and "non-half-hourly metering
equipment" shall be construed
accordingly.
"holding company" means a holding company within the
meaning of Sections 736, 736A and 736B
of the Companies Act 1985.
"Licence Document" means this document (comprising Parts
I to VI inclusive and Schedules 1 to 6
inclusive).
"Licensee" means Scottish Power plc (registered
number: Sc 117120) and (where the
context so requires) shall include any
business in respect of which the
Scottish Power 13 August 1998
<PAGE>
Licensee is a successor company.
"Manweb" means Manweb plc (registered in
England and Wales under number
2366937).
"Manweb Licence" means the Licence granted to Manweb
under Section 6(1)(c) of the Act.
"Manweb Distribution Business" bears the meaning given to
Distribution Business in the Manweb
Licence.
"Manweb Generation Business" bears the meaning given to Generation
Business in the Manweb Licence.
"Manweb Second Tier Supply bears the meaning given to Second Tier
Business" Supply Business in the Manweb Licence.
"Manweb Supply Business" bears the meaning given to Supply
Business in the Manweb Licence.
"Manweb Group" means Manweb and its subsidiaries,
subsidiary undertakings, associated
companies (including any joint
venture, partnership, firm, company or
unincorporated association in which
any such subsidiary, subsidiary
undertaking or associated company is
interested) and related undertakings
other than the Licensee.
"Master Registration Agreement" means the agreement of that title to
be prepared by the Licensee, in
conjunction and co-operation with all
other public electricity suppliers, in
accordance with and comprising such
matters as are set out in
Scottish Power 14 August 1998
<PAGE>
Condition 8A of Part V.
"megawatt" or "MW" includes an equivalent megawatt.
"meter operation services" has the meaning given at sub-paragraph
1(b) of Condition 8C of Part V.
"meter provision services" has the meaning given at sub-paragraph
1(a) of Condition 8C of Part V.
"Metering and Data Services" has the meaning given in Condition 8C
of Part V.
"metering equipment" includes any meter and any associated
equipment which materially affects the
operation of that meter.
"Metering Point Administration means the service to be established,
Service" operated and maintained by the
Licensee in accordance with Condition
8A of Part V.
"metering point administration means the services of the Metering
services" Point Administration Service
established in accordance with
Condition 8A of Part V or, where the
context requires, means the equivalent
services provided by any other public
electricity supplier in accordance
with the provisions of its Public
Electricity Supply Licence.
"notice" means (unless otherwise specified)
notice given in writing or by any
other reasonable means.
"other Scottish Public means any public electricity supplier
Electricity (other than
Scottish Power 15 August 1998
<PAGE>
Supplier" the Licensee) who holds a Licence
under Section 6(1)(c) of the Act for
an authorised area in Scotland.
"other Scottish Transmission means any person (other than the
Licensee" Licensee) who holds a Licence under
Section 6(1)(b) of the Act for an
authorised area in Scotland.
"other Transmission Licensee" means any person (other than the
Licensee) who holds a Licence under
Section 6(1)(b) of the Act.
"participating interest" bears the meaning ascribed to that
expression by Section 260 of the
Companies Act 1985.
"Pooling and Settlement means the agreement of that title
Agreement" approved by the Secretary of State as
from time to time amended with the
approval of the Director (where so
required pursuant to its terms).
"Portfolio Generator" means any person who:
(a) is authorised to generate
electricity and owns or operated
a generating station situated in
Scotland; or
(b) is authorised to generate or
supply electricity and is
contracted to purchase the
output of one or more generating
stations situated in Scotland.
"prepayment meter services" has the meaning given at sub-paragraph
1(f) of
Scottish Power 16 August 1998
<PAGE>
Condition 8C of Part V.
"Principal Terms" means, in respect of any form of
Designated Supply Contract, those
terms which relate to:
(a) charges for the supply of
electricity;
(b) any requirement to pay charges
for the supply by prepayment
through a prepayment meter;
(c) any requirement for a security
deposit;
(d) the duration of the contract;
(e) the rights to terminate the
contract (including any
obligation to pay a termination
fee); and
(f) the obligation to enter into an
agreement on the Standard Terms
of Connection,
and such other terms as may reasonably
be considered significantly to affect
the evaluation of the contract.
"Public Electricity Supply means the Licence granted in
Licence" sub-paragraph 1(3) of Part I.
"related undertaking" in relation to any person means any
undertaking in which that person has a
participating interest.
"Relevant Consumers' means the committee appointed by the
Committee" Director under Section 2 of the Act
for the area consisting of or
including the Licensee's authorised
supply area.
Scottish Power 17 August 1998
<PAGE>
"relevant premises" in relation to a Designated Supply
Contract, means any premises supplied
with electricity under the terms of
the contract.
"restructuring agreement" means at anytime any agreement in
force at that time which prior to that
time has been entered into and
submitted to the Director pursuant to
Condition 7 of Part II (as such
agreement may be amended from time to
time with the approval of the Director
given pursuant to such Condition).
"representation" includes any objection or any other
proposal made in writing.
"Retail Price Index" means the general index of retail
prices published by the Office for
National Statistics each month in
respect of all items or:
(a) if the index for any month in
any year shall not have been
published on or before the last
day of the third month after
such month, such index for such
month or months as the Director
may after consultation with the
Licensee determine to be
appropriate in the
circumstances; or
(b) if there is a material change in
the basis of the index, such
other index as the Director may
after consultation with the
Licensee determine to be
appropriate in the
circumstances.
"Scottish Public Electricity means a person who holds a Licence
under Section
Scottish Power 18 August 1998
<PAGE>
Supplier" 6(1)(c) of the Act for an authorised
supply area in Scotland.
"Scottish Transmission Licensee" means a person who holds a Licence
under Section 6(1)(b) of the Act for
an authorised transmission area in
Scotland.
"Second Tier Supplier" means a person authorised to supply
electricity pursuant to Section 6(2)
of the Act.
"Second Tier Supply Business" means the authorised business (if any)
of the Licensee or any affiliate or
related undertaking as a private
electricity supplier.
"security period" means a period commencing on the date
on which any direction issued by the
Secretary of State under Section 34 of
the Act enters effect and terminating
on such date (being not earlier than
the date such direction, as varied, is
revoked or expires) as the Director,
after consultation with such persons
(including, without limitation,
Licence holders liable to be
principally affected) as he shall
consider appropriate, may with the
consent of the Secretary of State by
notice to all Licence holders
determine after having regard to the
views of such persons.
"Separate Business" means each of:
- the Generation Business,
Scottish Power 19 August 1998
<PAGE>
- the Transmission Business,
- the Distribution Business,
- the Supply Business,
- the Second Tier Supply Business,
- the Wholesaling Business.
each taken separately from one another
and from any other business of the
Licensee or any affiliate or related
undertaking of the Licensee, but so
that where all or any part of such
business is carried on by an affiliate
or related undertaking of the Licensee
such part of the business as is
carried on by that affiliate or
related undertaking shall be
consolidated with any other such
business of the Licensee (and of any
other affiliate or related undertaking
of the Licensee) so as to form a
single Separate Business.
"Settlement Agreement for means the agreement of that title to
Scotland" be prepared in accordance with, and
comprise such matters as are set out
in, Condition 24 of Part V.
"settlement purposes" means for the purposes of settlement
as set out in the Pooling and
Settlement Agreement or the Settlement
Agreement for Scotland.
"SHE" means Scottish Hydro-Electric plc
(registered
Scottish Power 20 August 1998
<PAGE>
number: Sc 117119).
"SNL" means Scottish Nuclear Limited
(registered number: Sc 117121).
"Standard Terms of Connection" means the terms approved by the
Director, in accordance with Condition
2C of Part VI, for the retention of an
established connection to the
Licensee's Distribution System.
"standby" means the periodic or intermittent
supply or sale of electricity:
(a) to an Authorised Electricity
Operator to make good any
shortfall in the availability of
electricity to that operator for
the purposes of its supply of
electricity to persons seeking
such supply; or
(b) to a customer of the Licensee,
to make good any shortfall
between the customer's total
supply requirements and that met
either by its own generation or
by electricity supplied by an
Authorised Electricity Operator
other than the Licensee
such standby supply or sale being
provided at such point on the
Licensee's Transmission System or
Distribution System as the operator or
customer may request.
Scottish Power 21 August 1998
<PAGE>
"subsidiary" means a subsidiary within the meanings
of Sections 736, 736A and 736B of the
Companies Act 1985.
"subsidiary undertaking" means a subsidiary undertaking within
the meaning of Section 258 of the
Companies Act 1985.
"Supply Business" means the authorised business of the
Licensee as public electricity
supplier in the Licensee's authorised
supply area, but excluding any
activities forming part of the
Distribution Business.
"Supply/Distribution Business" means the Supply and Distribution
Businesses taken together.
"termination fee" means any sum of money or other
penalty (whether financial or
otherwise) which may be demanded of a
customer solely in consequence of the
termination of a contract to supply
electricity to premises.
"top-up" means the supply or sale of
electricity on a continuing or regular
basis:
(a) to an Authorised Electricity
Operator to make good any
shortfall in the availability of
electricity (including, where
that operator is using the
Licensee's Distribution System
or Transmission System, to make
good any distribution or
transmission losses on that
system) to that operator for the
purposes of its
Scottish Power 22 August 1998
<PAGE>
supply of electricity to persons
seeking such supply; or
(b) to a customer of the Licensee,
to make good any shortfall
between the customer's total
supply requirements and that met
either by its own generation or
by electricity supplied by an
Authorised Electricity Operator
other than the Licensee
such top-up supply or sale being
provided at such point on the
Licensee's Distribution System or
Transmission System as the operator or
customer may request.
"Trading Code" means the Trading Code required to be
adopted pursuant to Condition 5 of
Part IV as from time to time revised
with the approval of the Director.
"transfer scheme" means a transfer scheme made under
Section 67(1) of the Act and approved
by the Secretary of State (and whether
or not he has modified it before
approving it).
"transmission by any person" means the transmission of electricity
through that person's Transmission
System (whether for its own account or
that of third parties).
"Transmission Business" means the authorised business of the
Licensee (as holder of the
Transmission Licence) or any affiliate
or related undertaking of the Licensee
in the planning, development,
construction and
Scottish Power 23 August 1998
<PAGE>
maintenance of the Licensee's
Transmission System (whether or not
pursuant to directions of the
Secretary of State made under Section
34 or 35 of the Act) and the operation
of such system for transmission by the
Licensee, including any business in
providing connections to the
Licensee's Transmission System, but
shall not include any other business
(whether or not a Separate Business)
of the Licensee or any affiliate or
related undertaking of the Licensee in
the provision of services to or on
behalf of any one or more persons.
"Transmission Company" means The National Grid Company plc or
any other Transmission Licensee who
holds a Licence under Section 6(1)(b)
of the Act for an authorised area in
England and Wales.
"Transmission Licence" means the Licence granted in
sub-paragraph 1(2) of Part I.
"Transmission Licensee" means a person who holds a Licence
under Section 6(1)(b) of the Act.
"Transmission System" in relation to the Licensee means the
system of electric lines comprising
the Licensee's high voltage lines
within the Licensee's authorised
transmission area (except any such
lines which the Director may approve
as being part of the Licensee's
Distribution System) and any other
electric lines which the Director may
specify as forming part of the
Licensee's Transmission
Scottish Power 24 August 1998
<PAGE>
System and includes any electrical
plant and meters of the Licensee which
are used in connection with
transmission by the Licensee; and, in
relation to any other Transmission
Licensee, it has the same meaning as
it has in the Licence held by such
Transmission Licensee under Section
6(1)(b) of the Act (and so that for
this purpose the Licensee shall be
deemed to be another Transmission
Licensee in relation to any authorised
area not included in the Licensee's
authorised transmission area for which
the Licensee holds a Licence under
Section 6(1)(b) of the Act).
"undertaking" bears the meaning ascribed to that
expression by Section 259 of the
Companies Act 1985.
"unmetered supply" means a supply of electricity to
premises which is not, for the purpose
of calculating the charges for
electricity supplied to the customer
at such premises, measured by metering
equipment.
"use of system" in relation to the Transmission
Licence, means: use of the Licensee's
Transmission System for the
transmission of electricity by the
Licensee for the Generation, Supply
and Wholesaling Businesses or for any
other person; in relation to the
Public Electricity Supply Licence,
means use of the Licensee's
Distribution System for the
distribution of electricity by the
Licensee for the Supply and
Wholesaling Businesses or for any
other Authorised Electricity Operator;
and in relation to
Scottish Power 25 August 1998
<PAGE>
the Generation Licence means use of
the ancillary system for the transport
of electricity provided by or for the
Licensee or any other person
"use of system charges" in relation to the Transmission
Licence, means: charges made or levied
or to be made or levied for the
provision of services as part of the
Transmission Business to any person or
to the Licensee for the purposes of
its Supply Business or Second Tier
Supply Business or Wholesaling
Business, as referred to at Condition
2 of Part VI and at paragraph 5.2 of
Schedule 5, but shall not include
connection charges; and in relation to
the Public Electricity Supply Licence,
means: charges made or levied or to be
made or levied for the provision of
services as part of the Distribution
Business to any person or to the
Licensee for the purposes of its
Supply Business or Second Tier Supply
Business or Wholesaling Business, as
referred to at Condition 2 of Part VI
and at paragraph 9.2.2 of Schedule 6,
but shall not include connection
charges.
"valid notice of termination" has the meaning given in Condition 33
of Part V.
"Wholesaling Business" means the business (if any) of the
Licensee or any affiliate or related
undertaking of the Licensee in the
supply or sale of electricity to
Authorised Electricity Operators
(including in the form of top-up and
stand-by) other than to SHE pursuant
to the restructuring agreements.
Scottish Power 26 August 1998
<PAGE>
"year" means a period of 12 months commencing
on 1 January.
4. Unless otherwise specified, any reference to a numbered Condition (with or
without a suffix letter) is a reference to the Condition bearing that
number in the Part of this Licence Document in which the reference occurs,
any reference to a numbered Schedule is a reference to the Schedule
bearing that number in this Licence Document and any reference to a
numbered paragraph (with or without a suffix letter) is a reference to the
paragraph bearing that number in the Condition or Schedule in which the
reference occurs.
5. In construing the provisions of this Licence Document, the heading or
title of any Part, Section, Condition, Schedule or paragraph shall be
disregarded.
6. Where any obligation of the Licensee is required to be performed by a
specified date or within a specified period, and where the Licensee has
failed so to perform, such obligation shall continue to be binding and
enforceable after the specified date or after the expiry of the specified
period (but without prejudice to all rights and remedies available against
the Licensee by reason of the Licensee's failure to perform by that date
or within that period).
7. The provisions of Section 109 of the Act shall apply for the purposes of
the delivery or service of any documents, directions or notices to be
delivered or served pursuant to any Condition or Schedule of this Licence
Document, and directions issued by the Director pursuant to any Condition
or Schedule of this Licence Document shall be delivered or served as
aforesaid.
Scottish Power 27 August 1998
<PAGE>
Condition 3. Separate Accounts for Separate Businesses
1. The first financial year of the Licensee shall run from 1st April 1990 to
31st March 1991 and thereafter each financial year of the Licensee shall
run from 1st April to the following 31st March.
2. The remaining paragraphs of this Condition apply for the purpose of
ensuring that the Licensee (and any affiliate or related undertaking of
the Licensee) maintains accounting and reporting arrangements which enable
separate accounts to be prepared for each Separate Business and showing
the financial affairs of each such Separate Business.
3. The Licensee shall in respect of each Separate Business:
(a) keep or cause to be kept for the period referred to in Section
222(5)(b) of the Companies Act 1985 and in the manner referred to in
that Section such accounting records in respect of each Separate
Business as would by Section 221 of the Companies Act 1985 be
required to be kept in respect of each such business if it were
carried on by a separate company so that the revenues and costs,
assets, liabilities, reserves and provisions of, or reasonably
attributable to, each Separate Business are separately identifiable
in the books of the Licensee (and any affiliate or related
undertaking of the Licensee) from those of any other business; and
(b) prepare on a consistent basis from such accounting records in
respect of:
(i) the financial year commencing on 1st April 1990 and each
subsequent financial year, accounting statements comprising a
profit and loss account, a balance sheet and a statement of
source and application of funds, together with notes thereto,
and showing separately in respect of each Separate Business
and in appropriate detail the amounts of any revenue, cost,
asset, liability, reserve or provision which has been either:
Scottish Power 28 August 1998
<PAGE>
(aa) charged from or to any other business (whether or not a
Separate Business) together with a description of the
basis of that charge; or
(bb) determined by apportionment or allocation between any
Separate Business and any other business (whether or not
a Separate Business) together with a description of the
basis of the apportionment or allocation; and
(ii) the first 6 months of the financial year commencing on 1st
April, 1990 and of each subsequent financial year, an interim
profit and loss account;
(c) procure, in respect of the accounting statements prepared in
accordance with this Condition in respect of a financial year, a
report by the Auditors and addressed to the Director stating whether
in their opinion those statements have been properly prepared in
accordance with this Condition and give a true and fair view of the
revenues, costs, assets, liabilities, reserves and provisions of, or
reasonably attributable to, the Separate Business to which the
statements relate; and
(d) deliver to the Director a copy of the account referred to in
sub-paragraph (b)(ii) above, the Auditors' report referred to in
sub-paragraph (c) above and the accounting statements referred to in
sub-paragraph (b)(i) above as soon as reasonably practicable, and in
any event not later than three months after the end of the period to
which it relates in the case of the account referred to in
subparagraph (b)(ii) above and six months after the end of the
financial year to which they relate in the case of the accounting
statements and Auditors' report referred to in sub-paragraphs (b)(i)
and (c) above.
4. The Licensee shall prepare and deliver to the Director audited
consolidated accounting statements for each of:
Scottish Power 29 August 1998
<PAGE>
(a) the Distribution Business and Manweb Distribution Business;
(b) the Generation Business and Manweb Generation Business;
(c) the Supply Business and Manweb Supply Business;
(d) the Second Tier Supply Business and Manweb Second Tier Supply
Business,
on a consistent basis with, and at the same time as, the accounts prepared
for each Separate Business under the terms of this Condition.
5. The Licensee shall not in relation to the accounting statements in respect
of a financial year change the bases of charge, apportionment or
allocation referred to in subparagraph (b)(i) of paragraph 3 from those
applied in respect of the previous financial year, unless the Director
shall previously have issued directions for the purposes of this Condition
directing the Licensee to change such bases in a manner set out in the
directions or the Director gives his prior written approval to the change
in such bases. The Licensee shall comply with any directions issued for
the purposes of this Condition.
6. Where, in relation to the accounting statements in respect of a financial
year, the Licensee has changed such bases of charge, apportionment or
allocation from those adopted for the immediately preceding financial
year, the Licensee shall, if so directed in directions issued by the
Director for the purposes of this Condition, in addition to preparing
accounting statements on those bases which it has adopted, prepare such
accounting statements on the bases which applied in respect of the
immediately preceding financial year.
7. Accounting statements in respect of a financial year prepared under
sub-paragraph (b)(i) of paragraph 3 shall, so far as reasonably
practicable and unless otherwise approved by the Director having regard to
the purposes of this Condition:
(a) have the same content and format (in relation to each Separate
Business) as the annual accounts of the Licensee (and any affiliate
or related undertaking of the
Scottish Power 30 August 1998
<PAGE>
Licensee) prepared under Section 226 and, where appropriate, Section
227 of the Companies Act 1985 and conform to the best commercial
accounting practices including Statements of Accounting Practice
issued by the member bodies of the Consultative Committee of
Accounting Bodies currently in force; and
(b) state the accounting policies adopted; and
(c) (with the exemption of the part of such statements which shows
separately the amounts charged, apportioned or allocated and
describes the bases of charge or apportionment or allocation
respectively, and with the exception of the accounting statements
relating to the Second Tier Supply Business and the Wholesaling
Business), be published with the annual accounts of the Licensee.
8. Unless the accounting statements prepared under sub-paragraph (b)(i) of
paragraph 3 are prepared on the current cost basis as provided by the
alternative accounting rules, the Licensee shall unless otherwise agreed
by the Director in addition to preparing those accounting statements under
that paragraph, prepare accounting statements for each Separate Business
covering the same period, which shall comprise and show separately:
(a) a profit and loss account, a balance sheet and a statement of source
and application of funds, together with notes thereto, which shall:
(i) include in respect of current cost assets amounts determined
on the current cost basis as provided by the alternative
accounting rules; and
(ii) show or disclose the information and other matters required by
the alternative accounting rules to be shown or disclosed in
accounts where the amounts included in respect of assets
covered by any items shown in those accounts have been
determined on any basis mentioned in paragraph 31 of Section C
of Part II of Schedule 4 to the Companies Act 1985;
Scottish Power 31 August 1998
<PAGE>
(b) in respect of each Separate Business the adjusted amount of any such
provision for depreciation as is referred to in paragraph 32(2) of
Section C of Part II of Schedule 4 to the Companies Act 1985 and the
items shown in the profit and loss account of the Separate Business
for the relevant period which are affected by the determination of
amounts on the current cost basis as provided by the alternative
accounting rules, including the profit (or loss) before taxation;
and
(c) such other current cost information as is referred to in the
Handbook as the Director may reasonably require
and shall deliver the same, together with an Auditors' report prepared in
relation to the current cost basis accounting statements in the form
referred to in sub-paragraph (c) of paragraph 3, to the Director within
the time limits referred to in sub-paragraph (d) of paragraph 3, and shall
(with the exception of the part of such statements which shows separately
the amounts charged, apportioned or allocated and describes the bases of
charge or apportionment or allocation respectively and with the exception
of the accounting statements relating to the Second Tier Supply Business
and the Wholesaling Business) publish the same with the annual accounts of
the Licensee.
9. References in this Condition to costs or liabilities of, or reasonably
attributable to, any Separate Business shall be construed as excluding
taxation, capital liabilities which do not relate principally to a
particular Separate Business, and interest thereon; and references to any
accounting statement shall be construed accordingly.
10. Without prejudice to paragraph 1 of Condition 2, references in this
Condition to provisions of the Companies Act 1985 are references to those
provisions as amended, substituted or inserted by the relevant provisions
of the Companies Act 1989 and if such provisions of the Companies Act 1989
are not in force at the date of grant of this Licence Document shall be
construed as if such provisions were in force at such date.
11. For the purposes of paragraph 8:
Scottish Power 32 August 1998
<PAGE>
"alternative accounting rules" means the rules set out in Section C
of Part II of Schedule 4 to the
Companies Act 1985.
"current cost assets" means assets of any description
mentioned in paragraph 31 of Section C
of Part II of Schedule 4 to the
Companies Act 1985.
"the Handbook" means the handbook issued by the
Accounting Standards Committee of the
Consultative Committee of Accounting
Bodies (CCAB Limited) or any successor
body entitled "Accounting for the
effects of changing prices: a
Handbook" in its current edition for
the time being or in the event that no
such handbook shall be in issue such
guidance or publication as may be
issued in replacement or substitution
therefor.
1.
12. The Licensee's obligations to comply with this Condition shall be deemed
to arise and be enforceable as follows:
(a) under the Generation Licence, to the extent that this Condition
relates to the Generation Business;
(b) under the Transmission Licence, to the extent that this Condition
relates to the Transmission Business; and
(c) under the Public Electricity Supply Licence, in relation to all
matters other than those referred to in sub-paragraphs (a) and (b)
above.
Scottish Power 33 August 1998
<PAGE>
Condition 3A. Restriction on activity
1. The Licensee shall not, at any time during the subsistence of the
Generation Licence, the Transmission Licence or the Public Electricity
Supply Licence, conduct or carry on any Non-Core Business or Non-Core
Businesses, if the turnover of such Non-Core Business or the aggregate
turnover of such Non-Core Businesses, as the case may be, in any financial
year of the Licensee exceeds 5% of the Turnover of the Licensee for the
immediately preceding financial year, but this Condition shall not prevent
such Non-Core Business or Non-Core Businesses being carried on by an
affiliate or related undertaking of the Licensee.
2. In this Condition:
"Core Business" means each of those parts of the
Separate Businesses and any other
business carried on by the Licensee
(but not by an affiliate or related
undertaking of the Licensee) which is
regulated under the Act or any other
business which was conducted or
carried on by the Licensee (but not by
an affiliate or related undertaking of
the Licensee) on 19 July 1996.
"Non-Core Business" means any business or activity of any
kind, other than a Core Business.
"Turnover" means the aggregate turnover of the
Core Businesses taken as a whole in
any financial year of the Licensee but
excluding that part of such turnover
which is attributable to transactions
entered into between one Core Business
and another Core Business.
Scottish Power 34 August 1998
<PAGE>
Condition 4. Prohibition of cross-subsidies
1. The Licensee shall procure that no Separate Business gives any
cross-subsidy to, or receives any cross-subsidy from any other business of
the Licensee, of an affiliate or related undertaking of the Licensee or of
any other member of the Manweb Group (whether or not a Separate Business).
2. Nothing which the Licensee is obliged to do or not to do pursuant to this
Licence Document or any other document which grants a licence to the
Licensee under the Act, shall be regarded as a cross-subsidy for the
purposes of this Condition.
Scottish Power 35 August 1998
<PAGE>
Condition 5. Security arrangements
1. If so directed in directions issued by the Director for the purposes of
this Condition, the Licensee shall, not later than such date as it shall
be directed so to do in the directions, enter into an agreement designated
by the Secretary of State for the purposes of this Condition relating to
the compliance with directions issued by the Secretary of State under
Section 34 and/or Section 35 of the Act.
2. The Licensee shall comply with and perform its obligations under any
agreement which it enters into pursuant to paragraph 1.
Scottish Power 36 August 1998
<PAGE>
Condition 6. Health and safety of employees
1. The Licensee shall, together with all other licensees, consult with
appropriate representatives of persons employed by itself and by those
licensees in order to establish and maintain an appropriate machinery or
forum for the joint consideration of matters of mutual concern in respect
of the health and safety of such persons.
2. In this Condition:
"licensees" means all holder of licences granted
under Sections 6(1)(a), 6(1)(b),
6(1)(c) and 6(2) of the Act.
Scottish Power 37 August 1998
<PAGE>
Condition 7. Submission of certain agreements
1. The Licensee shall enter into the specified agreements as soon as
practicable after the date of grant of this Licence Document and shall,
not later than 1 June 1990 or such later date (if any) as the Secretary of
State shall agree, submit the specified agreements so entered into to the
Director.
2. The Licensee shall, if required so to do by notice given by the Secretary
of State within 60 days after the date of submission of the last of the
specified agreements under paragraph 1, as soon as practicable (and in any
event not later than 10 days) after receipt of the notice:
(a) enter into such proposed specified agreements as are described in
the notice; and
(b) submit the proposed specified agreements so entered into to the
Director.
3. The Licensee shall not make or enter into any agreement (other than an
agreement which the Licensee is required to enter into pursuant to
paragraph 2) which amends an agreement which has been submitted to the
Director pursuant to paragraph 1 or 2, or any agreement the making or
entering into of which has been approved pursuant to this paragraph,
except in each case with the prior written approval of the Director.
4. The Licensee shall comply with the relevant provisions of the nuclear
energy agreement.
5. For the purposes of this Condition:
"specified agreements" means agreements relating to the
following matters, namely:
(a) the provision by the Licensee to
SHE of 576MW of capacity from
the Longannet
Scottish Power 38 August 1998
<PAGE>
and Cockenzie Power Stations;
(b) the provision by SHE to the
Licensee of 200 MW of
hydro-generated capacity;
(c) the provision by SHE to the
Licensee of a 50% share of the
capacity of Peterhead Power
Station (including rights and
obligations relative to the
consumption of electricity
generated from 50% (or 70% in
peak periods) of the gas
supplied to Peterhead Power
Station from the Miller Field);
(d) the provision by the Licensee to
SHE of a share (initially 46%)
of the export and import
capacity of the Interconnector
with England and Wales (after
deduction of an allowance for
the share of such capacity
dedicated to the existing
agreement between South of
Scotland Electricity Board and
British Nuclear Fuels plc
relative to the transmission of
output from Chapelcross Power
Station);
(e) the provision by SHE to the
Licensee of a 74.9% share of any
electricity supplied by the
United Kingdom Atomic Energy
Authority pursuant to the
existing agreement between such
Authority and North of Scotland
Hydro-Electric Board;
Scottish Power 39 August 1998
<PAGE>
(f) the provision by SNL to the
Licensee and SHE (in the
respective proportions of 74.9%
and 25.1%) of all electricity
generated by SNL from the
nuclear stations at Hunterston
and Torness (net of electricity
consumed by such stations
themselves); and
(g) operational provisions for the
implementation of all or some of
the agreements relating to the
matters referred to in (a) to
(f) above; provisions supporting
the co-ordination, planning and
operation of an electricity
supply system within Scotland;
an operational basis to support
trading relationships between
SHE and the Licensee and/or
between either of them and any
third party and/or between third
parties using the electricity
Transmission Systems in
Scotland; and a framework for
accommodating generators of
electricity using the
electricity Transmission System
of SHE and the Licensee.
"proposed specified agreement" means an agreement designated by the
Secretary of State for the purposes of
this Condition which relates to a
matter referred to in the definition
of "specified agreements" and which
the Secretary of State proposes be
entered into between the Licensee and
SHE or, in the case of the matter
referred to in sub-paragraph (f) of
the definition of "specified
Scottish Power 40 August 1998
<PAGE>
agreements", among SNL, the Licensee
and SHE in substitution for, and to
the exclusion of a specified agreement
relating to that matter submitted to
the Director pursuant to paragraph 1.
"amendment" in relation to any agreement shall
(without limiting the generality)
include the making, entering into and
granting of:
(a) any agreement which terminates,
extends the duration of, varies
or has the effect of affecting
in any other way any right
and/or obligation (or the
enforceability of any right
and/or obligation) of any person
under the first mentioned
agreement; and
(b) any waiver or purported waiver
(whether or not constituted or
evidenced by any written
document, and whether express,
implied or otherwise) of any
right of any person under that
agreement.
"agreement" includes any contract or arrangement
(whether or not constituted or
evidenced by any written document).
"nuclear energy agreement" means the specified agreement relating
to the matter referred to in
sub-paragraph (f) of the definition of
"specified agreements" submitted to
the Director pursuant to paragraph 1
(or, if a proposed specified agreement
relating to that
Scottish Power 41 August 1998
<PAGE>
matter is entered into pursuant to
paragraph 2, that proposed specified
agreement), as amended from time to
time with the approval of the Director
given pursuant to this Condition.
"relevant provisions of the means such provisions of the nuclear
nuclear energy agreement" energy agreement as are set out in a
notice designated by the Secretary of
State for the purpose of this
Condition which is given to the
Licensee not later than 60 days after:
(i) the date on which the nuclear
energy agreement is submitted to the
Director pursuant to paragraph 1; or
(ii) (if the nuclear energy agreement
is entered into and submitted pursuant
to paragraph 2) the date on which it
is submitted to the Director pursuant
to that paragraph, and such provisions
shall have effect as if they were set
out in this Condition.
Scottish Power 42 August 1998
<PAGE>
Condition 8. Provision of information to the Director
1. Subject to paragraphs 3 and 4, the Licensee shall, in relation to each
licence granted by this Licence Document, furnish to the Director, in such
manner and at such times as the Director may require, such information and
shall procure and furnish to him such reports, as the Director may
consider necessary in the light of the Conditions applicable to that
licence or as he may require for the purpose of performing:
(a) the functions assigned to him by or under the Act; and
(b) any functions transferred to him under the Act.
2. Without prejudice to the generality of paragraph 1, the Director may call
for the furnishing of accounting information which is more extensive than
or differs from that required to be prepared and supplied to the Director
under Condition 3.
3. The Licensee may not be required by the Director to furnish him under this
Condition with information for the purpose of the exercise of his
functions under Section 48 of the Act.
4. The Licensee may not be required by the Director to furnish him under this
Condition with any information in relation to an enforcement matter which
the Licensee could not be compelled to produce or give under Section 28(3)
of the Act.
5. The power of the Director to call for information under paragraph 1 is in
addition to the power of the Director to call for information under or
pursuant to any other Condition.
6. In paragraphs 1 to 5, "information" shall include any documents, accounts,
estimates, returns or reports (whether or not prepared specifically at the
request of the Director) of any description specified by the Director.
Scottish Power 43 August 1998
<PAGE>
Condition 9. Payment of fees
1. The Licensee shall at the times stated hereunder pay to the Secretary of
State fees of the amount specified in or determined under this Condition.
2. In respect of the year beginning on 1 April 1991 and in each subsequent
year, the Licensee shall pay to the Secretary of State in relation to each
licence granted by this Licence Document a fee which is the aggregate of
the following amounts:
(a) an amount equal to the proportion which the Director shall determine
in relation to that licence of the amount estimated by the Director,
according to a method which has previously been disclosed in writing
to the Licensee, as likely to be his total costs during the coming
year;
(b) in relation to the Public Electricity Supply Licence only, the
amount (or, where the Relevant Consumer's Committee in question is
the consumers' committee for more than one public electricity
supplier, the amount which is a proportion as determined by the
Director, according to a method which has previously been disclosed
in writing to the Licensee, of such amount) estimated by the
Director (having regard to any statement under paragraph 8(2) of
Schedule 2 to the Act) as being likely to be the costs during the
coming year of the Relevant Consumers' Committee in the exercise of
the functions assigned to it by or under the Act and any other such
functions as it has been or may be required to exercise by the
Director;
(c) an amount which is a proportion as determined by the Director of the
amount estimated by the Director (in consultation with the
Monopolies Commission) as having been incurred in the calendar year
immediately preceding the 1st April in question by the Monopolies
Commission in connection with references made to it under Section 12
of the Act with respect:
(i) (in relation to the Generation Licence only) to the Generation
Licence or any other licence granted under Section 6(1)(a) of
the Act;
Scottish Power 44 August 1998
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(ii) (in relation to the Transmission Licence only) to the
Transmission Licence or any other licence granted under
Section 6(1)(b) of the Act; and
(iii) (in relation to the Public Electricity Supply Licence only)
the Public Electricity Supply Licence or any other licence
granted under Section 6(1)(c) of the Act; and
(d) the difference (being a positive or negative amount), if any,
between:
(i) the amount of the fee paid by the Licensee in respect of the
year immediately preceding the 1st April in question in
relation to that licence; and
(ii) the amount which that fee would have been in respect of that
year:
(aa) had the amount comprised therein under sub-paragraph
2(a) been calculated by reference to the actual total
costs of the Director during that year, and the
proportion thereof attributable to that licence; and
(bb) (in the case of the Public Electricity Supply Licence
only) had the amount comprised therein under
sub-paragraph 2(b) been calculated by reference to the
actual total costs of the Relevant Consumer's Committee
during that year and, where appropriate, the proportion
thereof attributable to the Licensee
(such costs being apportioned in each case as determined by
the Director according to a method previously disclosed in
writing to the Licensee),
and the fee shall be paid by the Licensee to the Secretary of State within
one month of the Director giving notice to the Licensee of its amount if
that notice is given within 6 months of the beginning of the year in
respect of which the fee is payable.
Scottish Power 45 August 1998
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3. The Licensees obligations to comply with this Condition shall be deemed to
arise and be enforceable as follows:
(a) under the Generation Licence, to the extent that this Condition
relates to fees payable in relation to the Generation Licence;
(b) under the Transmission Licence, to the extent that this Condition
relates to fees payable in relation to the Transmission Licence; and
(c) under the Public Electricity Supply Licence, in relation to all
matters other than those referred to in sub-paragraphs 3(a) and (b).
Scottish Power 46 August 1998
<PAGE>
PART III. CONDITIONS APPLICABLE TO THE GENERATION LICENCE
Condition 1. Scope of application of Part III
1. The Generation Licence is subject to the Conditions in Part III (including
where such Conditions refer to activities other than those authorised by
that licence).
2. The Transmission Licence and the Public Electricity Supply Licence are not
subject to the Conditions in Part III.
Scottish Power 47 August 1998
<PAGE>
Condition 2. Compulsory acquisition of land
1. The powers and rights conferred by or under the provisions of Schedule 3
to the Act (compulsory acquisition of land etc) shall have effect for the
purposes set out in paragraph 2.
2. The purposes referred to in paragraph 1 are:
(a) the construction or extension of a generating station;
(b) activities connected with the construction or extension of a
generating station or connected with the operation of a generating
station; and
(c) the installation, maintenance, removal or replacement of ancillary
lines, and electrical plant associated with them, connecting a
generating station with -
(i) the Transmission System of the Licensee or any other
Transmission Licensee; or
(ii) the Distribution System of the Licensee or any other public
electricity supplier or the system for the distribution of
electricity of any other person authorised to supply
electricity.
3. In paragraph 2:
(a) the references to "generating station" are to an electricity
generating station which
(i) has, or will have when its construction or extension is
completed, a capacity of not less than 50 megawatts or such
other capacity as may be specified in relation thereto by
Order of the Secretary of State under Section 36(3) of the
Act; and
Scottish Power 48 August 1998
<PAGE>
(ii) is, or will be when its construction or extension is
completed, operated by or for the Licensee; and
(b) "extension" in relation to a generating station includes the use by
the person operating the station of any land (wherever situated) for
a purpose directly related to the generation of electricity by that
station.
Scottish Power 49 August 1998
<PAGE>
Condition 3. Power to carry out road works etc.
1. For the purpose of enabling the Licensee to carry on the authorised
activities, the powers and rights conferred by or under the provisions of
Schedule 4 to the Act (other powers etc of licence holders) shall, subject
to paragraphs 3 and 4. have effect and may, subject to paragraph 5, be
exercised by carrying out works:
(a) in relation to, or in pursuance of, the installation, inspection,
maintenance, adjustment, repair, alteration, replacement and removal
of:
(i) electric lines specified in paragraph 2;
(ii) electrical plant associated with such lines; and
(iii) any structures for housing or covering such lines or plant;
(b) in relation to the installation of electrical plant to be used in
connection with a generating station or the operation thereof; and
(c) in relation to electric lines or electrical plant referred to in
sub-paragraphs (a) and (b) above as if the references to them in
Schedule 4 to the Act included pipes used or intended to be used for
conveying heat produced in association with electricity and steam
produced from air and water heated by such heat and associated works
in relation to such pipes and as if "associated works" had the
meaning given in Section 10(3) of the Act.
2. Electric lines are specified for the purposes of sub-paragraph (a) of
paragraph 1:
(a) if they are ancillary lines and connect, or will connect when
installed, a generating station with:
(i) the Transmission System of the Licensee or any other
Transmission Licensee; or
Scottish Power 50 August 1998
<PAGE>
(ii) the Distribution System of the Licensee or any other public
electricity supplier or the system for the distribution of
electricity of any other person authorised to supply
electricity; or
(b) where "electric lines" has the extended meaning given by paragraph
1(c), if they connect a generating station with any premises.
3. Paragraph 10 of Schedule 4 to the Act shall apply to the Licensee if -
(a) it wishes to exercise its rights of entry on land for the purpose of
establishing whether or not the land is suitable for the
construction or extension of a generating station; and
(b) it obtains the consent of the Director before exercising those
rights.
4. Works which are under, over, in, on, along or across any road, which for
the purposes of the Roads (Scotland) Act 1984 constitutes a public road
may be undertaken in pursuance of paragraph 1 subject to the following
conditions -
(a) that such works shall not be carried out except with the consent,
which shall not be unreasonably withheld, of the roads authority and
in accordance with such reasonable conditions as may be attached to
such consent;
(b) that any question as to whether or not a consent of the roads
authority is unreasonably withheld, or as to the reasonableness of
conditions attached to such consent, shall be determined by a single
arbiter to be appointed -
(i) by agreement between the Licensee and the roads authority; or
(ii) in default of such agreement, by the Director on the
application of either party.
Scottish Power 51 August 1998
<PAGE>
5. The provisions of Schedule 4 of the Act shall have effect in relation to
works of the kind described in paragraph 1 which are executed -
(a) in Scotland except for such of those provisions as extend only to
England and Wales; and
(b) in England and Wales except for such of those provisions as extend
only to Scotland
and in its application to works executed in England and Wales this
Condition shall have effect as if for "road, which for the purposes of the
Roads (Scotland) Act 1984 constitutes a public road" there was substituted
"street, which for the purposes of the Highways Act 1980 constitutes a
highway or part of a highway maintainable at the public expense", for
"Roads (Scotland) Act 1984" there was substituted "Highways Act 1980", for
"roads authority" there was substituted "highway authority" and for
"arbiter" there was substituted "arbitrator".
6. In this Condition:
"authorised activities" means the activities which the
Licensee is authorised by the
Generation Licence to carry on, and
shall include any purpose connected
with the supply to any premises of
heat produced in association with
electricity and steam produced from
air and water heated by such heat.
"generating station" have the meanings given in paragraph 3
and "extension" of Condition 2.
Scottish Power 52 August 1998
<PAGE>
Condition 4. Planning of Licensee's ancillary system
1. The Licensee shall plan and develop each part of the ancillary system in
accordance with a standard not less than the relevant standard insofar as
applicable to it, or such other standard of planning as the Licensee may,
following consultation with such (if any) Authorised Electricity Operators
as the Director shall consider appropriate and with the approval of the
Director, adopt from time to time.
2. The Director may (following consultation with the Licensee and such other
(if any) Authorised Electricity Operators as the Director shall consider
appropriate) issue directions relieving the Licensee of its obligations
under paragraph 1 in respect of such parts of the ancillary system and to
such extent as may be specified in the directions.
3. In this Condition:
"relevant standard" means, in relation to each part of the
ancillary system, which ever of the
following standards is applicable to
that part, namely:
(a) the standard in accordance with
which the Transmission Licensee
within whose authorised
transmission area that part is
situated is required under the
licence held by it under Section
6(1)(b) of the Act to plan and
develop its Transmission System;
or
(b) the standard in accordance with
which the public electricity
supplier within whose authorised
supply area that part is
situated is required under the
licence held by it under Section
6(1)(c) of the Act to plan
Scottish Power 53 August 1998
<PAGE>
and develop its Distribution System.
Scottish Power 54 August 1998
<PAGE>
Condition 5. Compliance with Scottish Grid codes
1. The Licensee shall comply with the provisions of the Grid Code and the
Grid Code of each other Scottish Transmission Licensee insofar as
applicable to its business in generating electricity in pursuance of the
Generation Licence or to the electricity generated in the course of that
business.
2. The Director may (following consultation with the Licensee and such other
Scottish Transmission Licensees as the Director shall consider
appropriate) issue directions relieving the Licensee of its obligation
under paragraph 1 in respect of such parts of the Grid Code or the Grid
Code of any other Scottish Transmission Licensee and, in each case, to
such extent as may be specified in those directions.
Scottish Power 55 August 1998
<PAGE>
Condition 6. Compliance with Scottish Distribution Codes
1. The Licensee shall comply with the provisions of the Distribution Code and
the Distribution Code of each other Scottish Public Electricity Supplier
insofar as applicable to its business in generating electricity in
pursuance of the Generation Licence or to the electricity generated in the
course of that business.
2. The Director may (following consultation with the Licensee and such other
Scottish Public Electricity Suppliers as the Director shall consider
appropriate) issue directions relieving the Licensee of its obligation
under paragraph 1 in respect of such parts of the Distribution Code of any
other Scottish Public Electricity Supplier and, in each case, to such
extent as may be specified in those directions.
Scottish Power 56 August 1998
<PAGE>
Condition 7. Compliance with Trading Code
1. The Licensee shall comply with the provisions of the Trading Code insofar
as applicable to its business in generating electricity in pursuance of
the Generation Licence or to the electricity generated in the course of
that business, including any requirements thereunder for the Director's
approval or consent, for compliance with directions issued by the Director
or relating to determinations made by the Director.
2. The Director may (following consultation with such members of the trading
system established by the Trading Code as the Director shall consider
appropriate) issue directions relieving the Licensee of its obligation
under paragraph 1 in respect of such parts of the Trading Code and to such
extent as may be specified in those directions.
Scottish Power 57 August 1998
<PAGE>
Condition 8. Connection to and use of ancillary system - requirement to offer
terms
1. In this Condition and Condition 8A, "system" means the ancillary system.
2. The Licensee shall, subject to paragraphs 7 and 8:
(a) offer to enter into an agreement to provide a connection to the
system with any person who has made application for connection to
the system; and
(b) offer to enter into an agreement for the modification of a
connection to the system with any person who has made application
for modification of a connection to the system; and
(c) offer to enter into an agreement with any person who has made
application for use of system:
(i) to accept into the system at such entry point and in such
quantities as may be specified in the application electricity
to be provided by or for the person; and
(ii) to deliver electricity equal in quantity to that accepted into
the system (less only any losses incurred in the course of
transporting such electricity through the system) from such
exit points on the system and in such quantities as may be
specified in the application to such person as the person
making the application may specify.
3. The Licensee shall, subject to paragraphs 7 and 8, offer terms for an
agreement in accordance with paragraph 2 as soon as practicable and in any
event not more than the period specified in paragraph 9 after receipt by
the Licensee of an application from the person containing all such
information as the Licensee may reasonably require for the purpose of
formulating the terms of its offer.
Scottish Power 58 August 1998
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4. Each offer made in accordance with paragraph 1 shall:
(a) make detailed provision regarding such of the following matters as
are relevant for the purposes of the agreement:
(i) the carrying out of works (if any) required for the
construction or modification of the entry point to connect the
system to the Transmission System of the Licensee or any other
Transmission Licensee or the Distribution System of the
Licensee or any other public electricity supplier and/or the
system for the distribution of electricity of any other person
authorised to supply electricity or in connection with the
construction or modification of any exit point for the
delivery of electricity as specified in the application, and
for the obtaining of any consents necessary for such purposes;
(ii) the carrying out of works (if any) for the provision of
electrical plant or for the extension or reinforcement of the
system which are required to be undertaken for the provision
of connection to and/or use of system to the person and for
the obtaining of any consents necessary for such purposes;
(iii) the installation of appropriate meters or other apparatus (if
any) required to enable the Licensee to measure electricity
being accepted into the system at the specified entry point
and leaving the system at the specified exit points;
(iv) the installation of such switchgear or other apparatus (if
any) as may be required for interrupting the use of system
should there be a failure by or for a person to provide
electricity at its entry point on the system for delivery to
the person specified by the person making the application from
the exit points on the system;
(v) the date by which any works required so as to permit access to
the system (including for this purpose any works for its
extension or
Scottish Power 59 August 1998
<PAGE>
reinforcement) shall be completed and so that, unless
otherwise agreed by the person making the application, a
failure to complete such works by such date shall be a
material breach of the agreement entitling the person to
rescind the agreement; and
(vi) the charges to be paid by the person making the application
for the provision of electrical plant, for connections to or
modification of connections to, or the extension or
reinforcement of the system, for the installation of meters,
switchgear or other apparatus and for their maintenance, for
disconnection from the system and the removal of electrical
plant, electric lines and meters following disconnection and
for use of system which shall, unless manifestly
inappropriate, be set in conformity with paragraph 5; and
(b) contain such other provisions as may be appropriate for the purposes
of the agreement in the circumstances in which it is likely to be
entered into.
5. The charges referred to in paragraph 4 to be contained in every agreement
the subject of an offer by the Licensee shall be such that:
(a) charges for the provision of electrical plant, charges for
connection to the system, charges for modification of connections,
charges for disconnection from the system and the removal of
electrical plant, electric lines and meters following disconnection
and charges for extension or reinforcement of the system and for use
of system are set at a level which will enable the Licensee to
recover no more than:
(i) an appropriate proportion (taking account of the factors
referred to in paragraph 6) of the costs directly or
indirectly incurred by the Licensee; and
(ii) a reasonable rate of return on the capital represented by such
costs; and
Scottish Power 60 August 1998
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(b) charges for the installation of meters, switchgear or other
apparatus and for their maintenance shall not exceed the costs
thereof and a reasonable rate of return on the capital represented
by such cost.
6. For the purpose of determining an appropriate proportion of the costs
directly or indirectly incurred in carrying out works, the Licensee shall
have regard to:
(a) the benefit (if any) to be obtained or likely in the future to be
obtained by the Licensee or any other person as a result of the
carrying out of such works whether by virtue of the provision of
electrical plant, the reinforcement or extension of the system, or
the provision of additional entry or exit points on the system or
otherwise; and
(b) the ability or likely future ability of the Licensee to recoup a
proportion of such costs from other persons.
7. The Licensee shall not be obliged pursuant to this Condition 8 to offer to
enter into any agreement where, by reason of the capacity of the system
and the use made or reasonably expected to be made of it, the Licensee
would be required to expand or reinforce the capacity of the system.
8. The Licensee shall not be obliged pursuant to this Condition 8 to offer to
enter into any agreement with any person if:
(a) to do so would be likely to involve the Licensee in breach of:
(i) the Grid Code or the Grid Code of any other Transmission
Licensee; or
(ii) the Distribution Code or the Distribution Code of any other
public electricity supplier; or
(iii) the Electricity Supply Regulations 1988 or any regulations
made under Section 29 of the Act; or
Scottish Power 61 August 1998
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(iv) any other enactment relating to safety or standards applicable
to the system; or
(b) the person does not undertake to be bound, insofar as applicable, by
the terms of the Codes referred to in sub-paragraphs (a)(i) and
(a)(ii) above, as from time to time in force.
9. For the purpose of paragraph 3, the period specified shall be:
(a) in the case of persons seeking use of system only, 28 days; and
(b) in the case of persons seeking connection or modification of an
existing connection or seeking use of system in conjunction with
connection, 3 months.
10. The Licensee shall within 28 days following receipt of a request from any
person, give or send to such person such information in the possession of
the Licensee as may be reasonably required by such person for the purpose
of completing paragraph 8 of Part 1 and paragraphs 2(v) and (vi) of Part 2
of Schedule 2 to the Electricity (Application for Licences and Extensions
of Licences) Regulations 1990 or such provisions to like effect contained
in any further regulations then in force made pursuant to Sections 6(3),
60 and 64(1) of the Act.
Scottish Power 62 August 1998
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Condition 8A. Connection to and use of ancillary system - functions of the
Director
1. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with a person
entitled or claiming to be entitled thereto pursuant to an application in
accordance with Condition 8, the Director may, pursuant to Section 7(3) of
the Act, on the application of such person or the Licensee, settle any
terms of the agreement in dispute between the Licensee and the person in
such manner as appears to the Director to be reasonable having (insofar as
relevant) regard, in particular, to the following considerations:
(a) that the person should pay to the Licensee the whole or an
appropriate proportion (as determined in accordance with paragraph 6
of Condition 8) of the costs directly or indirectly incurred by the
Licensee in the carrying out of any works or in providing or doing
any other thing under the agreement in question calculated in
accordance with the principles set out in paragraph 4 of Condition 8
together with a reasonable rate of return on the capital represented
by such costs;
(b) that the performance by the Licensee of its obligations under the
agreement should not cause it to be in breach of any other Condition
to which the Generation Licence is subject;
(c) that any methods by which the system is connected to the
Transmission System of the Licensee or any other Transmission
Licensee or the Distribution System of the Licensee or any other
public electricity supplier or the system for the distribution of
electricity of any other person authorised to supply electricity
accords with good engineering principles and practices; and
(d) that the terms and conditions of agreements entered into by the
Licensee pursuant to an application in accordance with Condition 8
should be, so far as circumstances allow, as similar in substance
and form as is practicable.
Scottish Power 63 August 1998
<PAGE>
2. If the person wishes to proceed on the basis of the agreement as settled
by the Director, the Licensee shall forthwith enter into and implement
such agreement in accordance with its terms.
3. If the Licensee proposes to vary the contractual terms of any agreement
entered into pursuant to Condition 8 or this Condition in any manner
provided for under such agreement, the Director may, at the request of the
Licensee or other party to such agreement, settle any dispute relating to
such variation in such manner as appears to the Director to be reasonable.
Scottish Power 64 August 1998
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Condition 9. Generation outages
1. The Licensee shall notify the Director in writing forthwith in the event
that the Licensee and SHE have not agreed a programme of planned outages
for their respective generation sets for the financial year commencing on
1 April 1991 or any subsequent financial year on or before the 1st day of
January prior to the commencement of the relevant financial year.
Scottish Power 65 August 1998
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Condition 10. Supplementary Conditions in relation to England and Wales
1. The Conditions set out in Schedule 4 shall apply in respect of any
generating station which the Licensee shall construct or operate in
England and Wales.
Scottish Power 66 August 1998
<PAGE>
PART IV. CONDITIONS APPLICABLE TO THE TRANSMISSION LICENCE
Condition 1. Scope of application of Part IV
1. The Transmission Licence is subject to the Conditions in Part IV
(including where such Conditions relate to activities other than those
authorised by that Licence).
2. The Generation Licence and the Public Electricity Supply Licence are not
subject to the Conditions in Part IV.
Scottish Power 67 August 1998
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Condition 2. Transmission charge restriction conditions
1. The Transmission Licence is subject to the Conditions in Schedule 5.
2. The Generation Licence and the Public Electricity Supply Licence are not
subject to the Conditions in Schedule 5.
Scottish Power 68 August 1998
<PAGE>
Condition 3. Grid Code
1. The Licensee shall in consultation with Authorised Electricity Operators
liable to be materially affected thereby prepare and at all times have in
force and (subject to paragraph 11) shall implement and comply with a Grid
Code:
(a) covering all material technical aspects relating to connections to
and the operation and use of the Licensee's Transmission System or
(insofar as relevant to the operation and use of that Transmission
System) the operation of electric lines and electrical plant
connected to the Transmission System of the Licensee or any other
Transmission Licensee or the Distribution System of the Licensee or
any other public electricity supplier or the system for the
distribution of electricity of any other person authorised to supply
electricity and (without prejudice to the foregoing) making express
provision as to the matters referred to in paragraph 5; and
(b) which is designed so as:
(i) to permit the development, maintenance and operation of an
efficient, co-ordinated and economical system for the
transmission of electricity;
(ii) to facilitate the Licensee's Transmission System being made
available to persons authorised to supply or generate
electricity on terms which neither prevent nor restrict
competition in the supply or generation of electricity; and
(iii) subject to sub-paragraphs (i) and (ii), to promote the
security and efficiency of the electricity generation,
transmission and Distribution System in Scotland as a whole.
2. The Grid Code in force at the date of the coming into force of the
Transmission Licence shall be sent to the Director for his approval.
Thereafter the Licensee shall in consultation with Authorised Electricity
Operators liable to be materially affected
Scottish Power 69 August 1998
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thereby periodically review (including upon the request of the Director)
the Grid Code and its implementation. Following any such review, the
Licensee shall send to the Director:
(a) a report on the outcome of such review; and
(b) any proposed revisions to the Grid Code from time to time as the
Licensee (having regard to the outcome of such review) reasonably
thinks fit for the achievement of the objectives referred to in
sub-paragraph (b) of paragraph 1; and
(c) any written representations or objections from Authorised
Electricity Operators (including any proposals by such operators for
revisions to the Grid Code not accepted by the Licensee in the
course of the review) arising during the consultation process and
subsequently maintained.
3. Revisions to the Grid Code proposed by the Licensee and sent to the
Director pursuant to paragraph 2 shall require to be approved by the
Director.
4. Having regard to any written representations or objections referred to in
sub-paragraph (c) of paragraph 2, and following such further consultation
(if any) as the Director may consider appropriate, the Director may issue
directions requiring the Licensee to revise the Grid Code in such manner
as may be specified in the directions, and the Licensee shall forthwith
comply with any such directions.
5. The Grid Code shall include:
(a) connection conditions specifying the technical, design and
operational criteria to be complied with by the Licensee and by any
person connected or seeking connection with the Licensee's
Transmission System;
(b) an operating code specifying the conditions under which the Licensee
shall operate the Licensee's Transmission System, under which the
Licensee shall
Scottish Power 70 August 1998
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operate its plant and Distribution System and other persons shall
operate their plant and/or systems for the distribution of
electricity in relation to the Licensee's Transmission System,
insofar as the imposition of such conditions is necessary to protect
the security and quality of supply and safe operation of the
Licensee's Transmission System under both normal and abnormal
operating conditions;
(c) a planning code specifying the technical and design criteria and
procedures to be applied by the Licensee in the planning and
development of the Licensee's Transmission System and to be taken
into account by the Licensee and other persons connected or seeking
connection with the Licensee's Transmission System in the planning
and development of their own plant and systems;
(d) a scheduling and despatch code specifying procedures for the
scheduling and despatch of generating stations connected to the
Licensee's Transmission System; and
(e) procedures relating to outages of generation sets.
6. The Licensee shall give or send a copy of the Grid Code (as from time to
time revised) to the Director.
7. The Licensee shall (subject to paragraph 8) give or send a copy of the
Grid Code (as from time to time revised) to any person requesting the
same.
8. The Licensee may make a charge for any copy of the Grid Code (as from time
to time revised) given or sent pursuant to paragraph 7 of an amount which
will not exceed any amount specified for the time being for the purposes
of this Condition in directions issued by the Director.
9. In preparing, implementing and complying with the Grid Code, (including in
respect of the scheduling of maintenance of the Licensee's Transmission
System) the Licensee shall not unduly discriminate against or unduly
prefer:
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(a) any one or any group of persons; or
(b) the Licensee in the conduct of any business other than the
Transmission Business
in favour of or as against any one other or any other group of persons.
10. The Licensee shall keep and maintain such records concerning its
implementation of and compliance with the Grid Code as are, in the opinion
of the Director, sufficient to enable the Director to assess whether the
Licensee is performing the obligation imposed upon it under paragraph 9
concerning these matters and the Licensee shall furnish to the Director
such records (or such of these as the Director may require) in such manner
and at such times as the Director may require.
11. The Director may (following consultation with the Licensee) issue
directions relieving the Licensee of its obligations under the Grid Code
in respect of such parts of the Licensee's Transmission System and to such
extent as may be specified in the directions.
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Condition 4. Transmission System security standard and quality of service
1. The Licensee shall:
(a) plan and develop its Transmission System in accordance with the
document number TDMl3/10,001 and entitled Security of Supply (Issue
2 dated October 1985) (incorporating Engineering Recommendation P2/5
(October 1978 revision) of the Electricity Council Chief Engineers'
Conference) and the planning document numbered NSP366 entitled
Security of the 400kV and 275kV Systems in Scotland (each such
document being as submitted by or on behalf of the Licensee to the
Director on or before the date of grant of this Licence Document or
such later date as the Director shall agree) as appropriate to the
purpose under consideration, and the Grid Code or such other
standard of planning as the Licensee may, following consultation
with any Authorised Electricity Operator liable to be materially
affected thereby and with the approval of the Director, adopt from
time to time; and
(b) operate its Transmission System in accordance with the document
entitled Grid Control Instruction (System) BI - SSEB Operational
Standards of Security of Supply (dated 30 March 1981) and (each such
document being as submitted by or on behalf of the Licensee to the
Director on or before the date of grant of this Licence Document),
as appropriate to the purpose under consideration and the Grid Code
or such other standard of operation as the Licensee may, following
consultation with any Authorised Electricity Operator liable to be
materially affected thereby and with the approval of the Director,
adopt from time to time.
2. The Licensee shall, in consultation with Authorised Electricity Operators
liable to be materially affected thereby, review the documents (other than
the Grid Code) referred to in paragraph 1 and their implementation on each
occasion that it carries out a review of the Grid Code in accordance with
paragraph 2 of Condition 3. Following any such review, the Licensee shall
send to the Director:
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(a) a report on the outcome of such review; and
(b) any revision which the Licensee proposes to make to such documents
from time to time (having regard to the outcome of such review); and
(c) any written representations or objections from Authorised
Electricity Operators (including any proposals by such operators for
revisions to such documents not accepted by the Licensee in the
course of the review) arising during the consultation process and
subsequently maintained.
3. Revisions to the documents (other than the Grid Code) referred to in
paragraph 1 proposed by the Licensee and sent to the Director pursuant to
paragraph 2 shall require to be approved by the Director.
4. Having regard to any written representations or objections referred to in
sub-paragraph (c) of paragraph 2, and following such further consultation
(if any) as the Director may consider appropriate, the Director may issue
directions requiring the Licensee to revise the documents (other than the
Grid Code) referred to in paragraph 1 in such manner as may be specified
in the directions, and the Licensee shall forthwith comply with any such
directions.
5. The Licensee shall within 3 months after the Transmission Licence comes
into force draw up and submit to the Director for his approval a statement
setting out criteria by which the performance of the Licensee in
maintaining Transmission System security and availability and quality of
service may be measured.
6. The Licensee shall within 2 months after the end of each financial year
submit to the Director a report providing details of the performance of
the Licensee during the previous financial year against the criteria
referred to in paragraph 5.
7. The Director may (following consultation with the Licensee and any
Authorised Electricity Operator liable to be materially affected thereby)
issue directions relieving
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the Licensee of its obligations under paragraph 1 in respect of such parts
of the Licensee's Transmission System and to such extent as may be
specified in the directions.
8. The Licensee shall give or send a copy of the documents (other than the
Grid Code) referred to in paragraph 1 (as from time to time revised) to
the Director.
9. The Licensee shall (subject to paragraph 10) give or send a copy of such
documents (as from time to time revised) to any person requesting the
same.
10. The Licensee may make a charge for any copy given or sent pursuant to
paragraph 9 of an amount which will not exceed any amount specified for
the time being for the purposes of this Condition in directions issued by
the Director.
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Condition 5. Trading Code
1. The Licensee shall, jointly with the other Founder Member, adopt a Trading
Code designated by the Director for the purposes of this Condition not
later than such date as shall be specified in directions issued by the
Director for the purposes of this Condition and the Licensee shall comply
with the terms of such Trading Code as from time to time revised
(including any directions, consents, approvals or determinations
thereunder by the Director).
2. The Trading Code shall include:
(a) arrangements for the establishment of facilities and procedures for
effecting trading of electricity between the Founder Members and
between and among the Founder Members and other persons who become
members of the trading system after the date of the coming into
force of the Trading Code;
(b) arrangements for effecting trading of electricity between members of
the trading system;
(c) arrangements for the establishment of a Trading Committee to carry
out the general management and supervision of the trading system and
its operation;
(d) arrangements for the admission to membership of the trading system
of:
(i) any person authorised to generate electricity by a licence
granted under Section 6(1)(a) of the Act:
(aa) who operates a generating station of a net capacity not
less than 50MW (or such other net capacity as the
Director shall direct time to time); and
(bb) who satisfies such other (if any) requirements as the
Director shall direct from time to time; and
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(cc) applies for such membership and agrees to be bound by
the provisions of the Trading Code; and
(dd) whose said licence contains a Condition requiring it to
comply with the provisions of the Trading Code in the
terms mutatis mutandis of Condition 7 of Part III; and
(ii) any licence holder specified or of a description specified by
the Director:
(aa) who applies for such membership and agrees to be bound
by the provisions of the Trading Code; and
(bb) whose licence contains a Condition requiring it to
comply with the provisions of the Trading Code in the
terms mutatis mutandis of Condition 7 of Part III;
(e) arrangements for charging members for the costs of the trading
system;
(f) provisions for the giving of directions by the Director to the
members of the trading system including (without limitation)
directions in relation to the responsibilities of the Trading
Committee, the contents of reports to be prepared by the Trading
Committee pursuant to the Trading Code, the confidentiality and
prevention of disclosure of information and matters relating to the
trading system and trading of electricity under the trading system
and the criteria for membership of the trading system;
(g) provisions for the approval by the Director of certain matters
including (without limitation) approval of the resignation of a
Founder Member from membership of the trading system, the cessation
of the membership of other members in certain circumstances, the
admission of persons to membership in certain circumstances and any
adjustment by the Trading Committee to the amount of the membership
contributions or other sums payable by members pursuant to the
Trading Code;
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(h) provisions for referring certain matters to the Director for his
determination including (without limitation) certain disagreements
arising under the Trading Code concerning the admission of persons
to membership of the trading system and the cessation of the
membership of members;
(i) provisions for delivering to the Director copies of reports prepared
by the Trading Committee pursuant to the Trading Code;
(j) administration procedures for the trading system.
3. In complying with the Trading Code the Licensee:
(a) shall have regard to its duty to facilitate competition as specified
in Section 9(2) and (3) of the Act; and
(b) shall not unduly discriminate against or unduly prefer:
(i) any one or any group of members; or
(ii) the Licensee in the conduct of any business other than the
Transmission Business
(c) in favour of or as against any one other or any other group of
members.
4. The Licensee shall, jointly with each other Scottish Transmission Licensee
and in consultation with the members of the trading system, review the
Trading Code and its operation from time to time after the date of the
coming into force of the Transmission Licence and the Licensee shall do so
whenever requested by the Director and in accordance with the terms of
such request (including any requirement to prepare such revisions to the
Trading Code as shall be necessary in order to give effect to such matters
as shall be specified in the request). Any revision to the Trading Code
resulting from the carrying out of any review shall be sent to the
Director for his approval and no
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revision to the Trading Code shall become effective until the Director has
approved the revision.
5. The Licensee shall give or send a copy of the Trading Code (as from time
to time revised) to the Director.
6. The Licensee shall (subject to paragraph 7) give or send a copy of the
Trading Code (as from time to time revised) to any Authorised Electricity
Operator who requests it.
7. The Licensee may make a charge for any copy of the Trading Code (as from
time to time revised) given or sent pursuant to paragraph 6 of an amount
which will not exceed any amount specified for the time being for the
purpose of this Condition in directions issued by the Director.
8. If there shall be any disagreement between the Licensee and any other
Scottish Transmission Licensee as to the terms of any revision which is to
be made to the Trading Code pursuant to paragraph 4 then:
(a) the Licensee shall refer the matter to the Director for
determination;
(b) the Licensee shall jointly with each other Scottish Transmission
Licensee forthwith prepare such revision on the basis of the terms
so determined by the Director; and
(c) a revision so prepared shall for all the purposes of this Condition
be deemed to have been prepared in accordance with paragraph 4.
9. For the purposes of this Condition:
"trading of electricity" means sales and purchases of
electricity pursuant to short term
contracts.
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"short term contract" means a contract under which a person
has a right or an obligation (whether
or not conditional or contingent) to
receive or provide electricity other
than:
(a) a contract:
(i) which is performed without
the use of any part of the
Scottish Transmission
System; and
(ii) under which the purchaser
is not a person authorised
to supply electricity in
Scotland or, if so
authorised, undertakes to
the seller to use the
electricity received or
provided pursuant to the
contract only for purposes
other than supply to
premises in Scotland
or
(b) a contract under which no person
has a right or an obligation
(whether or not conditional or
contingent) to receive or
provide electricity on a day
earlier than the 29th day after
the date on which the contract
is made or entered into
or
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(c) a contract under which:
(i) a person has a right or an
obligation (whether or not
conditional or contingent)
to receive or provide
electricity on any one or
more of the 28 days after
the date on which the
contract is made or
entered into; and
(ii) that person has a right or
an obligation to receive
or provide on the 29th (or
any later) day after such
date (and on the same
terms as the highest daily
amount referred to below)
an amount of electricity
not less than the highest
daily amount of
electricity which it has a
right or an obligation to
receive or provide during
the period of 28 days
referred to in (i) above.
"the trading system" means the facilities and procedures
established under the Trading Code for
the trading of electricity.
"the Founder Members" means the Licensee and SHE together.
"the Scottish Transmission means the Transmission Systems of the
System" Licensee and other Scottish
Transmission Licensees taken together,
but excluding any part thereof which
is not situated in Scotland.
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"contract" shall include any contract whether or
not in, or evidenced by, writing but
shall not include the Pooling and
Settlement Agreement or any contract
made or entered into pursuant to the
Pooling and Settlement Agreement.
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Condition 6. Compliance with Distribution Codes
1. The Licensee shall comply with the provisions of the Distribution Code and
the Distribution Code of each other public electricity supplier insofar as
applicable to the authorised business of the Licensee referred to in the
definition of "Transmission Business" in paragraph 3 of Condition 2 in
Part II.
2. The Director may (following consultation with the Licensee and such other
public electricity suppliers as the Director shall consider appropriate)
issue directions relieving the Licensee of its obligation under paragraph
1 in respect of such parts of the Distribution Code or the Distribution
Code of any other public electricity supplier and, in each case, to such
extent as may be specified in those directions.
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Condition 7. Disposal of relevant assets
1. The Licensee shall not dispose of or relinquish operational control over
any relevant asset otherwise than in accordance with the following
paragraphs of this Condition.
2. Save as provided in paragraph 3, the Licensee shall give to the Director
not less than 2 months' prior written notice of its intention to dispose
of or relinquish operational control over any relevant asset, together
with such further information as the Director may request relating to such
asset or the circumstances of such intended disposal or relinquishment of
control or to the intentions in regard thereto of the person proposing to
acquire such asset or operational control over such asset.
3. Notwithstanding paragraphs 1 and 2, the Licensee may dispose of or
relinquish operational control over any relevant asset:
(a) where:
(i) the Director has issued directions for the purposes of this
Condition containing a general consent (whether or not subject
to conditions) to;
(aa) transactions of a specified description; and/or
(bb) the disposal of or relinquishment of operational control
over relevant assets of a specified description; and
(ii) the disposal or relinquishment of operational control in
question is effected pursuant to a transaction of a
description specified in the directions or the relevant asset
in question is of a description so specified and the disposal
of relinquishment of operational control is in accordance with
any conditions to which the consent is subject; or
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(b) where the disposal or relinquishment of operational control in
question is required by or under any enactment or subordinate
legislation or by or under a transfer scheme.
4. Notwithstanding paragraph 1, the Licensee may dispose of or relinquish
operational control over any relevant asset specified in any notice given
under paragraph 2 in circumstances where:
(a) the Director confirms in writing that he consents to such disposal
or relinquishment (which consent may be made subject to the
acceptance by the Licensee or any third party in favour of whom the
relevant asset is proposed to be disposed or operational control is
proposed to be relinquished of such conditions as the Director may
specify); or
(b) the Director does not inform the Licensee in writing of any
objection to such disposal or relinquishment of control within the
notice period referred to in paragraph 2.
5. In this Condition:
"disposal" includes any sale, gift, lease,
licence, the grant of any right of
possession, loan, security, mortgage,
charge or the grant of any other
encumbrance or the permitting of any
encumbrance to subsist or any other
disposition to a third party and
"dispose" shall be construed
accordingly.
"relevant asset" means any asset for the time being
forming part of the Licensee's
Transmission System, any control
centre for use in conjunction
therewith and any right, title or
interest in land
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upon which any of the foregoing is
situtate.
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Condition 8. Restriction on use of certain information
1. The Licensee shall procure:
(a) that neither the Licensee nor any other person obtains any unfair
commercial advantage from its possession of protected information;
and
(b) that protected information is not used by the Licensee or any other
person for the purpose of obtaining for the Licensee or that other
person:
(i) any licence under Section 6 of the Act;
(ii) any right to purchase or otherwise acquire electricity;
(iii) any right to sell or otherwise supply electricity; or
(iv) control of any body corporate which, directly or indirectly,
has the benefit of any such licence or right
or when carrying on activities other than activities carried on for
the purposes of the Transmission Business.
2. The Licensee shall implement such measures and procedures and take all
such other steps as shall be specified in directions issued by the
Director from time to time for the purposes of this Condition to be in his
opinion reasonably necessary for the purpose of securing compliance by the
Licensee with its obligations under paragraph 1.
3. The Licensee shall:
(a) procure and furnish to the Director, in such manner and at such
times as the Director may require, such information and reports as
the Director may consider necessary concerning the performance by
the Licensee of its obligations under paragraphs 1 and 2 and the
effectiveness of the measures, procedures and steps
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specified in the directions referred to in paragraph 2 to secure
compliance by the Licensee with its obligations under paragraph 1;
(b) procure that access to any premises of the Licensee shall be given
at any time and from time to time to any nominated person(s) for the
purpose of investigating whether the Licensee has performed its
obligations under paragraphs 1 and 2 and the effectiveness of
measures, procedures and steps specified in the directions referred
to in paragraph 2 to secure compliance by the Licensee with its
obligations under paragraph 1 and that the Licensee and its
employees shall co-operate in any such investigation to the extent
requested by the nominated person(s); and
(c) procure that nominated person(s) shall be entitled to inspect and/or
take copies of such records and data of the Licensee as they shall
consider to be reasonably necessary for the purpose referred to in
sub-paragraph (b) above.
4. For the purposes of this Condition:
"protected information" means:
(a) information relating to the
affairs of an outside person
which has been furnished to or
otherwise acquired by the
Licensee under or pursuant to,
or in the course of any dealings
with the outside person under,
the Transmission Licence, the
Grid Code, any agreement for use
of or connection to or
modification of a connection to
the Licensee's Transmission
System or any agreement for use
of the Scottish interconnection
as referred to in
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Condition 2B and Condition 3B
respectively of Part VI or in
the course of any negotiations
with (including any application
made by) the outside person for
any such agreement; and
(b) any other information in the
possession of the Licensee which
relates to the affairs of an
outside person and would not
reasonably be expected to be in
the possession of the Licensee
if the Licensee were not a
Transmission Licensee
other than (in each case):
(aa) any such information which, or
any such information of a
description which, is specified
in directions issued by the
Director from time to time for
the purposes of this Condition
to be information, or (as the
case may be) information of a
description, which is not
protected information of the
purposes of this Condition; and
(bb) any such information which is in
or enters into the public domain
otherwise than as a consequence
of unauthorised disclosure by
the Licensee or any affiliate or
related
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undertaking of the Licensee (or
by any person to whom the same
is disclosed or suffered to be
disclosed by the Licensee or
such affiliate or related
undertaking) and for this
purpose the disclosure of
information by its inclusion in
a statement prepared under
paragraph 9 of Condition 2 of
Part VI shall be deemed to be an
authorised disclosure of that
information.
"outside person" means any person who is not an
affiliate or related undertaking of
the Licensee.
"dealings" includes dealings entered into
otherwise than for purposes connected
with the transmission of electricity.
"data" has the same meaning as in the Data
Protection Act 1984.
"nominated person(s)" means the person(s) from time to time
nominated by the Director for the
purposes of this Condition by notice
to the Licensee.
5. This Condition is without prejudice to the duties at law of the Licensee
towards outside persons.
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Condition 9. Transmission System outages
1. The Licensee shall notify the Director in writing forthwith in the event
that the Licensee and SHE have not agreed a programme of planned outages
for their respective Transmission Systems for the financial year
commencing on 1 April 1991 or any subsequent financial year on or before
the 1st day of January prior to the commencement of the relevant financial
year.
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PART V. CONDITIONS APPLICABLE TO THE PUBLIC ELECTRICITY SUPPLY
LICENCE
SECTION A. GENERAL OBLIGATIONS
Condition 1. Scope of application of Part V
1. The Public Electricity Supply Licence is subject to the Conditions in Part
V (including where such Conditions relate to activities other than those
authorised by that Licence).
2. The Generation Licence and the Transmission Licence are not subject to the
Conditions in Part V.
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Condition 2. Public electricity supply charge restriction Conditions
1. The Public Electricity Supply Licence is subject to the Conditions in
Schedule 6.
2. The Generation Licence and the Transmission Licence are not subject to the
Conditions in Schedule 6.
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Condition 3. Prohibition of discrimination in electricity sale contracts
1. The Licensee shall not, and shall procure that no affiliate or related
undertaking of the Licensee shall, sell or offer to sell electricity under
any electricity sale contract to any one relevant purchaser or person
seeking to become a relevant purchaser on terms as to price which are
materially more or less favourable than those on which it sells or offers
to sell electricity under any electricity sale contract to comparable
relevant purchasers. For these purposes, due regard shall be had to the
circumstances of sale to such purchasers including (without limitation)
volumes, load factors, conditions of interruptibility and the dates and
duration of the relevant agreements.
2. For the purposes of paragraph 1:
"relevant purchaser" means any purchaser of electricity
from the Licensee or any affiliate or
related undertaking of the Licensee
under an electricity purchase
contract, other than SHE in its
capacity as a purchaser of electricity
from the Licensee under any of the
restructuring agreements.
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Condition 3A. Prohibition of discrimination in supply
1. This Condition applies where the Licensee is in a dominant position in a
market for the supply of electricity to customers at premises.
2. Where this Condition applies the Licensee shall not supply or offer to
supply electricity to customers in any market in which it is dominant on
terms which are predatory.
3. Where this Condition applies, but subject to paragraph 4, the Licensee
(taken together with its affiliates and related undertakings) shall not,
in supplying or offering terms for the supply of electricity to customers
in any market in which it is dominant:
(a) show undue preference to any person (or class of persons) within
such market;
(b) exercise undue discrimination between any persons (or classes of
person) within such market; or
(c) set terms which are unduly onerous.
4. Nothing in paragraph 3 shall prohibit the Licensee, within any area or
class of customers (the "relevant area or class") in respect of which
there is established competition in the supply of electricity, from
supplying or offering to supply electricity on terms which are reasonably
necessary to meet that competition, save that the Licensee (taken together
with its affiliates and related undertakings) shall not, in supplying or
offering terms for the supply of electricity:
(a) show undue preference to any person (or class of persons) or
exercise undue discrimination between any persons (or classes of
person) within the relevant area or class of customers; or
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(b) set terms in respect of any person (or class of persons) in a market
in which the Licensee is dominant, save such persons who are within
the relevant area or class of customers, which are unduly onerous.
5. For the purposes of this Condition, terms are unduly onerous if the
revenue from the supply of electricity to customers on those terms:
(a) significantly exceeds the costs of that supply; and
(b) exceeds such costs to a significantly greater degree than the
revenue from supply to all other customers of the Licensee (and of
its affiliates and related undertakings) within the same market
exceeds the costs of supply to those customers.
6. For the purposes of this Condition, a market may be defined by reference
to a geographical area, or to a class of customer or both, save that no
market defined by reference to Designated Customers shall comprise fewer
than 50,000 such customers.
7. In determining, for the purposes of this Condition, whether any persons
constitute a class of person, due regard shall be had to the circumstances
of supply to such persons including (without limitation) volumes, load
factors, conditions of interruptibility, location of premises being
supplied and date and duration of the supply contract.
8. For the purposes of this Condition, the Director shall determine any
question as to:
(a) whether any area or class of customers constitutes a market for the
supply of electricity;
(b) whether the Licensee is dominant in any market for the supply of
electricity;
(c) whether there is established competition in respect of the supply of
electricity in any area or to any class of customers; and
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(d) whether any terms are predatory, having due regard to whether such
terms:
(i) incorporate charges which do not reasonably cover the
avoidable costs incurred in consequence of supplying the
customers in question; and
(ii) are intended or are likely to restrict, distort or prevent
competition in the supply of electricity.
9. The Director may determine that the Licensee is dominant in a specified
market:
(a) at any time prior to this Condition coming into force; or
(b) having first consulted with the Licensee and such other persons as
he considers appropriate (and having taken into account any
representations made to him), at any time after this Condition has
come into force,
and where the Director does make such a determination he shall immediately
notify the Licensee.
10. Where the Director has notified the Licensee of his determination in
accordance with paragraph 9 that it is dominant in a specified market, the
provisions of paragraphs 11 to 16 shall apply in respect of that market.
11. Where this paragraph applies the Licensee shall, prior to supplying or
offering to supply electricity under a tariff or Designated Supply
Contract on any new terms, give to the Director at least 28 days' notice
in writing of its intention to supply on such terms.
12. For the purposes of this Condition, a tariff or Designated Supply Contract
is on "new terms" if:
(a) it is a form of tariff or Designated Supply Contract under which the
Licensee has not previously supplied or offered to supply
electricity;
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(b) it is a tariff or Designated Supply Contract in respect of which the
Licensee is varying the terms as to price; or
(c) it is a tariff or Designated Supply Contract in respect of which the
Licensee is varying any other terms in such a manner as to
significantly affect the evaluation of that tariff or contract.
13. Where the Licensee has given notice to the Director of its intention to
supply on new terms it shall not supply or offer to supply electricity on
such terms until either the period of notice given to the Director has
expired and:
(a) the Director has not given or sent to the Licensee a counter-notice
(the "counter-notice") in accordance with paragraph 14; or
(b) prior to the expiry of such period, the Director has informed the
Licensee that he will not issue a counter-notice in respect of such
terms.
14. The Director may issue a counter-notice where, having considered the new
terms and having had regard to the likely effects of issuing such
counter-notice (including, but not limited to, the likely effect upon the
business of the Licensee), he determines that further consideration is
required to assess whether such terms are in breach of the provisions of
this Condition.
15. Where the Director issues a counter-notice in respect of any new terms the
Licensee shall not supply or offer to supply electricity on such terms
until either:
(a) a period of 3 months from the date of the counter-notice has
expired; or
(b) prior to the expiry of such period, the Director indicates to the
Licensee that he has no present intention of taking enforcement
action under Section 25 of the Act in respect of such terms.
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16. Where the Director issues a counter-notice he may:
(a) give or send a copy of that counter-notice to any Interested Person;
(b) invite representations from Interested Persons as to the matters to
which the counter-notice relates; and
(c) require the Licensee, within a reasonable period determined by the
Director, to provide him with such further information relating to
the new terms as he may specify (save that he may not by virtue of
this paragraph require the Licensee to furnish him with information
for the purpose of exercising his functions under Section 48 of the
Act),
and the Director shall take into account any representations made to him
by the Licensee in respect of such terms.
17. The Director may, at any time after notifying the Licensee of his
determination in accordance with paragraph 9 that it is dominant in a
specified market, determine that the Licensee is no longer dominant in
that market, and where he does make such a determination:
(a) the Director shall immediately notify the Licensee; and
(b) the provisions of paragraphs 11 to 16 shall cease to apply in
respect of the specified market.
18. For the purposes of this Condition, any reference to the Licensee being
dominant in a market for the supply of electricity shall be treated as a
reference to the Licensee, taken together with its affiliates and related
undertakings, being so dominant.
19. In this Condition:
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"Interested Persons" means all Electricity Suppliers which
supply electricity within the market
or area or to the class of customers
in question, the Relevant Consumers'
Committee and such other persons or
bodies as in the opinion of the
Director have a legitimate interest in
the terms on which the Licensee
supplies electricity.
"terms" means all the terms on which a supply
of electricity is offered or provided
which significantly affect the
evaluation of that supply, and shall
include all terms as to price.
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Condition 3B. Duration of discrimination conditions
1. Condition 3A shall cease to have effect (in whole or in part, as the case
may be) if the Licensee makes a disapplication request in accordance with
this Condition and:
(a) the Director agrees in writing to that request; or
(b) the application of Condition 3A (in whole or in part) is terminated
by notice given by the Licensee in accordance with paragraph 4 or 5
of this Condition.
2. A disapplication request pursuant to this Condition may be made by the
Licensee only where the Director has notified it, in accordance with
paragraph 9 of Condition 3A, of his determination that the Licensee is
dominant in a specified market, and any such request shall:
(a) be made in writing to the Director;
(b) specify whether the request relates to the whole of Condition 3A or
any part or parts thereof; and
(c) state the date (the "disapplication date") from which the Licensee
wishes the specified provisions of Condition 3A to cease to have
effect, which date shall be in accordance with paragraph 3 and not
earlier than 12 months after the date on which the request is made.
3. Where the Licensee was notified by the Director prior to this Condition
coming into force of his determination that the Licensee is dominant in a
specified market, no disapplication request made by the Licensee shall be
effective to disapply any of the provisions of Condition 3A prior to 31
March 2000.
4. If the Director has not by the date which is 6 months prior to the
disapplication date made a reference to the Monopolies Commission (under
Section 12 of the Act) relating to the modification of Condition 3A, the
Licensee may give to the Director a
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notice in writing terminating the application of such of the provisions of
Condition 3A as are specified in the disapplication request with effect
from the disapplication date or from any later date specified in the
notice.
5. If the Monopolies Commission reports on a reference made by the Director
relating to the modification of Condition 3A and does not conclude that
the disapplication of any of the provisions of that Condition (being
provisions specified in the disapplication request) would or may be
expected to operate against the public interest, the Licensee may within
30 days of the publication of the report under Section 13 of the Act give
to the Director notice in writing terminating the application of such
provisions with effect from the disapplication date or any later date
specified in the notice.
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Condition 4. Tariffs
1. The Licensee shall ensure that any tariffs fixed under Section 18 of the
Act shall be so framed as separately to identify:
(a) the element for use of the Licensee's Transmission System in the
Licensee's charges;
(b) the element for use of the Licensee's Distribution System in the
Licensees charges; and
(c) the element in respect of the supply of electricity to tariff
customers in the Licensee's charges.
2. Where the Director considers that by reason of the complexity of any such
tariffs fixed by the Licensee, simplified explanatory statements are
required or expedient for the understanding of tariff customers, the
Director may direct the Licensee to draw up such explanatory statements
and thereafter to publish them with the tariffs to which they relate.
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Condition 4A. Arrangements for informing customers on revocation of Licence
1. The Licensee shall comply with a direction from the Director in the
following terms where the Director:
(a) is, or is aware that the Secretary of State is, about to revoke a
Licence granted to another Electricity Supplier to supply
electricity (in this Condition known as the "First Supplier"); and
(b) considers that the Licensee is able to supply electricity to the
customers of the First Supplier without significantly prejudicing
the supplies of electricity which the Licensee makes or is
contracted to make.
2. The Director shall only issue a direction in accordance with paragraph 1
when the Secretary of State or, as the case may be, the Director has
served the First Supplier with a notice that he is revoking the First
Supplier's Licence to supply electricity in accordance with the terms of
the First Supplier's Licence, or such earlier date as the Director may
agree with the First Supplier.
3. A direction issued in accordance with paragraph 1 shall require that the
Licensee shall, within the period specified by the Director, send a
written notice in a form approved by the Director to each of the persons
or premises specified or described in the direction:
(a) informing the customer in question that, notwithstanding any
contract he may have with the First Supplier, the First Supplier is
no longer supplying him with electricity and has not done so since
the revocation took effect or, where the notice has been sent before
the revocation has taken effect, will be no longer supplying him
with electricity when it takes effect;
(b) informing the customer that the customer must from the moment the
revocation takes effect enter into a new contract for supply with
another
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Electricity Supplier of the customer's choice, and that he is free
to request a supply from the Licensee; and
(c) setting out the terms upon which the Licensee is prepared to supply
electricity if requested.
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Condition 4B. The Programme Implementation Agreement
1. The Licensee shall, where the Director has given it a written direction to
do so, enter into and comply with the Programme Implementation Agreement
established in accordance with paragraph 4.
2. The Programme Implementation Agreement shall be concerned with matters
relating to the effective implementation of trading and other arrangements
between the Licensee and other Relevant Parties which, in the reasonable
opinion of the Director following consultation with all Relevant Parties,
are or are likely to be necessary and appropriate to provide for the
effective and timely facilitation of competition in the supply of
electricity.
3. The Programme Implementation Agreement may include provisions relating to:
(a) the operation and management of procedures for the testing, trialing
and integration of those systems, processes and procedures required
to facilitate competition in the supply of electricity;
(b) the obligations of each of the Relevant Parties in respect of the
procedures defined under sub-paragraph (a);
(c) limitations of the liability of the Licensee and of such other
persons as are specified in the Agreement in respect of actions
taken in connection with the Agreement;
(d) the provision of information as between Relevant Parties and to
other persons specified in the Agreement;
(e) the determination of the specification of systems, processes and
procedures to be tested, trialed and integrated in accordance with
the Agreement, except in those circumstances where the Director
considers that any of the Relevant
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Parties has entered into another agreement which adequately provides
for such specification to be otherwise determined;
(f) the settling by the Director of disputes between Relevant Parties in
relation to matters covered by the Agreement; and
(g) the establishment of a board (the "Implementation Board"),
comprising appropriate persons appointed by the Director following
consultation with the Relevant Parties, which shall:
(i) oversee the conduct of the Agreement;
(ii) advise the Director and the Relevant Parties of any matters
upon which they may reasonably seek advice in relation to
matters covered by the Agreement, including the operation and
management of procedures established under the Agreement; and
(iii) undertake such other functions as in the reasonable opinion of
the Director are necessary to provide for the effective and
timely facilitation of competition in electricity supply.
4. The Programme Implementation Agreement shall be that established by
agreement between the Relevant Parties with the approval of the Director
or, where the Relevant Parties cannot agree (or where in the opinion of
the Director such agreement is unlikely to be reached within a reasonable
period) and where:
(a) the Director has sent to each of the Relevant Parties a notice (the
"proposals notice") setting out his own proposals in relation to the
content of the Programme Implementation Agreement; and
(b) following consideration of any comments received from any of the
Relevant Parties within 21 days of the issue of the proposals
notice, and having made such changes to his proposals as the
Director considers appropriate, the
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Director has given to each of the Relevant Parties a notice setting
out his final proposals (the "confirmation notice"),
the Programme Implementation Agreement shall, unless within 7 days of the
issue of the confirmation notice the parties have reached agreement with
the approval of the Director as to an alternative, be established in
accordance with the terms of the Director's confirmation notice.
5. With regard to the provisions of paragraphs 1 to 4, and following
consultation with the Relevant Parties and with such other persons or
bodies as appear to the Director to represent the interests of those
likely to be affected, the Director may issue a direction that specified
parts of the Relevant Conditions shall take effect at such time and in
such cases or circumstances as he shall direct.
6. In issuing a direction in accordance with paragraph 5 the Director shall
have regard to the need to provide for effective arrangements to
facilitate competition in the supply of electricity to customers and for
the effective maintenance of existing trading arrangements in respect of
the supply of electricity.
7. This Condition shall cease to be in force on whichever is the latest of
the following dates:
(a) 30 September 1998;
(b) the date which is 6 months after the latest date upon which any
provision in accordance with paragraph 3 (but excluding
sub-paragraph 3(c)) ceases to have effect; or
(c) such other date as may be agreed between the Director and the
Licensee.
8. In this Condition:
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"Relevant Conditions" means Conditions 4A, 4B, 7A, 8A to 8F,
12 to 17C, 25 to 28 and Section B of
Part V, and Condition 2B and 2C of
Part VI of this Licence Document.
"Relevant Parties" means the Licensee, other Authorised
Electricity Operators, the Electricity
Pool of England and Wales and Scottish
Electricity Settlements Ltd.
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Condition 5. Generation security standard
1. The Licensee shall make arrangements sufficient to meet the generation
security standard.
2. Not later than 3 months before the end of each financial year, commencing
with the financial year ending on 31 March 1991, the Licensee shall
provide to the Director a statement complying with the provisions of
paragraph 3.
3. The statement to be provided to the Director under paragraph 2 shall:
(a) be signed by 2 directors of the Licensee;
(b) describe the arrangements made or to be made by the Licensee to meet
the generation security standard in each of the 7 succeeding
financial years;
(c) state the planning margin or margins adopted by the Licensee for the
purpose of the above arrangements and set out the methodology and
calculations used in arriving at such margin or margins;
(d) refer to data, assumptions and demand forecasts (including insofar
as relevant those relating to diversity of demand, own generation,
arrangements for trading energy and capacity with other persons,
arrangements with qualifying customers and relevant purchasers,
including those permitting interruption and reduction of supply,
forecast maximum demand from qualifying customers and relevant
purchasers, the maximum demand which the Licensee can meet without
failing to meet the generation security standard, contracted
availability of generation, and load management (if any) of
qualifying customers and relevant purchasers); and
(e) include such other matters as the Director shall specify in
directions issued by the Director to the Licensee for the purpose of
this Condition not later than 6 months before the end of the
financial year in which the statement is provided.
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4. The Licensee shall upon request by the Director provide to the Director
such information as the Director may require for the purpose of monitoring
compliance with this Condition and to enable the Director (having regard
to his statutory duties) to review the operation of the generation
security standard.
5. The Licensee shall not make or agree any alteration, other than an
alteration to which paragraph 7 applies, to the arrangements described in
any statement provided to the Director under paragraph 2 as having been
made by the Licensee to meet the generation security standard for the
first financial year covered by such statement.
6. The Licensee shall:
(a) procure that, except to the extent that the Director shall otherwise
approve, arrangements described in any statement provided to the
Director under paragraph 2 as falling to be made by the Licensee to
meet the generation security standard for the first financial year
covered by such statement shall be made; and
(b) not make or agree any alteration, other than an alteration to which
paragraph 7 applies to the arrangements so made.
7. This paragraph applies to an alteration which the Director considers is
unlikely to result in the Licensee failing to meet the generation security
standard.
8. Save as required by law, the Licensee shall not enter into any contract
for the supply of electricity if the entering into of the contract would
cause demand in the first year covered by the statement most recently
provided to the Director under paragraph 2 to exceed the maximum demand
which the Licensee can meet in that year without failing to meet the
generation security standard as referred to in such statement, unless the
Director shall consider that the entering into of the contract is unlikely
to result in the Licensee failing to meet the generation security
standard.
9. Subject to paragraph 10, the Licensee shall not:
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(a) enter into any contract to supply electricity to a person other than
a qualifying customer if the Licensee has interrupted or reduced the
supply of electricity to any qualifying customer (other than by
reason of relevant constraints) and the interruption or reduction
continues during the period or any part of the period in which
electricity would otherwise be supplied under such contract; or
(b) interrupt or reduce the supply of electricity to any qualifying
customer (except to the extent that such interruption or reduction
is made by reason of relevant constraints) if at or shortly before
the time of the interruption or reduction the Licensee enters into
any contract to supply electricity to a person other than a
qualifying customer during the period or part of the period that the
supply is interrupted or reduced; or
(c) interrupt or reduce the supply of electricity to any qualifying
customer in circumstances where:
(i) electricity is available for purchase under the terms of the
Pooling and Settlement Agreement or the trading system
established by the Trading Code at a price less than Value of
Lost Load; and
(ii) the Licensee is not prevented from purchasing such electricity
by reason of relevant constraints.
10. Notwithstanding paragraph 9, the Licensee may interrupt or reduce a supply
of electricity in circumstances where it is necessary to do so by reason
of planned maintenance undertaken on the Licensee's Distribution System or
Transmission System or by reason of a fault on or affecting either the
Licensee's Distribution System or Transmission System or the quantities of
electricity delivered into that system.
11. In the event that the Director, after consultation with the Licensee,
shall at any time or from time to time issue a direction to the Licensee
for the purpose of this Condition to the effect that, in the opinion of
the Director, it is desirable that the Licensee make arrangements such as
are specified in the direction to meet the generation security
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standard, then the duty imposed by paragraph 1 shall not be capable of
being discharged by the Licensee after such date as shall be specified for
the purpose in the direction except by the Licensee making the
arrangements so specified.
12. The Director, after consultation with the Licensee, may at any time and
from time to time by directions issued to the Licensee for the purpose of
this Condition make such modifications to this Condition or any other
Condition to which the Public Electricity Supply Licence is subject as, in
the opinion of the Director, are the most appropriate to ensure that the
Licensee's supply charges are restricted in circumstances where the
Licensee fails to meet demand from its qualifying customers by reason of
an insufficiency of electricity generation available for the purposes of
supply by the Licensee to such customers.
13. The duty of the Licensee under paragraph 1 may, in relation to qualifying
customers whose premises are located in isolated areas, be discharged by
the making of arrangements sufficient to meet a standard of generation
security (other than the generation security standard) agreed between the
Licensee and the Director.
14. The provisions of this Condition are without prejudice to the duties of
the Licensee under the Electricity Supply Regulations 1988.
15. In this Condition:
"generation security standard" means:
(a) such standard of generation
security as will ensure:
(i) that the supply of
electricity to qualifying
customers will not be
discontinued in more than
9 years in any period of
100 years;
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and
(ii) that the voltage or
frequency of electricity
supplied to qualifying
customers will not be
reduced below usual
operational limits in more
than 30 years in any
period of 100 years.
by reason of insufficiency of
electricity generation available
for the purposes of supply by
the Licensee to its qualifying
customers at times of annual
system peak demand; and
(b) sufficient electricity
generation being available for
the purposes of supply by the
Licensee to its qualifying
customers at times other than
times of annual system peak
demand to ensure that the
standard of generation security
at each such time will be not
less than that referred to in
sub-paragraph (a) above for
times of annual system peak
demand.
"qualifying customer" means any purchaser from the Licensee
entitled and requiring at any time to
be supplied by the Licensee at
premises within the authorised supply
area of the Licensee but shall
exclude:
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(a) a purchaser under an
interruptible contract or a
contract containing load
management terms to the extent
that supplies to that purchaser
may be interrupted or reduced in
accordance with the terms of
that contract; and
(b) a tariff customer on special
tariffs which restrict supplies
to particular time periods to
the extent that supplies to that
customer may be interrupted or
reduced in accordance with such
tariff
"relevant constraints" constraints on the Transmission System
of the Licensee or any other
Transmission Licensee or on the
interconnector or on the Distribution
System of the Licensee.
"relevant purchaser" means any purchaser from the Licensee
who is not a qualifying customer.
"Value of Lost Load" means, in respect of the first
financial year, the sum of (pound)2
per kWh and, in respect of each
succeeding financial year, the sum
which corresponds to (pound)2 per kWh
as adjusted to reflect the percentage
change in the Retail Price Index
between the index published or
determined in respect of the December
prior to the start of that financial
year and the index published or
determined for December 1989.
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"contract" includes any agreements or arrangement
(whether or not constituted or
evidenced by any written document).
"contract for the supply of
electricity" includes any contract which amends
another contract so as to provide for
the Licensee to supply quantities of
electricity in excess of that supplied
under the last mentioned contract.
"modification" shall have the same meaning as in
Section 111 of the Act.
"interconnector" means the electric lines and
electrical plant and meters owned or
operated by the Transmission Company
solely for the transfer of electricity
to or from Scotland from or to the
Transmission Company's Transmission
System.
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Condition 6. Obligation on economic purchasing
1. Subject to paragraph 2, the Licensee shall:
(a) itself purchase;
(b) procure any affiliate of the Licensee to purchase; and
(c) insofar as it is able through the exercise of voting rights or
otherwise to do so, procure any related undertaking of the Licensee
to purchase
electricity at the best effective price reasonably obtainable having
regard to the sources available.
2. In the discharge of its obligations under paragraph 1, the Licensee may
additionally have regard to any considerations liable to affect its
ability and that of any affiliate or related undertaking of the Licensee
to discharge its obligations under this Condition in the future, including
the future security, reliability and diversity of sources of fuel for own
generation and of electricity available for purchase.
3. In addition, and without prejudice to, the Licensee's obligations under
paragraph 1:
(a) the Licensee shall purchase electricity under the terms of the
Pooling and Settlement Agreement during any period that the Licensee
is a pool member under the Pooling and Settlement Agreement (and, in
its capacity as a member of the trading system established by the
Trading Code, the Licensee shall make offers to purchase electricity
and offers to acquire options to purchase electricity, and accept
offers to sell electricity and offers to grant options to purchase
electricity under such trading system) in the manner which is best
designed to secure that the short term electricity requirements of
the Licensee are met at the best effective price reasonably
obtainable having regard to the sources available; and
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(b) the Licensee shall procure that any affiliate of the Licensee which
is a pool member under the Pooling and Settlement Agreement or a
member of such trading system and (insofar as it is able through the
exercise of voting rights or otherwise to do so) procure that any
related undertaking of the Licensee which is a pool member under the
Pooling and Settlement Agreement or a member of such trading system
shall purchase electricity (or, in the case of such trading system,
make and accept offers such as are referred to in sub-paragraph (a)
above) in the manner which is best designed to secure that the short
term electricity requirements of the affiliate or related
undertaking are met at the best effective price reasonably
obtainable having regard to the sources available.
4. In determining the effective price at which electricity is purchased by
the Licensee or any affiliate or related undertaking of the Licensee,
regard shall be had to any payments made or received or to be made or
received for the grant of or pursuant to any electricity purchase
contract.
5. Paragraphs 1 to 4 shall apply mutatis mutandis where the Licensee (or any
affiliate or related undertaking of the Licensee) exercises a discretion
or (by agreement or otherwise) varies the terms of an existing agreement
(whether or not entered into prior to the date on which the Public
Electricity Supply Licence comes into force) in such a manner as to alter
the effective price under such agreement.
6. The Licensee shall not be in breach of this Condition by reason only of
performing a must-take obligation to purchase electricity under a relevant
electricity agreement or acquiring electricity from own generation in
circumstances where the Licensee has a must-take obligation to purchase
the fossil fuel which is used to generate the electricity in question
under a relevant fuel agreement.
7. For the purpose of this Condition, an agreement which imposes an
obligation on the Licensee to make a payment to another party to the
agreement in the event that the Licensee does not purchase electricity (or
a minimum quantity of electricity) under the agreement shall be deemed to
be an agreement under which the Licensee has a must-take obligation to
purchase electricity and any quantity of electricity purchased by the
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Licensee pursuant to the agreement shall be deemed to have been purchased
in performance of a must-take obligation to purchase electricity if the
Licensee would have been obliged to make a payment to another party to the
agreement had it not purchased such quantity of electricity.
8. For the purpose of this Condition:
"purchase" includes the acquisition of
electricity from any source whether by
own-generation, or any other means.
"relevant electricity agreement" means a restructuring agreement or any
agreement under which the Licensee has
a must-take obligation to purchase
electricity and which is (a) entered
into prior to the relevant date and
(b) submitted by the Licensee to, and
approved by, the Director as a
relevant electricity agreement.
"relevant fuel agreement" means any agreement under which the
Licensee has a must-take obligation to
purchase fossil fuel and which is
submitted by the Licensee to, and
approved by, the Director as a
relevant fuel agreement.
"relevant date" means the date on which the Public
Electricity Supply Licence comes into
force.
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Condition 7. Distribution System planning standard and quality of service
1. The Licensee shall plan and develop its Distribution System in accordance
with a standard not less than that set out in Engineering Recommendation
P.2/5 (October 1978 revision) of the Electricity Council Chief Engineers'
Conference, insofar as applicable to it, or such other standard of
planning as the Licensee may, following consultation with such (if any)
other Transmission Licensees as the Director shall consider appropriate
and with the approval of the Director, adopt from time to time.
2. The Licensee shall within 3 months after the Public Electricity Supply
Licence comes into force draw up and submit to the Director for his
approval a statement setting out criteria by which the quality of
performance of the Licensee in maintaining Distribution System security
and availability and quality of service may be measured.
3. The Licensee shall within 2 months after the end of each financial year
submit to the Director a report providing details of the performance of
the Licensee during the previous financial year against the criteria
referred to in paragraph 2.
4. The Director may (following consultation with the Licensee and such (if
any) other licence holders as the Director shall consider appropriate)
issue directions relieving the Licensee of its obligation under paragraph
1 in respect of such parts of the Licensee's Distribution System and to
such extent as may be specified in the directions.
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Condition 7A. Security and safety of supplies
1. The Licensee shall establish and operate an enquiry service for use by any
person for the purposes of receiving reports and offering information,
guidance or advice about any matter or incident that:
(a) causes danger or requires urgent attention, or is likely to cause
danger or require urgent attention, in relation to the supply or
distribution of electricity in the Licensee's authorised area; or
(b) affects, or is likely to affect the maintenance of the security,
availability and quality of service of the Licensee's Distribution
System.
2. The service established by the Licensee in accordance with paragraph 1
shall:
(a) be provided without charge by the Licensee to the user at the point
of use;
(b) ensure that all reports and enquiries are processed in a prompt and
efficient manner whether made by telephone, in writing or in person;
(c) be available to receive and process telephone reports and enquiries
at all times on every day of each year; and
(d) be operational no later than 31 March 1998.
3. In the establishment and operation of the enquiry service in accordance
with paragraph 1 the Licensee shall not discriminate:
(a) between any persons or class or classes thereof; or
(b) between the Licensee (in the provision of such services by the
Licensee as part of its Distribution Business to itself for the
purpose of its Supply Business) and any private electricity supplier
or any customer thereof.
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4. In the establishment and operation of the enquiry service in accordance
with paragraph 1 the Licensee shall not restrict, distort or prevent
competition in the supply of electricity.
5. The Licensee shall by 1 January 1998 prepare and submit to the Director
for his approval a statement setting out details of the service to be
provided in accordance with paragraph 1, and the Licensee shall, following
the Director's approval, give or send a copy of such statement to any
person requesting it.
6. The Licensee shall give to the Director notice of any amendments it
proposes to make to the statement prepared under paragraph 5, and shall
not make such amendments until either:
(a) a period of one month from the date of the notice has expired; or
(b) prior to the expiry of such period, the Licensee has obtained the
written approval of the Director to the amendments.
7. The Licensee shall make arrangements to keep each of its customers
informed of a postal address and telephone number at which the service
established in accordance with paragraph 1 may be contacted.
8. The Licensee may discharge the duty imposed by paragraph 7 by providing
the requisite information to each of its customers:
(a) on the occasion of the customer first commencing to take a supply
from the Licensee; and
(b) either:
(i) where bills or statements in respect of charges for the supply
of electricity are rendered to the customer, on a quarterly
basis (it being
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sufficient that the information is included on or with that
bill or statement); or
(ii) where no bills or statements in respect of charges for the
supply of electricity are rendered to the customer, on an
annual basis
and by publishing such information in such manner as will in the opinion
of the Licensee secure adequate publicity for it.
9. The Licensee shall take steps to inform each of its customers, and each
Authorised Electricity Operator which uses the service, of any change to
the address or telephone number of the service established in accordance
with paragraph 1 as soon as is practicable prior to such change becoming
effective.
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Condition 7B. Procedures for the detection and prevention of theft, damage and
meter interference
1. The Licensee shall (and shall ensure that its agents) take all reasonable
steps to detect and prevent:
(a) the theft of electricity at premises which are supplied by it;
(b) damage to any electrical plant, electric line or electricity meter
through which such premises are supplied; and
(c) interference with any electricity meter through which such premises
are supplied.
2. Where a person other than the Licensee is the owner of any electrical
plant, electric lines or meter the Licensee shall, as soon as is
reasonably practicable, inform that person of any incident where it has
reason to believe:
(a) there has been damage to such electrical plant, electric line or
meter; or
(b) there has been interference with the meter to alter its register or
prevent it from duly registering the quantity of electricity
supplied.
3. Where a person other than the Licensee is the supplier of electricity to
premises within the authorised area the Licensee shall, as soon as is
reasonably practicable, inform that person of any incident where it has
reason to believe:
(a) there has been damage to any electrical plant, electric line or
meter through which such premises are supplied with electricity; or
(b) there has been interference with the meter through which such
premises are supplied to alter its register or prevent it from duly
registering the quantity of electricity supplied.
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Condition 7C. Provisions relating to the connection of metering equipment
1. On application made by any person the Licensee shall, subject to paragraph
5, offer to enter into an agreement authorising that person to connect
metering equipment to the Licensee's Distribution System.
2. In making an offer to enter into an agreement specified in paragraph 1,
the Licensee shall set out:
(a) the date from which the applicant is authorised to undertake
connections;
(b) the procedures to be adopted by the applicant when making
connections, with particular regard to those relating to safety; and
(c) such other detailed terms as are or may be appropriate for the
purposes of the agreement.
3. The Licensee shall offer terms for agreements in accordance with paragraph
1 as soon as practicable and (save where the Director consents to a longer
period) in any event not more than 28 days after receipt by the Licensee
from any person of an application containing all such information as the
Licensee may reasonably require for the purpose of formulating the terms
of the offer.
4. In the offering of the terms in accordance with paragraph 1, the Licensee
shall not show undue preference to or exercise undue discrimination
against any person or class of persons.
5. The Licensee shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement:
(a) (in respect of non-half-hourly metering equipment) which comes into
effect prior to 1 April 2000; or
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(b) where to do so would be likely to cause the Licensee to be in breach
of those provisions referred to at sub-paragraph 7(a) of Condition
2B of Part VI.
6. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with any
person entitled or claiming to be entitled thereto pursuant to a request
under this Condition, the Director may, on the application of such person
or the Licensee, settle any terms of the agreement in dispute between the
Licensee and that person in such manner as appears to the Director to be
reasonable.
7. In so far as any person entitled or claiming to be entitled to an offer
under this Condition wishes to proceed on the basis of the agreement as
settled by the Director, the Licensee shall forthwith enter into and
implement such agreement in accordance with its terms.
8. If the Licensee or other party to such agreement proposes to vary the
terms of any agreement entered into pursuant to this Condition in any
manner provided for under such agreement, the Director may, at the request
of the Licensee or other party to such agreement, settle any dispute
relating to such variation in such manner as appears to the Director to be
reasonable.
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Condition 7D. Agreements for the provision of meters
1. The Licensee shall not, in the course if its Supply Business, enter into
an agreement with any person for the provision of an electricity meter at
any premises (whatever the nature of that agreement) which is intended or
is likely to restrict, distort or prevent competition in the supply of
electricity.
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Condition 8. Distribution Code
1. The Licensee shall in consultation with Authorised Electricity Operators
liable to be materially affected thereby prepare and at all times have in
force and (subject to paragraph 10) shall implement and comply with a
Distribution Code:
(a) covering all material technical aspects relating to connections to
and the operation and use of the Licensee's Distribution System or
(insofar as relevant to the operation and use of the Licensee's
Distribution System) the operation of electric lines and electrical
plant connected to the Distribution System of the Licensee or any
other public electricity supplier or the system for the distribution
of electricity of any other person authorised to supply electricity
and (without prejudice to the foregoing) making express provision as
to the matters referred to in paragraph 5; and
(b) which is designed so as:
(i) to permit the development, maintenance and operation of an
efficient, co-ordinated and economical system for the
distribution of electricity; and
(ii) to facilitate competition in the generation and supply of
electricity.
2. The Distribution Code in force at the date of the coming into force of the
Public Electricity Supply Licence shall be sent to the Director for his
approval. Thereafter the Licensee shall (in consultation with Authorised
Electricity Operators liable to be materially affected thereby)
periodically review (including upon the request of the Director) the
Distribution Code and its implementation. Following any such review, the
Licensee shall send to the Director:
(a) a report on the outcome of such review;
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(b) any proposed revisions to the Distribution Code from time to time as
the Licensee (having regard to the outcome of such review)
reasonably thinks fit for the achievement of the objectives referred
to in sub-paragraph (b) of paragraph 1; and
(c) any written representations or objections from Authorised
Electricity Operators (including any proposals by such operators for
revisions to the Distribution Code not accepted by the Licensee in
the course of the review) arising during the consultation process
and subsequently maintained.
3. Revisions to the Distribution Code proposed by the Licensee and sent to
the Director pursuant to paragraph 2 shall require to be approved by the
Director.
4. Having regard to any written representations or objections referred to in
sub-paragraph (c) of paragraph 2, and following such further consultation
(if any) as the Director may consider appropriate, the Director may issue
directions requiring the Licensee to revise the Distribution Code in such
manner as may be specified in the directions, and the Licensee shall
forthwith comply with any such directions.
5. The Distribution Code shall include:
(a) a distribution planning and connection code containing:
(i) connection conditions specifying the technical, design and
operational criteria to be complied with by any person
connected or seeking connection with the Licensee's
Distribution System; and
(ii) planning conditions specifying the technical and design
criteria and procedures to be applied by the Licensee in the
planning and development of the Licensee's Distribution System
and to be taken into account by persons connected or seeking
connection with the Licensee's Distribution System in the
planning and development of their own plant and systems; and
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(b) a distribution operating code specifying the conditions under which
the Licensee shall operate the Licensee's Distribution System and
under which persons shall operate their plant and/or systems for the
distribution of electricity in relation to the Licensee's
Distribution System, insofar as the imposition of such conditions is
necessary to protect the security and quality of supply and safe
operation of the Licensee's Distribution System under both normal
and abnormal operating conditions.
6. The Licensee shall give or send a copy of the Distribution Code (as from
time to time revised) to the Director.
7. The Licensee shall (subject to paragraph 8) give or send a copy of the
Distribution Code (as from time to time revised) to any person requesting
the same.
8. The Licensee may make a charge for any copy of the Distribution Code (as
from time to time revised) given or sent pursuant to paragraph 7 of an
amount which will not exceed any amount specified for the time being for
the purposes of this Condition in directions issued by the Director.
9. In preparing, implementing and complying with the Distribution Code
(including in respect of the scheduling of maintenance of the Licensee's
Distribution System), the Licensee shall not unduly discriminate against
or unduly prefer:
(a) any one or any group of persons; or
(b) the Licensee in the conduct of any business other than the
Distribution Business
in favour of or as against any one other or any other group of persons.
10. The Director may (following consultation with the Licensee) issue
directions relieving the Licensee of its obligations to implement and
comply with the Distribution Code in respect of such parts of the
Licensee's Distribution System and to such extent as may be specified in
the directions.
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11. Compliance with this Condition shall not require the Licensee to impose
any contractual obligation on tariff customers to comply with the
Distribution Code (as from time to time revised).
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Condition 8A. The Metering Point Administration Service and the Master
Registration Agreement
1. The Licensee shall establish, and shall subsequently operate and maintain,
a service to be known as the Metering Point Administration Service.
2. The Metering Point Administration Service shall, within the authorised
area, fulfil the following functions:
(a) the maintenance of such a register of technical and other data as is
necessary to facilitate supply by any Electricity Supplier or Exempt
Supplier to all premises within the authorised area and to meet the
reasonable requirements of Electricity Suppliers in respect of such
premises for information for settlement purposes, including (where
so required):
(i) the identity of the Electricity Supplier responsible under the
Settlement Agreement for Scotland for the supply to each such
premises;
(ii) the type of metering equipment installed at each such
premises; and
(iii) the address of each such premises;
(b) the amendment of the register maintained in accordance with
sub-paragraph (a) to reflect changes of supplier in respect of any
premises;
(c) the provision, in a timely and efficient manner, of such data
contained in the register as is reasonably required and requested
to:
(i) any Electricity Supplier or agent thereof;
(ii) any person identified in the Settlement Agreement for Scotland
as an appropriate person for the receipt of data for
settlement purposes; and
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(iii) any person identified in the Master Registration Agreement as
entitled to such data for the purpose of facilitating changes
of supplier in respect of any premises; and
(d) the maintenance of an enquiry service for the provision to any
customer of an Electricity Supplier, on request and free of charge
to that customer, of such data contained in the register as is
relevant to the supply of electricity to premises which are (or are
to be) owned or occupied by the customer, and the taking of such
steps as will in the opinion of the Licensee secure adequate
publicity for the operation of the enquiry service.
3. In fulfilling its obligation in accordance with paragraph 1 the Licensee
shall not restrict, distort or prevent competition in the provision of
meter operation, data retrieval, data processing, data aggregation or
prepayment meter services.
4. The Licensee shall use its best endeavours, in conjunction and
co-operation with all other public electricity suppliers, to prepare a
form of agreement to be known as the Master Registration Agreement.
5. The Master Registration Agreement shall be an agreement made between:
(a) on the one part, the Licensee and all other public electricity
suppliers in their capacity as providers of metering point
administration services; and
(b) on the other part, all Electricity Suppliers who require the
provision of metering point administration services from at least
one public electricity supplier, together with such other persons as
are, for settlement purposes, appropriate parties to the agreement
and shall comprise all the matters set out at paragraph 6.
6. The Master Registration Agreement shall comprise:
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(a) terms for the provision of metering point administration services in
accordance with the requirements of paragraph 2 and the equivalent
requirements in the licences of all other public electricity
suppliers;
(b) provisions to facilitate, and procedures and practices to be
followed by Electricity Suppliers in relation to changes of
Electricity Supplier in respect of any premises;
(c) a catalogue of definitions, flows and forms of such data as may
require to be transferred by or to parties to the Master
Registration Agreement, or as between any persons for settlement
purposes or for any related purposes (the "Data Transfer
Catalogue");
(d) arrangements for the variation of the Master Registration Agreement
following consultation with the parties, or representatives of the
parties, to that agreement;
(e) provisions (which shall require to be approved in advance by the
Director) by virtue of which the whole or specified parts of the
Master Registration Agreement shall not be capable of variation
without the prior approval of the Director; and
(f) such other matters as are or may be appropriate for the development,
maintenance and operation of an efficient, co-ordinated and
economical system for the supply of electricity and for the purpose
of facilitating competition in electricity supply.
7. The Licensee shall be a party to and shall comply with the provisions of
the Master Registration Agreement.
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Condition 8B. Establishment of a Data Transfer Service
1. The Licensee shall use its best endeavours, in conjunction and
co-operation with all other public electricity suppliers:
(a) to establish, or to procure the establishment by a third party of, a
service to be known as the Data Transfer Service; and
(b) subsequently to operate and maintain, or to procure the subsequent
operation and maintenance by a third party of such Data Transfer
Service in accordance with the provisions of this Condition.
2. The Data Transfer Service shall:
(a) provide a network over which may be made all of the electronic data
transfers specified at paragraph 3;
(b) operate and maintain that network; and
(c) provide a connection to that network, on request, to any person who
is or will be a party to any of the electronic data transfers
specified at paragraph 3.
3. The electronic data transfers specified at this paragraph are those which
are reasonably required for any of the purposes set out at paragraph 4 and
which are made between:
(a) a Metering Point Administration Service (MPAS) Operator and an
Electricity Supplier (including the Licensee acting in the course of
its Supply Business) or any agent thereof;
(b) an MPAS Operator and any person identified in the Pooling and
Settlement Agreement or the Settlement Agreement for Scotland as an
appropriate person for the receipt of data from the MPAS Operator
for settlement purposes;
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(c) the Electricity Pool of England and Wales or Scottish Electricity
Settlements Limited (or any agent thereof) and an Electricity
Supplier (or any agent thereof);
(d) an Electricity Supplier (or any agent thereof) and another
Electricity Supplier (or any agent thereof);
(e) an Electricity Supplier and any of its agents;
(f) different agents of the same Electricity Supplier;
(g) public electricity suppliers (or their agents) and generators (or
their agents) which are parties to the Settlement Agreement for
Scotland; and
(h) Scottish Electricity Settlements Limited (or any agent thereof) and
generators which are parties to the Settlement Agreement for
Scotland.
4. The purposes of this paragraph are:
(a) meeting obligations with respect to the transfer of data for
settlement purposes;
(b) communicating meter reading and meter standing data;
(c) facilitating the provision of metering point administration
services;
(d) communicating distribution use of system information; and
(e) fulfilling such other requirements relating to the transfer of data
as may be requisite for the supply of electricity to customers and
compliance by Electricity Suppliers with the Master Registration
Agreement.
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5. The Data Transfer Service shall, where relevant, transmit data in a form
which complies with the provisions of the Data Transfer Catalogue.
6. In fulfilling its obligation under paragraph 1 the Licensee shall not, or
(if appropriate) shall ensure that the third party shall not, restrict,
distort or prevent competition in the provision of meter operation, data
retrieval, data processing, data aggregation or prepayment meter services.
7. Any obligation placed on the Licensee under Conditions 8C to 8F in respect
of the provision of data transfer services shall (for the purposes of
those Conditions) be treated as a requirement on the Licensee to use its
best endeavours, in conjunction and co-operation with all other public
electricity suppliers, to fulfil that obligation or to procure the
fulfilment of that obligation by a third party, and Conditions 8C to 8F
shall apply mutatis mutandis to the provision of data transfer services.
8. Further, in relation to the provision of data transfer services the
reference at paragraph 1 of Condition 8F to the Licensee failing to enter
into an agreement shall be a reference to the Licensee, in conjunction
with all other public electricity suppliers, failing to enter into or
failing to procure that a third party enters into an agreement.
9. In this Condition:
"Metering Point Administration means the Licensee or any other public
Service (MPAS) Operator" electricity supplier in its capacity
as a provider of metering point
administration services.
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Condition 8C. Requirement to offer terms for the provision of Metering and Data
Services
1. On application made by any private electricity supplier, or in the case of
sub-paragraphs 1(a) and (b) by any person, the Licensee shall (subject to
paragraph 6) offer to enter into an agreement for the provision within its
authorised area of such of the following services as may be required:
(a) the provision of metering equipment whether, at the discretion of
the Licensee, by way of sale, hire or loan ("meter provision
services");
(b) the installation, commissioning, testing, repair and maintenance of
metering equipment ("meter operation services");
(c) the retrieval and verification of meter reading data from
electricity meters and the delivery of such data to any relevant
person for the purpose of data processing ("data retrieval
services");
(d) the:
(i) processing, validation and (where necessary) estimation of
meter reading data; and
(ii) creation, processing and validation of data in respect of the
consumption of electricity at premises which receive an
unmetered supply,
and in each case the delivery of such data to any relevant person
for the purpose of data aggregation ("data processing services");
(e) the collation and summation of meter reading data (whether actual or
estimated) and of data in respect of the consumption of electricity
at premises
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which receive an unmetered supply, and the delivery of such data to
any relevant person for settlement purposes ("data aggregation
services"); and
(f) the access to a system which supports the supply of electricity to
Designated Customers with prepayment meters ("prepayment meter
services"), such system providing as may be reasonably appropriate
for prepayment meters which require tokens, cards or keys for their
operation and comprising facilities for:
(i) (where requested) the purchase by private electricity
suppliers and/or encoding with data of tokens, cards or keys;
(ii) the use by customers of local outlets for the purchase of
tokens and the crediting with value of cards or keys;
(iii) the making of payments to suppliers in respect of sums
received by the Licensee on behalf of customers; and
(iv) where relevant, the transfer of customer data to private
electricity suppliers.
2. On application made by any Electricity Supplier the Licensee shall
(subject to paragraph 6) offer to provide metering point administration
services within the authorised area pursuant to and in accordance with the
Master Registration Agreement.
3. On application made by any person the Licensee shall (subject to paragraph
6) offer to enter into an agreement for the provision of data transfer
services.
4. In making an offer to enter into any agreement specified in paragraphs 1
to 3, the Licensee shall set out:
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(a) the date by which the services required shall be provided (time
being of the essence unless otherwise agreed between parties);
(b) the charges to be paid in respect of the services required, such
charges (unless manifestly inappropriate):
(i) to be presented in such a way as to be referable to the
statements prepared in accordance with paragraph 1 of
Condition 8E or any revision thereof; and
(ii) to be set in conformity with the requirements of Condition 8E;
and
(c) such other detailed terms in respect of each of the services
required as are or may be appropriate for the purpose of the
agreement.
5. The Licensee shall offer terms for agreements in accordance with
paragraphs 1 to 3 as soon as practicable and (save where the Director
consents to a longer period) in any event not more than 28 days after
receipt by the Licensee from any person of an application containing all
such information as may reasonably be required for the purpose of
formulating the terms of the offer.
6. The Licensee shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement if to do so would be likely to cause
the Licensee to be in breach of any of the provisions referred to at
sub-paragraph 7(a) of Condition 2B of Part VI.
7. The Licensee shall undertake each of the services referred to in
paragraphs 1 to 3 in the most efficient and economic manner practicable
having regard to the alternatives available and the other requirements of
this Licence and of the Act in so far as they relate to the provision of
those services.
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8. In the provision of any of the services referred to in paragraphs 1 to 3
(excepting prepayment meter services) the Licensee shall not restrict,
distort or prevent competition in the supply of electricity.
9. The services referred to in paragraphs 1 to 3 shall collectively be
described as Metering and Data Services.
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Condition 8D. Non-discrimination in the provision of Metering and Data Services
1. In the provision of any of the Metering and Data Services the Licensee
shall not discriminate:
(a) between any persons or class or classes thereof; or
(b) as between the Licensee (in the provision of such services by the
Licensee as part of its Distribution Business to itself for the
purpose of its Supply or Second Tier Supply Business) and any
persons or class or classes thereof.
2. Without prejudice to paragraph 1, and subject to the provisions of
Condition 8E, the Licensee shall not make charges for the provision of any
of the Metering and Data Services to any person or class or classes
thereof which differ from the charges for such provision:
(a) to any other person or class or classes of person; or
(b) to the Licensee in the provision of such services by the Licensee
(as part of its Distribution Business to itself for the purposes of
its Supply or Second Tier Supply Business)
except in so far as such differences reasonably reflect differences in the
costs associated with such provision.
3. In relation to the provision of prepayment meter services paragraphs 1
and 2 shall have effect as if after "Distribution Business" were inserted
therein "or any other business."
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Condition 8E. Basis of charges for Metering and Data Services: requirements for
transparency
1. The Licensee shall as soon as reasonably practicable prepare statements in
a form approved by the Director setting out:
(a) the basis upon which charges for the provision of each of the
Metering and Data Services will be made; and
(b) information relating to the other terms that will apply to the
provision of each service,
in each case in such form and with such detail as shall be necessary to
enable any person to make a reasonable estimate of the charges to which he
would become liable for the provision of such services and of the other
terms, likely to have a material impact on the conduct of his business,
upon which the service would be provided and (without prejudice to the
foregoing) including the information set out in paragraph 2.
2. The statements referred to in paragraph 1 shall include:
(a) a schedule of charges for such services; and
(b) an explanation of the methods by which and the principles on which
such charges will be calculated.
3. The Director may, upon the written request of the Licensee, issue a
direction relieving the Licensee of its obligations under paragraphs 1 and
2 to such extent and subject to such terms and conditions as he may
specify in that direction.
4. The Licensee shall not in setting its charges for or in setting the other
terms that will apply to the provision of any of the Metering and Data
Services restrict, distort or prevent competition in the generation,
distribution or supply of electricity or in the
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provision of meter operation, data retrieval, data processing or data
aggregation services.
5. The Licensee may periodically review the information set out in and, with
the approval of the Director, alter the form of the statements prepared in
accordance with paragraph 1 and shall, at least once in every year that
this Licence is in force, make any necessary revisions to such statements
in order that the information set out in the statements shall continue to
be accurate in all material respects.
6. The Licensee shall send a copy of the statements prepared in accordance
with paragraph 1, and of each revision of such statements in accordance
with paragraph 5, to the Director.
7. The Licensee shall give or send a copy of the statements prepared in
accordance with paragraph 1, or (as the case may be) of the latest
revision of such statements in accordance with paragraph 5, to any person
who requests a copy of such statement or statements.
8. The Licensee may make a charge for any statement given or sent pursuant to
paragraph 7 of an amount which shall not exceed the amount specified in
directions issued by the Director for the purposes of this Condition based
on the Director's estimate of the Licensee's reasonable costs of providing
such a statement.
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Condition 8F. Functions of the Director
1. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with any
person entitled or claiming to be entitled thereto pursuant to a request
under Condition 8C, the Director may, on the application of such person or
the Licensee, settle any terms of the agreement in dispute between the
Licensee and that person in such manner as appears to the Director to be
reasonable having (in so far as relevant) regard in particular to the
following considerations:
(a) that such person should pay in respect of the services required the
whole or the appropriate proportion of such sum as is determined in
accordance with paragraph 4 of Condition 8E;
(b) that the performance by the Licensee of its obligations under the
agreement should not cause it to be in breach of those provisions
referred to at subparagraph 7(a) of Condition 2B of Part VI; and
(c) that the terms and conditions of the agreement so settled by the
Director and of any other agreements entered into pursuant to a
request under Condition 8C should be, so far as circumstances allow,
in as similar a form as is practicable.
2. In so far as any person entitled or claiming to be entitled to an offer
under Condition 8C wishes to proceed on the basis of the agreement as
settled by the Director, the Licensee shall forthwith enter into and
implement such agreement in accordance with its terms.
3. If any party to such agreement proposes to vary the contractual terms of
any agreement for any Metering and Data Services entered into pursuant to
Condition 8C or this Condition in any manner provided for under such
agreement, the Director may, at the request of that party, settle any
dispute relating to such variation in such manner as appears to the
Director to be reasonable.
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4. The Director may (following consultation with the Licensee) issue
directions relieving the Licensee of its obligations under Condition 8C in
respect of such parts of that Condition and to such extent as may be
specified in the directions.
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Condition 9. Restriction on use of certain information
1. Where the Licensee or any affiliate or related undertaking of the Licensee
receives, in the course of the operation of the Distribution Business,
information from any person:
(a) pursuant to the provisions of the Distribution Code;
(b) pursuant to the provisions of the Master Registration Agreement;
(c) in accordance with any agreement to provide a Metering or Data
Service pursuant to Condition 8C (but excluding prepayment meter
services); or
(d) in accordance with any agreement for Standard Terms of Connection,
such information shall be treated as confidential information for the
purposes of this Condition and, subject to paragraph 7, the provisions of
this Condition shall apply to that information, save where the person
providing the information notifies (or otherwise agrees with) the Licensee
that the information need not be treated as confidential.
2. The Licensee shall not (and shall procure that its affiliates and related
undertakings shall not) use confidential information in a manner which may
obtain for the Licensee or any affiliate or related undertaking of the
Licensee any commercial advantage in the operation of the Supply Business
or of the Second Tier Supply Business.
3. The Licensee shall not (and shall procure that its affiliates or related
undertakings shall not) authorise access to confidential information to
any of its (or its affiliates and related undertakings') employees,
agents, consultants or contractors save insofar as such persons require
access to the information for the effective operation of the Distribution
Business.
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4. The Licensee shall use all reasonable endeavours to ensure that any person
with authorised access to confidential information in accordance with
paragraph 3 shall use such information only for the purposes for which it
was provided.
5. The Licensee shall not (and shall procure that its affiliates and related
undertakings shall not) disclose confidential information other than:
(a) subject to paragraph 6, to any professional or other advisers who
require such information for the purpose of providing advice which
is necessary for the effective operation of the Distribution
Business.
(b) to the Director; and
(c) where the Licensee (or any affiliate or related undertaking of the
Licensee) is required or permitted to disclose such information:
(i) in compliance with its duties under the Act or any other
requirement of a Competent Authority;
(ii) in compliance with the conditions of any licence granted under
the Act or any document referred to in such a licence with
which it is required by virtue of the Act or that Licence to
comply;
(iii) in compliance with any other requirement of law;
(iv) in response to a requirement of any Stock Exchange, the Panel
on Take-overs and Mergers or any other regulatory authority;
or
(v) pursuant to the arbitration rules for the Electricity
Arbitration Association or pursuant to any judicial or other
arbitral process or tribunal of competent jurisdiction.
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6. Where confidential information is disclosed in accordance with
sub-paragraph 5(a), the Licensee shall ensure that any persons to whom
that information is disclosed are aware of its confidential nature, and
shall take reasonable steps to ensure that such persons do not disclose
that confidential information save in accordance with the provisions of
this Condition.
7. The Director may, upon the written request of the Licensee, issue a
direction relieving the Licensee of its obligations under paragraphs 1 to
6 to such extent and subject to such terms and conditions as he may
specify in that direction.
8. The Licensee shall no later than 1 January 1998 prepare a statement in a
form approved by the Director setting out the practices, procedures and
systems the Licensee has adopted (or intends to adopt) to ensure its
compliance:
(a) with paragraphs 2 to 6 of this Condition; and
(b) in the provision of services in accordance with Conditions 7A, 8A,
8B and 8C (excluding prepayment meter services), with its
obligations not to restrict, distort or prevent competition.
9. The Licensee may periodically revise the information set out in and, with
the approval of the Director, alter the form of the statement prepared in
accordance with paragraph 8 and shall, at least once every year during
which this Licence is in force, review such statement in order that the
information set out therein shall continue to be accurate in all material
respects.
10. The Licensee shall take all reasonable steps to ensure that it complies
with the practices and procedures set out in the statement prepared in
accordance with paragraph 8 (as from time to time revised).
11. The Licensee shall send a copy of the statement prepared in accordance
with paragraph 8, and of each revision of such statement in accordance
with paragraph 9, to the Director.
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12. The Licensee shall give or send a copy of the statement prepared in
accordance with paragraph 8, or (as the case may be) of the latest
revision of such statement in accordance with paragraph 9, to any person
who requests a copy of such statement.
13. As soon as is reasonably practicable after the end of each calendar year
the Licensee shall produce a report as to its compliance during that year
with the practices and procedures set out in the statement prepared in
accordance with paragraph 8, and such report shall:
(a) detail the procedures followed by the Licensee during that year for
monitoring its compliance with paragraph 10;
(b) refer to such other matters as are or may be appropriate in relation
to the operation of the practices, procedures and systems adopted by
the Licensee during that year;
(c) outline the content of any representations received by the Licensee
in respect of the practices and procedures set out in the statement
prepared in accordance with paragraph 8, and detail such steps as
were taken by the Licensee in response to those representations; and
(d) specify any remedial action taken by the Licensee to ensure its
conformity with the statement prepared in accordance with paragraph
8.
14. The Licensee shall submit to the Director a copy of the report produced in
accordance with paragraph 13, and shall give or send a copy of the report
to any person who requests such a copy.
15. In this Condition:
"Competent Authority" means the Secretary of State, the
Director and any local or national
agency, authority,
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department, inspectorate, minister,
ministry, official or public or
statutory person (whether autonomous
or not) of, or of the government of,
the United Kingdom or the European
Community.
"confidential information" means all information required to be
treated as confidential under
paragraph 1, but shall exclude all
information that is in or enters into
the public domain otherwise than as a
consequence of unauthorised disclosure
by the Licensee or any affiliate or
related undertaking of the Licensee
(or by any person to whom the same is
disclosed or suffered to be disclosed
by the Licensee or such affiliate or
related undertaking).
"Electricity Arbitration means the unincorporated members' club
Association" of that name formed inter alia to
promote the efficient and economic
operation of the procedure for the
resolution of disputes within the
electricity supply industry by means
of arbitration or otherwise in
accordance with its arbitration rules.
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Condition 10. Conditions of supply affecting customers' statutory rights
1. The Licensee shall not include in or send with any notice given under
Section 16(3) of the Act, or any form provided to customers for use in
giving notice under Section 16(2) of the Act, or any notice sent to
customers prior to their entering into a tariff or special agreement, an
invitation to agree to anything which, by virtue of the Act, may only be
done or (as the case may be) not done:
(a) with the agreement of that customer; or
(b) in any case where that customer withholds his agreement or makes
that agreement subject to terms and conditions to which the Licensee
objects, with the approval or consent or by order of the Secretary
of State
unless the form and terms of such invitation have first been submitted to
and approved by the Director.
2. Nothing in paragraph 1 shall prevent the Licensee from:
(a) inviting or requiring a customer to take a supply of electricity
under a special agreement in accordance with Section 22 of the Act;
(b) including in any such notice any provision or condition which the
Licensee is required or permitted to include in such notice by
virtue of Section 16(4) of the Act; or
(c) including in any such notice concerning the provision of a supply to
premises:
(i) not previously supplied by the Licensee; or
(ii) where any modification is required to any electric line,
electrical plant or electric meter through which such premises
are supplied, or where any change is required to the location
thereof
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an invitation to any customer to agree to any provision or condition
concerning the installation or location of any or all of an electric
line, electrical plant or an electric meter
in any such case without having submitted the form and terms of such
agreement or notice to the Director.
3. The Licensee shall include in any form provided to a customer for use in
giving notice under Section 16(2) of the Act a prominent statement of the
right of such customer to apply to the Director for the determination of
any dispute arising out of the proposed terms of supply.
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Condition 11. Licensee's apparatus on customers' side of meter
1. This Condition applies where the Licensee, whether on its own behalf or as
a provider of meter operation services to another Electricity Supplier,
installs a second meter or other apparatus for the purpose of ascertaining
or regulating the amount of electricity supplied, the period of supply, or
any other quantity or time connected with the supply on the customer's
side of the non-half-hourly metering equipment registering the quantity of
the supply to that customer.
2. Any second meter or other apparatus installed by the Licensee in the
position and for a purpose described in paragraph 1 shall be such that the
power consumed by it, when aggregated with the power consumed by any other
meter or apparatus installed by the Licensee in the like position and for
a like purpose in relation to the customer, does not exceed 10 watts
except where otherwise agreed with the customer.
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Condition 12. Code of practice on payment of bills and guidance for dealing with
customers in difficulty
1. The Licensee shall, no later than 1 January 1998, prepare and submit to
the Director for his approval a code of practice concerning the payment of
electricity bills by its Domestic Customers, including appropriate
guidance for the assistance of such customers who, through misfortune or
inability to cope with electricity supplied on credit terms, may have
difficulty in paying such bills.
2. The code of practice shall include procedures by which the Licensee can
distinguish customers in difficulty (the "relevant customers") from others
in default and can:
(a) provide general information as to how relevant customers might
reduce their bills in the future by the more efficient use of
electricity;
(b) where such a facility is available, accept in payment for
electricity supplied sums which are deducted at source from social
security benefits payable to relevant customers;
(c) detect failures by relevant customers to comply with arrangements
entered into for paying by instalments charges for electricity
supplied;
(d) make such arrangements so as to take into account the customers'
ability to comply with them;
(e) ascertain with the assistance of other persons or organisations, the
ability of customers to comply with such arrangements;
(f) provide for customers who have failed to comply with such
arrangements, or procure for them the provision of, a prepayment
meter (where safe and practicable to do so); and
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(g) arrange for the calibration of any prepayment meter so provided so
as to take into account the customers' ability to pay any of the
charges due from them under such arrangements in addition to the
other charges lawfully being recovered through the prepayment meter.
3. In formulating the procedures referred to at paragraph 2 the Licensee
shall have particular regard:
(a) to the purpose of avoiding, in so far as is practicable, the
disconnection of premises occupied by relevant customers otherwise
than following compliance by the Licensee with such procedures; and
(b) to the interests of relevant customers who are of pensionable age or
disabled or chronically sick and to the purpose of avoiding, in so
far as is practicable, the disconnection of premises occupied by
such customers during the winter months of each year,
and the procedures shall be designed for the achievement of such purposes.
4. This Condition is subject to the provisions of Condition 17A.
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Condition 13. Record of and report on performance
1. The Licensee shall keep a record of its general operation of the
arrangements mentioned in Conditions 12, 14, 14A, 15, 16 and 17 and if the
Director so directs in writing, of its operation of any particular cases
specified, or of a description specified, by him.
2. The Licensee shall keep a statistical record of its performance in
relation to the provision of electricity supply to its Designated
Customers under the terms of contracts or in accordance with tariffs fixed
under Section 18 of the Act, including services relating to:
(a) the amounts of electricity supplied and the recovery of electricity
charges for each of the principal payment methods and for each set
of the contract or tariff terms offered;
(b) the disconnection of customers for non-payment of bills and breach
of payment arrangements agreed following such non-payment;
(c) the holding of security deposits;
(d) the installation of prepayment meters calibrated to recover customer
debts;
(e) the offering of appointments and the making of visits to customers'
premises;
(f) the response made to enquiries concerning electricity supply
matters;
(g) the nature of guidance as to the efficient use of electricity given
and the measures to improve the efficient use of electricity
introduced by the Licensee; and
(h) payments made to customers and to suppliers pursuant to the
standards of performance prescribed by the Director in accordance
with regulations made
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under Section 39 of the Act or in accordance with paragraphs 2 and 3
of Condition 15.
3. The Licensee shall, from time to time as required by the Director, provide
to the Director and to the Relevant Consumers' Committee such of the
information contained in the records prepared in accordance with
paragraphs 1 and 2 as the Director may request in writing.
4. As soon as is reasonably practicable after the end of each calendar year,
the Licensee shall submit to the Director and the Relevant Consumers'
Committee a report dealing with the matters mentioned in paragraphs 1 and
2 in relation to that year and shall:
(a) publish the report so submitted in such manner as will in the
reasonable opinion of the Licensee secure adequate publicity for it;
and
(b) send a copy of it free of charge to any person requesting one,
except that, in performing its obligations under sub-paragraphs 4(a) and
(b), the Licensee shall exclude from the report such information as
appears to it to be necessary or expedient to ensure that, save where they
consent, individual Designated Customers referred to therein cannot
readily be identified.
5. The report shall be presented, so far as is reasonably practicable, in a
standard form designated by the Director for the purposes of this
Condition.
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Condition 14. Provision of services for persons who are of pensionable age or
disabled or chronically sick
1. The Licensee shall, no later than 1 January 1998, prepare and submit to
the Director for his approval a code of practice detailing the special
services the Licensee will make available for Domestic Customers who are
of pensionable age or disabled or chronically sick.
2. The code of practice shall include arrangements by which the Licensee will
where appropriate, in respect of its customers:
(a) provide where practicable special controls and adaptors for
electrical appliances and meters (including prepayment meters) and
reposition meters (and shall set out any charges to be made for the
provision of such services);
(b) provide special means of identifying persons acting on behalf of the
Licensee;
(c) give advice on the use of electricity;
(d) send bills in respect of the supply of electricity to a customer to
any person who is willing to be sent such bills and is nominated by
that customer (without prejudice, however, to the right of the
Licensee to send such bills both to the customer and to the
nominated person where that appears appropriate to the Licensee);
(e) make available (free of charge) to blind and partially sighted
customers, by telephone or other appropriate means, information
concerning the details of any bill relating to the supply of
electricity to them and a facility for enquiring or complaining in
respect of any such bill or any service provided by the Licensee;
and
(f) make available (free of charge) to deaf and hearing impaired
customers, being in possession of appropriate equipment, facilities
to assist them in enquiring or
Scottish Power 160 August 1998
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complaining about any bill relating to the supply of electricity to
them or any service provided by the Licensee.
3. The code of practice shall further include arrangements whereby the
Licensee will:
(a) take reasonable steps to draw the attention of its customers to the
existence of a register of customers who may be expected, by virtue
of being of pensionable age or disabled or chronically sick, to
require:
(i) information and advice in respect of the matters set out at
paragraph 2; or
(ii) advance notice of interruptions to the supply of electricity;
(b) maintain such a register, comprising the relevant details of each
customer who requests (or, in the case of a customer supplied by a
private electricity supplier, whose supplier requests) his inclusion
on it and:
(i) give to those of its own customers so registered, in respect
of the matters set out at paragraph 2; and
(ii) give to all customers so registered, in respect of
interruptions to the supply of electricity,
such information and advice as may be appropriate and is of such
nature as shall be set out in the code of practice.
4. This Condition is subject to the provisions of Condition 17A.
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Condition 14A. Code of practice on procedures with respect to site access
1. The Licensee shall, no later than 1 January 1998, prepare and submit to
the Director for his approval a code of practice setting out the
principles and procedures the Licensee will follow in respect of any
person acting on its behalf who requires access to customers' premises.
2. The code of practice shall include procedures calculated to ensure that
persons visiting customers' premises on behalf of the Licensee:
(a) possess the skills necessary to perform the required duties;
(b) are readily identifiable to members of the public;
(c) use passwords provided for vulnerable customers;
(d) are appropriate persons to visit and enter customers' premises; and
(e) are able to inform customers, on request, of a contact point for
help and advice they may require in relation to the supply of
electricity.
3. This Condition is subject to the provisions of Condition 17A.
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Condition 15. Standards of performance
1. The Licensee shall conduct its Supply and Distribution Businesses in the
manner which it reasonably considers to be best calculated to achieve any
standards of overall performance or standards of performance in connection
with the promotion of the efficient use of electricity by customers, as
may be determined by the Director pursuant to Sections 40 and 41
respectively of the Act.
2. The Licensee shall not enter into a use of system agreement with any
Electricity Supplier that does not provide for the Licensee to make
payments in respect of the performance of the Distribution Business to the
Electricity Supplier for the benefit of any customer of that Electricity
Supplier equivalent to such sums as would have been paid pursuant to the
standards of performance prescribed by the Director in accordance with
regulations made under Section 39 of the Act had that customer been a
customer of the Licensee in those situations where the Licensee would have
been obliged to make such a payment.
3. In making payments in accordance with any standards of performance or in
accordance with paragraph 2, the Licensee shall not discriminate:
(a) between any persons or class or classes thereof; or
(b) as between the Licensee and any persons or class or classes thereof.
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Condition 16. Efficient use of electricity
1. The Licensee shall, no later than 1 January 1998, prepare and submit to
the Director for his approval a code of practice setting out the ways in
which the Licensee will make available to customers such guidance on the
efficient use of electricity as will, in the opinion of the Licensee,
enable them to make informed judgements on measures to improve the
efficiency with which they use the electricity supplied to them. Such code
of practice shall include, but shall not be limited to:
(a) the preparation and making available free of charge to any customer
who requests it of a statement, in a form approved by the Director,
setting out information and advice for the guidance of customers in
the efficient use of electricity supplied to them;
(b) the making of arrangements for maintaining sources from which
customers may obtain further information about the efficient use of
electricity supplied to them, including the maintenance of a
telephone information service; and
(c) the preparation and making available free of charge to any customer
who requests it of a statement or statements of sources (to the
extent that the Licensee is aware of the same) outside the
Licensee's organisation from which customers may obtain additional
information or assistance about measures to improve the efficiency
with which they use the electricity supplied to them, such statement
or statements to include basic information which is publicly
available on financial assistance towards the costs of such measures
available from Central or Local Government or through bodies in
receipt of financial support from Government in connection with
measures to promote the efficiency of energy use.
2. Where the Director (who may have regard to the need for economy,
efficiency and effectiveness before giving directions under this
paragraph) gives directions to do so, the Licensee shall:
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(a) review and prepare a revision of the code of practice;
(b) take steps to bring to the attention of customers information on the
efficient use of electricity supplied to them; and
(c) send to each customer a copy of any information published by the
Director pursuant to Section 48 of the Act
in such manner and at such times as will comply with those directions.
3. This Condition is subject to the provisions of Condition 17A.
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Condition 17. Complaint handling procedure
1. The Licensee shall, no later than 1 January 1998, prepare and submit to
the Director for his approval a code of practice detailing the procedure
for handling complaints from customers about the manner in which the
Licensee conducts its Supply and Distribution Businesses.
2. Any procedure established in accordance with this Condition shall specify
the periods within which it is intended that different descriptions of
complaint should be processed and resolved.
3. This Condition is subject to the provisions of Condition 17A.
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Condition 17A. Preparation, review of and compliance with customer service codes
1. This Condition applies to any code of practice required to be prepared by
the Licensee pursuant to Conditions 12, 14, 14A, 16 and 17.
2. In first preparing such a code the Licensee shall, prior to submitting
that code to the Director, consult the Relevant Consumers' Committee and
shall have regard to any representations made by the committee about such
code or the manner in which it is likely to be operated.
3. Where before the expiry of 30 days of the Licensee first submitting such
code to the Director for his approval the Director notifies the Licensee
that the Director considers the code is not sufficient for the purposes of
meeting the requirements of this Licence the Licensee shall forthwith make
such changes as the Director may require.
4. The Licensee shall, whenever requested to do so by the Director, review
such code and the manner in which it has been operated, with a view to
determining whether any modification should be made to it or to the manner
of its operation.
5. In carrying out any such review the Licensee shall consult the Relevant
Consumers' Committee and shall have regard to any representations made by
it about such code or the manner in which it is likely to be or (as the
case may be) has been operated.
6. The Licensee shall submit any revision of such code which, after
consulting the Relevant Consumers' Committee in accordance with paragraph
5, it wishes to make, to the Director for his approval and following his
approval in writing shall then revise the code.
7. The Licensee shall:
(a) as soon as practicable following the preparation of any code or any
revision made to it send to the Director and the Relevant Consumers'
Committee a
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copy of such code or such revision (in each case in the form
approved by the Director);
(b) draw the attention of those of its customers to whom such code
applies to the existence of the code and of each substantive
revision of it and to the means by which they may inspect a copy of
such code in its latest form; and
(c) give or send free of charge a copy of such code (as from time to
time revised) to any person who requests it.
8. No changes may be made to any code otherwise than in accordance with the
foregoing procedures.
9. The Licensee shall ensure, so far as reasonably practicable, that it
complies with such arrangements or procedures (as the case may be) as are
contained in or described by any code to which this Condition applies and
approved by the Director or any revision to such code approved by the
Director.
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Condition 17B. Information given to Designated Customers
1. The Licensee shall keep each of its Designated Customers (save insofar as
he receives an unmetered supply) informed of the amount of electricity
which, since he was last informed, its records show as having been
consumed by that customer:
(a) according to the meter through which he is supplied; or
(b) where no meter reading is available, according to the estimate of
the Licensee.
2. The Licensee shall keep each of its Designated Customers informed:
(a) that the Relevant Consumers' Committee or the Director can assist in
resolving complaints which the Licensee has not resolved to the
customer's satisfaction; and
(b) of how the appropriate office of the Committee or the Director can
be contacted.
3. The Licensee may discharge its duties under paragraphs 1 and 2 by
providing the relevant information on or with each bill or statement given
to a customer in respect of charges for the supply of electricity, and
annually to each customer to whom no such bills or statements are
rendered.
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Condition 17C. Publication of information to customers
1. Subject to paragraph 5, the Licensee shall by 31 December 1997 inform each
customer of a number or numbers ("the Supply Number(s)") relevant to the
registration, under the Master Registration Agreement, of a supplier of
electricity to the premises owned or occupied by such customer.
2. The Licensee shall, at the same time as it informs a customer of the
relevant Supply Number in accordance with paragraph 1, send to that
customer a statement in writing which provides a clear and sufficient
explanation of the nature and function of the Supply Number, such
statement having received the prior approval of the Director.
3. The Supply Number shall consist of a number of data items, each of which
shall be represented by a numerical identifier which shall:
(a) have the number of digits specified in a direction issued by the
Director;
(b) be approved by the Director; and
(c) be used by the Licensee in common with all Electricity Suppliers.
4. Subject to paragraph 5, the Licensee shall inform each of its customers of
the Supply Number relevant to such customer:
(a) in a form in accordance with the terms of a direction issued by the
Director, on each bill or statement given to the customer in
relation to the supply of electricity; and
(b) annually where the customer does not receive such a bill or
statement.
5. The Director may issue a direction relieving the Licensee of its
obligation under paragraphs 1 and 4 to such extent and subject to such
terms and conditions as he may specify in that direction.
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Condition 18. Relations with the Relevant Consumers' Committee
1. The Licensee shall meet with the Relevant Consumers' Committee whenever
requested to do so by that committee, up to a maximum of 6 times in every
year during the period of the Public Electricity Supply Licence.
2. Without prejudice to paragraph 1, the Licensee shall meet the Relevant
Consumers' Committee at least once in every year during the period of the
Public Electricity Supply Licence.
3. In at least one meeting with the Relevant Consumers' Committee in every
year during the period of the Public Electricity Supply Licence, the
Licensee shall be represented by one or more directors of the Licensee.
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Condition 19. Provision of information to the Director and provision of comments
to the Director on information and advice
1. The Licensee shall, if so requested by the Director, give reasoned
comments on the accuracy and text of any information and advice, so far as
relating to the Supply/Distribution Business, which the Director proposes
to publish pursuant to Section 48 of the Act.
2. "[No longer used]".
3. The Licensee may not be required by the Director to furnish him under this
Condition with information for the purpose of the exercise of his
functions under Section 48 of the Act.
4. The Licensee may not be required by the Director to furnish him under this
Condition with any information in relation to an enforcement matter which
the Licensee could not be compelled to produce or give under Section 28(3)
of the Act.
5. The power of the Director to call for information under paragraph 2 is in
addition to the power of the Director to call for information under or
pursuant to any other Condition.
6. In paragraphs 2 to 5, "information" shall include any documents, accounts,
estimates, returns or reports (whether or not prepared specifically at the
request of the Director) of any description specified by the Director.
7. For the purpose of this Condition:
"excluded premises" means premises within the Licensee's
authorised supply area which were at
the relevant time occupied by any
person holding a licence granted under
Section 6 of the Act (or any
predecessor of such
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persons) for the purpose of carrying
on its licensed activities (or, in the
case of any predecessor, activities
comparable to its licensed
activities).
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Condition 20. Disposal of relevant assets
1. The Licensee shall not dispose of or relinquish operational control over
any relevant asset otherwise than in accordance with the following
paragraphs of this Condition.
2. Save as provided in paragraph 3, the Licensee shall give to the Director
not less than 2 months' prior written notice of its intention to dispose
of or relinquish operational control over any relevant asset, together
with such further information as the Director may request relating to such
asset or the circumstances of such intended disposal or relinquishment of
control or to the intentions in regard thereto of the person proposing to
acquire such asset or operational control over such asset.
3. Notwithstanding paragraphs 1 and 2, the Licensee may dispose of or
relinquish operational control over any relevant asset:
(a) where:
(i) the Director has issued directions for the purposes of this
Condition containing a general consent (whether or not subject
to conditions) to:
(aa) transactions of a specified description; and/or
(bb) the disposal of or relinquishment of operational control
over relevant assets of a specified description; and
(ii) the disposal or relinquishment of operational control in
question is effected pursuant to a transaction of a
description specified in the directions or the relevant assets
in question is of a description so specified and the disposal
or relinquishment of operational control is in accordance with
any conditions to which the consent is subject; or
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(b) where the disposal or relinquishment of operational control in
question is required by or under any enactment or subordinate
legislation or by or under a transfer scheme.
4. Notwithstanding paragraph 1, the Licensee may dispose of or relinquish
operational control over any relevant asset specified in any notice given
under paragraph 2 in circumstances where:
(a) the Director confirms in writing that he consents to such disposal
or relinquishment (which consent may be made subject to the
acceptance by the Licensee or any third party in favour of whom the
relevant asset is proposed to be disposed or operational control is
proposed to be relinquished of such conditions as the Director may
specify); or
(b) the Director does not inform the Licensee in writing of any
objection to such disposal or relinquishment of operational control
within the notice period referred to in paragraph 2.
5. In this Condition:
"disposal" includes any sale, gift, lease,
licence, the grant of any right of
possession, loan, security, mortgage,
charge or the grant of any other
encumbrance or the permitting of any
encumbrance to subsist or any other
disposition to a third party and
"dispose" shall be construed
accordingly.
"relevant asset" means any asset for the time being
forming part of the Licensee's
Distribution System, any control
centre for use in conjunction
therewith and any right, title or
interest in land upon
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which any of the foregoing is situate.
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Condition 21. Compliance with Grid Codes
1. The Licensee shall comply with the provisions of the Grid Code and the
Grid Code of each other Transmission Licensee insofar as applicable to the
businesses of the Licensee referred to in the definitions of "Supply
Business", "Wholesaling Business" and "Distribution Business" in paragraph
3 of Condition 2 of Part II.
2. The Director may (following consultation with the Licensee and such other
Transmission Licensees as the Director shall consider appropriate) issue
directions relieving the Licensee of its obligations under paragraph 1 in
respect of such parts of the Grid Code or the Grid Code of any other
Transmission Licensee and, in each case, to such extent as may be
specified in those directions.
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Condition 22. Compliance with Trading Code
1. The Licensee shall comply with the provisions of the Trading Code insofar
as applicable to the businesses of the Licensee referred to in the
definitions of "Supply Business", "Wholesaling Business" and "Distribution
Business" in paragraph 3 of Condition 2 of Part II including any
requirements thereunder for the Director's approval or consent, for
compliance with directions issued by the Director or relating to
determinations made by the Director.
2. The Director may (following consultation with such members of the trading
system established by the Trading Code as the Director shall consider
appropriate) issue directions relieving the Licensee of its obligations
under paragraph 1 in respect of such parts of the Trading Code and to such
extent as may be specified in those directions.
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Condition 23. Arrangements relating to supplies to premises within the
Licensee's authorised supply area by persons other than the Licensee
1. The Licensee shall, as soon as practicable after the Public Electricity
Supply Licence has come into force and, in any event, not later than such
date as the Director shall specify, establish relevant second tier supply
arrangements.
2. The Licensee shall implement and comply with the relevant second tier
supply arrangements established in accordance with paragraph 1.
3. The Licensee shall, in consultation with relevant second tier suppliers,
periodically review (including upon the request of the Director) the
relevant second tier supply arrangements established in accordance with
paragraph 1. Following any such review, the Licensee shall send to the
Director:
(a) a report on the outcome of such review;
(b) any proposed revisions to the relevant second tier supply
arrangements established in accordance with paragraph 1 as the
Licensee (having regarding to the outcome of such review) reasonably
thinks fit for the achievement of the objective referred to in
sub-paragraph (a) of paragraph 10; and
(c) any written representations or objections from relevant second tier
suppliers (including any proposals by such suppliers for revisions
to the relevant second tier supply arrangements established in
accordance with paragraph 1 not accepted by the Licensee in the
course of the review) arising during the consultation process and
subsequently maintained.
4. Revisions to the relevant second tier supply arrangements established in
accordance with paragraph 1 proposed by the Licensee and sent to the
Director pursuant to paragraph 3 shall require to be approved by the
Director.
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5. Having regard to any written representations or objections referred to in
sub-paragraph (c) of paragraph 3, and following such further consultation
(if any) as the Director may consider appropriate, the Director may issue
directions requiring the Licensee to revise the relevant second tier
supply arrangements established in accordance with paragraph 1 in such
manner as may be specified in the directions, and the Licensee shall
forthwith comply with any such directions.
6. The Licensee shall give or send a copy of the relevant second tier supply
arrangements established in accordance with paragraph 1 to the Director.
7. The Licensee shall (subject to paragraph 8) give or send a copy of the
relevant second tier supply arrangements established in accordance with
paragraph 1 to any person requesting the same.
8. The Licensee may make a charge for any copy given or sent pursuant to
paragraph 7 of an amount which will not exceed any amount specified for
the time being for the purposes of this Condition in directions issued by
the Director.
9. In establishing, implementing and complying with the relevant second tier
supply arrangements established in accordance with paragraph 1, the
Licensee shall not unduly discriminate against or unduly prefer any one or
any group of persons in favour of or as against any one other or any other
group of persons.
10. In this Condition:
"relevant second tier supply means arrangements which the Director
arrangements" shall agree to be the most appropriate
for securing the objective of
eliminating barriers to the economic
and efficient supply of electricity by
relevant second tier suppliers to
relevant premises caused by relevant
constraints (and, where the context
admits, it means such
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arrangements as from time to time
revised).
"relevant second tier supplier" means a person authorised to supply
electricity to relevant premises by a
licence granted under Section 6(2)(a)
of the Act.
"relevant premises" means premises situated within the
Licensee's authorised supply area.
"relevant constraints" means constraints arising from the
costs of implementing technical
arrangements for ensuring that the
amount of electricity which is
delivered by or for a relevant second
tier supplier into a system at any
given time for the purpose of giving a
supply to any relevant premises
matches the level of demand of these
relevant premises at that time.
"system" means the Transmission System of the
Licensee or any other Transmission
Licensee or the Distribution System of
the Licensee or any other public
electricity supplier or the system for
the distribution of electricity of any
person authorised to supply
electricity.
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Condition 24. The Settlement Agreement for Scotland
1. The Licensee shall use its best endeavours, in conjunction and
co-operation with the other Scottish Public Electricity Supplier:
(a) to establish, or to procure the establishment by a third party of, a
system (the "settlement system") which shall - to the extent
required to facilitate the proper functioning of arrangements
established in accordance with Condition 23, or as otherwise agreed
by the Licensee and the other Scottish Public Electricity Supplier -
fulfil the objects set out at paragraph 2;
(b) subsequently to operate and maintain, or to procure the subsequent
operation and maintenance by a third party of, the settlement
system;
(c) to prepare (or procure the preparation of) a form of agreement, to
be known as the Settlement Agreement for Scotland, which shall
contain terms on which the settlement system will be made available
and shall comply with the other requirements of this Condition; and
(d) to offer (or procure that a third party offers) to make available
the settlement system, pursuant to and in accordance with the
Settlement Agreement for Scotland, to any person applying for the
use of such system who is a private electricity supplier or
Portfolio Generator or is otherwise an appropriate user of the
system in accordance with the objects set out at paragraph 2.
2. The objects set out at this paragraph are:
(a) to enable private electricity suppliers to have their volumetric
purchases of electricity from Portfolio Generators and from parties
to the Pooling and Settlement Agreement correctly allocated to them;
(b) to enable private electricity suppliers and Portfolio Generators,
other than the Licensee and the other Scottish Public Electricity
Supplier, to have their
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volumetric residual electricity requirements and provisions
correctly allocated to them;
(c) to enable public and private electricity suppliers to have their
volumetric supplies of electricity to customers correctly allocated
to them;
(d) to facilitate the calculation of accurate information regarding the
aggregate amount of electricity provided to each Scottish Public
Electricity Supplier by itself in its capacity as a Portfolio
Generator; and
(e) to provide for such other matters ancillary to those specified in
sub-paragraphs (a) to (d) as are or may be appropriate to facilitate
competition in electricity supply in Scotland.
3. The Settlement Agreement for Scotland shall provide - to the extent
required to facilitate the proper functioning of arrangements established
in accordance with Condition 23, or as otherwise agreed by the Licensee
and the other Scottish Public Electricity Supplier - for the fulfilment of
the objects set out at paragraph 2, and shall also comprise provisions
(which shall require to be approved in advance by the Director):
(a) which relate to the level and method of recovery of charges payable
by parties to the Settlement Agreement for Scotland in respect of
the establishment, operation and maintenance of the settlement
system, such charges to be set so as to reflect the Director's
estimate of the reasonable costs of efficiently establishing,
operating and maintaining such a system;
(b) which provide for the variation of the Settlement Agreement for
Scotland following consultation with the parties, or representatives
of the parties, to that agreement; and
(c) by virtue of which the whole or (following consultation with
representatives of all of the parties to the agreement) specified
parts of the Settlement Agreement
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for Scotland shall not be capable of variation without the prior
approval of the Director.
4. The Licensee shall be a party to and shall comply with the provisions of
the Settlement Agreement for Scotland.
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Condition 25. Designated Premises
1. For the purposes of this Licence, the question whether any premises are
"Designated Premises" shall be determined in accordance with the
provisions of this Condition.
2. Premises are Designated Premises if they are either:
(a) Domestic Premises; or
(b) premises at which, in the reasonable expectation of the Licensee at
the time of entering into a contract for the supply of electricity
to such premises, the normal annual consumption of electricity will
amount to no more than 12,000 kWh,
but excluding premises referred to at sub-paragraph (b) which receive an
unmetered supply, or which are supplied through half-hourly or maximum
demand metering equipment or under the terms of a multi-site contract.
3. For the purposes of this Condition, a "multi-site contract" is a contract
for the supply of electricity both to any premises which do not fall
within the terms of sub-paragraphs 2(a) or (b) and to one or more other
premises (not being Domestic Premises), all of which premises are owned or
occupied by:
(a) the same person or body of persons whether corporate or
unincorporate; or
(b) an undertaking (the "principal undertaking") and any holding
company, subsidiary, or subsidiary of the holding company of that
principal undertaking, or any other undertaking in which the
principal undertaking has a participating interest.
4. Any premises supplied by the Licensee which (in accordance with paragraphs
1 to 3) were not Designated Premises at the time at which the Licensee
entered into a contract for their supply shall, notwithstanding subsequent
changes to the nature or level of the
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consumption of electricity at those premises, not become Designated
Premises for the purposes of this Licence prior to the time at which they
cease to be supplied by the Licensee.
5. Any premises supplied by the Licensee which (in accordance with paragraphs
1 to 3) were Designated Premises at the time at which the Licensee entered
into a contract for their supply shall cease to be Designated Premises for
the purposes of this Licence where:
(a) they have been continuously supplied by the Licensee for a period of
at least 12 months and:
(i) they are not, or are no longer, Domestic Premises; and
(ii) it is reasonably to be expected that the normal annual
consumption of electricity at the premises will amount to more
than 12,000 kWh; or
(b) (not being, or being no longer, Domestic Premises) the premises
commence receipt of an unmetered supply or a supply through
half-hourly or maximum demand metering equipment or under the terms
of a multi-site contract.
6. In this Condition:
"maximum demand metering means metering equipment which is
equipment" capable of recording the demand for
electricity supplied to premises
during the half hour of maximum demand
in any period of supply.
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Condition 26. Terms for supply of electricity incompatible with Licence
Conditions
1. Without prejudice to its rights and obligations under the Act, the
Licensee shall not enter into, offer to enter into or enter into a
variation of any contract for the supply of electricity to a customer at
Designated Premises otherwise than on terms which comply with the
Licensee's obligations under this Licence.
2. The Licensee shall not enforce or take advantage of any term of a contract
for the supply of electricity to a customer at Designated Premises if the
inclusion of that term was in breach of the provisions of this Licence.
3. The Licensee shall not take advantage of the omission of any term from a
contract for the supply of electricity to a customer at Designated
Premises if the omission of that term was in breach of the provisions of
this Licence.
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Condition 27. Limitation on requirements for termination fees
1. Where the Licensee enters into any Designated Supply Contract in the
circumstances set out at paragraph 2 it may not in such contract provide
for the payment of any termination fee by the Designated Customer.
2. Paragraph 1 applies in respect of any Designated Supply Contract entered
into prior to the date which is 90 days following the earliest date
specified (and not subsequently withdrawn or varied to a later date) in
any direction or variation of a direction issued by the Director, pursuant
to condition 3 of the licence held by any Second Tier Supplier, in
relation to the supply of electricity to all premises within the
authorised area.
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Condition 28. Revision of the Contract Terms Conditions
1. The Director, in accordance with the provisions of this Condition, may
from time to time review (in whole or in part) the provisions and
operation of the Contract Terms Conditions in the licences of all
Electricity Suppliers with a view to establishing whether any revision
should be made to the Contract Terms Conditions in all such licences.
2. At the commencement of any review by the Director, the Director shall:
(a) give to all Relevant Parties a notice in writing which sets out the
terms of the review and of any proposals in connection therewith and
which invites the submission of any representations by a specified
date (being not less than 28 days after the date of the notice); and
(b) publish such notice or an accurate summary of it in a manner which
will, in the opinion of the Director, secure adequate publicity for
it.
3. On receiving from the Director notice of such a review the Licensee may
submit any representations on matters within the terms of the review by
the date specified in the notice.
4. As soon as practicable following the completion of any such review, the
Director shall send to each Relevant Party, and to any person who has made
representations to him by virtue of the notice published under
sub-paragraph 2(b), a copy of:
(a) a report on the outcome of such review;
(b) any revisions which he proposes to make, having regard to any
representations received during such review, to the Contract Terms
Conditions in the licences of all Electricity Suppliers;
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(c) a statement of his reasons for proposing those revisions; and
(d) a notice specifying the time (being not less than 28 days from the
date the Director issues the notice) within which Electricity
Suppliers which are entitled to supply electricity to Designated
Premises shall state whether or not they consent to the proposed
revisions to the Contract Terms Conditions in their licences.
5. A revision proposed to be made by the Director to the Contract Terms
Conditions of all Electricity Suppliers may be made only where the
Director is satisfied that the figures determined in accordance with
paragraphs 6 and 7 (expressed as a percentage) are each not less than 90
per cent.
6. The figure determined in accordance with this paragraph shall be
calculated under the following formula:
C x 100
----
C+N
where:
C = the number of Designated Premises supplied on contract by
consenting Electricity Suppliers; and
N = the number of Designated Premises supplied on contract by
non-consenting Electricity Suppliers
as estimated (in each case) by the Director on the basis of the
information most recently available to him.
7. The figure determined in accordance with this paragraph shall be
calculated under the following formula:
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C x 100
----
C+N
where:
C = the number of consenting Electricity Suppliers; and
N = the number of non-consenting Electricity Suppliers.
8. In paragraphs 6 and 7 the expressions "consenting" and "non-consenting"
refer (as the case may be) to the consent or otherwise of Electricity
Suppliers which are entitled to supply electricity to Designated Premises
to the proposed revision to the Contract Terms Conditions in their
licences.
9. Where the Director is satisfied that the figures determined in accordance
with paragraphs 6 and 7 (expressed as a percentage) are each not less than
90 per cent the Director may amend the Contract Terms Conditions of the
Licensee in accordance with the proposed revision.
10. No revision made to the Contract Terms Conditions by virtue of this
Condition may introduce an obligation in respect of any matter other than
one which:
(a) is provided for, or is reasonably ancillary to a matter provided
for, under the Contract Terms Conditions on the date on which such
Conditions come into force;
(b) concerns the terms of contracts offered or entered into by the
Licensee for the supply of electricity to Designated Premises; or
(c) concerns any dealings with customers by or on behalf of the Licensee
prior to and for the purpose of offering or entering into contracts
for the supply of electricity to Designated Premises.
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11. In this Condition:
"Relevant Parties" means the Licensee, all other
Electricity Suppliers, the Electricity
Consumers' Committees and such other
persons or bodies as in the opinion of
the Director are representative of
those likely to be affected by a
revision to the Contract Terms
Conditions.
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SECTION B. THE CONTRACT TERMS CONDITIONS
Condition 29. Designated Supply Contracts
1. A Designated Supply Contract is a contract for the supply of electricity
to Designated Premises, as varied from time to time, which complies with
the provisions of this Condition.
2. Without prejudice to its rights and obligations under the Act, the
Licensee shall not supply electricity to Designated Premises on contract
except under a Designated Supply Contract.
3. A Designated Supply Contract shall:
(a) be in a standard form, save that there may (subject to paragraph 4)
be different forms for different areas, cases and circumstances;
(b) set out all the terms and conditions, including terms as to price,
on which the Licensee will supply electricity in the relevant case;
and
(c) contain terms reflecting the termination provisions of Conditions 33
and 34.
4. Where the Secretary of State has specified an area of Scotland by an order
made pursuant to section 3(2)(a) of the Act, a Designated Supply Contract
for the supply of electricity to premises within that area shall be on
terms as to price which are the same as those for an equivalent supply to
any other premises within that area.
5. Any Designated Supply Contract for both the supply of electricity and the
provision of goods or services shall identify separately the charge for
that supply from the charge for the goods or services.
6. Where a Designated Supply Contract may be terminated by a customer by
virtue of any provision included in that contract in compliance with
Conditions 33 and 34, the
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Licensee may at its discretion accept a lesser period of notice than is
specified in that provision.
7. Nothing in this Licence shall prevent the Licensee from entering into a
Designated Supply Contact which contains provisions for its termination
that are additional to and do not derogate from those set out at
Conditions 33 and 34.
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Condition 30. Contractual terms
1. Where the Licensee offers to supply electricity to Domestic Premises under
Designated Supply Contracts, it shall have available forms of Designated
Supply Contract which provide for the payment of charges for electricity
supplied to Domestic Premises:
(a) by prepayment through a prepayment meter;
(b) by different methods, including:
(i) by cash, at such places and to such persons as are reasonable
in all the circumstances; and
(ii) by cheque, and
(c) at a reasonable range of different intervals, including:
(i) paying monthly a predetermined sum; and
(ii) paying quarterly in arrears.
2. Before entering into any contract to supply electricity to Domestic
Premises (other than through a prepayment meter) the Licensee shall inform
the customer of and offer to enter into Designated Supply Contracts which
comply with sub-paragraphs 1(b) and (c).
3. The Licensee shall process all requests for a supply of electricity to
Designated Premises without undue preference or undue discrimination.
4. The Licensee shall send copies of each of the forms of Designated Supply
Contract (as revised from time to time) under which it supplies or offers
to supply electricity:
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(a) on receipt of a request, to any person; and
(b) not later than the date on which it first offers to supply
electricity under each such form of Designated Supply Contract (or
revision thereof), to the Director.
5. The Licensee shall prepare, in respect of each form of Designated Supply
Contract:
(a) a document which sets out an accurate summary of the Principal Terms
of that form of Designated Supply Contract; and
(b) particulars of inducements offered to any person entering into such
a contract which might reasonably be expected materially to
influence the decision whether or not to enter into it.
6. The Licensee shall publish the documents and particulars referred to at
paragraph 5 in a manner that will in the opinion of the Licensee secure
adequate publicity for them, and shall send copies of them to the Director
no later than the date on which they are published.
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Condition 31. Notification of terms
1. Before entering into any Designated Supply Contract the Licensee shall
take all reasonable steps to draw the attention of the customer to the
Principal Terms of the contract.
2. Where the Licensee has entered into a Designated Supply Contract it shall
(except where it has already done so) provide the customer within 2
working days of the date of the contract with a copy of its full terms and
conditions.
3. Subject to paragraph 4 the Licensee shall, at least 30 days before any
Designated Supply Contract to supply electricity for a specified period is
due to expire, send to the customer:
(a) a written offer to enter into a new contract for supply from the
date of expiry of the existing contract, drawing the attention of
the customer to the Principal Terms relevant to that offer;
(b) an accurate summary of the Principal Terms of other contracts which
the Licensee will make available to the customer; and
(c) details of how the customer can obtain continuity of supply from the
Licensee.
4. Paragraph 3 shall not apply where:
(a) the customer has informed the Licensee that he does not wish to
continue to be supplied by it after the expiry of the existing
contract; or
(b) it is not reasonable in all the circumstances for the Licensee to be
required to continue to supply that customer and the Licensee has
(at least 30 days before the contract was due to expire) both
notified the customer to that effect and informed him that he must
make arrangements to obtain a supply from another Electricity
Supplier.
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5. Where a Designated Supply Contract allows for its unilateral variation (in
any respect) by the Licensee and is so varied to the significant
disadvantage of the customer, the Licensee shall within 10 days of the
variation give to the customer written notice:
(a) of the variation;
(b) of the customer's right to terminate the contract; and
(c) of the effect of paragraph 6.
6. Where a customer gives to the Licensee a valid notice of termination
within 14 days of receiving notice under paragraph 5, the Licensee shall
treat the variation as ineffective and shall neither enforce nor take
advantage of it.
7. Where the Licensee believes that any of its customers no longer occupies
or is about to vacate Designated Premises to which it supplies
electricity, it shall as soon as reasonably practicable provide any new
occupier of those premises with an accurate summary of the Principal Terms
of contracts it will make available to him.
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Condition 32. Security deposits
1. The Licensee shall not, in respect of the supply of electricity under any
Designated Supply Contract, require a deposit:
(a) where the customer is prepared to be supplied through a prepayment
meter and it is reasonably practicable in all the circumstances
(including in particular the risk of loss or damage) for the
Licensee to provide such a meter; or
(b) where it is otherwise unreasonable in all the circumstances to do
so.
2. Any deposit required of a Designated Customer may be 1 1/2 times the value
of the average quarterly consumption of electricity reasonably expected at
the relevant premises, or more if that is reasonable in all the
circumstances.
3. Where the Licensee requires a deposit of a Designated Customer it shall at
the same time inform that customer of the effect of paragraphs 5 and 7.
4. Where the Licensee holds any deposit it shall pay interest, at a rate it
shall fix from time to time with the approval of the Director, on every
sum of 50p deposited for every 3 months during which that sum is held.
5. Subject to paragraph 6, any deposit given by a Designated Customer shall
be repaid (with interest) by the Licensee:
(a) within 14 days where, in the previous 12 months, the customer has
paid all charges for electricity supplied within 28 days of each
written demand made; or
(b) as soon as reasonably practicable, and in any event within 1 month,
where the Licensee has ceased to supply the customer and the
customer has paid all charges for electricity supplied.
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6. Sub-paragraph 5(a) shall not apply where it is reasonable in all the
circumstances for the Licensee to retain the deposit.
7. Any dispute arising under this Condition between the Licensee and a
Designated Customer may be referred by either party to the Director. The
Director shall determine any such dispute, following such practice and
procedure as he considers appropriate.
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Condition 33. Termination of contracts on notice
1. Each Designated Supply Contract shall contain a term allowing the customer
to terminate such contract at any time by:
(a) giving to the Licensee a valid notice of termination; and
(b) subject to paragraph 6, paying to the Licensee on demand a
termination fee.
2. A notice of termination is valid where it is given at least 28 days in
advance of the date on which it is to take effect and where, not later
than that date, the requirements of paragraphs 3 and (unless the Licensee
expressly agrees to waive it) 4 are satisfied.
3. The requirement of this paragraph is that either:
(a) another Electricity Supplier commences a supply of electricity to
the relevant premises; or
(b) the relevant premises are cut off because the customer at those
premises has ceased to require a supply.
4. The requirement of this paragraph is that no charges for electricity
supplied to the customer (whether at the relevant premises or at any
premises previously occupied by him), having been demanded in writing
prior to the notice of termination being given, remain owing to the
Licensee more than 28 days after that demand was made.
5. Each Designated Supply Contract shall provide that a notice of termination
which is not valid shall not be effective to terminate such contract.
6. A termination fee shall not be demanded of a customer where:
(a) the contract was terminated under any provision of Condition 34;
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(b) the contract was a contract of indefinite length, and was terminated
other than during a fixed term period;
(c) the Licensee notified the customer, under paragraph 5 of Condition
31, of a unilateral variation of the contract and the customer gave
notice of termination in accordance with paragraph 6 of that
Condition; or
(d) the contract was a contact to which paragraph 4 of Condition 34
applied and the Licensee did not, before entering into it, take all
reasonable steps to draw the attention of the customer to the effect
of the term set out at that paragraph.
7. Where a termination fee is payable, it shall be of an amount not greater
than that which the Licensee may in all the circumstances reasonably
require.
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Condition 34. Termination of contracts in specified circumstances
1. Each Designated Supply Contract shall provide that the contract will
terminate:
(a) on the date on which the customer ceases to own or occupy the
relevant premises, having given the Licensee at least 2 working
days' notice of that date; or
(b) where the customer has ceased to own or occupy the premises without
giving the Licensee at least 2 working days' notice, on the first in
time of:
(i) the second working day after he has given notice to the
Licensee;
(ii) the next day on which the meter is due to be read; and
(iii) the date on which any subsequent owner or occupier enters into
a contract or tariff agreement for the supply of electricity
to the premises.
2. Each Designated Supply Contract shall provide that where it is terminated
by virtue of a term included in the contract in compliance with paragraph
1, the customer shall remain liable for any charges for the supply of
electricity until the date of termination.
3. Each Designated Supply Contract shall provide that it may be terminated
immediately by either party at any time after the Director or the
Secretary of State has revoked this Licence.
4. Any Designated Supply Contract which:
(a) provides for the Licensee to supply electricity for a specified
period of more than 12 months; or
(b) contains an initial fixed term period,
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shall provide that it may be terminated immediately by the customer at any
time within 5 working days of the date of the contract.
5. Where a Designated Supply Contract is for both the supply of electricity
and the provision of goods or services:
(a) any reference in the Contract Terms Conditions to its termination is
a reference to its termination in respect of the supply of
electricity alone; and
(b) on its termination by virtue of any provision of the Contract Terms
Conditions, the Licensee may require the customer to give any
reasonable security for his future compliance with the contract for
the provision of goods or services.
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Condition 35. Assignment of outstanding charges
1. This Condition shall apply where:
(a) the Licensee has commenced the supply of electricity to Domestic
Premises at which a supply was previously given to its customer by
the Previous Supplier;
(b) the customer has failed to pay, within 28 days of receiving a demand
in writing, any charges due from him to the Previous Supplier for
the supply of electricity at those premises;
(c) that failure occurred after either the Previous Supplier was
informed of the change of supplier or the Licensee commenced supply
to the premises (whichever is the earlier);
(d) the Previous Supplier has given written notice to the customer that
it proposes to assign the debt to the Licensee, which may be
entitled to reclaim from him its costs in recovering the debt; and
(e) the Licensee has received from the Previous Supplier a notice in
accordance with paragraph 2.
2. A notice in accordance with this paragraph is one which:
(a) is given at least 14 days after the notice referred to at
sub-paragraph 1(d) and is received by the Licensee within 90 days of
it commencing a supply to the premises;
(b) specifies the amount of the debt which remains unpaid;
(c) states that the Previous Supplier has used all reasonable endeavours
to recover the debt, which remains unpaid at least 42 days after
being demanded in writing; and
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(d) states that the Previous Supplier intends to assign to the Licensee
the debt, up to a maximum sum of one-third of the value (calculated
in accordance with the charges of the Previous Supplier to the
customer immediately before it ceased to supply him) of the average
annual consumption reasonably expected of the customer.
3. Where this Condition applies the Licensee shall, within 60 days of
receiving a notice under paragraph 2 and in consideration of the
assignment of the debt, pay to the Previous Supplier the sum specified
under sub-paragraph 2(d) (less, where they cannot be reclaimed from the
customer, its reasonable costs of recovering that debt).
4. For the purposes of this Condition, a customer shall not be regarded as
being in debt to the Previous Supplier to the extent to which that debt is
genuinely in dispute.
5. In this Condition:
"Previous Supplier" means, in relation to any premises, the
Electricity Supplier which supplied electricity to
those premises immediately prior to the
commencement of supply by the Licensee.
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Condition 36. Modification of Provisions under Conditions 33 and 35
1. In this Condition, the "relevant provisions" are the provisions of
paragraph 4 of Condition 33 and Condition 35 of Part V (or any of them).
2. Where the Director considers (having regard to any representations made to
him) that in any specified class of cases the relevant provisions do not
fulfil the requirements of paragraph 4, he may direct that they shall
cease to have effect in that class of cases.
3. Where a direction under paragraph 2 has been made and the Director
considers (having regard to any representations made to him) that in the
specified class of cases the relevant provisions would fulfil the
requirements of paragraph 4, he may direct that they shall again have
effect in those cases.
4. The requirements of this paragraph are that, in the specified class of
cases, the operation of the relevant provisions:
(a) significantly reduces the number of unrecovered debts otherwise to
be expected; or
(b) involves expenditure in debt recovery which is less than the
reduction in the value of unrecovered debts which it achieves.
5. Any direction under paragraphs 2 or 3 shall be made by a notice given to
the Relevant Parties which shall specify:
(a) the relevant provisions to which it applies;
(b) the class of cases to which it applies; and
(c) the date on which it shall have effect (being, in a direction under
paragraph 3, at least 3 months after the notice is given).
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6. In this Condition:
"Relevant Parties" means the Licensee, all other Electricity
Suppliers, the Electricity Consumers' Committees
and such other persons or bodies as in the opinion
of the Director are representative of those likely
to be affected by a revision to the relevant
provisions.
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Condition 37. Marketing of electricity to Designated Customers
1. This Condition applies to the marketing activities of the Licensee in
respect of the supply or the proposed supply of electricity to the
Designated Premises.
2. This Condition shall cease to have effect on a date (the "termination
date") which shall be 31 March 2000, provided that:
(a) if the Director, after consultation with the Licensee, all other
Electricity Suppliers, the electricity consumers' committees and
such other persons or bodies as in the opinion of the Director are
representative of those likely to be affected, gives notice for the
purposes of this Condition generally:
(i) by publishing the notice in such a manner as the Director
considers appropriate for the purpose of bringing it to the
attention of persons likely to be affected by it; and
(ii) by sending a copy of the notice to all Electricity Suppliers
and electricity consumers' committees,
that he considers that the development of competition in electricity
supply is such as to require the continuation of any part of this
Condition until such date - not later than two years from the
termination date - as may be specified in the notice (the "new
termination date"), then such part of this Condition as may be
specified in the notice shall continue to apply as if for the
termination date there were substituted the new termination date;
and
(b) notice under sub-paragraph (a) may be given on more than one
occasion.
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3. The Licensee shall:
(a) set up appropriate procedures for the selection of staff employed or
engaged in roles the principal duties of which involve oral
communication with Designated Customers for the purposes of the
marketing activities of the Licensee;
(b) take all reasonable steps to ensure that each such person is trained
so as to have a sufficient understanding of:
(i) the arrangements for competition in electricity supply in
Scotland; and
(ii) the Principal Terms of Designated Supply Contracts made
available by the Licensee;
such that any relevant advice given by him to Designated Customers
is not misleading;
(c) take all reasonable steps to ensure that:
(i) a Designated Customer may readily identify the Licensee
whenever he is contacted by a representative of the Licensee;
and
(ii) any unsolicited contact made on behalf of the Licensee with
any Designated Customer takes place at a reasonable time; and
(d) take all reasonable steps to ensure that any agents or
sub-contractors of the Licensee set up equivalent procedures and
take equivalent steps to those set out at sub-paragraphs (a), (b)
and (c).
4. Where a contract has been entered into by a Designated Customer in the
course either of a visit to his premises by a representative of the
Licensee or of a telephone conversation between him and a representative
of the Licensee, the Licensee shall,
Scottish Power 210 August 1998
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through a representative who is not engaged in activities leading to the
making of contracts between the Licensee and customers, and not less than
24 hours nor more than 14 days after the date of the contract:
(a) use its reasonable endeavours to contact the customer by telephone
or by letter seeking his confirmation that:
(i) he understands that he has entered into an electricity supply
contract;
(ii) he is content to have entered into that contract; and
(iii) he is content with the way in which the marketing activities
of the Licensee were conducted;
(b) if in the course of such telephone contact, or within a reasonable
period of the despatch of such a letter, the customer indicates that
he is not content to have entered into the contract and wishes to
terminate it, take all reasonable steps to ensure that the contract
is terminated and, where reasonably practicable, that the Licensee
does not commence a supply to the customer; and
(c) if the response of the customer, alone or when considered with the
responses of other customers, suggests weaknesses in the methods,
systems or personnel employed or engaged by the Licensee or its
agents or sub-contractors for the purpose of its marketing
activities, ensure that all reasonable steps to remedy the matter
are taken.
5. Where, by virtue of any Designated Supply Contract, electricity is not to
be supplied to premises before the expiry of 60 days after the date of the
contract, the Licensee shall take reasonable steps during the period after
that date and prior to the commencement of supply to keep the customer
informed that he has entered into an electricity supply contract with the
Licensee.
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6. The complaint handling procedures to be established by the Licensee in
accordance with Condition 17 shall provide in appropriate cases for the
payment of compensation to Designated Customers adversely affected by
failure by the Licensee to perform its obligations under this Condition.
7. The Licensee shall keep a record of its compliance with its obligations
under this Condition including-
(a) the contacting of customers in pursuance of sub-paragraph 4(a) and
the response of customers to such contact;
(b) the termination of contracts in pursuance of sub-paragraph 4(b); and
(c) compensation paid in pursuance of paragraph 6.
8. Except as the Director may for the purposes of this Condition determine,
as soon as reasonably practicable after the end of each period of three
months ending on 31 March, 30 June, 30 September and 31 December in every
year, the Licensee shall submit to the Director and to all Relevant
Electricity Consumers' Committees a report dealing with the matters
specified in paragraph 7 in that period and shall:
(a) publish the report so submitted in such manner as will in the
opinion of the Licensee secure adequate publicity for it; and
(b) send a copy of it free of charge to any person requesting one,
except that, in performing its obligations under sub-paragraphs (a) and
(b), the Licensee shall exclude from the report such information as
appears to it to be necessary or expedient to ensure that, save where they
consent, individual customers referred to therein cannot readily be
identified.
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9. Reports in pursuance of paragraph 8 shall be presented by the Licensee, in
so far as is reasonably practicable, in a standard format submitted to and
approved by the Director for the purposes of this Condition.
10. Except as the Director may approve:
(a) for the purpose of protecting the interests of any Designated
Customer who, prior to the date on which this Condition came into
force, may have made a payment in advance with a view to arranging a
supply of electricity; or
(b) where any payment in advance is wholly or mainly for services other
than arranging the supply of energy,
the Licensee shall not enter into any commercial relations connected with
the supply of electricity to Designated Premises with any person who has
sought, after the coming into force of this Condition, payment in advance
(other than a security deposit) from any Designated Customer with a view
to arranging a supply of electricity, and the Licensee shall not enter
into a contract for the supply of electricity to any such customer made
through the agency (either for the Licensee or for any customer) of such a
person.
11. In this Condition:
"marketing activities" means any activities of the Licensee directed at
or incidental to the identification of and
communication with Designated Customers supplied
or to be supplied with electricity by the
Licensee, and includes entering into contracts
with such customers.
"representative" in relation to the Licensee, means any person
directly or indirectly authorised to represent the
Scottish Power 213 August 1998
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Licensee in its dealings with customers.
Scottish Power 214 August 1998
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PART VI. CONDITIONS APPLICABLE TO THE TRANSMISSION LICENCE AND
THE PUBLIC ELECTRICITY SUPPLY LICENCE
Condition 1. Scope of application of Part VI
1. Except as stated in paragraphs 2 and 3 both the Transmission Licence and
the Public Electricity Supply Licence are subject to the Conditions in
Part VI (including where such Conditions relate to activities other than
those authorised by such licences) but so that each provision in Part VI
shall be construed as applying separately to each such Licence and shall
not impose any obligation on the Licensee as holder of either Licence to
comply with that provision as it applied to the other Licence.
2. The Transmission Licence only is subject to the following:
(a) Sub-paragraph 1(b) of Condition 2;
(b) Paragraphs 4 and 11 of Condition 2;
(c) Paragraph 4 of Condition 2A;
(d) Sub-paragraph 1(b) of Condition 2D; and
(e) Conditions 3 and 4.
3. The Public Electricity Supply Licence only is subject to the following:
(a) Sub-paragraphs 1(a), (c) and (d) of Condition 2;
(b) Paragraphs 2, 3, 5, 6, 7, 12, 19 and 20 to 22 of Condition 2;
(c) Sub-paragraph 13(b) of Condition 2;
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(d) Paragraphs 4 and 5 of condition 2B;
(e) Sub-paragraph 7(c) of Condition 2B.
(f) Condition 2C; and
(g) Sub-paragraphs 1 (a)(i) and (ii), 1(f) of Condition 2D.
4. For the purposes of applying the Conditions in Part VI to the Transmission
Licence and the Public Electricity Supply Licence respectively references
to the Licensee's System mean the Licensee's Transmission System and
Distribution System respectively.
5. The Generation Licence is not subject to the Conditions in Part VI.
6. In this Condition and in Conditions 2A, 2B and 2D the expressions "use of
the Licensee's System" and "use of the Licensee's Transmission System"
shall be deemed to exclude use of the Scottish interconnection and cognate
expressions shall be construed accordingly.
7. In this Condition:
"Scottish interconnection" has the meaning given in sub-paragraph 13(h)
of Condition 3.
Scottish Power 216 August 1998
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Condition 2. Basis of charges for top-up and standby supplies or sales of
electricity, exempt supply services, use of system and connection to system:
requirements for transparency
Preparation of statements on basis of charging
1. The Licensee shall as soon as practicable after the Public Electricity
Supply Licence and the Transmission Licence have come into force and, in
any event, not later than such date as the Director shall specify prepare:
(a) a statement approved by the Director setting out the basis upon
which charges will be made for the provision of top-up and standby
supplies or sales of electricity (as part of the Supply Business or
Second Tier Supply Business or Wholesaling Business);
(b) a statement approved by the Director setting out the basis upon
which charges will be made for use of the Licensee's Transmission
System and for connection to the Licensee's Transmission System (as
part of the Transmission Business);
(c) a statement approved by the Director setting out the basis upon
which charges will be made for the provision of exempt supply
services (as part of the Supply Business); and
(d) a statement approved by the Director setting out the basis upon
which charges will be made for use of the Licensee's Distribution
System and for connection to the Licensee's Distribution System (as
part of the Distribution Business)
each of such statements to be in such form and to contain such detail as
shall be necessary to enable any person to make a reasonable estimate of
the charges to which it would be come liable for the provision of such
services, and (without prejudice to the foregoing) including such of the
information set out in paragraphs 2, 4, 5, 7 and 9 as is required by such
paragraphs to be included in the relevant statement.
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Top-up and standby
2. The statement referred to in sub-paragraph 1(a) shall set out the methods
by which and the principles on which charges for the provision of each of
top-up supplies or sales and standby supplies or sales will be made.
3. The basis on which charges for the provision of top-up and standby
supplies or sales of electricity shall be set shall reflect the costs
directly incurred in the provision thereof, together with a reasonable
rate of return on the capital represented by such costs.
Use of Licensee's Transmission System
4. Except to the extent that the Director shall otherwise specify, the
statement referred to in sub-paragraph 1(b) shall in respect of use of
system include:
(a) a schedule of charges for the transmission of electricity under use
of system;
(b) the charge for maintaining voltage and frequency within statutory
limits;
(c) a schedule of adjustment factors to be made in respect of
transmission losses, in the form of additional supplies required to
cover those transmission losses;
(d) the methods by which and the principles on which charges (if any)
for availability of transmission capacity on the Licensee's
Transmission System will be made;
(e) a schedule of the charges (if any) which may be made for the
provision and installation of any meters or electrical plant at
entry or exit points, the provision and installation of which is
ancillary to the grant of use of system, and for the maintenance of
meters or electrical plant;
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(f) the methods by which and the principles on which entry and exit
charges for connections in operation before the date on which the
Transmission Licence comes into force will be calculated; and
(g) such other matters as shall be specified in directions issued by the
Director from time to time for the purposes of this Condition.
Exempt supply services
5. The statement referred to at sub-paragraph 1(c) shall, in respect of
exempt supply services, set out the methods by which and the principles on
which charges for the provision of such services will be made.
6. The basis on which charges for the provision of exempt supply services
shall be set shall reflect the costs directly incurred in the provision
thereof, together with a reasonable rate of return on the capital
represented by such costs.
Use of Licensee's Distribution System
7. Except to the extent that the Director shall otherwise specify, the
statement referred to in sub-paragraph 1(d) shall in respect of use of
system include:
(a) a schedule of charges for the distribution of electricity under use
of system;
(b) a schedule of adjustment factors to be made in respect of
distribution losses, in the form of additional supplies required to
cover those distribution losses;
(c) the methods by which and the principles on which the charges (if
any) for availability of distribution capacity on the Licensee's
Distribution System will be made;
(d) save to the extent that such matters are included in any statement
prepared in accordance with Condition 8E of Part V:
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(i) a schedule of charges in respect of meter reading, accounting
and administrative services; and
(ii) a schedule of the charges (if any) which may be made for the
provision and installation of any meters or electrical plant
at entry or exit points, the provision and installation of
which is ancillary to the grant of use of system, and for the
maintenance of such meters or electrical plant; and
(e) such other matters as shall be specified in directions issued by the
Director from time to time for the purposes of this Condition.
8. Use of system charges for those items referred to in paragraphs 4 and 7
shall be determined on the same basis as is applied by the Licensee when
determining the use of system element of tariffs fixed pursuant to Section
18 of the Act and Condition 4 of Part V.
Connection to system
9. The statements referred to in sub-paragraphs 1(b) and (d) shall in respect
of connections to the Licensee's System include (save to the extent that
such matters are included in any statement prepared in accordance with
Condition 8E of Part V):
(a) a schedule listing those items (including the carrying out of works
and the provision and installation of electric lines or electrical
plant or meters) of significant cost liable to be required for the
purpose of connection (at entry or exit points) to the Licensee's
System for which connection charges may be made or levied and
including (where practicable) indicative charges for each such item
and (in other cases) an explanation of the methods by which and the
principles on which such charges will be calculated;
(b) the methods by which and the principles on which any charges will be
made in respect of extension or reinforcement of the Licensee's
System rendered (in the
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Licensee's discretion) necessary or appropriate by virtue of
providing connection to or use of system to any person seeking
connection;
(c) the methods by which and the principles on which connection charges
will be made in circumstances where the electric lines or electrical
plant to be installed are (at the Licensee's discretion) of greater
size or capacity than that required for use of system by the person
seeking connection;
(d) the methods by which and the principles on which any charges
(including any capitalised charge) will be made for maintenance,
replacement and repair required of electric lines, electrical plant
or meters provided and installed for making a connection to the
Licensee's System;
(e) the methods by which and principles on which any charges will be
made for disconnection from the Licensee's System and the removal of
electrical plant, electric lines and ancillary meters following
disconnection; and
(f) such other matters as shall be specified in directions issued by the
Director from time to time for the purposes of this Condition.
10. Connection charges for those items referred to in paragraph 9 shall be set
at a level which will enable the Licensee to recover:
(a) the appropriate proportion of the costs directly or indirectly
incurred in carrying out any works, the extension or reinforcement
of the Licensee's System or the provision and installation,
maintenance, replacement and repair or (as the case may be) removal
following disconnection of any electric lines, electrical plant,
meters, special metering, telemetry, data processing equipment or
other items; and
(b) a reasonable rate of return on the capital represented by such
costs.
Scottish Power 221 August 1998
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Preparation of statements on system capacity. etc.
11. The Licensee shall as soon as practicable after the Transmission Licence
has come into force and, in any event, not later than such date as the
Director shall specify prepare a statement approved by the Director
showing in respect of each of the 7 succeeding financial years circuit
capacity, forecast power flows and loading on each part of its
Transmission System and fault levels for each transmission node, together
with:
(a) such further information as shall be reasonably necessary to enable
any person seeking use of system to identify and evaluate the
opportunities available when connecting to and making use of such
system;
(b) a commentary prepared by the Licensee indicating the Licensee's
views as to those parts of the Licensee's Transmission System most
suited to new connections and the transmission of further quantities
of electricity; and
(c) such other matters as shall be specified in directions issued by the
Director from time to time for the purposes of this Condition.
12. If so requested and subject to paragraphs 13 and 19, the Licensee shall,
as soon as practicable and in any event within 28 days (or where the
Director so approves such longer period as the Licensee may reasonably
require having regard to the nature and complexity of the request) after
the date referred to in paragraph 20, give or send to any person making
such request a statement showing present and future circuit capacity,
forecast power flows and loading on the part or parts of its Distribution
System specified in the request and fault levels for each distribution
node covered by the request and containing:
(a) such further information as shall be reasonably necessary to enable
such person to identify and evaluate the opportunities available
when connecting to and making use of the part or parts of the
Licensee's Distribution System specified in the request; and
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(b) if so requested, a commentary prepared by the Licensee indicating
its views as to the suitability of the part or parts of the
Licensee's Distribution System specified in the request for new
connections and the distribution of further quantities of
electricity.
13. The Licensee shall include in every statement prepared or (as the case may
be) given or sent under paragraphs 11 or 12 the information required by
such paragraphs, save that:
(a) the Licensee may with the prior consent of the Director omit from
any such statement any details as to circuit capacity, power flows,
loading or other information, disclosure of which would, in the view
of the Director, seriously and prejudicially affect the commercial
interests of the Licensee or any third party; and
(b) the Licensee may omit from any statement given or sent under
paragraph 12 any information the disclosure of which would place the
Licensee in breach of Condition 9 of Part V.
Preparation of new statements, circulation and charging
14. In addition to, and without prejudice to, the Licensee's obligations under
paragraph 1, the Licensee shall, upon being directed to do so in
directions issued by the Director from time to time for the purposes of
this Condition and within such period as shall be specified in the
directions, prepare a statement or statements approved by the Director
providing that charges for the provision of top-up and standby supplies or
sales of electricity, for the provision of exempt supply services, for use
of the Licensee's Transmission System or Distribution System and/or for
connection to the Licensee's Transmission System or Distribution System
will be made on such basis as shall be specified in the directions and
such statement or statements shall be in such form and contain such detail
as shall be necessary to enable any person to make a reasonable estimate
of the charges to which it would become liable for the provision of such
services and (without prejudice to the foregoing) including such
information as shall be specified in the directions. Each statement
prepared in accordance with this paragraph
Scottish Power 223 August 1998
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shall, with effect from the date on which it is approved by the Director
or such later date as the Director shall specify, replace the
corresponding statement prepared by the Licensee in accordance with
paragraph 1 or, as the case may be, this paragraph (as from time to time
revised in accordance with paragraph 15) which is in force at such date
and the Licensee shall, with effect from such date make charges in
accordance with the statement (as from time to time revised in accordance
with paragraph 15) which has replaced such corresponding statement.
15. The Licensee may periodically revise the statements prepared in accordance
with paragraphs 1, 11 and 14 and shall, at least once in every year the
Transmission Licence and/or (as the case may be) the Public Electricity
Supply Licence is in force, make any necessary revisions to such
statements in order that the information set out in the statements shall
continue to be accurate in all material respects.
16. The Licensee shall send a copy of the statements prepared in accordance
with paragraphs 1, 11 and 14, and of each revision of such statements in
accordance with paragraph 15, to the Director. Each such revision shall
require to be approved by the Director and shall not become effective
until approved by the Director.
17. The Licensee shall give or send a copy of the statements prepared in
accordance with paragraphs 1, 11 and 14 or (as the case may be) of the
latest revision of such statements in accordance with paragraph 15
approved by the Director pursuant to such paragraph to any person who
requests a copy of such statement or statements.
18. The Licensee may make a charge for any statement given or sent pursuant to
paragraph 17 of an amount reflecting the Licensee's reasonable costs of
providing such a statement which shall not exceed the maximum amount
specified in directions issued by the Director for the purposes of this
Condition.
19. The Licensee may within 10 days after receipt of the request provide an
estimate of its reasonable costs in the preparation of any statement
referred to in paragraph 12, and its obligation to provide such statement
shall be conditional on the person requesting such statement agreeing to
pay the amount estimated or such other amount as the Director
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may, upon the application of the Licensee or the person requesting such
statement, direct.
20. For the purposes of paragraph 12, the date referred to shall be the later
of:
(a) the date of receipt of the request referred to in paragraph 12; or
(b) the date on which the Licensee receives agreement from the person
making the request to pay the amount estimated or on which an amount
is determined by the Director (as the case may be) under paragraph
19.
21. The Licensee shall, not less than 5 months prior to the date on which it
proposes to amend its use of system charges in respect of any agreement
for use of system, send to the Director a notice setting out the
Licensee's proposals in relation to such amendment together with an
explanation of the proposed amendment (including a statement of any
assumptions on which such proposals are based), and the Licensee shall
send a copy of such notice to any person who has entered into an agreement
for use of system under Condition 2B.
22. Except with the prior consent of the Director, the Licensee shall not
amend its use of system charges in respect of any agreement for use of
system save to the extent that it has given prior notice of the amendment
in accordance with paragraph 21 and such amendment reflects the proposals
made in the notice (subject only to revisions consequent upon material
changes in the matters which were expressed, in the statement which
accompanied the notice, to be assumptions on which the proposals were
based).
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Condition 2A. Non-discrimination in the provision of top-up or standby supplies
or sales of electricity, exempt supply services, use of system and connection to
system
1. In the provision of top-up or standby supplies or sales of electricity or
use of system or in the carrying out of works for the purpose of
connection to the Licensee's System or in providing for the retention of a
connection to its system the Licensee shall not discriminate:
(a) as between any persons or class or classes of person; or
(b) as between the Licensee (in the provision of use of system and
connections by the Licensee as part of the Distribution Business or
Transmission Business to itself for the purpose of the Supply
Business, Second Tier Supply Business or Wholesaling Business) and
any person or any class or classes of persons.
2. In the provision of exempt supply services the Licensee shall not
discriminate between any Exempt Suppliers or class or classes thereof.
3. Without prejudice to paragraphs 1 or 2, and subject to paragraph 4, the
Licensee shall not make charges for the provision of top-up or standby
supplies or sales of electricity, for the provision of exempt supply
services, or for use of system to any person or class or classes of
persons which differ from the charges for such provision:
(a) (in the case of top-up or standby supplies or sales of electricity
and exempt supply services) to any other person or class or classes
of persons; or
(b) (in the case of use of system):
(i) to any other person or class or classes of persons; or
(ii) to the Licensee (in the provision of use of system by the
Licensee as part of the Distribution Business or Transmission
Business to itself for the
Scottish Power 226 August 1998
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purposes of the Supply Business, the Second Tier Supply
Business or the Wholesaling Business)
except insofar as such differences reasonably reflect differences in the
costs associated with such provision.
4. Notwithstanding paragraph 3, the Licensee shall not make or levy use of
system charges in respect of any item of charge separately identified in
the statement referred to at subparagraph 1(b) of Condition 2 on any
person whose contract does not provide for him to receive the service to
which such item of charge refers.
5. The Licensee shall not in setting its charges for provision of top-up or
standby supplies or sales of electricity, for exempt supply services or
for use of system restrict, distort or prevent competition in the
generation, transmission, distribution or supply of electricity.
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Condition 2B. Requirement to offer terms
Offer of terms for use of system
1. On application made by any Authorised Electricity Operator, the Licensee
shall (subject to paragraph 7) offer to enter into an agreement for use of
system:
(a) to accept into the Licensee's System at such entry point or points
and in such quantities as may be specified in the application,
electricity to be provided by or on behalf of such Authorised
Electricity Operator;
(b) to deliver such quantities of electricity as are referred to in
sub-paragraph (a) (less any transmission or distribution losses) to
such exit point or points on the Licensee's System and to such
person or persons as the Authorised Electricity Operator may
specify;
(c) specifying the use of system charges to be paid by the Authorised
Electricity Operator, such charges (unless manifestly inappropriate)
to be referable to the statement prepared in accordance with (as
appropriate) sub-paragraph 1(b) or (d) (or, as the case may be,
paragraph 14) of Condition 2 or any revision thereof and to be in
conformity with the requirements of paragraph 8 of that Condition;
(d) containing (where appropriate) the provisions referred to in
paragraph 2 of Condition 15 of Part V;
(e) including terms requiring and entitling the Authorised Electricity
Operator to act (where appropriate) as agent of the Licensee in
order to procure an agreement on the Standard Terms of Connection
between the Licensee and each customer of the Authorised Electricity
Operator at premises which are to be supplied with electricity
through an established connection;
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(f) where the applicant is an Exempt Supplier, requiring such Exempt
Supplier either to enter into an agreement with the Licensee for
exempt supply services or to enter into an equivalent agreement with
another Electricity Supplier; and
(g) containing such further terms as are or may be appropriate for the
purposes of the agreement.
Offer of terms for connection
2. On application made by any person the Licensee shall (subject to paragraph
7) offer to enter into an agreement for the provision of a connection or
for the modification of an existing connection to the Licensee's System,
and such offer shall make detailed provision regarding:
(a) the carrying out of works (if any) required to connect the
Licensee's System to any other system for the transmission or
distribution of electricity, and for the obtaining of any consents
necessary for such purposes;
(b) the carrying out of works (if any) in connection with the extension
or reinforcement of the Licensee's System rendered necessary or
appropriate by reason of making the connection or modification to an
existing connection and for the obtaining of any consents necessary
for such purposes;
(c) (save to the extent that such matters are included in any agreement
offered in accordance with Condition 8C of Part V) the installation
of appropriate meters (if any) required to enable the Licensee to
measure electricity being accepted into the Licensee's System at the
specified entry point or points or leaving such system at the
specified exit point or points;
(d) the installation of such switchgear or other apparatus (if any) as
may be required for the interruption of supply where the person
seeking connection or modification of an existing connection does
not require the provision by the Licensee of top-up or standby
supplies or sales of electricity;
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(e) the date by which any works required so as to permit access to the
Licensee's System (including for this purpose any works to reinforce
or extend the Licensee's System) shall be completed and so that,
unless otherwise agreed by the person making the application, a
failure to complete such works by such date shall be a material
breach of the agreement entitling the person to repudiate the
agreement;
(f) the connection charges to be paid to the Licensee, such charges
(unless manifestly inappropriate):
(i) to be presented in such a way as to be referable to the
statements prepared in accordance with (as appropriate)
sub-paragraph 1(b) or (d) (or, as the case may be, paragraph
14) of Condition 2 or any revision thereof; and
(ii) to be set in conformity with the requirements of paragraph 10
of Condition 2 and (where relevant) of paragraph 3 of this
Condition;
(g) (save to the extent that such matters are included in any agreement
offered in accordance with Condition 8C of Part V) the installation
of special metering, telemetry or data processing equipment (if any)
for the purpose of enabling any person which is party to the
Settlement Agreement for Scotland to comply with is obligations in
respect to metering thereunder or the performance by the Licensee of
any service in relation to such metering thereunder; and
(h) such further matters as are or may be appropriate for the purposes
of the agreement.
3. For the purpose of determining an appropriate proportion of the costs
directly or indirectly incurred in carrying out works (or in relation to
any of the other matters referred to in sub-paragraph 10(a) of Condition
2) under an agreement for making a connection or modification to an
existing connection, the Licensee shall have regard to:
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(a) the benefit (if any) to be obtained or likely in the future to be
obtained by the Licensee or any other person as a result of the
carrying out of such works (or of such other matters) whether by
reason of the reinforcement or extension of the Licensee's System or
the provision of additional entry or exit points on such system or
otherwise;
(b) the ability or likely future ability of the Licensee to recoup a
proportion of such costs from third parties; and
(c) the principles for connections to the Licensee's Distribution
System:
(i) no charge will normally be made for reinforcement of the
existing Distribution System if the new or increased load
requirement does not exceed 25 per cent of the existing
effective capacity at the relevant points on the system; and
(ii) charges will not generally take into account Distribution
System reinforcement carried out at more than one voltage
level above the voltage of connections.
Offer of terms for top-up or standby supplies or sales of electricity
4. The Licensee shall (subject to paragraph 7) offer to enter into an
agreement with any person who requests the same to provide top-up or
standby supplies or sales of electricity, such offer to make provision for
the charges to be made in respect of top-up or standby supplies or sales
of electricity, which shall:
(a) be presented in such a way as to be referable to the statement
prepared in accordance with sub-paragraph 1(a) (or, as the case may
be, paragraph 14) of Condition 2 or any revision of any such
statement; and
(b) be set in conformity with the requirements of paragraph 3 of
Condition 2.
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Offer of terms for exempt supply services
5. On application made by any Exempt Supplier the Licensee shall (subject to
paragraph 7) offer to enter into an agreement for exempt supply services
within its authorised area and such offer shall make detailed provision
regarding:
(a) the making, maintenance and termination by the Licensee of
registrations under and in accordance with the Master Registration
Agreement in relation to premises to which the Exempt Supplier
supplies or is required to supply electricity;
(b) the exchange between the Licensee and Exempt Supplier of such
information as is required for the performance of the Licensee's
obligations in accordance with sub-paragraph (a);
(c) the appointment by the Exempt Supplier of an appropriate provider of
meter operation, data retrieval, data processing and data
aggregation services in relation to premises to which it supplies
electricity;
(d) the apportionment and settlement by the Licensee of charges incurred
by it by virtue of registrations under the Master Registration
Agreement which are made, maintained and terminated in accordance
with sub-paragraph (a);
(e) the payment by the Exempt Supplier of charges for exempt supply
services, such charges (unless manifestly inappropriate) to be
referable to the statement prepared in accordance with sub-paragraph
1(c) of Condition 2 or any revision thereof and to be in conformity
with the requirements of paragraph 6 of Condition 2;
(f) the reimbursement by the Exempt Supplier (by way of indemnity) of
all charges incurred by the Licensee by virtue of registrations made
and maintained in accordance with sub-paragraph (a);
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(g) the provision by the Exempt Supplier to the Licensee of reasonable
security or collateral for the performance of its obligations under
the agreement;
(h) the varying of the agreement, including the making of amendments
necessary to give effect to any determination made by the Director
in respect of the agreement; and
(i) such further matters as are or may be appropriate for the purposes
of the agreement.
Offer of terms - general
6. The Licensee shall offer terms for agreements in accordance with
paragraphs 1, 2, 4 and 5 as soon as practicable and (save where the
Director consents to a longer period) in any event not more than the
period specified in paragraph 8 after receipt by the Licensee (or its
agent) of all such information as the Licensee may reasonably require for
the purpose of formulating the terms of the offer.
7. The Licensee shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement:
(a) if to do so would be likely to involve the Licensee being:
(i) in breach of its duties under Section 9 of the Act;
(ii) in breach of the Electricity Supply Regulations 1988 or of any
regulations made under Section 29 of the Act or of any other
enactment relating to safety or standards applicable in
respect to the Distribution Business or Transmission Business;
(iii) in breach of the Conditions to which the Public Electricity
Supply Licence or the Transmission Licence is subject; or
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(iv) in breach of the Grid Code;
(b) (in the case of an application for use of, or connection to, the
Licensee's Transmission System) if the person making the application
does not undertake to be bound, insofar as applicable, by the terms
of the Grid Code from time to time in force;
(c) (in the case of any other application) if to do so would involve the
Licensee being in breach of the Distribution Code or if the person
making the application does not undertake to be bound, insofar as
applicable, by the terms of the Distribution Code or the Grid Code
from time to time in force.
8. For the purpose of paragraph 6, the period specified shall be:
(a) in the case of persons seeking use of system, exempt supply services
or top-up or standby supplies or sales of electricity only, 28 days;
(b) in the case of persons seeking connection or a modification to an
existing connection, 3 months; and
(c) in the case of person seeking use of system or top-up or standby
supplies or sales of electricity in conjunction with connection, 3
months.
9. The Licensee shall within 28 days following receipt of a request from any
person, give or send to such person such information in the possession of
the Licensee as may be reasonably required by such person for the purpose
of completing paragraph 8 of Part I and paragraphs 2(v) and (vi) of Part 2
of Schedule 2 to the Electricity (Application for Licences and Extensions
of Licences) Regulations 1990 or such provisions to like effect contained
in any further regulations then in force made pursuant to Sections 6(3),
60 and 64(1) of the Act.
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Condition 2C. Requirement to offer Standard Terms of Connection
1. The Licensee shall, within 28 days after this Condition has come into
force, prepare and submit to the Director for his approval the standard
terms of an agreement (the "Standard Terms of Connection") to provide, as
between the Licensee and any customer, for the retention of an established
connection at premises which are to be supplied with electricity through
such a connection.
2. The Licensee may, subject to the approval of the Director, prepare
different Standard Terms of Connection for different cases or classes of
customer or premises, clearly identifying the criteria used to distinguish
between such cases or classes.
3. The Licensee shall from time or time, and whenever requested to do so by
the Director, review the Standard Terms of Connection with a view to
determining whether any revision should be made to such terms, and in the
course of the review the Licensee shall consult with the Relevant
Consumers' Committee, all other public electricity suppliers and all
Second Tier Suppliers which supply electricity within the authorised area.
4. At the conclusion of any review in accordance with paragraph 3 the
Licensee shall submit to the Director:
(a) a proposal for the revision of the Standard Terms of Connection (or,
where the Licensee considers it appropriate in all the
circumstances, a proposal that no revision should be made to the
Standard Terms of Connection); and
(b) the reasons for its proposal, together with a summary of responses
received from such parties as were consulted by the Licensee.
5. A proposal made by the Licensee in accordance with paragraph 4 shall
require to be approved by the Director and, following such approval in
writing, the Licensee shall accordingly revise (or, as the case may be,
shall make no revision to) the Standard Terms of Connection.
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6. The Licensee shall, in such manner as will in the opinion of the Licensee
secure adequate publicity therefor:
(a) publish, no later than 31 December 1997, the Standard Terms of
Connection approved by the Director in accordance with paragraph 1;
and
(b) publish, within 21 days after receiving the approval of the
Director, any revision to the Standard Terms of Connection in
accordance with paragraph 5.
7. The Licensee shall not:
(a) subject to paragraph 8, enter into a contract with a customer for
the supply of electricity to premises which are to be supplied
through an established connection without at the same time (in
respect of such premises) entering into an agreement with the
customer on the Standard Terms of Connection; or
(b) do anything to prevent the conclusion of an agreement on the
Standard Terms of Connection between itself and a customer of any
Authorised Electricity Operator which is acting as agent for the
Licensee in accordance with an agreement for use of system.
8. The Licensee may at any time agree with any person (by way of variation to
the Standard Terms of Connection) terms for the retention of a particular
established connection which differ from the Standard Terms of Connection
where such different terms are appropriate in all the circumstances.
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Condition 2D. Functions of the Director
1. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with any
person entitled or claiming to be entitled thereto pursuant to a request
under Condition 2B or 2C, the Director may, on the application of that
person or the Licensee, settle any terms of the agreement in dispute
between the Licensee and that person in such manner as appears to the
Director to be reasonable having (insofar as relevant) regard in
particular to the following considerations:
(a) that such person should pay to the Licensee:
(i) in the case of the provision of top-up or standby supplies or
sales of electricity, such sum as is determined in accordance
with paragraph 3 of Condition 2;
(ii) in the case of exempt supply services, such sum as is
determined in accordance with paragraph 6 of Condition 2;
(iii) in the case of provision of use of system, the use of system
charges determined in accordance with paragraph 8 of Condition
2; and
(iv) in the case of provision of a connection, or a modification to
an existing connection, to the system the whole or an
appropriate proportion (as determined in accordance with
paragraph 3 of Condition 2B) of the costs referred to in
sub-paragraph 10(a) of Condition 2, together with a reasonable
rate of return on the capital represented by such costs;
(b) that no such person should pay any charges such as are referred to
in subparagraph 9(b) of Condition 2 in respect of any connection to
the Licensee's Transmission System or any modification to an
existing connection made prior to such date as shall be specified in
a direction issued by the Director for the purposes of this
Condition and that no such charges should be paid in respect of
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any such connection or modification made after such date unless the
Director is satisfied that the extension or reinforcement in respect
of which the charges are to be paid was rendered necessary or
appropriate by virtue of providing connection to or use of system to
the person or making such a modification;
(c) that the performance by the Licensee of its obligations under the
agreement should not involve the Licensee in a breach such as is
referred to in subparagraph 7(a) of Condition 2B;
(d) that any methods by which the Licensee's System is connected to any
other system for the transmission or distribution of electricity
accord (insofar as applicable to the Licensee) with the Grid Code
and with the Distribution Code;
(e) that the terms and conditions of the agreement so settled by the
Director and of any other agreements entered into by the Licensee
pursuant to an application under Condition 2B or 2C should be, so
far as circumstances allow, in as similar a form as is practicable;
and
(f) in the case of exempt supply services, that the agreement for the
provision of exempt supply services should make provision for all
the matters set out at paragraph 5 of Condition 2B.
2. In so far as any person entitled or claiming to be entitled to an offer
under Condition 2B or 2C wishes to proceed on the basis of the agreement
as settled by the Director, the Licensee shall forthwith enter into and
implement such agreement in accordance with its terms.
3. If either party to such agreement proposes to vary the contractual terms
of any agreement for exempt supply services, for the provision of a
connection or for the modification of an existing connection to the
Licensee's System, for the retention of an established connection to such
system or for use of system entered into pursuant to Condition 2B or 2C or
under this Condition in any manner provided for under such agreement, the
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Director may, at the request that party, settle any dispute relating to
such variation in such manner as appears to the Director to be reasonable.
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Condition 3. Basis of charges for use of the Scottish interconnection
1. Unless (and except for so long as) the Director approves otherwise,
charges for use of the Scottish interconnection shall be set at a level
which will enable the Licensee to recover no more than a reasonable rate
of return on the relevant proportion of the capital represented by the
Scottish interconnection.
2. The Licensee shall as soon as practicable after the Transmission Licence
has come into force, and, in any event, not later than such date as the
Director shall specify, prepare a statement approved by the Director
setting out the basis upon which charges for use of the Scottish
interconnection will be made, such statement to be in such form and to
contain such detail as shall be necessary to enable any person to make a
reasonable estimate of the charges to which it would become liable for use
of the Scottish interconnection, and (without prejudice to the foregoing)
including the information required to be included therein pursuant to
paragraph 3.
3. Except to the extent that the Director shall otherwise specify, the
statement referred to in paragraph 2 shall include:
(a) a schedule of charges for transport of electricity under use of the
Scottish interconnection;
(b) the charge for maintaining voltage and frequency within statutory
limits;
(c) a schedule of the adjustment factors to be made in respect of
transmission losses, in the form of additional supplies required to
cover those transmission losses;
(d) the methods by which and the principles on which charges (if any)
will be made for availability of capacity on the Scottish
interconnection; and
(e) such other matters as shall be specified in directions issued by the
Director from time to time for the purposes of this Condition.
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4. In addition to, and without prejudice to, the Licensee's obligations under
paragraph 2, the Licensee shall, upon being directed to do so in
directions issued by the Director from time to time for the purposes of
this Condition and within such period as shall be specified in the
directions, prepare a statement approved by the Director providing that
charges for use of the Scottish interconnection will be made on such basis
as shall be specified in the directions and such statement shall be in
such form and contain such detail as shall be necessary to enable any
person to make a reasonable estimate of the charges to which it would
become liable for use of the Scottish interconnection and (without
prejudice to the foregoing) including such information as shall be
specified in the directions. Each statement prepared in accordance with
this paragraph shall, with effect from the date on which it is approved by
the Director or such later date as the Director shall specify, replace the
corresponding statement prepared by the Licensee in accordance with
paragraph 2 or, as the case may be, this paragraph (as from time to time
revised in accordance with paragraph 5) which is in force at such date and
the Licensee shall, with effect from such date, make charges for use of
the Scottish interconnection in accordance with the statement (as from
time to time revised in accordance with paragraph 5) which has replaced
such corresponding statement.
5. The Licensee may periodically revise the statement prepared in accordance
with paragraph 2 or, in the event that the Licensee shall have prepared a
statement in accordance with paragraph 4, that statement or the latest of
such statements and shall, at least once in every year the Transmission
Licence is in force, revise such statement in order that the information
set out therein shall continue to be accurate in all material respects.
Each such revision shall require to be approved by the Director and shall
not become effective until approved by the Director.
6. The Licensee shall as soon as practicable after the Transmission Licence
has come into force and, in any event, not later than such date as the
Director shall specify prepare a statement approved by the Director
showing:
(a) the amount of the capacity of the Scottish interconnection which the
Licensee anticipates will be available for the transfer of
electricity from Scotland to England and England to Scotland during
each remaining week of the year ending
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on 31 March 1991 as notified by the Licensee to SHE pursuant to the
Interconnector Agreement;
(b) the amount of that capacity in relation to which SHE has a right to
require the Licensee to receive and deliver electricity as referred
to in sub-paragraph (b) of paragraph 13;
(c) the Licensee's forecast of the amount of the remainder of the
capacity of the Scottish interconnection which will be used for the
transfer of electricity from Scotland to England and from England to
Scotland during each week referred to in sub-paragraph (a) above;
and
(d) such other matters (if any) as the Director shall specify prior to
his approval of the statement.
7. The Licensee shall, as soon as practicable (and, in any event, within such
period as the Director shall specify) after giving a notification such as
is referred to in sub-paragraph (a) of paragraph 6 to SHE in respect of
the year ending on 31 March 1992 and each subsequent year, prepare a
statement approved by the Director showing the matters referred to in
sub-paragraphs (a) to (d) of paragraph 6 in respect of that year.
8. The Licensee shall send a copy of the statement prepared in accordance
with paragraph 2 and any statement prepared in accordance with paragraph
4, and of each revision of such statements in accordance with paragraph 5,
and of each statement prepared in accordance with paragraphs 6 and 7 and
with paragraphs 3(a) and 8 of Condition 3B, to the Director.
9. The Licensee shall give or send a copy of the statement prepared in
accordance with paragraph 2, any statement prepared in accordance with
paragraph 4 or (as the case may be) of the latest revision of the relevant
statement in accordance with paragraph 5 approved by the Director pursuant
to such paragraph and of each statement prepared in accordance with
paragraphs 6 and 7 to any person who requests a copy of such statement.
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10. The Licensee shall also give or send a copy of each statement prepared in
accordance with paragraphs 3(a) and 8 of Condition 3B to any person who
requests a copy of such statement.
11. The Licensee may make a charge for any statement given or sent pursuant to
paragraph 9 of an amount reflecting the Licensee's reasonable costs of
providing such a statement which shall not exceed the maximum amount
specified in directions issued by the Director for the purposes of this
Condition.
12. The Licensee may within 10 days after receipt of the relevant request
provide an estimate of its reasonable costs in the preparation of any
statement referred to in paragraph 10, and its obligation to provide such
statement shall be conditional on the person requesting such statement
agreeing to pay the amount estimated or such other amount as the Director
may, upon the application of the Licensee or the person requesting such
statement, direct.
13. For the purposes of this Condition and Conditions 3A to 3C and 4:
"Interconnector Agreement" means at any time the agreement relating
to the matter referred to in sub-paragraph
(a)(iv) of paragraph 5 of Condition 7 of
Part II in force at that time which has
been entered into and submitted to the
Director pursuant to that Condition as the
same may be amended from time to time with
the approval of the Director given
pursuant to such Condition.
"use of the Scottish shall exclude:
interconnection"
the rights conferred upon SHE under the
Interconnector Agreement to require the
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Licensee:
(a) to receive electricity from SHE at
the Combined Delivery Point (and
from certain generating stations
referred to in the Interconnector
Agreement) and deliver such
electricity (less losses as referred
to in the Interconnector Agreement)
to the Transmission Company at the
Southern Delivery Point; and/or
(b) to receive electricity from the
Transmission Company at the Southern
Delivery Point and deliver such
electricity (less losses as referred
to in the Interconnector Agreement)
to SHE at the Combined Delivery
Point; and
the rights conferred upon British Nuclear
Fuels plc under the existing agreement
referred to in sub-paragraph (a)(iv) of
paragraph 5 of Condition 7 of Part II
"relevant proportion of the means at any time, a proportion of such
capital represented by the capital equal to the percentage of the
Scottish interconnection" Reserved Share (as defined in the
Interconnector Agreement) of the Licensee
at that time.
"Combined Delivery Point" means the points at the boundary between
the Licensee's authorised transmission
area and SHE's authorised transmission
area defined as such in the Interconnector
Agreement.
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"Southern Delivery Point" means the points at the boundary between
the Licensee's authorised transmission
area and the Transmission Company's
authorised transmission area defined as
such in the Interconnector Agreement.
"Upgrade" means any alteration, modification or
addition to the Interconnected Scottish
Power System (as defined in the
Interconnector Agreement) which is
primarily designed to effect a permanent
increase in one or more Particular
Interconnection Capacities.
"interconnection" means:
the 275 kV transmission circuits between
and including the associated switchgear at
Harker sub-station in Cumbria and the
associated switchgear at Strathaven
sub-station in Lanarkshire;
the 275 kV transmission circuit between
and including the associated switchgear at
Cockenzie in East Lothian and the
associated switchgear at Stella in Tyne
and Wear; and
the 400 kV transmission circuit between
and including the associated switchgear at
Torness in East Lothian and the
associated switchgear at Stella in Tyne
and Wear
all as existing at the date on which the
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Transmission Licence comes into force and
as from time to time maintained, repaired
or renewed, together with any alteration,
modification or addition (other than
maintenance, repair or renewal) which is
primarily designed to effect a permanent
increase in one or more Particular
Interconnection Capacities as they exist
immediately prior to such alteration,
modification or addition and as from time
to time maintained, repaired or renewed;
and
the 132 kV transmission circuit between
and including (and directly connecting)
the associated switchgear at Chapelcross
and the associated switchgear at Harker
sub-station in Cumbria; and
the 132 kV transmission circuit between
and including (and connecting, via
Junction V) the associated switchgear at
Chapelcross and the associated switchgear
at Harker sub-station in Cumbria
all as existing at the date on which the
Transmission Licence comes into force and
as from time to time maintained, repaired
or renewed.
"Scottish interconnection" means such part of the interconnection as
is situated in Scotland.
"Particular Interconnection means the capacity of the interconnection
for transferring electricity from Scotland
to England
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Capacity" or vice versa in respect of any particular
system conditions.
"co-operator" means any person other than the Licensee
who owns assets which are used in
conjunction with the interconnection or
who is able to exercise jointly with the
Licensee control over the use made of the
interconnection.
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Condition 3A. Non-discrimination in the provision of use of the Scottish
interconnection
1. In the provision of use of the Scottish interconnection the Licensee shall
not discriminate:
(a) between any person or class or classes or persons; or
(b) between the Licensee (in the provision of use of the Scottish
interconnection by the Licensee as part of the Transmission Business
to itself for the purpose of the Supply Business, Second Tier Supply
Business or Wholesaling Business) and any person or class or classes
of persons.
2. Without prejudice to paragraph 1, and subject to paragraph 3, the Licensee
shall not make charges for the provision of use of the Scottish
interconnection to any person or class or classes of persons which differ
from the charges for such provision:
(a) to any other person or class or classes of persons; or
(b) to the Licensee (in the provision of use of the Scottish
interconnection by the Licensee to itself for the purposes of the
Supply Business, Second Tier Supply Business or Wholesaling
Business);
except insofar as such differences reasonably reflect differences in the
costs associated with such provision.
3. Notwithstanding paragraphs 1 and 2, the Licensee shall not make charges
for use of the Scottish interconnection in respect of any item of charge
separately identified in any statement such as is referred to at
paragraphs 2 and 4 of Condition 3 on any person whose contract does not
provide for it to receive the service to which such item of charge refers.
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4. The Licensee shall not in setting its charges for use of the Scottish
interconnection restrict, distort or prevent competition in the
transmission, supply, distribution or generation of electricity.
5. The Licensee shall:
(a) comply with and perform its obligations under the Interconnector
Agreement;
(b) exercise its rights and perform its obligations under the
Interconnector Agreement in a manner which is designed to facilitate
the carrying out of Upgrades proposed by SHE pursuant to the
Interconnector Agreement (but, for the avoidance of doubt, so that
the Licensee shall have no obligation to participate in any Upgrade
proposed by SHE);
(c) not exercise or perform such rights or obligations in a manner which
is designed to have the effect of inhibiting or preventing
competition in the supply of electricity from Scotland to England or
from England to Scotland; and
(d) not exercise or perform its rights or obligations under any related
document in a manner which is designed to have the effect referred
to in sub-paragraph (c) above.
6. The Licensee shall not be in breach of this Condition or Conditions 3, 3B
or 3C by reason only of a failure to do or not do any thing which it is
prevented from doing or not doing by reason of a failure by SHE to comply
with and perform its obligations under the Interconnector Agreement or by
a party to a related document or a person who is obliged to comply with a
related document to comply with and perform its obligations under the
related document in question.
7. The Licensee shall keep and maintain such records concerning the provision
of use of the Scottish interconnection as are, in the opinion of the
Director, sufficient to enable the Director to assess whether the Licensee
is performing its obligations under paragraph 1
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and the Licensee shall furnish to the Director such records (or such of
these as the Director may require), in such manner and at such times as
the Director may require.
8. In this Condition:
"related document" means any agreement, code, rules, or
arrangement relating to the use of the E&W
interconnection for the time being in
force and to which the Licensee is a party
or with which the Licensee is obliged to
comply.
"E&W interconnection" means such part of the interconnection as
is not situated in Scotland.
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Condition 3B. Requirement to offer terms
1. On application made by any person, the Licensee shall (except in a case
where paragraph 2 applies and subject to paragraph 7) offer to enter into
an agreement for use of the Scottish interconnection to transport across
the Scottish interconnection in such quantities and for such periods as
may be specified in the application, electricity to be provided by or on
behalf of such person:
(a) specifying the charges for use of the Scottish interconnection to be
paid by the person seeking use of the Scottish interconnection, such
charges to be referable to the statement referred to at paragraph 2
or (as the case may be) paragraph 4 of Condition 3 or any revision
thereof; and
(b) containing such further terms as are or may be appropriate for the
purposes of the agreement.
2. This paragraph applies in any case where, on the application of the
Licensee or any person entitled or claiming to be entitled to an offer
pursuant to an application under paragraph 1, the Director shall determine
that (having regard to the part of the capacity of the Scottish
interconnection already contracted to persons other than the Licensee and
affiliates and related undertakings of the Licensee and the part thereof
approved by the Director as being reserved to the Licensee and affiliates
and related undertakings of the Licensee for the purpose of the Supply
Business, Second Tier Supply Business and Wholesaling Business) the
capacity of the Scottish interconnection is insufficient to accommodate
the requirements of the person who has made application for an offer
pursuant to paragraph 1.
3. In a case where paragraph 2 applies:
(a) the Licensee shall (subject to paragraph 12 of Condition 3), if
requested by the person who has made application for an offer
pursuant to paragraph 1 and within such period as the Director shall
specify in his determination under paragraph 2, prepare a statement
approved by the Director setting out the basis upon which
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charges will be made for the costs which the Licensee would incur if
an Upgrade were to be carried out in accordance with the
Interconnector Agreement to accommodate the requirements of the
person who has made the application for an offer pursuant to
paragraph 1, such statement to be in such form and to contain such
detail as shall be necessary to enable such person to make a
reasonable estimate of the charges to which he would become liable
in respect of the Upgrade; and
(b) following the preparation of a statement under sub-paragraph (a)
above, the Licensee shall, on the application of the person who has
made the application for an offer pursuant to paragraph 1, offer to
enter into:
(i) an agreement pursuant to which the Licensee undertakes to
exercise its rights under the Interconnector Agreement to
require the carrying out of an Upgrade; and
(ii) an agreement such as is referred to in paragraph 1, but so
that the Licensee shall not be bound to make use of the
Scottish interconnection available pursuant to such agreement
until the time of completion of the Upgrade.
4. Charges in respect of Upgrades carried out pursuant to an agreement such
as is referred to in sub-paragraph (b)(i) of paragraph 3 will be set at a
level which will enable the Licensee to recover:
(a) the appropriate proportion of the costs directly incurred by the
Licensee in connection with Upgrades; and
(b) a reasonable rate of return on the capital represented by such
costs.
5. For the purpose of determining an appropriate proportion of the costs
directly incurred in connection with an Upgrade, the Licensee shall have
regard to:
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(a) the benefit (if any) to be obtained or likely in the future to be
obtained by the Licensee or any other person from the increase in
the capacity of the Scottish interconnection resulting from the
Upgrade; and
(b) the ability or likely future ability of the Licensee to recoup a
proportion of such costs from third parties.
6. The Licensee shall offer terms for agreements in accordance with paragraph
1 and paragraph 3(b) as soon as practicable and (save where the Director
consents to a longer period) in any event not more than the period
specified in paragraph 9 after receipt by the Licensee of an application
containing all such information as the Licensee may reasonably require for
the purpose of formulating the terms of the offer.
7. The Licensee shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement:
(a) if to do so would involve the Licensee:
(i) in breach of its duties under Section 9 of the Act; or
(ii) in breach of the Electricity Supply Regulations 1988 or of any
regulations made under Section 29 of the Act or of any other
enactment relating to safety or standards applicable to the
interconnection; or
(iii) in breach of the Conditions to which the Transmission Licence
is subject; or
(b) if the person making the application does not undertake to be bound
by the terms of any code of general application or agreement between
the Licensee and any co-operator of the interconnection governing
the operation of and maintenance of the interconnection approved for
the time being by the Director; or
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(c) if (in the case of an application for an agreement for use of the
Scottish interconnection to transport electricity from the Southern
Delivery Point) the electricity to be so transported is to be
transported from the northern end of the Scottish interconnection to
the Combined Delivery Point under an agreement for use of the
Licensee's Transmission System or Distribution System; or
(d) if (in the case of an application for an agreement for use of the
Scottish interconnection to transport electricity to the Southern
Delivery Point) the electricity to be so transported is to be
transported from the Combined Delivery Point to the northern end of
the Scottish interconnection under an agreement for use of the
Licensee's Transmission System or Distribution System.
8. If so requested by any person, the Licensee shall (subject to paragraph 12
of Condition 3), as soon as practicable and in any event not later than
the expiry of such period as the Director, on the application of the
person making the request, shall determine for this purpose, give or send
to such person a statement approved by the Director setting out the basis
upon which charges will be made for the costs which the Licensee would
incur if an Upgrade were to be carried out in accordance with the
Interconnector Agreement to accommodate the requirements of such person as
specified in the request, such statement to be in such form and to contain
such detail as shall be necessary to enable such person to make a
reasonable estimate of the charges to which it would become liable in
respect of the Upgrade.
9. For the purpose of paragraph 1, the period specified shall be 28 days. For
the purpose of paragraph 3(b), the period specified shall be 3 months.
10. The Licensee shall within 28 days following receipt of a request from any
person, give or send to such person such information in the possession of
the Licensee as may be reasonably required by such person for the purpose
of completing paragraph 8 of Part 1 and paragraphs 2(v) and (vi) of Part 2
of Schedule 2 to the Electricity (Application for Licences and Extensions
of Licences) Regulations 1990 or such provisions to like effect contained
in any further regulations then in force made pursuant to Sections 6(3),
60 and 64(1) of the Act.
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<PAGE>
Condition 3C. Functions of the Director
1. If, after a period which appears to the Director to be reasonable for the
purpose the Licensee has failed to enter into an agreement with any person
entitled or claiming to be entitled thereto pursuant to a request under
Condition 3B the Director may, on the application of such person or the
Licensee, settle any terms of the agreement in dispute between the
Licensee and that person in such manner as appears to the Director to be
reasonable having (insofar as relevant) regard in particular to the
following considerations:
(a) that such person should pay to the Licensee charges determined in
accordance with Conditions 3, 3A and 3B; and
(b) that the performance by the Licensee of its obligations under the
agreement should not involve it in such a breach as is referred to
in paragraph 7 of Condition 3B;
(c) that the obligations of the Licensee under the agreement should not
be in conflict with the provisions of the Interconnector Agreement
or any relevant document for the time being approved by the
Director; and
(d) that the terms and conditions of the agreement so settled by the
Director and of any other agreements entered into by the Licensee
pursuant to a request under Condition 3B should be, so far as
circumstances allow, in as similar a form as is practicable.
2. If the person wishes to proceed on the basis of the agreement as settled
by the Director, the Licensee shall forthwith enter into and implement
such agreement in accordance with its terms.
3. If the Licensee proposes to vary the contractual terms of any agreement
entered into pursuant to Condition 3B or this Condition in any manner
provided for under such agreement, the Director may, at the request of the
Licensee or other party to such agreement, settle any dispute relating to
such variation in such manner as appears to the Director to be reasonable.
Scottish Power 255 August 1998
<PAGE>
Condition 4. Requests for Transit
1. In this Condition:
"entity" means any of the entities referred to in
Article 3.1 of the Directive of the
Council of the European Communities, dated
29th October 1990, (No.90/547/EEC) on the
transit of electricity through
transmission grids ("the Directive");
"grid" means any high-voltage electricity
transmission grid for the time being
listed in the Annex to the Directive;
"Member State" means a Member State of the European
Communities;
"transit" means a transaction for the transport of
electricity between grids where:
(a) the grid of origin or final
destination is situated in a Member
State; and
(b) the transport involves:
(i) the crossing of at least one
frontier between Member
States; and
(ii) the use of the Licensee's
Transmission System and at
least two other grids.
Scottish Power 256 August 1998
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2. The Licensee shall, after receiving in connection with transit for a
minimum duration of one year an application by an entity for an agreement
for:
(a) use of system;
(b) connection to the Licensee's Transmission System or modification to
an existing connection; or
(c) use of the Licensee's share of Scottish interconnection,
notify the Secretary of State, the Director and the Commission of the
European Communities without delay of the matters set out in paragraph 3
below.
3. The matters of which notification must be given are:
(a) the application;
(b) if an agreement has not been concluded within 12 months of the date
of receipt of the application, the reasons for the failure to
conclude it;
(c) the conclusion of the agreement, whether it is concluded before or
after the expiry of the period mentioned in sub-paragraph (b) above.
4. If, in relation to an application for transit by an entity, the Director
has been requested to exercise his powers under Condition 2D and 3C, the
Director may delay the exercise of his said powers until the terms have
been considered by the body set up under Article 3.4 of the Directive and
the Director may give such weight to the opinion (if any) of that body as
he thinks fit in exercising his said powers.
Scottish Power 257 August 1998
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SCHEDULE 1
Authorised transmission area
1. Scotland (except the area specified in the Electricity Act 1989 (North of
Scotland Specified Area) Order 1990 made on 7 March 1990), the Cruachan
Transmission Line, and the Dalmally Switching Station.
2. In this Schedule:
"the Cruachan Transmission means the double circuit 275 kV
Line" transmission line extending from the
Cruachan Station Works, to the Dalmally
Switching Station and thereafter to the
Windyhill Substation together with all
lattice towers, conductors, insulators,
associated cables and connections, and all
other items of plant or equipment making
up or supporting said transmission line,
with the benefit, subject to the
applicable conditions therein, of all
wayleaves and/or servitude rights relating
thereto.
3. Expressions used in the definition of the Cruachan Transmission Line which
are defined in a transfer scheme shall have the same meaning in this
Schedule as in such transfer scheme.
4. If any part of the authorised transmission area is designated in a
subsequent licence granted under Section 6(1)(b) of the Act, such part
shall be excluded from the authorised transmission area.
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SCHEDULE 2
Authorised supply area
1. Scotland (except the area specified in The Electricity Act 1989 (North of
Scotland Specified Area) Order 1990 made on 7 March 1990), the areas in
the north of England supplied prior to 30 March 1990 by the South of
Scotland Electricity Board and shown on the twelve boundary maps signed by
representatives of South of Scotland Electricity Board, North Eastern
Electricity Board and the North Western Electricity Board, and deposited
with the Secretary of State for Scotland on 28 March 1990.
2. In this Schedule "the twelve boundary maps" mean:
O.S. 1:50 000 Second Series, Sheet 80
O.S. 1:50 000 First Series, Sheets 74 + 75
O.S. NY 36 NW
O.S. NY 37 SW
O.S. NY 37 SE
O.S. NY 37 NE
O.S. NY 47 SW
O.S. NY 47 NW
O.S. NY 48 SE
O.S. NY 58 SW
O.S. NY 58 NW
O.S. NY 58 NE
3. If any part of the authorised supply area is designated under a subsequent
licence granted under Section 6(l)(c) of the Act, such part shall be
excluded from the authorised supply area.
Scottish Power 259 August 1998
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SCHEDULE 3
Revocation
1. The Secretary of State may at any time revoke any of the licences granted
by this Licence Document by not less than 30 days' notice in writing to
the Licensee:
(a) if the Licensee agrees in writing with the Secretary of State that
such licence should be revoked;
(b) if any amount payable under Condition 9 of Part II in relation to
such licence is unpaid 30 days after it has become due and remains
unpaid for a period of 14 days after the Secretary of State has
given the Licensee notice that the payment is overdue provided that
no such notice shall be given earlier than the sixteenth day after
the day on which the amount payable became due;
(c) if the Licensee fails to comply with a final order (within the
meaning of Section 25 of the Act) or with a provisional order
(within the meaning of that Section which has been confirmed under
that Section and which (in either case) has been made in respect of
a contravention or apprehended contravention of a Condition to which
such licence is subject or of any relevant requirement (within the
meaning of that Section) imposed on the Licensee in its capacity as
holder of such licence and (in either case) such failure is not
rectified to the satisfaction of the Secretary of State within 3
months after the Secretary of State has given notice of such failure
to the Licensee. Provided that no such notice shall be given by the
Secretary of State before the expiration of the period within which
an application under Section 27 of the Act could be made questioning
the validity of the final or provisional order or before the
proceedings relating to any such application are finally determined;
Scottish Power 260 August 1998
<PAGE>
(d) if the Licensee fails to comply with any order made by the Secretary
of State under Section 56, 73, 74 or 89 of the Fair Trading Act 1973
or under Section 10(2)(a) of the Competition Act 1980;
(e) if any other licence granted by this Licence Document is revoked;
(f) if the Licensee:
(i) is unable to pay its debts (within the meaning of Section
123(1) or (2) of the Insolvency Act 1986, but subject to
paragraph 3 of this Schedule) or if any voluntary arrangement
is proposed in relation to it under Section 1 of that Act, or
if it enters into any scheme of arrangement (other than for
the purpose of reconstruction or amalgamation upon terms and
within such period as may previously have been approved in
writing by the Secretary of State);
(ii) has a receiver (which expression shall include an
administrative receiver within the meaning of Section 251 of
the Insolvency Act 1986) of the whole or any material part of
its assets or undertaking appointed;
(iii) has an administration order under Section 8 of the Insolvency
Act 1986 made in relation to it;
(iv) passes any resolution for winding-up other than a resolution
previously approved in writing by the Secretary of State; or
(v) becomes subject to an order for winding-up by a court of
competent jurisdiction; or
(g) if the Licensee is convicted of having committed an offence under
Section 59 of the Act.
Scottish Power 261 August 1998
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2. The Secretary of State may at any time by not less than 30 days' notice in
writing to the Licensee:
(a) revoke the Generation Licence if the Licensee ceases to carry on its
business in generating electricity in pursuance of the Generation
Licence;
(b) revoke the Transmission Licence if the Licensee ceases to carry on
its business in the transmission of electricity; and
(c) revoke the Public Electricity Supply Licence if the Licensee ceases
to carry on its business as a public electricity supplier.
3. For the purposes of paragraph 1(f)(i) of this Schedule Section 123(1)(a)
of the Insolvency Act 1986 shall have effect as if for "(pound)750" there
was substituted "(pound)250,000" or such higher figure as the Director may
from time to time determine by notice in writing to the Secretary of State
and the Licensee.
4. The Licensee shall not be deemed to be unable to pay its debts for the
purposes of paragraph 1 (f)(i) of this Schedule if any such demand as is
mentioned in Section 123(1)(a) of the Insolvency Act 1986 is being
contested in good faith by the Licensee with recourse to all appropriate
measures and procedures or if any such demand is satisfied before the
expiration of such period as may be stated in any notice given by the
Secretary of State under paragraph 1 of this Schedule.
Scottish Power 262 August 1998
<PAGE>
SCHEDULE 4
Supplementary conditions in relation to England and Wales
Definitions
1. In this Schedule:
"Ancillary Services" means:
(a) such services as the Licensee may
be required to have available in
association with any E&W generation
set pursuant to the England and Wales
Grid Code and which may be offered for
sale to the Transmission Company for
the purpose of securing stability of
operation on the Transmission
Company's Transmission System and the
system for the distribution of
electricity of any Authorised
Electricity Operator; and
(b) such services as the Licensee may
have agreed to have available in
association with any E&W generation
set pursuant to agreement made with
the Transmission Company and which may
be offered for sale to the
Transmission Company for the purpose
of securing stability of operation on
the Transmission Company's
Transmission System and the
Distribution System of any authorised
Scottish Power 263 August 1998
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electricity operator.
"England and Wales Distribution Code" means in relation to any England and
Wales public electricity supplier the
Distribution Code required to be drawn
up by such supplier and approved by
the Director as from time to time
revised with the approval of the
Director.
"England and Wales Grid Code" means the Grid Code required to be
drawn up by the Transmission Company
and approved by the Director as from
time to time revised with the approval
of the Director.
"England and Wales public electricity means any public electricity supplier
supplier" who holds a licence for an authorised
area in England and Wales.
"E&W generation set" means a generation set in England and
Wales.
"Fuel Security Code" means the document of that title
designated as such by the Secretary of
State as from time to time amended.
Scottish Power 264 August 1998
<PAGE>
Compliance with the England and Wales Grid Code
2. The Licensee shall comply with the provisions of the England and Wales
Grid Code insofar as applicable to it.
3. The Director may (following consultation with the Transmission Company)
issue directions relieving the Licensee of its obligation under paragraph
2 in respect of such parts of the England and Wales Grid Code and to such
extent as may be specified in those directions.
Compliance with England and Wales Distribution Code
4. The Licensee shall comply with the provisions of the England and Wales
Distribution Code of any England and Wales public electricity supplier
insofar as applicable to it.
5. The Director may (following consultation with any England and Wales public
electricity supplier directly affected thereby) issue directions relieving
the Licensee of its obligation under paragraph 4 in respect of such parts
of the England and Wales Distribution Code of any England and Wales public
electricity supplier and to such extent as may be specified in those
directions.
Security Arrangements
6. The Licensee shall comply with the provisions of the Fuel Security Code
insofar as they relate to any generating station of the Licensee in
England and Wales and such provisions shall have effect as if they were
set out in the Generation Licence.
Ancillary Services
7. The Licensee shall from time to time upon request by the Transmission
Company offer terms for the provision by the Licensee of Ancillary
Services from any operating E&W generation set of the Licensee.
Scottish Power 265 August 1998
<PAGE>
8. The Licensee shall at any time upon request of the Director provide to the
Director a report containing details of:
(i) prices offered pursuant to paragraph 7 for the provision of
Ancillary Services from each E&W generation set of the Licensee; and
(ii) an explanation of the factors justifying the prices offered
including (without limitation) details of the Licensee's costs
associated with making available such Ancillary Services in
conformity with the England and Wales Grid Code and of providing the
same to the Transmission Company.
Central Despatch, Merit Order and Pooling and Settlement
9. The Licensee shall submit all available E&W generation sets forming part
of a generating station in England and Wales which is capable of providing
100 megawatts or more to the total system, to central despatch by the
Transmission Company.
10. The Licensee shall at such times and in such manner as may be provided
under the England and Wales Grid Code provide the Transmission Company
with all information in relation to such generating stations as are
referred to in paragraph 9 reasonably required by it to enable it, in
conformity with the conditions of the Transmission Company's Transmission
Licence;
(i) to operate the system of central despatch; and
(ii) to operate the merit order system.
11. The Licensee shall be party to and (from the date of commissioning of any
generating station in England and Wales) be a pool member under, and shall
in either case comply with, the provisions of the Pooling and Settlement
Agreement insofar as the same shall apply to it in its capacity as a party
to such agreement and/or as a pool member being a generator of electricity
(as the case may be).
Scottish Power 266 August 1998
<PAGE>
12. In this Schedule:
"available" means (a) available in accordance with
the England and Wales Grid Code and
(b) declared as available for the
generation of electricity in
accordance with the provisions of the
Pooling and Settlement Agreement.
"central despatch" means the process of scheduling and
issuing direct instructions for
despatch of available E&W generation
sets and interconnector transfers by
the Transmission Company under the
conditions of the Transmission
Company's Transmission Licence.
"interconectors" means the electric lines and
electrical plant and meters owned or
operated by the Transmission Company
solely for the transfer of electricity
to or from the Transmission Company's
Transmission System into or out of
England and Wales.
"interconnector transfer" means electricity generating capacity
of an amount not exceeding the maximum
capacity specified in any contract for
use of the relevant interconnector as
may at any time be available to
generate electricity for transfer
across the interconnector to the total
system.
Scottish Power 267 August 1998
<PAGE>
"merit order system" means a system establishing economic
precedence of electricity from
available E&W generation sets or
interconnector transfers to be
delivered or transferred to the total
system (subject to other system
needs).
"total system" means the systems for the transmission
and distribution of electricity of all
Authorised Electricity Operators which
are located in England and/or Wales
"Transmission Company's Transmission means the licence issued to the
Licence" Transmission Company under Section
6(1)(b) of the Act as from time to
time amended.
Scottish Power 268 August 1998
<PAGE>
SCHEDULE 5*
Transmission charge restriction conditions
Not reproduced in this document
Scottish Power 269 August 1998
<PAGE>
SCHEDULE 6
Public electricity supply charge restriction conditions
1. Definitions
1.1 In this Schedule:
"attribute" means attribute in accordance with the
principles set out in paragraph 8.
"average charge per regulated unit means the regulated distribution
distributed" revenue in the relevant year divided
by the regulated quantity distributed
in that year.
"average specified rate" means the average of the daily base
rates of the Governor and Company of
the Bank of Scotland (or such other
bank as the Director shall specify
from time to time) current from time
to time during the period in respect
of which the calculation falls to be
made.
"distribution losses" means units unaccounted for on the
Licensee's distribution system,
measured as being the difference
between the units metered on entry
into the system and the units metered
on leaving the system.
"distribution revenue" means the revenue (measured on an
accruals basis) derived from the
provision of distribution services
(including to any Separate Business
(other than the Distribution
Business)) in the relevant year, after
Scottish Power 270 August 1998
<PAGE>
deduction of value added tax (if any)
and any other taxes based directly on
the amounts so derived.
"distribution services" means all services provided as part of
the Distribution Business other than
excluded services.
"EHV premises" means premises connected to the
Licensee's distribution system at a
voltage at or higher than 22 kilovolts
or at a sub-station with a primary
voltage of 66 kilovolts or above, to
which units are delivered by the
Licensee, or any relevant entity, and
which fall to be treated as EHV
premises in accordance with paragraph
9.1.
"EHV units" means units distributed by the
Licensee, or any relevant entity,
which are delivered or deemed to be
delivered to EHV premises.
"England and Wales PES" means a public electricity supplier
for an authorised area wholly in
England and Wales.
"excluded services" means those services which in
accordance with the principles set out
in paragraphs 9.2 and 9.3 fall to be
treated as excluded services.
"HV units" means units (other than EHV units)
distributed by the Licensee which are
delivered to premises connected to the
Licensee's distribution system at a
voltage at or higher than 1000 volts.
"LV units" means units distributed by the
Licensee which are delivered to
premises connected to the Licensee's
Scottish Power 271 August 1998
<PAGE>
distribution system at a voltage less
than 1000 volts.
"LV1 units" means LV units which are distributed
by the Licensee outside night-time or
weekend periods to domestic premises
or small non-domestic premises where
the appropriate use of system charges
apply different rates in night-time or
weekend periods as opposed to other
times of day or week, for the
avoidance of doubt including the use
of system charges under the tariffs
specified in paragraph 9.5.2.
"LV2 units" means LV units which are distributed
by the Licensee to domestic premises
or small non-domestic premises:
(a) during night-time or weekend
periods, where the appropriate use of
system charges apply different rates
in night-time or weekend periods as
opposed to other times of the day; or
(b) where the appropriate use of
system charges are incorporated into
tariffs which restrict availability of
supply to specified off-peak periods,
for the avoidance of doubt including
the use of system charges under the
tariffs specified in paragraph 9.5.3.
"LV3 units" means LV units other than LV1 and LV2
units for the avoidance of doubt
including the tariffs
Scottish Power 272 August 1998
<PAGE>
specified in paragraph 9.5.4.
"maximum average charge per unit means the charge calculated in
distributed" accordance with the formula in
paragraph 4.1.
"metered" means, in relation to any quantity
supplied or distributed as measured by
a meter installed for such purpose or
(where no such meter is installed or
it is not reasonably practicable to
measure the quantity by such meter) as
otherwise reasonably calculated.
"public electricity supply charge means this Schedule as from time to
restriction conditions" time modified or replaced in
accordance therewith or pursuant to
Section 11, 14 or 15 of the Act.
"quantity supplied" means the aggregate quantity of units
supplied by the Licensee in the
relevant year metered at the points of
supply in the authorised supply area
of the Licensee.
"regulated distribution revenue" means distribution revenue except such
part thereof as derives from the
distribution of EHV units or excluded
services.
"regulated distribution unit category" means as the case may be HV units or
LV1 units or LV2 units or LV3 units.
"regulated quantity distributed" means the aggregate quantity of units
distributed (both for the Licensee and
on behalf of third parties under use
of system) through the Licensee's
distribution system in the relevant
year metered at
Scottish Power 273 August 1998
<PAGE>
exit points on leaving the Licensee's
distribution system, but excluding for
this purpose:
(a) units distributed for the purpose
of supply to premises outside the
Licensee's authorised supply area; and
(b) EHV units.
"relevant entity" means any affiliate or related
undertaking of the Licensee.
"relevant year" means a financial year commencing on
or after 1 April 1990.
"relevant year t" means that relevant year for the
purposes of which any calculation
falls to be made;
"relevant year t-1" means the relevant year preceding
relevant year t or, in respect of the
period prior to 1st April 1990, the
period of 12 calendar months
commencing on 1 April 1989; and
similar expressions shall be construed
accordingly.
"supply" excludes supply outside the Licensee's
authorised supply area, standby,
top-up and any other sales of
electricity to persons other than
customers; "supplied" and similar
expressions shall be construed
accordingly.
"transmission services" means all services provided as part of
the Transmission Business other than
excluded services
Scottish Power 274 August 1998
<PAGE>
(as defined in paragraph 1.1 of
Schedule 5.
"unit" means a kilowatt hour.
1.2 In this Schedule, any reference to the first relevant year shall be a
reference to the relevant year commencing on 1 April 1990, and any
reference to the second relevant year and so on shall be construed
accordingly.
2. Restriction of Supply Charges
Continuation of Tariffs
2.1.1 Save where the Director consents in writing to a tariff being
discontinued, the Licensee shall continue to make available to customers
at Designated Premises the tariffs listed in Annex A to this Schedule.
2.1.2 Where a customer at Designated Premises was supplied at the end of the
eight relevant year on a tariff listed in Annex B to this Schedule, the
Licensee shall continue to offer that tariff to that customer at those
premises, unless the Director consents in writing to the Licensee's not
doing so.
2.1.3 The Licensee shall not, without the consent of the Director, change the
terms (other than price, which shall be regulated in accordance with this
paragraph) of any tariff described in the second column of the Table; and
the terms to which this prohibition applies include, for example, the
hours between which particular prices apply and the level of consumption
at which prices change.
New Tariffs
2.2 The Licensee shall not offer to supply any customer at Designated Premises
on a tariff not shown in the Table unless the terms of that tariff have
been approved by the Director.
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<PAGE>
The Price Restraint
2.3 Without prejudice to paragraph 7, the prices in the tariffs which apply at
the beginning of the ninth relevant year to supplies to Designated
Customers shall be set at or below the limit imposed by paragraph 2.4 and
in addition at or below each of the limits imposed by paragraph 2.5 and
(where those paragraphs apply) by paragraphs 2.6 and 2.7; save that in
addition the Licensee may recover from any Designated Customer an amount
not exceeding the Fossil Fuel Levy (as imposed under section 33 of the
Act) attributable to the electricity supplied by the Licensee to that
Designated Customer.
2.4 The prices first referred to in paragraph 2.3 shall be so set that they do
not cause the
n n
(sigma)PSi(t).QSi0+(sigma)PUi(t).QUi0
1 1
value of composite term _____________________________________ to exceed
n n
(sigma)PSi0.QSi0+(sigma)PUi0.QUi0
1 1
the value of the formula
( 100+RPI(t)-X(a))
( ______________ )
( 100 )
n
where (sigma) means the summation across all tariffs; and
1
X(a) has the value of 2.2.
2.5.1 Without prejudice to paragraph 7, at the beginning of the ninth relevant
year the Licensee shall so set its prices to Designated Customers supplied
on the tariff numbered 1 in the Table that the total charge for that
relevant year for a Designated Customer supplied on such a tariff who
consumes 3300 units in that year shall not increase by more than
( 100 + RPI(t)-X(a))
(PSi0 + 3300 PUi0)(__________________)
( 100 )
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<PAGE>
where X(a) has the value of 2.2.
2.5.2 Without prejudice to paragraph 7, at the beginning of the ninth relevant
year, the prices to Designated Customers on each of the domestic tariffs
in the Table other than the tariff numbered 1 shall be so set that, when
used to determine the value of the terms PUi(t) and PSi(t), they do not
cause the value of the composite term
u
(sigma) PUi(t).QUi0
1 s
___________________ + (sigma) PSi(t) to exceed the value of the formula
NC 1
( u )
((sigma) PUi0.QUi0 )
( 1 s ) (100+RPI(t)-X(b))
(___________________ + (sigma) PSi0) (______________ )
( NC 1 ) ( 100 )
where X(b) has the value of 2.2.
2.5.3 Without prejudice to paragraph 7, at the beginning of the ninth relevant
year, the prices to Designated Customers on each of the non-domestic
tariffs in the Table shall be so set that, when used to determine the
values of the term PUi(t) and PSi(t), they do not cause the value of the
u
(sigma) PUi(t).QUi0
1 s
composite term ___________________ + (sigma) PSi(t), when applied to that
NC 1
tariff, to exceed the value of the formula
( u )
((sigma) PUi0.QUi0 )
( 1 s ) (100+RPI)
(___________________ + (sigma) PSi0) (_______).
( NC 1 ) ( 100 )
2.6 Without prejudice to paragraph 7, in the case of any tariff described as
domestic in column 3 of the Table, the standing charge to a Designated
Customer at the beginning of the ninth relevant year shall not exceed the
standing charge given for that tariff in column 5 of the Table multiplied
by
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(100 + RPI(t))
(____________).
( 100 )
2.7.1 Without prejudice to paragraph 7, in the case of any tariff described in
column 2 of the Table which is a domestic prepayment tariff,
(a) the standing charge and the unit charge at the beginning of the
ninth relevant year shall each be lower than the standing charge and
unit charge respectively set against that tariff in column 5 of the
Table by the same proportion as the standing charge and the unit
charge at the beginning of the ninth relevant year of the nearest
equivalent domestic tariff (not being a prepayment tariff) are lower
than the standing charge and unit charge respectively of that
nearest equivalent domestic charge shown against them in column 5 of
the Table (and in this paragraph the standing charge shall be
exclusive of any prepayment surcharge); and
(b) there shall at no time be any increase in the amount by which the
standing charge (including any prepayment meter surcharge) for any
domestic prepayment tariff exceeds the standing charge for the
nearest comparable domestic tariff (not being a prepayment tariff).
2.7.2 The Director may direct which tariff is the nearest equivalent domestic
tariff for the purpose of paragraph 2.7.1.
2.8.1 Without prejudice to paragraphs 2.9 and 7, no price (whether a standing
charge or a unit charge) in any tariff shall be increased during the
ninth relevant year above the price which applies at the beginning of the
ninth relevant year, unless the Director has consented in writing.
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2.8.3 In giving consent the Director shall have regard in particular but not
exclusively to the impact of significant movements in costs outside the
Licensee's control, and shall consider whether such movements in costs
justify an increase in all tariffs, a differential increase in tariffs or
an increase in some tariffs only.
2.9 If the Licensee proposes to change the rate at which Fossil Fuel Levy is
incorporated in the prices to be charged by the Licensee to Designated
Customers, the Licensee shall give notice of the new rate to the Director
28 days before it comes into effect, and when it comes into effect every
price limit set pursuant to paragraphs 2.4, 2.5, 2.6 and 2.7.1(a) shall be
multiplied by the following factor
100 + F(t)
__________ .
100 + F(d)
2.10.1 Where, after the end of the eighth relevant year, the Director is
satisfied that in the eighth relevant year the average charge per
regulated unit supplied differed from the maximum average charge per
regulated unit supplied (as those terms are defined in the form of
licence in force 31 March 1998) assumed for the purpose of setting the
prices in column 5 of the Table, the Director may give a direction to the
Licensee stipulating the prices to be charged for any (or all) of the
tariffs described in column 2 of the Table.
2.10.2 Before giving any such direction, the Director shall consult the
Licensee.
2.10.3 In considering whether to give any such direction, and in considering the
content of any such direction, the Director shall have regard
(a) to the extent to which the regulated supply revenue for the eighth
relevant year assumed for the purpose of setting the prices in
column 5 of the Table differs from the actual regulated supply
revenue for that year adjusted
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(i) to reflect what the regulated supply revenue would have been
if the tariffs in force on 1 August 1997 had remained
unchanged until the end of the eighth relevant year; and
(ii) by adding any rebates or discounts to Regulated Customers in
respect of the period from 1 August 1997 to the end of the
eighth relevant year, being rebates or discounts not included
in the tariffs in force on 1 August 1997
(terms in this sub-paragraph which are defined in the form of
licence in force on 31 March 1998 having that meaning in this
sub-paragraph);
(b) to any representations made by the Licensee; and
(c) to the cost to the Licensee of changing any tariff
2.11.1 Where, for relevant year t, the terms TA(dt) or GA(dt) (or both of them)
in paragraph 4.4 have a value greater than 0, the Director may give a
direction to the Licensee stipulating the prices to be charged, in that
or any subsequent relevant year, for any (or all) of the tariffs
described in Column 2 of the Table.
2.11.2 Before giving any such direction, the Director shall consult the
Licensee.
2.11.3 In considering whether to give any such direction, and in considering the
content of any such direction, the Director shall have regard
(a) to the extent by which the charges made by the Distribution Business
to the Supply Business have been reduced on account of the terms
TA(dt) or GA(dt) (or both of them) having a greater value than 0;
(b) to any representation made by the Licensee; and
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(c) to the cost to the Licensee of changing any tariff.
2.12.1 Without prejudice to paragraphs 2.11 and 7, for the tenth and every
subsequent relevant year, unless the Director has consented in writing,
each component of each tariff described in colunm 2 of the Table or
approved for the purpose of paragraph 2.2 shall have a price no greater
than the price at the end of the immediately preceding relevant year, in
each case reduced by the formula
100 + RPI(t) - X(c)
___________________
100
where X(c) has the value of 3 for the tenth relevant year and the value
of 0 for every subsequent relevant year.
2.12.2 In giving his consent, the Director shall have regard in particular but
not exclusively to the impact of significant movements in costs outside
the Licensee's control, and shall consider whether such movements in
costs justify an increase in all tariffs, a differential increase in
tariffs or an increase in some tariffs only.
Interpretation
2.13. In this paragraph 2:
(a) all prices and revenue shall exclude value added tax (if any);
(b) in respect of any tariff described in column 2 of the Table, the
following terms shall have the following meanings:
PSi(t) is the standing charge (or each of them) for that tariff for
the ninth relevant year;
PSi0 is the standing charge (or each of them) for that tariff given
in column 5 of the Table;
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QSi0 is the number in column 6 of the Table set against that
standing charge;
PUi(t) is the unit charge (or each of them) for that tariff in the
ninth relevant year;
PUi0 is the unit charge (or each of them) given for that tariff in
column 5 of the Table;
QUi0 is the number in column 6 of the Table set against that unit
charge;
u
(sigma) means the summation across all unit charges for that tariff;
1
s
(sigma) means the summation across all standing charges for that
1 tariff;
NC means the number given against that tariff in column 7 of the
Table; and
(c) the following terms shall have the following meanings:
F(t) means the rate at which Fossil Fuel Levy will be incorporated
in the prices to be charged by the Licensee to Designated
Customers as shown in the notice given pursuant to paragraph
2.9;
F(d) has the value of 0.4%; and
RPI(t) means the percentage change (whether of a positive or a
negative value) in the arithmetic average of the Retail Price
Index numbers published or determined with respect to each of
the six months July to
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December (inclusive) in relevant year t-1 and the arithmetic
average of the Retail Price Index numbers published or
determined with respect to the same months in relevant year
t-2; and
the Table means the table set out in Annex C to this Schedule.
3. [Deleted]
4. Restriction of distribution charges
Basic Formula
4.1 Without prejudice to paragraph 7, the Licensee shall in setting its
charges for the provision of distribution services use its best endeavours
to ensure that in any relevant year the average charge per regulated unit
distributed shall not exceed the maximum average charge per unit
distributed calculated in accordance with the following formula:
M(dt) = P(dt) + PN(dt) - K(dt)
4.2 For the purposes of paragraph 4.1, M(dt) means the maximum average charge
per unit distributed in relevant year t.
Formula for P(dt) as used in paragraph 4.1
4.3 For the purposes of paragraph 4.1, P(dt) is derived from the following
formula:
P(dt)=((PU+PM). GR(t).PID(t)) + (PL.(AL(t)-L(t)).PIL(t))
__________________________________________________
D(t)
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where:
PU means an amount equal to (Pounds)253,600,000
PM means an amount equal to (Pounds)13,500,000
GR(t) is derived from the following formula:
where for the sixth relevant year GR(t-1) equals 1.
((sigma)P(oi).D(it) C(dt) )
GR(t) = 0.5(____________________ + ________) GR(t-1)
((sigma)P(oi).D(it-1) C(dt-1))
(sigma) means the summation across all regulated distribution unit
categories i.
P(oi) means in respect of each regulated distribution unit category i set
out below in column 1 the value equal to that amount set opposite
that category in colunm 2.
1 2
regulated distribution
unit category i value (p)
______________________ _________
HV 0.482
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LV1 2.790
LV2 0.281
LV3 1.704
D(it) means that number of units in each regulated distribution unit
category i distributed in relevant year t.
D(it-1) means that number of units in each regulated distribution unit
category i distributed in relevant year t-1.
C(dt) means a notional figure representing the number of customers in the
authorised area defined (for the purpose of this term C(dt) only)
for each relevant year, as the figure in the table below.
relevant year beginning:
1st April 1994 1,778,900
1st April 1995 1,790,900
1st April 1996 1,802,900
1st April 1997 1,815,000
1st April 1998 1,827,200
1st April 1999 1,838,900
any subsequent 1,838,900
relevant year
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C(dt-1) means the number equal to C(dt) in relevant year t-1.
PID(t) is derived from the following formula:
( RPI(t) - Xd(t) )
PID(t) = (1 + ______________ ) PID(t-1)
( 100 )
where:
PID(t-1) for the sixth relevant year equals 1.
RPI(t) means the arithmetic mean of the percentage change (whether of a
positive or a negative value) in the Retail Price Index between that
published or determined with respect to each of the months from July
to December (both inclusive) in relevant year t-1 and that published
or determined with respect to the same months in the relevant year
t-2.
Xd means 2.
PL means an amount equal to 3.O656p.
AL(t) means, in respect of relevant year t, allowed distribution losses
calculated as provided in paragraph 4.6.6.
L(t) means in respect of relevant year t, adjusted distribution losses
calculated as provided in paragraphs 4.6.2 to 4.6.5.
PIL(t) is derived from the following formula:
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( RPI(t))
PIL(t) = (1 + ______) PIL(t-1)
( 100 )
where, for the sixth relevant year, PIL(t-1) equals 1.
D(t) means the regulated quantity distributed in relevant year t.
Formula for PN(dt) as used in paragraph 4.1
4.4 For the purposes of paragraph 4.1, in the ninth and subsequent relevant
years the term PN(dt) shall be calculated in accordance with the following
formula:
(PS+PR)PIR(t) - TA(dt-1) - GA(dt-1)
PN(dt) = ___________________________________
D(t)
and for each relevant year t prior to the ninth relevant year PN(dt) shall
be 0.
where:
PS means an amount equal to (Pound)4.87 million for each of the ninth
to the thirteenth relevant years, and thereafter shall be 0.
PR means, in the ninth and all subsequent relevant years, an amount
equal to (Pound)3,010,000.
PIR(t) is derived from the following formula:
( RPI(t))
PIR(t) = (1 + ______) PIR(t-1)
( 100 )
where for the ninth relevant year PIR(t-1) equals 1
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TA(dt) in respect of any relevant year t, is derived from the following
formula:
My
TA(dt) = (sigma)P(sd).C(m)n
Mx
save that TA shall be a figure not less than 0, and shall for each
relevant year t prior to the ninth relevant year be 0.
where:
My
(sigma) means a summation across all the months M(x) to M(y) in each
Mx relevant year.
M(x) means, in the ninth relevant year, the month commencing 1st July
1998, and means in each subsequent relevant year the month
commencing 1st April in such relevant year.
M(y) means, in each relevant year, the month commencing 1st March in such
relevant year.
P(sd) means an amount equal to (Pound)670,000.
C(mn) means, in respect of each month M(x) to M(y) in the ninth and each
subsequent relevant year, a proportion of the total number of 0.1MW
customers within the authorised area (expressed as a figure greater
than or equal to greater than or equal to -1 and less than or equal
to 1) to be calculated by reference to the first day of such month
in accordance with the following formula:
C(mn) = N-SC
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where:
N means a figure equal to:
(a) in respect of the months commencing 1st July 1998, 1st August
1998 and 1st September 1998, 0.096;
(b) in respect of the months commencing 1st October 1998, 1st
November 1998 and 1st December 1998, 0.5; and
(c) in respect of the month commencing 1st January 1999 and all
subsequent months, 1.
SC in respect of the first day of each relevant month, means a
proportion of the total number of 0.1MW customers within the
authorised area (expressed as a figure greater than or equal to 0
and less than or equal to 1), being customers who may be supplied by
a Second Tier Supplier on such date in accordance with any direction
or variation of a direction issued by the Director (and not
subsequently withdrawn or varied) pursuant to condition 3 of that
Supplier's licence to supply electricity.
GA(dt) shall in the ninth relevant year, where the earliest date specified
(and not subsequently withdrawn or varied to a later date) in any
direction or variation of a direction issued by the Director,
pursuant to condition 3 of the licence held by any Second Tier
Supplier, in relation to the supply of electricity to any premises:
(a) is in April 1998, be 0;
(b) is in May 1998, be an amount equal to (Pound)120,000;
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(c) is in June 1998, be an amount equal to (Pound)450,000;
(d) is in July 1998 or any subsequent month, be an amount equal to
(Pound)1,020,000,
and shall in each relevant year t other than the ninth relevant year
be 0.
Formula for K(dt), as used in Paragraph 4.1
4.5 For the purposes of paragraph 4.1, K(dt) means the correction factor per
unit (whether of a positive or a negative value) to be applied to the
average charge per unit distributed in relevant year t which (subject to
paragraph 5.4) is derived from the following formula:
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R(dt-1) - (D(t-1).M(dt-1)) I(dt)
K(dt) = __________________________ (1 + _____ )
D(t) 100
provided that: notwithstanding the above, the value of K(dt) for the sixth
relevant year shall be that value required by paragraph 4.1
of this Schedule in the form in force on 31st March 1995.
where:
R(dt-1) means the distribution revenue in relevant year t-1.
D(t-1) means the regulated quantity distributed in relevant year t-1.
M(dt-1) means maximum average charge per unit distributed in relevant
year t-1.
I(dt) means that interest rate in relevant year t which is equal to, where
K(dt) (taking no account of I(d) for this purpose) has a positive
value, the average specified rate plus 4, or where K(dt) (taking no
account of I(d) for this purpose) has a negative value, the average
specified rate.
4.6 Calculation of factor in respect of distribution losses
4.6.1 The terms Al(t) and L(t) as used in paragraph 4.1 of this Schedule shall
each be determined using the consistent methodological basis set out in
paragraphs 4.6.2 to 4.6.6 below.
Consistent methodological basis for determination of AL(t) and L(t)
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4.6.2 Adjusted distribution losses L(t) means in respect of relevant year t the
difference between adjusted grid supply point purchases (calculated as
provided in paragraph 4.6.3 and 4.6.4) and adjusted units distributed
(calculated as provided in paragraph 4.6.5), save that for the purposes of
paragraph 4.6.6, adjusted distribution losses for the 12 month period from
1 April 1989 shall be derived by applying the initial relevant loss
percentage (calculated as provided in paragraphs E6 to E8 of Part E of
Schedule 3 of the public electricity supply licences for England and Wales
PESs in the form in force on 31 March 1995) to the adjusted units
distributed in that period.
4.6.3 Adjusted grid supply point purchases shall be obtained by adjusting the
units metered on entry to the Licensee's distribution system by:
(a) excluding that number of units which is equal to the sum of
(i) EHV units; and
(ii) units distributed by the Licensee for the purpose of supply to
premises outside the Licensee's authorised area; and
(iii) an amount in respect of distribution losses between the grid
supply point and the exit point attributable to the units
referred to in (i) and (ii) above, as determined in accordance
with the schedule of adjustment factors referred to in Part
VI, Condition 2, paragraph 5(b); and
(b) including an amount (in units) to represent the effect of units
entering the Licensee's distribution system otherwise than at grid
supply points, being the difference between the number of units so
entering and the number of units that would have been required to have
entered at grid supply points in their absence (such later number of
units calculated
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consistently with the principles underlying the schedule of
adjustment factors referred to at Part VI, Condition 2,
paragraph 5(b)).
4.6.4 For so long as units are metered on entry to the Licensee's distribution
system at bulk supply points instead of at grid supply points, such units
shall be calculated by:
(i) applying the procedures in paragraph 4.6.3 as if all references to
units metered at grid supply points were to units metered at bulk
supply points; and
(ii) grossing-up units metered at the bulk supply points by the relevant
grid supply point conversion factor being either:
(a) 0.5 per cent of the units metered at the bulk supply points;
or
(b) such other factor to take account of losses occurring between
the grid supply points and the bulk supply points as the
Licensee may with the prior approval of the Director determine
to be appropriate.
4.6.5 Adjusted units distributed shall be obtained by:
(a) calculating all units distributed by the Licensee metered during
relevant year t at exit points on leaving the Licensee's
distribution system; and
(b) deducting therefrom EHV units delivered or deemed to be delivered
during relevant year t and units distributed during relevant year t
for the purpose of supply to premises outside the Licensee's
authorised area; and
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(c) adding thereto an amount equal to the units consumed during relevant
year t on the Licensee's premises in the authorised area (insofar as
not otherwise taken into account in determining units distributed
under sub-paragraph (a) above).
4.6.6 The allowed distribution losses AL(t) in relevant year t shall be derived:
(a) by ascertaining the adjusted units distributed in accordance with
paragraph 4.6.5;
(b) multiplying it by the aggregate of adjusted distribution losses
(calculated as provided in paragraph 4.6.2) over the preceding
relevant years (commencing with the 12 month period from 1 April
1989 or, if the number of preceding relevant years exceeds 10,
relevant year t-10); and
(c) dividing the product by the aggregate of adjusted units distributed
over the same preceding relevant years.
Information to be provided to the Director
4.6.7 The Licensee shall by 1 July 1995 furnish to the Director as being one of
the specified items to be included in the statement referred to at
paragraph 6.7 a statement showing for each year since 1 April 1990
adjusted grid supply point purchases, adjusted units distributed and
adjusted distribution losses.
4.6.8 The Licensee shall, following the end of the sixth relevant year and each
succeeding relevant year, furnish to the Director, as being one of the
specified items to be included in the statement referred to at paragraph
6.7, a statement showing the grid supply point purchases, adjusted units
distributed and adjusted distribution losses for that relevant year,
accompanied by the underlying calculations of the adjusted distribution
losses and (where
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appropriate) an explanation of any changes in the basis of calculation
of estimation thereof.
4.6.9 Where the Director is satisfied that any statement or underlying
calculation provided has not been drawn up in conformity with paragraph
4.6.2 to 4.6.6 above, the Director may issue directions, and the statement
or underlying calculation shall be adjusted with effect from the date of
issue of the directions or (subject to paragraph 6.10) such other date as
may be specified in the directions.
Restriction of distribution charges and of supply charges: adjustments
5.1 It in respect of any relevant year, the average charge per regulated unit
distributed exceeds the maximum average charge per unit distributed by
more than 3 per cent, the Licensee shall furnish an explanation to the
Director and in the next following relevant year the Licensee shall not
effect any increase in charges for the provision of distribution services
unless it has demonstrated to the reasonable satisfaction of the Director
that the average charge per regulated unit distributed would not be likely
to exceed the maximum charge per unit distributed in that next following
relevant year.
5.2 It in respect of any 2 successive relevant years, the sum of the amounts
by which the average charge per regulated unit distributed has exceeded
the maximum average charge per unit distributed is more than 4 per cent,
then in the next following relevant year the Licensee shall, if required
by the Director, adjust its charges such that the average charge per unit
distributed would not be likely, in the judgment of the Director, to
exceed the maximum average charge per unit distributed in that next
following relevant year.
5.3 It in respect of 2 successive relevant years, the average charge per
regulated unit distributed is less than 90 per cent of the maximum average
charge per unit distributed, the Director, after consultation with the
Licensee, may direct that in calculating K(dt) for the purposes of
paragraph 4.1 in respect of the next
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following relevant year, there shall be substituted for R(dt-1) in the
formula at that paragraph such figure as the Director may specify being
not less than R(dt-1) and not more than 0.90 (D(t-1).M(dt-1)).
5.4.1 If, in respect of the eighth relevant year, the average charge per
regulated unit supplied exceeds the maximum average charge per regulated
unit supplied (as those terms are defined in the form of licence in force
on 31 March 1998), but by not more than 1 1/2 per cent, the Licensee shall
ensure that the excess above the maximum average charge per regulated unit
supplied, with interest thereon at a rate 2 per cent above the average
specified rate, shall be paid to all 0.1 MW customers who continue to be
supplied by the Licensee in the ninth relevant year.
5.4.2 If, in respect of the eighth relevant year, the average charge per
regulated unit supplied exceeds the maximum average charge per regulated
unit supplied (as those terms are defined in the form of licence in force
on 31 March 1998) by more than 1 1/2 per cent, the Licensee shall use all
reasonable endeavours to return the excess above the maximum average
charge per regulated unit supplied, with interest thereon at a rate 4 per
cent above the average specified rate, during the ninth relevant year to
all 0.1 MW customers supplied by the Licensee in the eighth relevant year.
5.4.3 For the purpose of paragraph 2, no sum payable under paragraph 5.4.1 or
5.4.2 shall be regarded as paid or payable under a tariff applicable to
the ninth relevant year or any subsequent relevant year.
5.5 No later than three months after the end of the eighth relevant year, the
Licensee shall send to the Director a statement accompanied by such
forecasts, estimates and calculations as may be necessary, showing the
basis by which the Licensee intends to comply with paragraph 5.4.
6. Information to be provided to the Director in connection with the public
electricity supply charge restriction conditions
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6.1 Where any change is intended to be made in charges for the provision of
distribution services regulated under paragraph 4 the Licensee shall not
later than the time referred to in paragraph 6.2 provide the Director
with:
(a) a written forecast of the maximum average charge per unit
distributed, together with its components, in respect of the
relevant year t in which such change is to take effect and in
respect of the next following relevant year t+1; and
(b) a written estimate of the maximum average charge per unit
distributed, together with its components, in respect of the
relevant year t-1 immediately preceding the relevant year in which
the change is to take effect unless a statement complying with
paragraph 6.7 in respect of relevant year t-1 has been furnished by
the Licensee to the Director before the publication of the proposed
change.
6.2 The relevant time referred to in paragraph 6.1 shall be the date of
publication of such change.
6.3 If within 3 months of the commencement of any relevant year t the Licensee
has not provided the aforementioned forecasts pursuant to paragraph 6.1
for the purpose of such changes in charges as are referred to in paragraph
6.1, the Licensee shall provide the Director with a written forecast of
the maximum average charge per unit distributed together with its
components in respect of the relevant year t.
6.4 [Deleted]
6.5 The Director may issue directions providing that any forecast or estimate
provided in accordance with paragraphs 6.1 or 6.3 shall be accompanied by
such information as regards the assumptions underlying the forecast or
estimate as may be necessary to enable the Director to be satisfied that
the
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forecast or estimate has been properly prepared on a consistent basis and
the Licensee shall comply with such directions.
6.6 Not later than six weeks after the commencement of each relevant year t,
the Licensee shall send to the Director a statement as to:
(a) whether or not the provisions of paragraph 5 are likely to be
applicable in consequence of the average charge per regulated unit
distributed in the preceding relevant year t-1 or the 2 preceding
relevant years t-1 and t-2; and
(b) its best estimate as to the relevant correction factor K(dt)
calculated in accordance with the formula set out in paragraph 4 to
be applied in calculating the maximum average charge per unit
distributed in respect of the relevant year t.
6.6A Not later than 15 January in each relevant year t the Licensee shall send
to the Director a written statement of the value of the term TA for that
year (TA(dt)), together with an estimate of the value of each of its
component parts, as detailed in paragraph 4.4.
6.7 Not later than 3 months after the end of each relevant year the Licensee
shall send to the Director a statement, in respect of that relevant year,
showing the specified items referred to in paragraph 6.9.
6.8 The statement referred to in the preceding paragraph shall be:
(a) accompanied by a report from the Auditors that in their opinion:-
(i) such statement fairly presents each of the specified items
referred to in paragraph 6.9 in accordance with the
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requirements of the public electricity supply charge
restriction conditions; and
(ii) the amounts shown in respect of each of those specified items
are in accordance with the Licensee's accounting records which
have been maintained in respect of each of the relevant
Separate Businesses in accordance with Condition 3 of Part II;
and
(b) certified by a director of the Licensee on behalf of the Licensee
that to the best of his knowledge, information and belief having
made all reasonable enquiries:
(i) (in respect of the eighth relevant year only) there is no
amount included in its calculations under paragraph 2 (in the
form of licence in force on 31 March 1998) which represents
other than
(aa) bona fide consideration for electricity supplied to
regulated customers (as defined in the form of licence
in force on 31 March 1998) in the course of the Supply
Business; or
(bb) an amount permitted under the public electricity supply
charge restriction conditions to be so included;
(ii) there is no amount included in its calculations under
paragraph 4 which represents other than:
(aa) bona fide consideration for the provision of
distribution services in the course of the Distribution
Business; or
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(bb) an amount permitted under the public electricity supply
charge restriction conditions to be so included;
(iii) there is no amount included in its calculations of allowed
security costs under paragraph 7 which represents other than
an amount permitted under the public electricity supply charge
restriction conditions to be so included;
(iv) no service has been treated as an excluded service which was
not properly so treated and no amount included in the revenues
in respect thereof represents other than bona fide
consideration for the provision of the excluded service to
which it relates; and
(v) all amounts which should properly be taken into account for
the purposes of the public electricity supply charge
restriction conditions have been taken into account.
6.9 The specified items to be contained in the statement referred to in
paragraph 6.7 shall be the following:
(a) the regulated quantity distributed;
(b) the quantity distributed in each regulated distribution unit
category;
(c) the average charge per regulated unit distributed;
(d) the value of the term TA(dt), together with the value of its
component parts, as described in paragraph 4.4;
(e) the information referred to at paragraph 7.8;
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(f) the statements and information referred to at paragraphs 9.1.2,
9.4.1 and 9.5.1;
(g) such other items as shall be specified in directions issued by the
Director for the purposes of this Schedule;
(h) the statement and information referred to at paragraphs 4.6.7 and
4.6.8; and
(i) the statement and information referred to at paragraph 8.5,
Provided that the statement to be provided in the ninth relevant year in
respect of the eighth relevant year shall contain the information required
by paragraph 6.9 of Schedule 6 to the Licence in the form in force on 31
March 1998.
6.10 Where the Director exercises his power to issue directions under paragraph
7.9 or paragraphs 8.6, 9.1.3, 9.4.2 or 9.5.5 then such directions shall
not have effect from a date earlier than the commencement of the relevant
year to which the statement last furnished to the Director pursuant to
paragraph 6.7 prior to the issue of the directions related, unless such
statement (or the accompanying report or certificate under paragraph 6.8)
or any statement, report or certificate in respect of an earlier relevant
year was incorrect or was misleading in any material respect.
6.11 Where the Director issues such directions as are referred to in the
preceding paragraph the Licensee shall, within such period as the Director
may specify, send to the Director a revised statement in substitution for
the Licensee's statement under paragraph 6.7 in respect of the relevant
year, which revised statement shall confirm and give effect to the
contents of the statement under paragraph 6.7.
7. Allowances in respect of security costs
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7.1 The Licensee may at any time after the commencement of a security period
give notice in writing to the Director suspending, with effect from the
date of receipt of the notice by the Director, application of such of the
public electricity supply charge restriction conditions as may be
specified in the notice for the unexpired term of the security period.
7.2 At any time during a security period, the Director may (having regard to
his duties under the Act) by means of directions:
(a) suspend or modify for the unexpired term of the security period the
public electricity supply charge restriction conditions or any part
or parts thereof; or
(b) introduce for the unexpired term of the security period new public
electricity supply charge restriction conditions
in either case, so as to make such provision as in the opinion or
estimation of the Director is requisite or appropriate:
(i) to enable the Licensee to recover by means of increased
charges an amount estimated as being equal to the Licensee's
allowed security costs during such period;
(ii) to ensure that such part of the amount referred to in
subparagraph (i) above as is estimated as being equal to the
Licensee's allowed security costs incurred as costs in the
Distribution Business are recovered by means of appropriate
equitable increases in the charges made in the Distribution
Business;
(iii) to ensure that such part of the amount referred to in
subparagraph (i) above as is estimated as being equal to the
Scottish Power 302 August 1998
<PAGE>
Licensee's allowed security costs incurred as costs in the
Supply Business, Second-Tier Supply Business and Wholesaling
Business respectively are recovered by appropriate equitable
increases in the charges made in those Businesses
and the Licensee shall comply with the terms of any directions so
issued.
7.3 At any time following a security period, the Director may (following such
consultation with the Licensee and others as the Director may consider
appropriate) issue directions suspending or modifying the public
electricity supply charge restriction conditions or any part or parts
thereof or replacing such directions as may have been made during the
security period and introducing such new public electricity supply charge
restriction conditions as in the opinion of the Director are appropriate
in all the circumstances (including, at the Director's discretion, an
appropriate adjustment having regard to any profit gained or foregone by
the Licensee during the security period), and the Licensee shall comply
with any directions so issued.
7.4 At any time within 3 months after the issue of directions by the Director
under paragraph 7.3, the Licensee may serve on the Director a
disapplication request in respect of such of the public electricity supply
charge restriction conditions or any part or parts thereof as are
specified in the request.
7.5 If within 3 months of the receipt by the Director of the disapplication
request referred to in paragraph 7.4, the Director has either not agreed
in writing to such disapplication request or has not made a reference to
the Monopolies Commission under Section 12 of the Act relating to the
modification of the public electricity supply charge restriction
conditions, the Licensee may deliver one month's written notice to the
Director terminating the application of such of the public electricity
supply charge restriction conditions (or any part or parts thereof) as are
specified in the disapplication request.
Scottish Power 303 August 1998
<PAGE>
7.6 Subject to paragraphs 7.7 and 7.9, the Licensee shall in any relevant year
be entitled to recover an aggregate amount equal to the Licensee's allowed
security costs in that year or (insofar as not previously recovered) any
previous year by means of appropriate equitable increases in the charges
made in each of the Distribution, Supply, Second-Tier Supply and
Wholesaling Businesses.
7.7 Paragraph 7.6 shall not apply insofar as the Licensee's allowed security
costs:
(a) were otherwise recovered by the Licensee; or
(b) were taken into account by the Director in setting public
electricity supply charge restriction conditions by means of
directions issued under paragraph 7.3.
7.8 The Licensee shall following the end of each relevant year provide to the
Director, as being one of the specified items to be contained in the
statement referred to in paragraph 6.7, details in respect of that
relevant year of:
(a) the amount of the Licensee's allowed security costs (on an accruals
basis);
(b) the aggregate amounts charged (on an accruals basis) under paragraph
7.6 on account of the Licensee's allowed security costs; and
(c) the bases and calculations underlying the increases in charges made
in the Distribution, Supply, Second-Tier Supply and Wholesaling
Businesses under paragraph 7.6.
7.9 Where the Director is satisfied that the Licensee has recovered amounts in
excess of the Licensee's allowed security costs, the Director may issue
directions requiring the Licensee to take such steps as may be specified
to reimburse customers of or purchasers from the Distribution, Supply,
Second-Tier Supply and Wholesaling Businesses (as the case may be) for the
excess amounts charged to them, and the Licensee shall comply with any
directions so issued
Scottish Power 304 August 1998
<PAGE>
provided that if the excess amounts relate to the Licensee's allowed
security costs paid to any authorised electricity operator, the Licensee
shall not be obliged to make any such reimbursement unless and until it
has recovered such costs from the relevant authorised electricity
operator.
7.10 No amounts charged by the Licensee under this paragraph 7 (whether or not
subsequently required to be reimbursed) shall be taken into account for
the purpose of applying the public electricity supply charge restriction
provisions of paragraphs 2, 3 and 4.
7.11 In this paragraph 7:
"Licensee's allowed security costs"
means any cost (whenever arising)
incurred by the Licensee and approved
by the Director as being directly
attributable to actions taken or
omitted to be taken by the Licensee or
by any authorised electricity operator
(as the case may be) in consequence
of:
(i) complying with directions issued
by the Secretary of State under
Section 34(3) or 34(4) of the Act; or
(ii) implementing recommendations of
any committee constituted to advise
the Secretary of State as to matters
related to his power to issue
directions under Section 34 of the Act
which are made to and
Scottish Power 305 August 1998
<PAGE>
accepted by the Secretary of State in
contemplation of circumstances likely
to lead to the issue of directions by
the Secretary of State under Section
34(3) or 34(4) of the Act;
but for the avoidance of doubt
excluding any cost which forms part of
the Licensee's allowed
transmission-related security costs
(as defined in paragraph 6.8 of
Schedule 5).
8. General principles of attribution
8.1 Where for the purposes of this Schedule a share of costs borne by the
Licensee requires to be attributed to any part of the market, the Licensee
shall make that attribution on a basis which ensures that no more than a
fair proportion of those costs, reflecting the costs incurred by the
Licensee in supplying that part of the market, are so attributed.
8.2 The following paragraphs are without prejudice to paragraph 8.1.
8.3 Fossil Fuel Levy and payments in lieu thereof
The fossil fuel levy requiring to be attributed to supplies to Designated
Customers shall be attributed on the basis of the amount of the levy
incorporated in the prices actually charged or to be charged by the
Licensee on supplies to such customers in the relevant year in respect of
which the attribution falls to be made.
Scottish Power 306 August 1998
<PAGE>
8.4 Distribution losses
Where an amount (in units) in respect of distribution losses requires to
be calculated and attributed in respect of EHV units and units distributed
by the Licensee for the purpose of supply to premises outside the
Licensee's authorised area, such calculation and attribution shall be made
consistently with the principles underlying the schedule of adjustment
factors referred to in paragraph 5(b) in Condition 2 of Part VI.
8.5 Information to be provided by Licensee
The Licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 6.7, a statement confirming that the
calculation of amounts in lieu of the fossil fuel levy and the attribution
of the fossil fuel levy, amounts in lieu thereof and of distribution
losses was made in accordance with the provisions of this paragraph
accompanied (where appropriate) by
(i) a statement of the total amounts attributed to Designated Customers
and other customers; and
(ii) an explanation of any changes in the principles of attribution or
their application (as the case may be) since the issue by the
Licensee of the last such statement.
8.6 Where the Director is satisfied that the basis of calculation or
attribution (as the case may be) used by the Licensee is not in conformity
with paragraph 8.1, the Director may issue directions specifying an
alternative basis of calculation or attribution, and the basis of
calculation or attribution by the Licensee (as the case may be) shall be
adjusted accordingly with effect from the date of issue of the directions
or (subject to paragraph 6.10) such other date as may be specified in
those directions.
Scottish Power 307 August 1998
<PAGE>
9. Matters supplemental to restriction of distribution charges
9.1 EHV premises:
9.1.1 EHV premises shall comprise:
(a) in relation to premises connected to the Licensee's
distribution system as at the date the public electricity
supply licence comes into force, those premises specified in
the list of EHV premises notified in writing to the Director
by the Licensee within 28 days after the public electricity
supply licence comes into force; and
(b) in relation to premises connected to the Licensee's
distribution system which are either first connected or
(having been previously connected) have had their connections
materially altered following the date the public electricity
supply licence comes into force, those premises connected to
the Licensee's distribution system at a voltage at or higher
than 22 KV or at a sub-station with a primary voltage of 66 KV
or above.
9.1.2 The Licensee shall following the end of each relevant year furnish
to the Director, as being one of the specified items to be included
in the statement referred to at paragraph 6.7, a statement listing
any changes in the premises falling to be treated as EHV premises.
9.1.3 Where the Director is satisfied that any premises treated by the
Licensee as being or not being EHV premises should not in conformity
with paragraph 9.1.1(b) be so treated, the Director may issue
directions to that effect, and such premises shall cease to be so
treated from the date of issue of the directions or (subject to
paragraph 6.10) such other date as may be specified in those
directions.
Scottish Power 308 August 1998
<PAGE>
9.2 Excluded services for purposes of the Distribution Business
9.2.1 There may be treated as excluded services provided by the
Distribution Business such services in respect of which charges are
made which:
(a) do not fall within paragraph 9.2.2; and
(b) may (subject to paragraph 9.4.2) be determined by the Licensee
as falling under one of the principles set out in paragraphs
9.2.3 to 9.2.6.
9.2.2 No service provided as part of the Distribution Business shall be
treated as an excluded service insofar as it consists of the
provision of services remunerated under use of system charges in
accordance with Condition 2 of Part VI including (without prejudice
to the foregoing):
(i) (subject to paragraph 9.2.3) the transport of electricity;
(ii) the carrying out of works for the installation of electric
lines or electrical plant (not otherwise payable in the form
of connection charges);
(iii) the carrying out of works or the provision of maintenance or
repair or other services for the purpose of enabling the
Licensee to comply with Conditions 7, 8 and 21 of Part V, the
Electricity Supply Regulations 1988 or any regulations made
under Section 29 of the Act or any other enactment relating to
safety or standards applicable in respect of the Distribution
Business; and
(iv) (subject to paragraph 9.2.5) the provision, installation and
maintenance of any meters, switchgear or other electrical
plant (not being part of connection charges).
Scottish Power 309 August 1998
<PAGE>
9.2.3 The Licensee may treat as being an excluded service for the purpose
of the Distribution Business the transport of:
(a) units of electricity not consumed in the Licensee's authorised
supply area; or
(b) EHV units.
9.2.4 Charges of the type described in paragraph 7 of Condition 2 of Part
VI and borne in accordance with the principles set out in paragraph
8 of that Condition by any person as connection charges, and charges
in respect of the statements referred to in paragraph 10 of that
Condition, may each be treated as excluded services for the purposes
of the Distribution Business.
9.2.5 A service provided as part of the Distribution Business may be
treated as an excluded service insofar as it consists in the
provision of services (including metering, electric lines or
electrical plant) for the specific benefit of any third party
requesting the same and not made available as a normal part of the
Distribution Business remunerated by use of system charges including
(without prejudice to the foregoing):
(i) special metering (including "time of day" metering) to
facilitate energy saving programmes for the benefit of
customers requesting the same;
(ii) charges for moving mains, services or meters forming part of
the Licensee's distribution system to accommodate extension,
redesign or re-development of any premises on which the same
are located or to which they are connected;
(iii) the provision of electric lines and electrical plant (a)
insofar as the same are required for the specific purpose of
enabling the provision of top-up or standby supplies or sales
of electricity or
Scottish Power 310 August 1998
<PAGE>
(b) to provide a higher degree of security than is required
for the purposes of complying with Condition 7 of Part V;
(iv) the amount by which charges for the provision of prepayment
meters to customers exceed charges for the provision of
standard meters for such customers;
(v) special metering or telemetry or data processing equipment for
the purposes of enabling any person which is a party to the
Settlement Agreement for Scotland to comply with its
obligations in respect of metering thereunder or for the
performance by the Licensee of any service in relation
thereto.
9.2.6 There may be treated as an excluded service for the purposes of the
Distribution Business charges for the relocation of electric lines
or electrical plant and the carrying out of works associated
therewith pursuant to a statutory obligation (other than under
Section 9(1) or Section 16 of the Act) imposed on the Licensee.
9.3 Excluded Services for purposes of Supply and Second-Tier Supply Businesses
9.3.1 Subject to paragraph 9.4.2, a service provided as part of the Supply
Business or Second-Tier Supply Business may be treated as an
excluded service insofar as it consists of the provision of services
for the specific benefit of customers requesting the same and not
made available as a normal part of such Business.
9.4 Information to be provided to the Director about excluded services
9.4.1 The Licensee shall following the end of each relevant year furnish
to the Director, as being one of the specified items to be included
in the statement referred to at paragraph 6.7, details specifying
separately the nature of all services provided as part of the
Distribution Business or Supply Business
Scottish Power 311 August 1998
<PAGE>
or Second-Tier Supply Business and treated as excluded services by
the Licensee during the course of such year and stating the revenues
derived in respect of each such service so treated.
9.4.2 Where the Director is satisfied that in the light of the principles
set out in the foregoing paragraphs any service treated by the
Licensee as being or not being an excluded service should not be so
treated, the Director shall issue directions to that effect, and the
service or services specified in the directions shall cease to be
treated as excluded services from the date of issue of the
directions or (subject to paragraph 6. 10) such other date as may be
specified in the directions.
9.5 Regulated distribution unit categories
9.5.1 The Licensee shall following the end of each relevant year furnish
to the Director, as being one of the specified items to be included
in the statement referred to at paragraph 6.7, details specifying
separately those use of system charges in respect of which the
Licensee has during the course of such year treated the units
distributed as falling within the definition of each of LV1 units
and LV2 units and LV3 units respectively.
9.5.2 The definition of LV1 units includes units distributed under the
following tariffs:
1. White Meter Day Units
2. Evening and Weekend Day Units
3. Monthly Maximum Demand (LV) Schedule B Tariffs
9.5.3 The definition of LV2 units includes units distributed under the
following tariffs:
1. White Meter Night Units
Scottish Power 312 August 1998
<PAGE>
2. Off Peak Units
3. Evening and Weekend (Evening and Weekend Units)
4. Monthly Maximum Demand (LV) Schedule B Tariffs
9.5.4 The definition of LV3 units includes units distributed under the
following tariffs:
1. Domestic
2. Farm and Combined Premises
3. General Block
4. Catering
5. Landlord Supplies
6. Monthly Maximum Demand (LV) Schedule A
7. Furnace Terms (LV)
8. Public Lighting
9.5.5 Notwithstanding the provisions of paragraphs 9.5.2 to 9.5.4, where
the Director is satisfied that a tariff or tariffs in respect of
which the Licensee has treated the units distributed as falling or
not falling within one of the categories in paragraphs 9.5.2 to
9.5.4 should not be so treated, the Director shall issue directions
to that effect and the tariff or tariffs specified in the directions
shall cease to be so treated from the date of issue of the
directions or (subject to paragraph 6.10) such other date as may be
specified in the directions and shall with effect from such date be
treated in such manner as may be specified in the directions.
10. Duration of public electricity supply charge restriction conditions
10.1 The public electricity supply charge restriction conditions shall apply so
long as the public electricity supply licence continues in force but shall
cease to have effect (in whole or in part, as the case may be) if the
Licensee delivers to the Director a disapplication request made in
accordance with paragraph 10.2 and:
Scottish Power 313 August 1998
<PAGE>
(a) the Director agrees in writing to the disapplication request; or
(b) their application (in whole or in part) is terminated by notice
given by the Licensee in accordance with either paragraph 10.4 or
paragraph 10.5.
10.2 A disapplication request pursuant to this paragraph 10 shall
(a) be in writing addressed to the Director,
(b) specify the public electricity supply charge restriction conditions
(or any part or parts thereof) to which the request relates, and
(c) state the date from which the Licensee wishes the Director to agree
that the specified public electricity supply charge restriction
conditions shall cease to have effect.
10.3 Save where the Director otherwise agrees, no disapplication following
delivery of a disapplication request pursuant to this paragraph 10 shall
have effect earlier than the date which is the later of:
(a) the date occurring 18 months after delivery of the disapplication
request; and
(b) 31 March 2000.
10.4 If the Director has not made a reference to the Monopolies Commission
under Section 12 of the Act relating to the modification of the public
electricity supply charge restriction conditions before the beginning of
the period of 12 months which will end with the disapplication date, the
Licensee may deliver written notice to the Director terminating the
application of such of the public electricity supply charge restriction
conditions (or any part or parts thereof) as
Scottish Power 314 August 1998
<PAGE>
are specified in the disapplication request with effect from the
disapplication date or a later date.
10.5 If the Monopolies Commission makes a report on a reference made by the
Director relating to the modification of the public electricity supply
charge restriction conditions (or any part or parts thereof) specified in
the disapplication request and such report does not include a conclusion
that the cessation of such public electricity supply charge restriction
conditions, in whole or in part, operates or may be expected to operate
against the public interest, the Licensee may within 30 days after the
publication of the report by the Director in accordance with Section 13 of
the Act deliver to him written notice terminating the application of such
public electricity supply charge restriction conditions (or any part or
parts thereof) with effect from the disapplication date or a later date.
10.6 A disapplication request or notice served under this Condition may be
served in respect of a specified geographic area.
Scottish Power 315 August 1998
<PAGE>
Annexes to Schedule 6.
ANNEX A
Tariffs Continuing to be Available
Tariff No. Tariff
1 Domestic
2 Comfort Plus
3 White Meter 1
4 Comfort Plus WM
5 Off Peak C
6 Off Peak D
7 Off Peak A
8 Off Peak 2
9 Economy 2000
10 Monthly Payment Scheme Discount
11 Powercard Discount
12 Powercard Rental
13 White Meter 3
14 White Meter 6
15 Farm & Combined Premises
16 General Block 1
17 General Block 2
18 Evening/Weekend
19 White Meter 2
20 White Meter 5
21 Off Peak C
22 Off Peak D
23 Off Peak A
24 Off Peak 2
25 Off Peak 3
26 Catering
27 Public Lighting
Scottish Power 316 August 1998
<PAGE>
ANNEX B
Preserved Tariffs
Tariff No. Tariff
3 White Meter 1
6 Off Peak D
7 Off Peak A
8 Off Peak 2
13 White Meter 3
19 White Meter 2
22 Off Peak D
24 Off Peak 2
Scottish Power 317 August 1998
<PAGE>
ScottishPower
ANNEX C
<TABLE>
<CAPTION>
Number Description of Tariff Category Component Price P0 (Unit Quantity QO NC
Rate in pence (Unit rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic Domestic Standing Charge 4044 1335996 13359
Unit Rate 6.61 4971
2 Comfort plus Domestic Stdg Chg 9440 25005 2500
General Units 6.61 71
Controlled Circuit Units 2.95 245
3 White Meter 1 Domestic Stdg Chg 5712 189906 0
Day Units 7.06 633
Night Units 2.93 1166
4 Comfort Plus WM Domestic Stdg Chg 6088 93660 9366
Day Units 7.06 291
Night Units 2.93 124
Controlled Circuit Units 2.65 603
5 Off Peak C Domestic Stdg Chg 1032 20930 2093
Unit Rate 4.36 55
6 Off Peak D Domestic Stdg Chg 1032 13504 1350
Unit Rate 5.22 43
7 Off Peak A Domestic Stdg Chg 1032 147 147
Unit Rate 3.55 1
8 Off Peak 2 Domestic Stdg chg 1032 1385 1385
Unit Rate 5.93 4
9 Economy 2000 Domestic Stdg chg 1032 2090 2090
Unit Rate 3.5 20
10 Monthly Payment Scheme Domestic Stdg Chg Disc. -400 484091 48409
Discount
11 Powercard Discount Domestic Stdg Chg Disc. -400 403033 40303
</TABLE>
Scottish Power 318 August 1998
<PAGE>
<TABLE>
<CAPTION>
Number Description of Tariff Category Component Price P0 (Unit Quantity QO NC
Rate in pence (Unit rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12 Powercard Rental Domestic Stdg Chg 2022 403033 40303
13 White Meter 3 Non-Domestic Stdg Chg 7230 1800 1800
Primary Day Units 11.84 6
Secondary Day Units 8.19 5
Night Units 2.93 7
14 White Meter 6 Non-Domestic Stdg Chg 8084 1790 1790
Day Primary Units 11.84 1
Day Secondary Units 8.19 3
Night Units 2.93 2
Controlled Circuit Units 2.65 4
15 Farm & Combined Premises Non-Domestic Stdg Chg 6982 3495 3495
Primary Units 12.64 6
Secondary Units 6.8 11
Tertiary Units 6.29 0
16 General Block I Non-Domestic Stdg Chg 6712 42707 4270
Primary Units 11.02 87
Secondary Units 7.28 152
17 General Block 2 Non-Domestic Stdg Chg 3898 5788 5788
Primary Units 11.76 4
Seconday Units 7.46 7.5
18 Evening & Weekend Non-Domestic Stdg chg 7230 1218 1218
Primary Units 13.32 2.3
Secondary Units 9.03 3.2
Evening/Weekend Units 6.05 5.5
19 White Meter 2 Non-Domestic Stdg Chg 7230 266 266
Primary Day Units 12.64 0.1
Additional Day Units 7.35 0.8
Night Units 2.93 0.8
20 White Meter 5 Non-Domestic Stdg Chg 8084 33 33
Primary Day Units 12.64 0
Additional Day Units 7.35 0.1
Night Units 2.93 0.1
Controlled Circuit Units 2.65 0.1
</TABLE>
Scottish Power 319 August 1998
<PAGE>
<TABLE>
<CAPTION>
Number Description of Tariff Category Component Price P0 (Unit Quantity QO NC
Rate in pence (Unit rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
21 Off Peak C Non-Domestic Stdg Chg 1032 2602 2602
All Units 4.36 10
22 Off Peak D Non-Domestic Stdg Chg 1032 298 298
All Units 5.22 2.3
23 Off Peak A Non-Domestic Stdg Chg 1032 430 430
All Units 3.55 1
24 Off Peak 2 Non-Domestic Stdg Chg 1032 312 312
All Units 5.93 3
25 Off Peak 3 Non-Domestic Stdg Chg 1032 62 62
All Units 6.21 0.5
26 Catering Non-Domestic Stdg Chg 1032 496 496
All Units 6.8 1.4
27 Public Lighting Non-Domestic Each kW installed 5990 13410 1341
Primary Units 8.02 14
Secondary Units 2.78 41
</TABLE>
Scottish Power 320 August 1998
<PAGE>
ScottishPower transmission price control conditions
SCHEDULE 5
Transmission charge restriction conditions
1. Definitions
1.1 In this Schedule:
"average charge per regulated means the regulated transmission
unit transmitted" revenue in the relevant year divided
by the regulated quantity transmitted
in that year.
"average specified rate" means the average of the daily base
rates of Governor and Company of the
Bank of Scotland (or such other bank
as the Director shall specify from
time to time) current from time to
time during the period in respect of
which the calculation falls to be
made.
"excluded services" means those services provided as part
of the Transmission Business which in
accordance with the principles set out
in paragraph 5 fall to be treated as
excluded services.
"maximum average charge means the charge calculated in
per unit transmitted" accordance with the formula in
paragraph 2.1.
"metered" means in relation to any quantity
transmitted, as measured by a meter
installed for such purpose or (where
no such meter is installed) as
otherwise reasonably calculated.
"notified value" means, in relation to any term, such
value as the Secretary of State shall
ascribe to that term in a written
notice given to the licensee as soon
as practicable after the date of grant
of this Licence Document.
"regulated quantity transmitted" means the aggregate quantity of units
transmitted through the licensee's
transmission system in that relevant
year metered at exit points on leaving
the licensee's transmission system.
<PAGE>
"regulated transmission revenue" means the revenue (measured on an
accruals basis) derived from the
provision of transmission services
(including to any Separate Business,
other than the Transmission Business)
in the relevant year, after deduction
of value added tax (if any) and any
other taxes based directly on the
amounts so derived.
"relevant entity" means any affiliate or related
undertaking of the licensee.
"regulated unit transmitted" means any unit within the regulated
quantity transmitted.
"relevant year" means a financial year commencing on
or after 1 April 1990.
"relevant year t" means that relevant year for the
purposes of which any calculation
falls to be made;
"relevant year t-1" means the relevant year preceding
relevant year t or, in respect of the
period prior to 1 April 1990, the
period of 12 calendar months
commencing on 1 April 1989; and
similar expressions shall be construed
accordingly.
"transmission charge" means this Schedule as from time to
time restriction conditions" modified
or replaced in accordance therewith or
pursuant to Section 11, 14 or 15 of
the Act.
"transmission services" means all services provided as part of
the Transmission Business other than
excluded services.
"unit" means a kilowatt hour.
<PAGE>
2. Initial restriction of transmission charges
Basic Formula
2.1 Without prejudice to paragraph 6 the licensee shall in setting its charges
for the provision of transmission services use its best endeavours to secure
that in any relevant year the average charge per regulated unit transmitted
shall not exceed the maximum average charge per unit transmitted calculated in
accordance with the following formula:
RPI(t) - X(t)
T(t) = [1 + -------------] P(t-1) - K(Tt)
100
where:
T(t) means the maximum average charge per regulated unit
transmitted in relevant year t.
RPI(t) means the arithmetic mean of the percentage change (whether
of a positive or a negative value) in the Retail Price Index between
that published or determined with respect to each of the months from
July to December (both inclusive) in relevant year t-1 and that
published or determined with respect to the same months in the
relevant year t-2 but in relation to the relevant year commencing on
1 April 1994 shall have a value equal to 2.5;
X(T) means 1.0.
P(t-1) means that amount per regulated unit transmitted in relevant
year t-l which is derived from the following formula:
RPI(t-1) - X(T)
P(t-1) = P(t-2) [ 1 + _______________ ]
100
but, in relation to the relevant year commencing on 1 April 1994
P(t-1) shall have a value equal to O.348p, and in relation to the
relevant year commencing on 1 April 1995 P(t-2) shall have that
value.
K(Tt) means the correction factor per regulated unit (whether of a
positive or negative value) to be applied to the average price per
regulated unit transmitted in relevant year t (other than in the
first relevant year and subject to paragraph 3.3) which is derived
from the following formula.
Q (t-1)(C(t-1) - T(t-1)) I(t)
K(Tt) = ________________________ (1 + ____ )
Q(t) 100
where:
Q(t-1) means the regulated quantity transmitted in relevant year
t-1, but in relation to the relevant year commencing on 1 April 1995
and each of the three succeeding relevant years shall have the value
specified opposite the preceding relevant year in Table 1 below.
<PAGE>
C(t-1) means the average charge per regulated unit transmitted in
relevant year t-1.
T(t-1) means the maximum average charge per unit transmitted in
relevant year t-1.
Q(t) means the regulated quantity transmitted in relevant year t,
but in relation to the relevant year commencing on 1 April 1994 and
each of the four succeeding relevant years shall have the value
specified opposite that relevant year in Table 1 below.
<PAGE>
Commencing Relevant Year
Regulated Quantity
1 April
Transmitted
(Gigawatt hours)
1994
26051
1995
26893
1996
29040
1997
29311
1998 30399
I(t) means that interest rate in relevant year t which is equal to, where K(Tt)
(taking no account of I for this purpose) has a positive value and C(t-1)
exceeds T(t-1) by more than 2 per cent, the average specified rate plus 4 or,
where K(Tt)(taking no account of I for this purpose) has a negative value, or
C(t-1) does not exceed T(t-1) by more than 2 per cent the average specified
rate.
<PAGE>
3. Restriction of transmission charges; adjustments
3.1 If, in respect of any relevant year, the average charge per regulated unit
transmitted exceeds the maximum average charge per unit transmitted by more than
3 per cent of the latter, the licensee shall furnish an explanation to the
Director and in the next following relevant year the licensee shall not effect
any increase in charges for the provision of transmission services the revenue
from which is regulated under this Schedule unless it has demonstrated to the
reasonable satisfaction of the Director that the average charge per regulated
unit transmitted would not be likely to exceed the maximum average charge per
unit transmitted in that next following relevant year.
3.2 If, in respect of any 2 successive relevant years, the sum of the amounts by
which the average charge per regulated unit transmitted has exceeded the maximum
average charge per unit transmitted is more than 4 per cent of the maximum
average charge per unit transmitted for the second of these relevant years, then
in the next following relevant year the licensee shall, if required by the
Director, adjust its charges for the provision of transmission services the
revenue from which is regulated under this Schedule such that the average charge
per regulated unit transmitted would not be likely, in the judgment of the
Director, to exceed the maximum average charge per unit transmitted in that next
following relevant year.
3.3 If, in respect of any 2 successive relevant years, the average charge per
regulated unit transmitted is less than 90 per cent of the maximum average
charge per unit transmitted, the Director, after consultation with the licensee,
may direct that in calculating K(Tt) in respect of the next following relevant
year, there shall be substituted for C(t-1) in the formula set out in paragraph
2.1 such figure as the Director may specify being not less than C(t-1) and not
more than 0.90 (T(t-1)).
<PAGE>
4. Information to be provided to the Director in connection with the
transmission charge restriction conditions.
4.1 Where any change is intended to be made in charges for the provision of
transmission services the revenue from which is regulated under this Schedule,
the licensee shall not later than the time of publication of such change provide
the Director with:
(i) a written forecast of the maximum average charge per unit transmitted,
together with its components, in respect of the relevant year t in which such
change is to take effect and in respect of the next following relevant year t+1;
(ii) a written estimate of the maximum average charge per unit
transmitted, together with its components, in respect of the relevant year t-1
immediately preceding the relevant year in which the change is to take effect
unless a statement complying with paragraph 4.5 in respect of relevant year t-1
has been furnished by the licensee to the Director before the publication of the
proposed change.
4.2 If within 3 months of the commencement of any relevant year t the licensee
has not made any such change in charges as is referred to in paragraph 4.1, the
licensee shall provide the Director with a written forecast of the maximum
average charge per unit transmitted together with its components, in respect of
relevant year t.
4.3 Any forecast or estimate provided in accordance with paragraph 4.1 or 4.2
shall be accompanied by such information as regards the assumptions underlying
the forecast or estimate as may be necessary to enable the Director to be
satisfied that the forecast or estimate has been properly prepared on a
consistent basis.
4.4 Not later than 6 weeks after the commencement of each relevant year t, the
licensee shall send to the Director a statement as to:
(a) whether or not the provisions of paragraph 3 are likely to be
applicable in consequence of the average charge per regulated unit transmitted
in the preceding relevant year t-1 or the 2 preceding relevant years t-1 and
t-2; and
(b) its best estimate as to the relevant correction factor K(Tt)
calculated in accordance with the formula set out in paragraph 2 to be applied
in calculating the maximum average charge per unit transmitted in respect of
relevant year t.
4.5 Not later than 3 months after the end of each relevant year the licensee
shall send to the Director a statement, in respect of that relevant year,
showing the specified items referred to in paragraph 4.7.
4.6 The statement referred to in the preceding paragraph shall be:
(a) accompanied by a report from the Auditors that in their opinion such
statement fairly presents each of the specified items in accordance with the
requirements of the transmission charge restriction conditions and that the
amounts shown in respect of each of the specified items are in accordance with
the accounting records which have been maintained in accordance with Condition 3
of Part II; and
<PAGE>
(b) certified by a director of the licensee on behalf of the licensee that
to the best of his knowledge, information and belief after having made all
reasonable enquiries:
(i) there is no amount included in its calculations under paragraph
2 which represents other than bona fide consideration for the
provision of transmission services the revenue from which is
regulated under this Schedule;
(ii) no service has been treated as an excluded service other than a
service permitted to be so treated in accordance with paragraph 5;
(iii) no amount included in the revenues stated in respect of
excluded services represents other than bona fide consideration for
the provision of the excluded service to which it relates.
4.7 The specified items to be shown in the statement referred to in paragraph
4.5 shall be the following:
(a) the regulated quantity transmitted;
(b) the average charge per regulated unit transmitted;
(c) the regulated transmission revenue;
(d) the nature of all services provided as part of the Transmission
Business and treated as excluded services, together with a statement of the
revenues derived from each service so treated;
(e) [deleted]
(f) [deleted]
(g) the details referred to in paragraph 6.5; and
(h) such other items as shall be specified in directions issued by the
Director for the purposes of this Schedule.
4.8 Where the Director issues directions under paragraph 5.6, the licensee
shall, if so required by the Director and within such period as the Director
shall specify, send to the Director a revised statement in substitution for the
licensee's statement under paragraph 4.5 in respect of the relevant year in
question and such revised statement shall give effect to such directions.
<PAGE>
5. Excluded services for purposes of Transmission Business
5.1 Subject to paragraph 5.6, there may be treated as excluded services provided
by the Transmission Business such services in respect of which charges are made:
(a) which fall within paragraph 5.5A; or
(b) which:
(i) do not fall within paragraph 5.2; and
(ii) may be determined by the licensee as falling under one of the
principles set out in paragraphs 5.3 to 5.5.
5.2 No service provided as part of the Transmission Business shall be treated as
an excluded service insofar as it relates to the provision of services
remunerated under use of system charges in accordance with Condition 2 of Part
VI including (without prejudice to the foregoing):
(i) the transport of electricity;
(ii) the carrying out of works for the installation of electric lines or
electrical plant (not otherwise payable in the form of connection charges) for
the purpose of maintaining or upgrading the licensee's transmission system;
(iii) the carrying out of works or the provision of maintenance or repair
or other services for the purpose of enabling the licensee to comply with
Conditions 3 and 4 of Part IV, the Electricity Supply Regulations 1988 or any
regulations made under Section 29 of the Act or any other enactment relating to
safety or standards applicable in respect of the Transmission Business; and
(iv) the provision, installation and maintenance of any meters, switchgear
or other electrical plant ancillary to the grant of use of system.
5.3 The whole or an appropriate proportion (as the case may be) of the charges
of the type described in paragraph 7 of Condition 2 of Part VI and borne by any
person as connection charges in respect of connections made after the grant of
this Licence Document may be treated as excluded services.
5.4 There may be treated as an excluded service charges for the relocation of
electric lines or electrical plant and the carrying out of works associated
therewith pursuant to a statutory obligation (other than under Section 9(2) of
the Act) imposed on the licensee.
5.5 There may with the approval of the Director be treated as an excluded
service any service of a type not above referred to which:
(a) consists in the provision of services for the specific benefit of a
third party requesting the same; and
(b) is not made available as a normal part of the Transmission Business
remunerated by use of system charges.
5.5A Services may be regarded as excluded services where the charges are:
<PAGE>
(a) to SHE for the provision of capacity for transferring electricity from
its-authorized transmission area to the Scottish interconnection;
(b) to SHE for the provision of capacity for transferring electricity
across any part of the Scottish interconnection apart from any Upgrade;
(c) made for the provision of capacity for transferring electricity across
any part of any Upgrade;
(d) to British Nuclear Fuels Limited for use of system for electricity
which British Nuclear Fuels Limited delivers to the Licensee's transmission
system at Chapelcross in accordance with the specified agreement referred to in
paragraph 5(a)(iv) of Condition 7 of Part II; and
(e) made for the provision of capacity for transferring electricity across
any interconnection between Scotland and Northern Ireland.
5.6 Where the Director is satisfied that in light of the principles set out in
paragraphs 5.3 to 5.5A inclusive any service treated as being or not being an
excluded service should not be so treated, the Director shall issue directions
to that effect, and such service shall cease to be treated as an excluded
service with effect from the date of issue of such directions or such earlier
date (being not earlier than the commencement of the relevant year to which the
statement last furnished to the Director pursuant to paragraph 4.5 prior to
issue of such directions related, unless such statement or the accompanying
report or certificate referred to in paragraph 4.6 or any earlier such
statement, report or certificate was incorrect or misleading in any material
respect) as may be specified in the directions.
5.7 For the purpose of this paragraph "Scottish interconnection", and "Upgrade"
have the meaning given in Condition 3.13 of Part VI.
<PAGE>
6. Allowances in respect of security costs
6.1 At any time during a security period, the licensee may give notice in
writing to the Director suspending, with effect from the date of receipt of the
notice by the Director, application of such of the transmission charge
restriction conditions as may be specified in the notice, for the unexpired term
of the security period.
6.2 At any time during a security period, the Director may (having regard to his
duties under the Act) by means of directions:
(a) suspend or modify for the unexpired term of the security period the
transmission charge restriction conditions or any part or parts thereof; or
(b) introduce for the unexpired term of the security period new
transmission charge restriction conditions
in either case, so as to make such provision as in the opinion or estimation of
the Director is requisite or appropriate to enable the licensee to recover by
means of a uniform percentage increase on all charges made in the course of the
Transmission Business an amount estimated as being equal to the licensee's
allowed transmission-related security costs during such period, and the licensee
shall comply with the terms of the directions so issued.
6.3 Subject to paragraphs 6.4 and 6.6, the licensee shall in any relevant year
be entitled to recover an aggregate amount equal to the licensee's allowed
transmission-related security costs in that year or (insofar as not previously
recovered) any previous year, by means of appropriate equitable increases in the
charges made by the licensee in the course of the Transmission Business.
6.4 Paragraph 6.3 shall not apply insofar as such licensee's allowed
transmission-related security costs:
(a) were otherwise recovered by the licensee; or
(b) were taken into account by the Director in setting charge restriction
conditions by means of directions issued under paragraph 6.2.
6.5 The licensee shall following the end of each relevant year provide to the
Director details in respect of that relevant year of:
(a) the aggregate amounts charged under paragraph 6.3 on account of the
licensee's allowed transmission-related security costs; and
(b) the bases and calculations underlying the increases in charges made by
the licensee in the course of the Transmission Business.
6.6 Where the Director is satisfied that the licensee has recovered amounts in
excess of the licensee's allowed transmission-related security costs, the
Director may issue directions requiring the licensee to take such steps as may
be specified to reimburse customers of the Transmission Business for the excess
amounts charged to them, and the licensee shall comply with any directions so
issued.
<PAGE>
6.7 No amounts charged by the licensee under this paragraph 6 (whether or not
subsequently required to be reimbursed) shall be taken into account for the
purpose of applying the transmission charge restriction provisions of paragraph
2.1.
6.8 In this paragraph 6:
"licensee's allowed transmission- means any cost allowed by the Director
related security costs" (upon receipt of such information,
including a certificate from the
Auditors, as the Director may request)
as being a cost which is directly
attributable to any action taken or
omitted to be taken by the licensee in
its capacity as holder of the
transmission licence for the purpose
of complying with directions issued by
the Secretary of State under Section
34(4) of the Act.
<PAGE>
7. Duration of transmission charge restriction conditions
7.1 The transmission charge restriction conditions shall apply so long as the
transmission licence continues in force but shall cease to have effect (in whole
or in part, as the case may be) if the licensee delivers to the Director a
disapplication request made in accordance with paragraph 7.2 and:
(a) the Director agrees in writing to the disapplication request; or
(b) their application (in whole or in part) is terminated by notice given
by the licensee in accordance with either paragraph 7.4 or paragraph 7.5.
7.2 A disapplication request shall (a) be in writing addressed to the Director,
(b) specify the transmission charge restriction conditions (or any part or parts
thereof) to which the request relates and (c) state the date (being not earlier
than the date referred to in paragraph 7.3) from which the licensee wishes the
Director to agree that the specified transmission charge restriction conditions
shall cease to have effect.
7.3 Save where the Director agrees otherwise, no disapplication following
delivery of a disapplication request pursuant to this paragraph 7 shall have
effect earlier than the date which is the later of:
(a) the date occurring 18 months after delivery of the disapplication
request; and
(b) 31 March 1999.
7.4 If the Director has not made a reference to the Monopolies Commission under
Section 12 of the Act relating to the modification of the transmission charge
restriction conditions before the beginning of the period of 12 months which
will end with the disapplication date, the licensee may deliver written notice
to the Director terminating the application of such of the transmission charge
restriction conditions (or any part or parts thereof) as are specified in the
disapplication request with effect from the disapplication date or a later date.
7.5 If the Monopolies Commission makes a report on a reference made by the
Director relating to the modification of the transmission charge restriction
conditions (or any part or parts thereof) specified in the disapplication
request and such report does not include a conclusion that the cessation of such
transmission charge restriction conditions, in whole or in part, operates or may
be expected to operate against the public interest, the licensee may within 30
days after the publication of the report by the Director in accordance with
Section 13 of the Act deliver to him written notice terminating the application
of such transmission charge restriction conditions (or any part or parts
thereof) with effect from the disapplication date or a later date.
<PAGE>
EXHIBIT 1(D)
THE COMPETITIVE ELECTRICITY
MARKET FROM 1998:
PUBLIC ELECTRICITY
SUPPLY LICENCE
for
MANWEB plc
JULY 1998
Manweb April 1998
<PAGE>
PREFACE
1. This document illustrates the licence obligations which presently apply
under the Public Electricity Supply Licence held by Manweb plc. The
document comprises conditions contained in the original Licence granted on
26 March 1990 and subsequent modifications made to that Licence.
2. OFFER wishes to make clear that this is not legally binding document but
has been produced as a working copy of Manweb plc's PES licence. It is
hoped that this document accurately reflects the present Licence, but it is
not a substitute for the original Licence and the subsequent schedules of
modifications issued to Manweb plc and held by OFFER's library.
Manweb April 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. TERMS OF THE LICENCE 1
PART II. THE CONDITIONS 2
SECTION A. GENERAL 2
1. Interpretation 2
SECTION B. GENERAL OBLIGATIONS 20
2. Separate accounts for Separate Businesses 20
2A. Restriction on activity and financial ring fencing 25
2B. Availability of resources 27
3. Change restriction conditions: definitions 30
3A. Restriction of distribution charges 38
3B. Restrictions on Supply Charges 59
3C. [No longer used] 114
3D. Restriction of distribution charges and of supply charges: adjustments 115
3E. Information to be provided to the Director in connection with the charge
restriction conditions 117
3F. Allowance in respect of security costs 122
3G. Duration of charge restriction conditions 126
4. Prohibition of cross-subsidies and of discrimination in electricity sale
contracts 128
4A. Prohibition of discrimination in supply 129
4B. Duration of discrimination conditions 135
5. Obligation on economic purchasing 137
6. Restriction on own generation capacity 140
7. Tariffs 146
7A. Arrangements for informing customers on revocation of Licence 147
7B. The Programme Implementation Agreement 149
8. Basis of charges for top-up and standby supplies or sales of electricity,
Exempt supply services, use of system and connection to the system:
requirements for transparency 153
</TABLE>
Manweb April 1998
<PAGE>
<TABLE>
<S> <C>
8A. Non-discrimination in the provision of top-up or standby supplies or sales
of electricity, exempt supply services, use of system and connection to
the system 159
8B. Requirement to offer terms 161
8C. Requirement to offer Standard Terms of Connection 168
8D. Functions of the Director 170
9. Distribution system planning standard and quality of service 172
9A. Security and Safety of Supplies 173
9B. Procedures for the detection and prevention of theft, damage and meter
interference 176
9C. Provisions relating to the connection of metering equipment 178
9D. Agreements for the provision of meters 180
10. Generation Security Standard 181
11. Distribution Code 184
11A. The Metering Point Administration Service and the Master Registration
Agreement 187
11B. Establishment of a Data Transfer Service 190
11C. Requirement to offer terms for the provision of Metering and Data
Services 193
11D. Non-discrimination in the provision of Metering and Data
Services 197
11E. Basis of charges for Metering and Data Services: requirements for
transparency 198
11F. Functions of the Director 200
12. Restriction on use of certain information 202
13. Compliance with the Grid Code 207
14. Security arrangements 208
15. Pooling and Settlement Agreement 209
16. Conditions of supply affecting customers' statutory rights 210
17. Licensee's apparatus on customers' side of meter 212
18. Code of practice on payment of bills and guidance for dealing with
customers in difficulty 213
19. Record of and report on performance 215
20. Provision of services for persons who are of pensionable age or disabled
or chronically sick 217
20A. Code of practice on procedures with respect to site access 219
21. Standards of performance 220
22. Efficient use of electricity 221
</TABLE>
Manweb April 1998
<PAGE>
<TABLE>
<S> <C>
23. Complaint handling procedure 223
23A. Preparation, review of and compliance with customer service codes 224
23B. Information given to Designated Customers 226
23C. Publication of information to customers 227
24. Relations with the Relevant Consumers' Committee 229
25. Health and safety of employees 230
26. [No longer used] 231
27. Disposal of relevant assets 232
28. Provision of information to the Director 236
29. Payment of fees 238
30. Designated Premises 240
31. Terms for supply of electricity incompatible with Licence Conditions 242
32. Limitation on requirements for termination fees 243
33. Revision of the Contract Terms Conditions 244
SECTION C. THE CONTRACT TERMS CONDITIONS 248
34. Designated Supply Contracts 248
35. Contractual terms 250
36. Notification of terms 252
37. Security deposits 254
38. Termination of contracts on notice 256
39. Termination of contracts in specified circumstances 258
40. Assignment of outstanding charges 260
41. Modification of provisions under Conditions 38 and 40 262
42. Marketing of Electricity to Designated Customers 264
Schedule 1. Description of authorised area 264
Schedule 2. Terms as to revocation 266
Schedule 3. Supplementary provisions of the charge restriction conditions 269
Part A. Principles for Attribution 269
Part B. EHV premises 272
Part C. Excluded services 272
Part D. Regulated distribution unit categories 277
Part E. Calculation of factor in respect of distribution losses 279
</TABLE>
Manweb April 1998
<PAGE>
PART I. TERMS OF THE LICENCE
1. The Secretary of State, in exercise of the power conferred by Section
6(1)(c), and Section 6(6) and Section 7 of the Electricity Act 1989
(hereinafter referred to as the "Act"), hereby licenses Manweb plc
(registered in England and Wales under number 2366927) as public
electricity supplier to supply electricity to any premises in the
authorised area designated in Schedule 1 below during the period specified
in paragraph 3 below, subject to the Conditions set out in Part II and
Schedule 3 below (hereinafter referred to as the "Conditions").
2. The Conditions are subject to modification or amendment in accordance with
their terms or with Sections 11, 14 or 15 of the Act. This Licence is
further subject to the terms as to revocation specified in Schedule 2.
3. This Licence shall come into force on the transfer date appointed under
Section 65 of the Act and unless revoked in accordance with the provisions
of Schedule 2 shall continue until determined by not less than 25 years'
notice in writing given by the Secretary of State to the Licensee, such
notice not to be served earlier than a date being 10 years after the
Licence comes into force.
JOHN WAKEHAM
26th March 1990 Secretary of State for Energy
Manweb 1 April 1998
<PAGE>
PART II. THE CONDITIONS
SECTION A. GENERAL
Condition 1. Interpretation
1. Unless the contrary intention appears, words and expressions used in the
Conditions shall be construed as if they were in an Act of Parliament and
the Interpretation Act 1978 applied to them and references to an enactment
shall include any statutory modification or re-enactment thereof after the
date when this Licence comes into force.
2. Any word or expression defined for the purposes of any provision of Part 1
of the Act shall, unless the contrary intention appears, have the same
meaning when used in the Conditions.
3. In the Conditions unless the context otherwise requires:
"Act" means the Electricity Act 1989.
"affiliate" in relation to the Licensee means any
holding company of the Licensee, any
subsidiary of the Licensee or any
subsidiary of a holding company of the
Licensee.
"Auditors" means the Licensee's auditors for the
time being holding office in accordance
with the requirements of the Companies
Act 1985.
"authorised" in relation to any business or activity
means authorised by licence granted
under Section 6 or by exemption
Manweb 2 April 1998
<PAGE>
granted under Section 5 of the Act.
"authorised area" means the area from time to time
comprised in Schedule 1 to this Licence.
"Authorised Electricity Operator" means any person (other than the
Licensee) who is authorised to generate,
transmit or supply electricity and for
the purposes of Conditions 8A to 8C
inclusive shall include any person who
has made an application to be so
authorised which has not been refused
and any person transferring electricity
to or from England and Wales across an
interconnector or who has made an
application for use of interconnector
which has not been refused.
"Condition" means a condition set out in this Part
of the Licence.
"connection charges" means charges made or levied or to be
made or levied for the carrying out
(whether before or after the date on
which the Licence comes into force) of
works and provision and installation of
electrical plant, electric lines and
ancillary meters in constructing or
modifying entry and exit points on the
Licensee's Distribution System together
with charges in respect of maintenance
and repair of such items in so far as
not otherwise recoverable as use of
system charges and in respect of
disconnection and the removal of
electrical plant, electric lines and
ancillary meters following
disconnection, all as more fully
described in paragraphs 5 and 9 of
Condition 8, whether or not such charges
are annualised.
"contract" in relation to the supply of electricity
by the Licensee to a customer at
premises, means a special agreement in
Manweb 3 April 1998
<PAGE>
accordance with section 22 of the Act.
"Contract Terms Conditions" means, as the context requires, either
the Conditions contained in Section C of
the Licence or those Conditions together
with the equivalent Conditions contained
in the licences of all other Electricity
Suppliers.
"customer" means any person supplied or requiring
to be supplied with electricity at
premises within the authorised area
whether by the Licensee (including any
affiliate or related undertaking of the
Licensee) or, where the context
requires, by another Electricity
Supplier, but shall not include any
Authorised Electricity Operator in its
capacity as such.
"data aggregation services" has the meaning given at sub-paragraph
1(e) of Condition 11C.
"data processing services" has the meaning given at sub-paragraph
1(d) of Condition 11C.
"data retrieval services" has the meaning given at sub-paragraph
1(c) of Condition 11C.
"Data Transfer Catalogue" has the meaning given at sub-paragraph
6(c) of Condition 11A.
"Data Transfer Service" means the service to be established,
operated and maintained by the Licensee,
in conjunction and co-operation with all
other public electricity suppliers, in
Manweb 4 April 1998
<PAGE>
accordance with Condition 11B.
"data transfer services" means the services of the Data Transfer
Service established in accordance with
Condition 11B.
"date of the contract" means, in respect of any contract, the
date on which that contract is entered
into.
"Declared Net Capacity" means, in relation to generation plant,
the highest generation of electricity at
the main alternator terminals which can
be maintained for an indefinite period
of time without causing damage to the
plant, less so much of that capacity as
is consumed by the plant.
"deposit" means a deposit of money by way of
security for the payment of charges for
the supply of electricity.
"Designated Customer" means a customer supplied or requiring
to be supplied with electricity at
Designated Premises (but excluding such
customer in so far as he is supplied or
requires to be supplied at premises
other than Designated Premises).
"Designated Premises" has the meaning determined in accordance
with Condition 30.
"Designated Supply Contract" has the meaning given in Condition 34.
"Distribution Business" means the business of the Licensee or
any affiliate or related undertaking
comprising or ancillary to
(a) the distribution (whether for its
own account or that of third
parties) of electricity through the
Licensee's
Manweb 5 April 1998
<PAGE>
Distribution System, including any
business in providing connections
to such system; and
(b) the provision of Metering and Data
Services (other than prepayment
meter services).
"Distribution Code" means the Distribution Code required to
be prepared pursuant to Condition 11 and
approved by the Director, as from time
to time revised with the approval of the
Director.
"Domestic Customer" means a customer supplied or requiring
to be supplied with electricity at
Domestic Premises (but excluding such
customer in so far as he is supplied or
requires to be supplied at premises
other than Domestic Premises).
"Domestic Premises" means premises at which a supply is
taken wholly or mainly for domestic
purposes.
"electricity purchase contract" includes any contract or arrangement,
other than for the supply of electricity
to a customer at premises, under which
provision is made for the making or
receipt of payments by reference to the
difference between
(a) an amount specified or
ascertainable under the terms of
such contract or arrangement; and
(b) the price at which electricity is
sold or purchased under the Pooling
and Settlement Agreement or any
component of either of such prices;
Manweb 6 April 1998
<PAGE>
and
"electricity sale contract" shall be construed accordingly.
"Electricity Supplier" means either a Second Tier Supplier or a
public electricity supplier.
"equivalent megawatt" in circumstances where demand is
measured only in megavolt amperes means
megavolt amperes converted into
megawatts using for this purpose a power
factor of 0.9 megawatts per megavolt
ampere or such other factor as may
with the approval of the Director be
taken as being appropriate having regard
to electrical characteristics of the
supply, and cognate expressions shall be
construed accordingly.
"established connection" means, in relation to any premises, an
existing connection to the Licensee's
Distribution System which does not
require modification, or a new or
modified connection to such system in
respect of which all works have been
completed, such that in either case
electricity is able to be supplied to
the premises in accordance with the
terms of the relevant supply agreement.
"Exempt Supplier" means a person who is authorised to
supply electricity by virtue of an
exemption granted under Section 5 of the
Act.
"exempt supply services" means the services detailed at paragraph
4 of Condition 8B, as provided by the
Licensee to Exempt Suppliers in respect
of premises within the authorised area.
Manweb 7 April 1998
<PAGE>
"financial year" bears the meaning given to it at
paragraph 1 of Condition 2.
"fixed term period" means, in relation to any Designated
Supply Contract, a specified period of
more than 12 months during which the
Principal Terms of that contract may not
be varied by the Licensee other than by
agreement with the customer.
"Fuel Security Code" means the document of that title
designated as such by the Secretary of
State as from time to time amended.
"Generation Business" means the business (if any) in the
generation of electricity, being a
business involving own-generation sets
or in which there is an accountable
interest in generation sets, as defined
for the purposes of Condition 6.
"generation set" means any plant or apparatus for the
production of electricity and shall
where appropriate include a generating
station comprising more than one
generation set.
"goods or services" includes electric lines and electric
plant, and goods or services designed or
calculated to promote the efficient use
of electricity, but excludes meters,
meter operation and prepayment systems,
and data retrieval and related services.
"Grid Code" means the Grid Code required to be
prepared by the Transmission Company and
approved by the Director as from time to
time revised with the approval of the
Manweb 8 April 1998
<PAGE>
Director.
"Grid Supply Point" means any point at which electricity is
delivered to the Licensee's Distribution
System from the Transmission System.
"half-hourly metering equipment" means metering equipment which is
configured to record the quantity of
electricity (to be calculated in kWh)
supplied to premises during each half
hour period of supply
and "non-half-hourly metering equipment"
shall be construed accordingly.
"holding company" means a holding company within the
meaning of Sections 736, 736A and 736B
of the Companies Act 1985.
"interconnectors" means the electric lines and electrical
plant and meters owned or operated by
the Transmission Company solely for the
transfer of electricity to or from the
Transmission System into or out of
England and Wales.
"Licensee" means Manweb plc (registered in England
and Wales under number 2366937) and
(where the context so requires) shall
include any Area Board in respect of
which the Licensee is the successor
company.
"Licensee's Distribution System" means the system of electric lines
situated wholly or partly within the
authorised area owned or operated by the
Licensee for the distribution of
electricity between the Grid Supply
Points or generation sets or other entry
Manweb 9 April 1998
<PAGE>
points and the points where it is
delivered to customers or Authorised
Electricity Operators, and includes any
Remote Transmission Assets owned by the
Transmission Company operated by the
Licensee and any electrical plant and
meters owned or operated by the Licensee
in connection with the distribution of
electricity, and references to the
distribution system of any Authorised
Electricity Operator shall be construed
accordingly.
"Master Registration Agreement" means the agreement of that title to be
prepared by the Licensee, in conjunction
and co-operation with all other public
electricity suppliers, in accordance
with and comprising such matters as are
set out in Condition 11A.
"megawatt" or "MW" includes an equivalent megawatt.
"meter operation services" has the meaning given at sub-paragraph
1(b) of Condition 11C.
"meter provision services" has the meaning given at sub-paragraph
1(a) of Condition 11C.
"Metering and Data Services" has the meaning given in Condition 11C.
"metering equipment" includes any meter and any associated
equipment which materially affects the
operation of that meter.
"Metering Point Administration means the service to be established,
Service" operated and maintained by the Licensee
in accordance with Condition 11A.
"metering point administration means the services of the Metering Point
Administration
Manweb 10 April 1998
<PAGE>
services" Service established in accordance with
Condition 11A or, where the context
requires, means the equivalent services
provided by any other public electricity
supplier in accordance with the
provisions of its public security supply
licence.
"notice" means (unless otherwise specified)
notice given in writing or by any other
reasonable means.
"participating interest" bears the meaning ascribed to that
expression by Section 260 of the
Companies Act 1985.
"Permitted Purpose" means the purpose of any or all of the
following:
(a) the Supply Business, the Second
Tier Supply Business, the
Distribution Business or any
business or activity within the
limits of paragraph 4(e) of
Condition 2A;
(b) the Generation Business;
(c) any business conducted or activity
carried on by the Licensee or by an
affiliate or related undertaking of
the Licensee on 11 October 1995;
and
(d) without prejudice to the generality
of paragraphs (a) to (c), any
payment or transaction lawfully
made or undertaken by the Licensee
for a purpose within sub-paragraphs
(i) to (ix) of paragraph 5(b) of
Condition 27.
Manweb 11 April 1998
<PAGE>
"Pooling and Settlement means the agreement of that title
Agreement" approved by the Secretary of State as
from time to time amended with the
approval of the Director (where so
required pursuant to its terms).
"prepayment meter services" has the meaning given at sub-paragraph
1(f) of Condition 11C.
"Principal Terms" means, in respect of any form of
Designated Supply Contract, those terms
which relate to:
(a) charges for the supply of
electricity;
(b) any requirement to pay charges for
the supply by prepayment through a
prepayment meter;
(c) any requirement for a security
deposit;
(d) the duration of the contract;
(e) the rights to terminate the
contract (including any obligation
to pay a termination fee); and
(f) the obligation to enter into an
agreement on the Standard Terms of
Connection,
and such other terms as may
reasonably be considered
significantly to affect the
evaluation of the contract.
"related undertaking" in relation to the Licensee means any
undertaking in
Manweb 12 April 1998
<PAGE>
which the Licensee has a participating
interest.
"Relevant Consumers' means the committee appointed by the
Committee" Director under Section 2 of the Act for
the area in respect of which the
Licensee is the public electricity
supplier.
"relevant premises" in relation to a Designated Supply
Contract, means any premises supplied
with electricity under the terms of the
contract.
"Remote Transmission Assets" means any electric lines, electrical
plant or meters owned by the
Transmission Company which:
(a) are embedded in the distribution
system of the Licensee or any
Authorised Electricity Operator
other than the Transmission Company
and are not directly connected by
lines or plant owned by the
Transmission Company to a
sub-station owned by the
Transmission Company; and
(b) are by agreement between the
Transmission Company and the
Licensee or such Authorised
Electricity Operator operated under
the direction and control of the
Licensee or such Authorised
Electricity Operator.
"representation" includes any objection or any other
proposal made in writing.
"Retail Price Index" means the general index of retail prices
published by the Office for National
Statistics each month in respect of all
Manweb 13 April 1998
<PAGE>
items or:
(a) if the index for any month in any
year shall not have been published
on or before the last day of the
third month after such month, such
index for such month or months as
the Director may after consultation
with the Licensee determine to be
appropriate in the circumstances;
or
(b) if there is a material change in
the basis of the index, such other
index as the Director may after
consultation with the Licensee
determine to be appropriate in the
circumstances.
"ScottishPower" means ScottishPower plc (registered
number SC 117120).
"ScottishPower Group" means ScottishPower and its
subsidiaries, subsidiary undertakings,
associated companies (including any
joint venture, partnership, firm,
company or unincorporated association in
which any subsidiary, subsidiary
undertaking or associated company is
interested) and related undertakings
other than the Licensee and its
subsidiaries and related undertakings.
"Second Tier Supplier" means a person authorised to supply
electricity pursuant to Section 6(2) of
the Act.
"Second Tier Supply Business" means the authorised business (if any)
of the Licensee or any affiliate or
related undertaking as a private
electricity supplier.
Manweb 14 April 1998
<PAGE>
"Settlement Agreement
for Scotland" means the agreement of that title to be
prepared in accordance with, and
comprising such matters as are set out
in, Condition 24 of Part V of the
Scottish Generation, Transmission and
Public Electricity Supply Licences.
"settlement purposes" means for the purposes of settlement as
set out in the Pooling and Settlement
Agreement or the Settlement Agreement
for Scotland.
"Separate Business" means each of the Distribution, Supply,
Second Tier Supply and Generation
Businesses taken separately from one
another and from any other business of
the Licensee, but so that where all or
any part of such business is carried on
by an affiliate or related undertaking
of the Licensee, such part of the
business as is carried on by that
affiliate or related undertaking shall
be consolidated with any other such
business of the Licensee (and of any
other affiliate or related undertaking)
so as to form a single Separate
Business.
"Standard Terms of Connection" means the terms approved by the
Director, in accordance with Condition
8C, for the retention of an established
connection to the Licensee's
Distribution System.
"standby" means the periodic or intermittent
supply or sale of electricity:
(a) to an Authorised Electricity
Operator to make good any shortfall
in the availability of electricity
to that operator for the purposes
of its supply of
Manweb 15 April 1998
<PAGE>
electricity to persons seeking such
supply; or
(b) to a customer of the Licensee to
make good any shortfall between the
customer's total supply
requirements and that met either by
its own generation or by
electricity supplied by an
Authorised Electricity Operator
other than the Licensee
such standby supply or sale being
provided at such entry or exit point on
the Licensee's Distribution System as
the operator or customer may request.
"subsidiary" means a subsidiary within the meanings
of Sections 736, 736A and 736B of the
Companies Act 1985.
"Supply Business" means the authorised business of the
Licensee as public electricity supplier
in the authorised area, but shall not
include any activities forming part of
the Distribution Business.
"termination fee" means any sum of money or other penalty
(whether financial or otherwise) which
may be demanded of a customer solely in
consequence of the termination of a
contract to supply electricity to
premises.
"top-up" means the supply or sale of electricity
on a continuing or regular basis:
(a) to an Authorised Electricity
Operator to make good any shortfall
in the availability of electricity
(including, where that operator is
using the
Manweb 16 April 1998
<PAGE>
Licensee's Distribution System, to
make good any distribution losses
on that system) to that operator
for the purposes of its supply of
electricity to persons seeking such
supply; or
(b) to a customer of the Licensee to
make good any shortfall between the
customer's total supply
requirements and that met either by
its own generation or by
electricity supplied by an
Authorised Electricity Operator
other than the Licensee
such top-up supply or sale being
provided at such entry or exit point on
the Licensee's Distribution System as
the operator or customer may request.
"Transfer Date" means such date as may be appointed by
the Secretary of State by order under
Section 65 of the Act.
"Transmission Company" means the National Grid Company plc or
any other holder of the time being of a
Licence to transmit electricity in
England and Wales under Section 6(1)(b)
of the Act.
"Transmission System" means the system consisting (wholly or
mainly) of high voltage electric lines
owned or operated by the Transmission
Company and used for the transmission of
electricity from one generating station
to a sub-station or to another
generating station, or between
sub-stations or to any interconnector,
and includes any electrical plant
Manweb 17 April 1998
<PAGE>
and meters owned operated by the
Transmission Company in connection with
the transmission of electricity but
shall not include any Remote
Transmission Assets.
"undertaking" bears the meaning ascribed to that
expression by Section 259 of the
Companies Act 1985.
"unmetered supply" means a supply of electricity to
premises which is not, for the purpose
of calculating the charges for
electricity supplied to the customer at
such premises, measured by metering
equipment.
"use of system" means use of the Licensee's Distribution
System for the distribution of
electricity by the Licensee for the
Supply Business or for any other
Authorised Electricity Operator.
"use of system charges" means charges made or levied or to be
made or levied by the Licensee for the
provision of services as part of the
Distribution Business to any Authorised
Electricity Operator or to the Licensee
for the purposes of its Supply Business
or Second Tier Supply Business as more
fully described at paragraph 4 of
Condition 8 and at paragraph C2 of Part
C of Schedule 3 to this Licence, but
shall not include connection charges.
"valid notice of termination" has the meaning given in Condition 38.
4. Unless otherwise specified, any reference to a numbered Condition (with or
without a suffix letter) or Schedule is a reference to the Condition or
Schedule bearing that number in
Manweb 18 April 1998
<PAGE>
this License, and any reference to a numbered paragraph (with or without a
suffix letter) is a reference to the paragraph bearing that number in the
Condition or Schedule in which the reference occurs.
5. In construing the provisions of this License, the heading or title of any
Part, Section, Condition, Schedule or paragraph shall be disregarded.
6. Where any obligation of the Licensee is required to be performed by a
specified date or within a specified period, and where the Licensee has
failed so to perform, such obligation shall continue to be binding and
enforceable after the specified date or after the expiry of the specified
period (but without prejudice to all rights and remedies available against
the Licensee by reason of the Licensee's failure to perform by that date or
within that period).
7. The provisions of Section 109 of the Act shall apply for the purposes of
the delivery or service of any documents, directions or notices to be
delivered or served pursuant to any Condition or Schedule, and directions
issued by the Director pursuant to any Condition or Schedule shall be
delivered or served as aforesaid.
Manweb 19 April 1998
<PAGE>
SECTION B. GENERAL OBLIGATIONS
Condition 2. Separate accounts for Separate Businesses
1. The first financial year of the Licensee shall run from 1st April 1990 to
31st March 1991, and thereafter each financial year of the Licensee shall
run from 1st April to the following 31st March.
2. The remaining paragraphs of this Condition apply for the purpose of
ensuring that the Licensee (and any affiliate or related undertaking)
maintains accounting and reporting arrangements which enable separate
accounts to be prepared for each Separate Business and showing the
financial affairs of each such Separate Business.
3. The Licensee shall in respect of each Separate Business:
(a) keep or cause to be kept for the period referred to in Section
222(5)(b) of the Companies Act 1985 and in the manner referred to in
that section such accounting records in respect of each Separate
Business as would by Section 221 of the Companies Act 1985 be required
to be kept in respect of each such business if it were carried on by a
separate company, so that the revenues, costs, assets, liabilities,
reserves and provisions or, or reasonably attributable to, each
Separate Business are separately identifiable in the books of the
Licensee (and any affiliate or related undertaking) from those of any
other business; and
(b) prepare on a consistent basis from such accounting records in respect
of:
(i) the financial year commencing on 1st April 1990 and each
subsequent financial year, accounting statements comprising a
profit and loss account, a balance sheet and a statement of
source and application of funds, together with notes thereto, and
showing separately in respect of each Separate
Manweb 20 April 1998
<PAGE>
Business and in appropriate detail the amounts of any revenue,
cost, asset, liability, reserve or provision which has been
either:
(aa) charged from or to any other business (whether or not a
Separate Business) together with a description of the basis
of that charge; or
(bb) determined by apportionment or allocation between any
Separate Business and any other business (whether or not a
Separate Business) together with a description of the basis
of the apportionment or allocation, and
(ii) the first six months of the financial year commencing on 1st
April 1990 and of each subsequent financial year, an interim
profit and loss account; and
(c) procure, in respect of the accounting statements prepared in
accordance with this Condition in respect of a financial year, a
report by the Auditors and addressed to the Director stating whether
in their opinion those statements have been properly prepared in
accordance with this Condition and give a true and fair view of the
revenues, costs, assets, liabilities, reserves and provisions of, or
reasonably attributable to, the Separate Business to which the
statements relate; and
(d) deliver to the Director a copy of the account referred to in
sub-paragraph (b)(ii) above, the Auditors' report referred to in
sub-paragraph (c) above and the accounting statements referred to in
sub-paragraph (b)(i) above as soon as reasonably practicable, and in
any event not later than three months after the end of the period to
which it relates in the case of the account referred to in
sub-paragraph (b)(ii) and six months after the end of the financial
year to which they relate in the case of the accounting statements and
Auditors' report referred to in sub-paragraphs (b)(i) and (c) above.
4. Unless the Director so specifies in directions issued for the purposes of
this Condition or with his prior written approval the Licensee shall not in
relation to the accounting
Manweb 21 April 1998
<PAGE>
statements in respect of a financial year change the bases of charge or
apportionment or allocation referred to in sub-paragraph (b)(i) of
paragraph 3 from those applied in respect of the previous financial year.
5. Where, in relation to the accounting statements in respect of a financial
year, the Licensee has changed such bases of charge or apportionment or
allocation from those adopted for the immediately preceding financial year,
the Licensee shall, if so directed in directions issued by the Director, in
addition to preparing accounting statements on those bases which it has
adopted, prepare such accounting statements on the bases which applied in
respect of the immediately preceding financial year.
6. Accounting statements in respect of a financial year prepared under
sub-paragraph (b)(i) of paragraph 3 shall, so far as reasonably practicable
and unless otherwise approved by the Director having regard to the purposes
of this Condition:
(a) have the same content and format (in relation to each Separate
Business) as the annual accounts of the Licensee prepared under
Section 226 and, where appropriate, Section 227 of the Companies Act
1985 and conform to the best commercial accounting practices including
Statements of Accounting Practice issued by the member bodies of the
Consultative Committee of Accounting Bodies currently in force; and
(b) state the accounting policies adopted; and
(c) (with the exception of the part of such statement which shows
separately the amounts charged, apportioned or allocated and describes
the bases of charge or apportionment or allocation respectively and
with the exception of the accounting statements relating to the
Second-Tier Supply Business), be published with the annual accounts of
the Licensee.
7. Unless the accounting statements prepared under sub-paragraph (b)(i) of
paragraph 3 are prepared on the current cost basis as provided by the
alternative accounting rules, the
Manweb 22 April 1998
<PAGE>
Licensee shall, unless otherwise agreed by the Director, in addition to
preparing those accounting statements under that paragraph, prepare
accounting statements for each Separate Business covering the same period,
which shall comprise and show separately:
(a) a profit and loss account, a balance sheet and a statement of source
and application of funds, together with notes thereto; which shall:
(i) include in respect of current cost assets amounts determined on
the current cost basis as provided by the alternative accounting
rules; and
(ii) show or disclose the information and other matters required by
the alternative accounting rules to be shown or disclosed in
accounts where the amounts included in respect of assets covered
by any items shown in those accounts have been determined on any
basis mentioned in paragraph 31 of Section C of Part II of
Schedule 4 to the Companies Act 1985;
(b) in respect of each Separate Business the adjusted amount of any such
provision for depreciation as is referred to in paragraph 32(2) of
Section C of Part II of Schedule 4 to the Companies Act 1985 and the
items shown in the profit and loss account of the Separate Business
for the relevant period which are affected by the determination of
amounts on the current cost basis as provided by the alternative
accounting rules, including the profit (or loss) before taxation; and
(c) such other current cost information as is referred to in the Handbook
as the Director may reasonably require
and shall deliver the same, together with an Auditors' report prepared in
relation to the current cost basis accounting statements in the form
referred to in sub-paragraph (c) of paragraph 3, to the Director within the
time limit referred to in sub-paragraph (d) of paragraph 3, and shall (with
the exception of the part of such statement which shows separately the
amounts charged, apportioned or allocated and describes the bases of charge
or apportionment or allocation respectively and with the exception of the
accounting
Manweb 23 April 1998
<PAGE>
statements relating to the Second-Tier Supply Business) publish the same
with the annual accounts of the Licensee.
8. References in this Condition to costs or liabilities of, or reasonably
attributable to, any Separate Business shall be construed as excluding
taxation, capital liabilities which do not relate principally to a
particular Separate Business, and interest thereon; and references to any
profit and loss account shall be construed accordingly.
9. Without prejudice to paragraph 1 of Condition 1, references in this
Condition to sections of the Companies Act 1985 are references to those
provisions as amended, substituted or inserted by the relevant provisions
of the Companies Act 1989 and if such provisions of the Companies Act 1989
are not in force at the date of grant of this Licence shall be construed as
if such provisions were in force at such date.
10. For the purposes of paragraph 7:
"alternative accounting rules" means the rules set out in Section C of
Part II of Schedule 4 to the Companies
Act 1985.
"current cost assets" means assets of any description
mentioned in paragraph 31 of Section C
of Part II of Schedule 4 to the
Companies Act 1985.
"the Handbook" means the handbook issued by the
Accounting Standards Committee of the
Consultative Committee of Accounting
Bodies (CCAB Limited) or any successor
body entitled "Accounting for the
effects of changing prices: a Handbook"
in its current edition for the time
being or in the event that no such hand
book shall be in issue such guidance or
publication as may be issued in
replacement or substitution therefor.
Manweb 24 April 1998
<PAGE>
Condition 2A. Restriction on activity and financial ring fencing
1. Save as provided by paragraphs 3 and 4, the Licensee shall not conduct any
business or carry on any activity other than the Supply Business, the
Second Tier Supply Business and the Distribution Business.
2. The Licensee shall not without the written consent of the Director acquire
shares in any affiliated or related undertaking after 11 October 1995
except:
(a) shares in any body corporate which was a subsidiary of the Licensee on
11 October 1995;
(b) shares acquired in a body corporate to satisfy the obligation imposed
by paragraph 3;
(c) shares in a body corporate which conducts business only for a
Permitted Purpose; or
(d) shares acquired in order to avoid dilution of a shareholding in a body
corporate in which the Licensee holds share in conformity with this
License.
3. Notwithstanding paragraph 1, the Licensee may continue to conduct any
business or carry on any activity otherwise prohibited by paragraph 1 which
it was conducting or carrying on as at 11 October 1995, but by 11 October
1996 or such later date as the Director shall specify to the Licensee in
writing, shall transfer to an affiliate or otherwise cease to conduct or
carry on any such other business or activity.
4. Nothing in this Condition shall prevent:
(a) any affiliate or related undertaking from conducting any businesses or
carrying on any activity;
Manweb 25 April 1998
<PAGE>
(b) the Licensee from holding shares as, or performing the supervisory or
management functions of, an investor in respect of any body corporate
in which it holds an interest consistently with the provisions of this
Licence;
(c) the Licensee from performing the supervisory or management functions
of a holding company in respect of any subsidiary;
(d) the Licensee from carrying on any business or conducting any activity
to which the Director has given his consent in writing; or
(e) the Licensee from conducting any business or carrying on any activity
other than the Supply Business, the Second Tier Supply Business and
the Distribution Business provided that the aggregate turnover of all
such other businesses or activities does not in any financial year
exceed 5% of the aggregate turnover of the Supply Business, the Second
Tier Supply Business and the Distribution Business (excluding the
turnover on transactions which the Supply Business, the Second Tier
Supply Business and the Distribution Business make with each other) in
the immediately preceding financial year.
Manweb 26 April 1998
<PAGE>
Condition 2B. Availability of resources
1. The Licensee shall at all times act in a manner calculated to secure that
it has sufficient management resources and financial resources and
financial facilities to enable it:
(a) to carry on the Supply Business and the Distribution Business; and
(b) to comply with its obligations under the Act and this Licence.
2. The Licensee shall submit a certificate addressed to the Director, approved
by a resolution of the board of directors of the Licensee and signed by a
director of the Licensee pursuant to that resolution. Such certificate
shall be submitted in June 1996 and June of each subsequent year. Each
certificate shall be in one of the following forms:
(a) "After making enquiries, the directors of the Licensee have a
reasonable expectation that the Licensee will have available to it,
after taking into account in particular (but without limitation) any
dividend or other distribution which might reasonably be expected to
be declared or paid, sufficient financial resources and financial
facilities to enable the Licensee to carry on the Supply Business and
Distribution Business for a period of 12 months from the date of this
certificate."
(b) "After making enquiries, the directors of the Licensee have a
reasonable expectation, subject to what is said below, that the
Licensee will have available to it, after taking into account in
particular (but without limitation) any dividend or other distribution
which might reasonably be expected to be declared or paid, sufficient
financial resources and financial facilities to enable the Licensee to
carry on the Supply Business and Distribution Business for a period of
12 months from the date of this certificate. However, they would like
to draw attention to the following factors which may cast doubt on the
ability of the Licensee to carry on the Supply Business and
Distribution Business...."
Manweb 27 April 1998
<PAGE>
(c) "In the opinion of the directors of the Licensee, the Licensee will
not have available to it sufficient financial resources and financial
abilities to enable the Licensee to carry on the Supply Business and
Distribution Business for a period of 12 months from the date of this
certificate."
3. The Licensee shall submit to the Director with that certificate a statement
of the main factors which the directors of the Licensee have taken into
account in giving that certificate.
4. The Licensee shall inform the Director in writing immediately if the
directors of the Licensee become aware of any circumstance which causes
them to no longer have the reasonable expectation expressed in the then
most recent certificate given under paragraph 2.
5. The Licensee shall use its best endeavours to obtain and submit to the
Director with each certificate provided for in paragraph 2 a report
prepared by its auditors and addressed to the Director stating whether or
not the auditors are aware of any inconsistencies between, on the one hand,
that certificate and the statement submitted with it and, on the other
hand, any information which they obtained during their audit work.
6. The Licensee shall procure from the holding company of the Licensee a
legally enforceable undertaking in favour of the Licensee in a form already
specified by the Director that the holding company will refrain from any
action, and will procure that every subsidiary of the holding company
(other than the Licensee and its subsidiaries) will refrain from any
action, which would then be likely to cause the Licensee to breach any of
its obligations under the Act or this License. Such undertaking shall be
obtained by 1 March 1996 and shall remain in force for as long as the
Licensee remains the holder of this Licence and the giver of the
undertaking remains the holding company of the Licensee.
7. The Licensee shall:
Manweb 28 April 1998
<PAGE>
(a) deliver to the Director evidence (including a copy of such
undertaking) that the Licensee has complied with the obligation to
procure an undertaking pursuant to paragraph 6; and
(b) inform the Director immediately in writing if the directors of the
Licensee become aware that the undertaking has ceased to be legally
enforceable or that its terms have been breached.
Manweb 29 April 1998
<PAGE>
Condition 3. Charge restriction conditions: definitions
1. In this Condition and in Conditions 3A to 3G and Schedule 3:
"attributed" means when used in relation to the
fossil fuel levy or payments in lieu
thereof or transmission connection point
charges or remote transmission asset
rentals or distribution losses or
transmission costs or allowed
distribution costs, or in relation to
attributing electricity purchase or sale
contracts and electricity purchase costs
to regulated customers and other
customers, attributed in accordance with
the principles set out in Part A of
Schedule 3 and attribute, attributed,
attributable and attribution shall be
construed accordingly.
"average charge per unit means the distribution revenue in the
distributed" relevant year divided by the regulated
quantity distributed in that year.
"average charge per unit
supplied" means the supply revenue in the year
divided by the quantity supplied in that
year.
"average charge per regulated means the regulated supply revenue in
unit supplied" the relevant year divided by the
regulated quantity supplied in that
year.
"average specified rate" means the average of the daily base
rates of Barclays Bank plc current from
time to time during the period in
respect of which the calculation falls
to be made.
"charge restriction conditions" means Conditions 3 to 3G inclusive
together with Schedule 3 to this
licence, as form time to time modified
or replaced in accordance therewith or
pursuant to
Manweb 30 April 1998
<PAGE>
Sections 11, 14 or 15 of the Act.
"distribution losses" means units unaccounted for on the
Licensee's Distribution System, measured
as being the difference between the
units metered on entry in to the system
and the units metered on leaving the
system.
"distribution revenue" means the revenue (measured on an
accruals basis) derived by the Licensee
from the provision of distribution
services in the relevant year, after
deduction of:
(i) an amount equal to such part of the
total amount payable in that
relevant year to the Transmission
Company (measured on an accruals
basis) in respect of transmission
connection point charges and remote
transmission asset rentals and
which would otherwise be included
in distribution revenue by reason
of being recovered in that relevant
year by the Licensee in its use of
system charges, as falls to be
attributed to the regulated
quantity distributed in that
relevant year; and
(ii) value added tax (if any) and any
other taxes based directly on the
amounts so derived.
"distribution services" means all services provided by the
Licensee as part of its Distribution
Business other than excluded services.
"EHV premises" means those premises to which units are
delivered by the Licensee which fall to
be treated as EHV premises in
Manweb 31 April 1998
<PAGE>
accordance with Part B of Schedule 3.
"EHV units" means units distributed by Licensee
which are delivered or deemed to be
delivered to EHV premises.
"electricity purchase costs" means the Licensee's purchase costs of
electricity calculated in accordance
with the principles in Part F of
Schedule 3.
"excluded services" means those services provided by the
Licensee which in accordance with the
principles set out in Part C of Schedule
3 fall to be treated as excluded
services.
"fifth relevant year" means the relevant year commencing 1st
April 1994.
"HV units" means units (other than EHV units)
distributed by the Licensee which are
delivered to premises connected to the
Licensee's Distribution System at a
voltage at or higher than 1000 volts.
"interconnector charges" means charges levied by the
Interconnectors Business of the
Transmission Company and payable by the
Supply or Second-Tier Supply Business of
the Licensee in respect of use of
interconnector for the transfer of
electricity into England and Wales.
"LV units" means units distributed by the Licensee
which are delivered to premises
connected to the Licensee's Distribution
System at a voltage less than 1000
volts.
"LV1 units" means LV units which are distributed by
the Licensee outside night-time periods
to Domestic Premises or
Manweb 32 April 1998
<PAGE>
small premises (other than Domestic
Premises) where the appropriate use of
the system charges apply different rates
in night-time periods as opposed to
other times of day, for the avoidance of
doubt including the use of system
charges under the tariffs specified in
paragraph D2 of Part D of Schedule 3.
"LV2 units" means LV units which are distributed by
the Licensee to Domestic Premises or
small premises (other than Domestic
Premises):
(a) during night-time periods, where
the appropriate use of system
charges apply different rates in
night-time periods as opposed to
other times of the day; or
(b) where the appropriate use of system
charges are incorporated into
tariffs which restrict availability
of supply to specified off-peak
periods,
for the avoidance of doubt including the
use of system charges under the tariffs
specified in paragraph D3 of Part D of
Schedule 3.
"LV3 units" means LV units other than LVI and LV2
units, for the avoidance of doubt
including units distributed under the
tariffs specified in paragraph D4 of
Part D of Schedule 3.
"maximum average charge per means the charge calculated in
unit distributed" accordance with the formula in paragraph
1 of Condition 3A.
Manweb 33 April 1998
<PAGE>
"maximum average charge means the charge calculated in
per regulated unit supplied" accordance with the formula in paragraph
1 of Condition 3B.
"metered" means, in relation to any quantity
distributed or supplied, as measured by
a meter installed for such purpose or
(where no such meter is installed or it
is not reasonably practicable to measure
the quantity by such meter) as otherwise
reasonably calculated.
"0.1 MW customer" means any customer other than an over
0.1 MW customer in its capacity as such.
"0.1 MW premises" means any premises other than over 0.1
MW premises.
"over 0.1 MW customer" means a customer supplied at over 0.1 MW
premises, but shall not include such
customer insofar as supplied at 0.1 MW
premises.
"over 0.1 MW premises" means premises supplied by the Licensee
at which the average of the maximum
monthly demands in the three months of
highest maximum demand in any period of
twelve consecutive months commencing on
or after January 1993 exceeds one tenth
of a megawatt.
"quantity supplied" means the aggregate quantity of units
supplied by the Licensee in the relevant
year metered at the points of supply
(whether or not in the authorised area
of the Licensee).
"regulated customer" means a person other than the Licensee
who in the calendar year ending in
relevant year t-l was supplied at
Manweb 34 April 1998
<PAGE>
0.1 MW premises.
"regulated distribution unit means as the case may be HV units or LV1
category" units or LV2 units or LV3 units.
"regulated quantity distributed" means the aggregate quantity of units
distributed (both for the Supply
Business of the Licensee and on behalf
of third parties under use of system) by
the Licensee through the Licensee's
Distribution System in relevant year t
metered at exit points on leaving the
Licensee's Distribution System but
excluding for this purpose:
(a) units distributed for the purpose
of supply to premises outside the
Licensee's authorised area; and
(b) EHV units.
"relevant years" means a financial year commencing on or
after 1st April 1990.
"relevant year t" means that relevant year for the
purposes of which any calculation falls
to be made, "relevant year t-l" means
the relevant year preceding relevant
year t or, in respect of the period
prior to 1st April 1990, the period of
12 calendar months commencing on 1st
April 1989, and similar expressions
shall be construed accordingly.
"remote transmission asset means any rent or other periodic payment
rental" payable by the Distribution Business of
the Licensee to the Transmission Company
in respect of remote transmission assets
forming part of the Licensee's
Manweb 35 April 1998
<PAGE>
Distribution System
"sixth relevant year" means the relevant year commencing 1st
April 1995.
"supply" includes supply outside the authorised
area, standby and top-up supply and sale
and any other sales of electricity by
the Licensee to persons other than
customers; and "supplied" and similar
expressions shall be construed
accordingly.
"supply charges" means all charges (including charges for
the provision of distribution services
and standing charges) made by the
Licensee in respect of electricity
supplied by the Licensee other than
charges for the provision of excluded
services by the Licensee.
"supply revenue" means the revenue (measured on an
accrual basis) derived by the Licensee
from supply charges after deduction of
value added tax (if any) and any other
taxes based on the amounts so derived.
"transmission charges" means charges levied by the Transmission
Company payable by the Supply or the
Second-Tier Supply Business of the
Licensee in respect of the transmission
of electricity, but for the avoidance of
doubt shall exclude transmission
connection point charges and remote
transmission asset rentals.
"transmission connection point means charges levied by the Transmission
charges" Company as connection charges by direct
reference to the number or nature of the
connections between the Licensee's
Distribution System and the transmission
Manweb 36 April 1998
<PAGE>
system and payable by the Distribution
Business of the Licensee.
"unit" means a kilowatt hour.
Manweb 37 April 1998
<PAGE>
Conditions 3A. Restrictions of distribution charges
Basic Formula
1. Without prejudice to Condition 3F the Licensee shall in setting its charges
for the provision of distribution services use its best endeavours to
ensure that in any relevant year the average charge per unit distributed
shall not exceed the maximum average charge per unit distributed calculated
in accordance with the following formula:
M(dt) = P(dt) + PN(dt) - K(dt)
2. For the purposes of paragraph 1, M(dt) means the maximum average charge per
unit distributed in relevant year t.
Formula for P(dt) as used in paragraph 1
3. For the purposes of paragraph 1, P(dt) is derived from the following
formula:
P(dt) = ((PU+PM) GR(t) PID(t)) + (PL (AL(t)-L(t))PIL(t))
------------------------------------------------
D(t)
where:
PU means the amount set against that term in the part of Annex A to this
Condition that applies to the Licensee.
PM means the amount set against that term in the part of Annex A to this
Condition that supplies to the Licensee.
Gr(t) is derived from the following formula:
Manweb 38 April 1998
<PAGE>
( (SIGMA) P(oi). D(it) C(dt) )
GR(t) = 0.5 ( --------------------- . --------- ) GR(t-1)
( (SIGMA) P(oi). D(it-1) C(dt-1) )
where for the relevant year beginning 1st April 1995 GR(t-1) equals 1.
(SIGMA) means the summation across all regulated distribution unit categories i.
P(oi) means in respect of each regulated distribution unit category i set out
in column 1 under that term in the part of Annex A to this Condition
that applies to the Licensee the value opposite that category in
column 2.
D(it) means that number of units in each regulated distribution unit category
i distributed in relevant year t.
D(it-1) means that number of units in each regulated distribution unit category
i distributed in relevant year t-1.
C(dt) means a notional figure, representing the number of customers in the
authorised area defined (for the purpose of this term C(dt) only) for
each relevant year, given in the table appearing under that term in the
part of Annex A to this Condition that applies to the Licensee.
C(dt-1) means the number equal to C(dt) in relevant year t-1.
PID(t) is derived from the following formula:
Manweb 39 April 1998
<PAGE>
RPI(t) - Xd(t)
PID(t) = (1.--------------) PID(t-1)
100
Where, for the relevant year beginning 1st April 1995, PID(t-1) equals
1.
RPI(t) means the percentage change (whether of a positive or a negative value)
in the arithmetic average of the Retail Price Index numbers published or
determined with respect to each of the six months July to December
(inclusive) in relevant year t-1 and the arithmetic average of the
Retail Price Index numbers published or determined with respect to the
same months in relevant year t-2.
Xd(t) for any relevant year beginning on or after 1 April 1997, shall equal 3.
PL means an amount equal to 3.0656p.
AL(t) means an amount (in units) representing allowed distribution losses in
relevant year t, being the allowed percentage of the adjusted units
distributed (calculated as provided in paragraph E5 of Part E of
Schedule 3) where in respect of each relevant year t, the allowed
percentage shall equal that percentage which the aggregate of adjusted
distribution losses (calculated as provided in paragraphs E2 to E5 of
Part E of Schedule 3) over the preceding relevant years (commencing with
the twelve-month period form 1st April 1989, or, if the number of
preceding relevant years exceeds nine, relevant year t-10) bears to the
aggregate of adjusted units distributed (calculated as aforesaid) over
the corresponding relevant years save that for this purpose adjusted
distribution losses in respect of the twelve-month period from 1st April
1989 shall be derived by applying the initial relevant loss percentage
(calculated as provided
Manweb 40 April 1998
<PAGE>
in paragraphs E6 to E8 of Part E of Schedule 3) to the adjusted units
distributed in that period.
L(t) means in respect of relevant year t, adjusted grid supply point
purchases less adjusted units distributed (calculated as provided in
paragraphs E2 to E5 of Part E of Schedule 3).
PIL(t) is derived from the following formula:
RPI(t)
PIL(t)(1.------) PIL(t-1)
100
where, for the relevant year beginning 1st April 1995, PIL (t-1) equals
1.
D(t) means the regulated quantity distributed in relevant year t.
Formula for PN(dt) as used in paragraph 1
4. For the purposes of Paragraph 1, in the ninth and subsequent relevant
years the term PN(dt) shall be calculated in accordance with the
following formula:
(PS + PR) PIR(t) - TA (dt-1) - GA(dt-1)
PN(dt) = ----------------------------------------
D(t)
and for each relevant year t prior to the ninth relevant year PN(dt)
shall be 0.
where:
PS means an amount equal to (pound)4.87 million for each of the
ninth to the thirteenth relevant years, and thereafter shall
be 0.
Manweb 41 April 1998
<PAGE>
PR means, in the ninth and all subsequent relevant years, the
amount given under that heading in Annex B to this Condition.
PIR(t) is derived from the following formula:
RPI(t)
PIR(t) = (1 + -------- ) PIR(t-1)
100
where for the ninth relevant year PIR(t-1) equals 1
TA(dt) in respect of any relevant year t, is derived from the following
formula:
M(y)
TA(dt)=(SIGMA) P(sd) C(mn)
M(x)
save that TA shall be a figure not less than 0, and shall for
each relevant year t prior to the ninth relevant year be 0.
where:
M(y) means a summation across all the months M(x) to M(y) in each
(SIGMA) relevant year.
M(x)
M(x) means, in the ninth relevant year, the month commencing 1st July
1998, and means each subsequent relevant year the month
commencing 1st April in such relevant year.
M(y) means, in each relevant year, the month commencing 1st March in
such relevant year.
Manweb 42 April 1998
<PAGE>
P(sd) means the amount given under that heading in Annex B to this
Condition.
C(mn) means, in respect of each month M(x) to M(y) in the ninth and
each subsequent relevant year, a proportion of the total number
of 0.1MW customers within the authorised area (expressed as a
figure greater than or equal to -1 and less than or equal to 1)
to be calculated by reference to the first day of such month in
accordance with the following formula:
C(mn) = N - SC
where:
N means a figure equal to:
(a) in respect of the months commencing 1st July 1998, 1st
August 1998 and 1st September 1998, the amount given
under that heading in Annex B to this Condition.
(b) in respect of the month commencing 1st October 1998, 1st
November 1998 and 1st December 1998, 0.5, and
(c) in respect of the month commencing 1st January 1999 all
and all subsequent months, 1.
SC in respect of the first day of each relevant month, means a
proportion of the total number of 0.1MW customers within the
authorised area (expressed as a figure greater than or equal to
0 and less than or equal to 1), being customers who may be
supplied by a Second Tier Supplier on such date in accordance
with any direction or variation of a direction issued by the
Director (and not subsequently
Manweb 43 April 1998
<PAGE>
withdrawn or varied) pursuant to condition 3 of that Supplier's
license to supply electricity.
GA(dt) shall in the ninth relevant year, where the earliest date
specified (and not subsequently withdrawn or varied to a later
date) in any direction or variation of a direction issued by the
Director, pursuant to condition 3 of the license held by any
Second Tier Supplier, in relation to the supply of electricity
to any premises:
(a) is in April 1998, be 0;
(b) is in May 1998, be the amount given for that month under
the heading GA(dt) in Annex B to this Condition;
(c) is in June 1998, be the amount given for that month
under that heading; or
(d) is in July 1998 or any subsequent month, be the amount
given for July under that heading,
and shall in each relevant year t other than the ninth relevant
year be 0.
Formula for K(dt) as used in Paragraph 1
5. For the purposes of paragraph 1, K(dt) means the correction factor per
unit (whether of a positive or a negative value) to be applied to the
average charge per unit distributed in relevant year t (subject to
paragraph 4 of Condition 3D) and is derived from the following formula:
Manweb 44 April 1998
<PAGE>
R(dt-1) - (D(t-1). M(dt-1)) I 6(t)
K(dt) --------------------------- (1. -------------)
D(t) 100
provided that: notwithstanding the above, the value of K(dt) for the sixth
relevant year shall be that value required by Condition 3A in
the licence in the form in force on 31st March 1995.
where:
R(dt-1) means the distribution revenue in relevant year t-1.
D(t-1) means the regulated quantity distributed in relevant year t-1.
M(dt-1) means maximum average charge per unit distributed in relevant
year t-1.
I(dt) means that interest rate in relevant year t which is equal to,
where K(dt) (taking no account of 1(d) for this purpose) has a
positive value, the average specified rate plus 4, or where
K(dt) (taking no account of I(d) for this purpose) has a
negative value, the average specified rate.
6. In this Condition, any term defined for the purposes of paragraph 1
shall have the same meaning in all paragraphs of this Condition.
Manweb 45 April 1998
<PAGE>
ANNEX A to Condition 3A
Distribution values specific to individual companies
EASTERN ELECTRICITY plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 327.4
PM 36.0
C(dt)
`000s
-----
</TABLE>
<TABLE>
<CAPTION>
relevant year beginning on
<S> <C>
1 April 1994 3073
1 April 1995 3107
1 April 1996 3152
1 April 1997 3196
1 April 1998 3241
1 April 1999 3286
</TABLE>
every subsequent relevant year 3286
P(oi)
<TABLE>
<S> <C>
1 2
</TABLE>
<TABLE>
<CAPTION>
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.0009
LV2 0.3031
LV3 1.3431
</TABLE>
Manweb 46 April 1998
<PAGE>
<TABLE>
<S> <C>
HV 0.4584
</TABLE>
EAST MIDLANDS ELECTRICITY plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 271.6
PM 30.2
C(dt)
`000s
-----
</TABLE>
Relevant year beginning on
<TABLE>
<S> <C>
1 April 1994 2248
1 April 1995 2272
1 April 1996 2297
1 April 1997 2321
1 April 1998 2346
1 April 1999 2371
</TABLE>
every subsequent relevant year 2371
P(0i)
1 2
<TABLE>
<CAPTION>
unit category i value (p)
--------------- ---------
<S> <C>
LV1 1.6131
LV2 0.5557
LV3 1.5711
HV 0.6350
</TABLE>
Manweb 47 April 1998
<PAGE>
LONDON ELECTRICITY plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 260.9
PM 31.0
C(dt)
`000s
-----
</TABLE>
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 1955
1 April 1995 1974
1 April 1996 1986
1 April 1997 1998
1 April 1998 2010
1 April 1999 2022
every subsequent relevant year 2022
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.2073
LV2 0.4057
LV3 1.5912
HV 0.5932
</TABLE>
Manweb 48 April 1998
<PAGE>
MANWEB plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 178.2
PM 21.6
C(dt)
`000s
-----
</TABLE>
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 1354
1 April 1995 1366
1 April 1996 1378
1 April 1997 1391
1 April 1998 1403
1 April 1999 1415
every subsequent relevant year 1415
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.1041
LV2 0.4323
LV3 1.7558
HV 0.5097
</TABLE>
MIDLANDS ELECTRICITY plc
Manweb 49 April 1998
<PAGE>
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 267.2
PM 31.2
C(dt)
`000s
-----
</TABLE>
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 2210
1 April 1995 2231
1 April 1996 2251
1 April 1997 2271
1 April 1998 2291
1 April 1999 2311
every subsequent relevant year 2311
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 1.9729
LV2 0.3966
LV3 1.6108
HV 0.5992
</TABLE>
NORTHERN ELECTRIC plc
(pound)m
--------
Manweb 50 April 1998
<PAGE>
<TABLE>
<S> <C>
PU 176.2
PM 22.2
C(dt)
`000s
-----
</TABLE>
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 1446
1 April 1995 1456
1 April 1996 1466
1 April 1997 1476
1 April 1998 1486
1 April 1999 1496
every subsequent relevant year 1496
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.0911
LV2 0.3273
LV3 1.9284
HV 0.4723
</TABLE>
NORWEB plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 254.5
</TABLE>
Manweb 51 April 1998
<PAGE>
<TABLE>
<S> <C>
PM 28.8
C(dt)
`000s
-----
</TABLE>
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 2170
1 April 1995 2182
1 April 1996 2196
1 April 1997 2209
1 April 1998 2223
1 April 1999 2236
every subsequent relevant year 2236
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.1750
LV2 0.2821
LV3 1.6304
HV 0.5335
</TABLE>
SEEBOARD plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 203.0
PM 29.2
</TABLE>
Manweb 52 April 1998
<PAGE>
C(dt)
`000s
-----
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 1982
1 April 1995 1997
1 April 1996 2031
1 April 1997 2030
1 April 1998 2046
1 April 1999 2062
every subsequent relevant year 2062
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 1.8735
LV2 0.3213
LV3 1.4098
HV 0.5892
</TABLE>
SOUTHERN ELECTRIC plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 304.4
PM 35.7
C(dt)
</TABLE>
Manweb 53 April 1998
<PAGE>
<TABLE>
<CAPTION>
relevant year beginning on '000s
-------------------------- -----
<S> <C>
1 April 1994 2576
1 April 1995 2602
1 April 1996 2633
1 April 1997 2664
1 April 1998 2695
1 April 1999 2727
every subsequent relevant year 2727
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.0600
LV2 0.3816
LV3 1.4815
HV 0.5560
</TABLE>
SOUTH WALES ELECTRICITY plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 142.2
PM 17.6
C(dt)
`000s
-----
</TABLE>
Manweb 54 April 1998
<PAGE>
<TABLE>
<CAPTION>
relevant year beginning on
--------------------------
<S> <C>
1 April 1994 952
1 April 1995 959
1 April 1996 966
1 April 1997 974
1 April 1998 982
1 April 1999 990
every subsequent relevant year 990
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.4442
LV2 0.3641
LV3 2.2009
HV 0.7272
</TABLE>
SOUTH WESTERN ELECTRICITY plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 186.3
PM 22.4
C(dt)
`000s
-----
</TABLE>
relevant year beginning on
--------------------------
Manweb 55 April 1998
<PAGE>
<TABLE>
<S> <C>
1 April 1994 1287
1 April 1995 1299
1 April 1996 1313
1 April 1997 1327
1 April 1998 1341
1 April 1999 1355
every subsequent relevant year 1355
</TABLE>
P(Oi)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 2.3889
LV2 0.6679
LV3 1.8707
HV 0.5072
</TABLE>
YORKSHIRE ELECTRICITY GROUP plc
<TABLE>
<CAPTION>
(pound)m
--------
<S> <C>
PU 249.7
PM 27.9
C(dt)
</TABLE>
<TABLE>
<CAPTION>
`000s
-----
<S> <C>
relevant year beginning on
- --------------------------
1 April 1994 2036
</TABLE>
Manweb 56 April 1998
<PAGE>
<TABLE>
<S> <C>
1 April 1995 2051
1 April 1996 2065
1 April 1997 2080
1 April 1998 2094
1 April 1999 2109
every subsequent relevant year 2109
</TABLE>
P(0i)
<TABLE>
<CAPTION>
1 2
unit category i value (p)
--------------- ---------
<S> <C>
LV1 1.9497
LV2 0.3271
LV3 1.6654
</TABLE>
Manweb 57 April 1998
<PAGE>
ANNEX B to Condition 3A
Values for paragraph 4 of this Condition
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PR (pound)M P(sd) N-1.7.98 GA(dt) GA(dt) GA(dt)
(pound)M to 1.9.98 (pound)M (pound)M (pound)M
- ------------------------------------------------------------------------------------------
May June July
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EASTERN 4.46 0.99 0.105 0.21 0.78 1.78
- ------------------------------------------------------------------------------------------
EAST MIDLANDS 3.53 0.67 0.106 0.15 0.57 1.29
- ------------------------------------------------------------------------------------------
LONDON 3.21 0.63 0.108 0.13 0.49 1.12
- ------------------------------------------------------------------------------------------
MANWEB 2.53 0.43 0.086 0.09 0.34 0.77
- ------------------------------------------------------------------------------------------
MIDLANDS 3.51 0.70 0.091 0.15 0.56 1.28
- ------------------------------------------------------------------------------------------
NORTHERN 2.64 0.42 0.101 0.10 0.36 0.83
- ------------------------------------------------------------------------------------------
NORWEB 3.42 0.67 0.081 0.15 0.54 1.23
- ------------------------------------------------------------------------------------------
SEEBOARD 3.23 0.60 0.106 0.14 0.50 1.14
- ------------------------------------------------------------------------------------------
SOUTHERN 3.96 0.85 0.107 0.18 0.67 1.52
- ------------------------------------------------------------------------------------------
SWALEC 2.07 0.31 0.109 0.06 0.23 0.53
- ------------------------------------------------------------------------------------------
SOUTH WESTERN 2.48 0.48 0.107 0.09 0.33 0.74
- ------------------------------------------------------------------------------------------
YORKSHIRE 3.28 0.57 0.105 0.14 0.51 1.16
- ------------------------------------------------------------------------------------------
SCOTTISH POWER 3.01 0.67 0.096 0.12 0.45 1.02
- ------------------------------------------------------------------------------------------
HYDRO-ELECTRIC 1.74 0.29 0.162 0.04 0.16 0.36
- ------------------------------------------------------------------------------------------
</TABLE>
Manweb 58 April 1998
<PAGE>
Condition 3B. Restriction on Supply Charges
Continuation Of Tariffs
1.1 Save where the Director consents in writing to a tariff being discontinued,
the Licensee shall continue to make available to customers at Designated
Premises the tariffs listed under the Licensee's name in Annex A to this
Condition.
1.2 Where a customer at Designated Premises was supplied at the end of the
eighth relevant year on a tariff listed under the Licensee's name in Annex
B to this Condition, the Licensee shall continue to offer that tariff to
that customer at those premises unless the Director consents in writing to
the Licensee's not doing so.
1.3 The Licensee shall not, without the consent in writing of the Director,
change the terms (other than price, which shall be regulated in accordance
with this Condition) of any tariff described in the second column of the
Table; and the terms to which this prohibition applies include, for
example, the hours between which particular prices apply and the level of
consumption at which prices change.
New Tariffs
2. The Licensee shall not offer to supply any customer at Designated Premises
on a tariff not shown in the Table unless the terms of that tariff have
been approved by the Director.
The Price Restraint
3. Without prejudice to Condition 3F, the prices in the tariffs which apply at
the beginning of the ninth relevant year to supplies to Desgnated Customers
shall be set at or below the limit imposed by paragraph 4 and in addition
at or below each of the limits imposed by paragraph 5 and (where those
paragraphs apply) by paragraphs 6 and 7.
Manweb 59 April 1998
<PAGE>
4. The prices referred to in paragraph 3 shall be so set that they do not
cause the value of composite term
n(SIGMA)l PSi(t). QSi0 + n(SIGMA)l PUi(t). QUi0 to exceed the value of the
-----------------------------------------------
n(SIGMA)l PSi0. QSi0 + n(SIGMA)l PUi0. QUi0
formula (100 + RPI(t) - X(a)
(-----------------------)
100
where,
n(SIGMA)1 means the summation across all tariffs; and
X(a) has the value given against the Licensee's name in Annex C
to this Condition.
5.1 Without prejudice to Condition 3F, at the beginning of the ninth relevant
year the Licensee shall so set its prices to Designated Customers supplied
on the tariff numbered 1 in the Table that the total charge for that year
for a Designated Customer supplied on such a tariff who consumes 3300 units
in that year shall not exceed
(PSi0+3300 PUi0)(100+RPI(t)-X(a))
----------------
100
where
X(a) has the value given against the Licensee's name in Annex C to
this Condition.
5.2 Without prejudice to Condition 3F, at the beginning of the ninth relevant
year, the prices to Designated Customers on each of the domestic tariffs in
the Table other than the tariff numbered 1 shall be so set that, when used
to determine the value of the terms PUi(t), and PSi(t), they do not cause
the value of the composite term
u(SIGMA)(1) PUi(t). QUi0 + S(SIGMA)(1) PSi(t)
- -------------------------
NC to exceed the value of the formula
Manweb 60 April 1998
<PAGE>
(u(SIGMA)(1) PUi0. QUi0 + s(SIGMA)(1) PSi0) 100+RPI(t)-X(b)
----------------------- (---------------)
100
where X(b) has the value of 3.
5.3 Without prejudice to Condition 3F, at the beginning of the ninth relevant
year, the prices to Designated Customers on each of the non-domestic
tariffs in the Table shall be so set that, when used to determine the value
of the terms PUi(t), and PSi(t), they do not cause the value of the
composite term
u(SIGMA)(1) PUi(t). QUi0 + s(SIGMA)(1) PSi(t),
------------------------
NC
when applied to that tariff, to exceed the value of the formula
(u(SIGMA)(1) PUi0. QUi0 + s(SIGMA)(1) PSi0) 100+RPI(t)
----------------------- (----------)
NC 100
6. Without prejudice to Condition 3F, in the case of any tariff described as
domestic in column 3 of the Table, the standing charge to a Designated
Customer at the beginning of the ninth relevant year shall not exceed the
standing charge given for that tariff in column 5 of the Table multiplied
by
(100+RPI(t))
(------------)
100
7.1 Without prejudice to Condition 3F, in the case of any tariff described in
column 2 of the Table which is a domestic prepayment tariff,
Manweb 61 April 1998
<PAGE>
(a) the standing charge and the unit charge at the beginning of the ninth
relevant year shall each be lower than the standing charge and unit
charge respectively set against that tariff in column 5 of the Table
by the same proportion as the standing charge and the unit charge at
the beginning of the ninth relevant year of the nearest equivalent
domestic tariff (not being a prepayment tariff) are lower than the
standing charge and unit charge respectively of that nearest
equivalent domestic charge shown against them in column 5 of the Table
(and in this sub-paragraph the standing charge shall be exclusive of
any prepayment surcharge); and
(b) there shall at no time be any increase in the amount by which the
standing charge (including any prepayment meter surcharge) for any
domestic prepayment tariff exceeds the standing charge for the nearest
comparable domestic tariff (not being a prepayment tariff).
7.2 The Director may direct which tariff is the nearest equivalent domestic
tariff for the purpose of this paragraph.
8.1 Without prejudice to paragraph 9 and Condition 3F, no price (whether a
standing charge or a unit charge) in any tariff shall be increased during
the ninth relevant year above the price which applies at the beginning of
the ninth relevant year, unless the Director has consented in writing.
8.2 In giving consent the Director shall have regard in particular but not
exclusively to the impact of significant movements in costs outside the
Licensee's control, and shall consider whether such movements in costs
justify an increase in all tariffs, a differential increase in tariffs or
an increase in some tariffs only.
9. If any change is made to the rate of the Fossil Fuel Levy between 1 August
1997 and 2 April 1998, and whenever any change is made to that rate
thereafter, every price limit set pursuant to paragraphs 4, 5, 6 and 7.1(a)
shall be multiplied by the following factor
Manweb 62 April 1998
<PAGE>
100+F(t)
--------
100+F(d)
10.1 Where, after the end of the eighth relevant year, the Director is satisfied
that in the eighth relevant year the average charge per unit supplied
differed from the maximum average charge per unit supplied assumed for the
purpose of setting the prices in column 5 of the Table, the Director may
give a direction to her Licensee stipulating the prices to be charged for
any (or all) of the tariffs described in column 2 of the Table.
10.2 Before giving any such direction, the Director shall consult the Licensee.
10.3 In considering whether to give any such direction, and in considering the
content of any such direction the Director shall have regard
(a) to the extent to which the regulated supply revenue for the eighth
relevant year assumed for the purpose of setting the prices in column
5 of the Table differs from the actual regulated supply revenue for
that year adjusted
(i) to reflect what the regulated supply revenue would have been if
the tariffs in force on 1 August 1997 had remained unchanged
until the end of the eighth relevant year; and
(ii) by adding any rebates or discounts to Regulated Customers in
respect of the period from 1 August 1977 to the end of the eighth
revelant year, being rebates or discounts not included in the
tariffs in force on 1 August 1997;
(a) to any representations made by the Licensee; and
(b) to the cost to the Licensee of changing any tariff.
Manweb 63 April 1998
<PAGE>
11.1 Where, for relevant year t, the terms TA(dt) or GA(dt) (or both of them) in
paragraph 4 of Condition 3A have a value greater than the 0, the Director
may give a direction to the Licensee stipulating the prices to be charged,
in that or any subsequent relevant year, for any (or all) of the tariffs
described in Column 2 of the Table.
11.2 Before giving any such direction, the Director shall consult the Licensee.
11.3 In considering whether to give any such direction, and in considering the
content of any such direction, the Director shall have regard
(a) to the extent by which the charges made by the Distribution Business
to the Supply Business have been reduced on account of the terms
TA(dt) or GA(dt) (or both of them) having a greater value than 0;
(b) to any representation made by the Licensee, and
(c) to the cost to the Licensee of changing any tariff
12.1 Without prejudice to paragraph 9 and Condition 3F, for the tenth and every
subsequent relevant year, unless the Director has consented in writing,
each component of each tariff described in column 2 of the Table or
approved for the purpose of paragraph 2 shall have a price no greater than
the price at the end of the immediately preceding relevant year, in each
case multiplied by the formula
100+RPI(t)-X(c)
---------------
100
where X(c) has the value of 3 for the tenth relevant year and the value of
0 for every subsequent relevant year.
12.2 In giving consent the Director shall have regard in particular but not
exclusively to the impact of significant movements in costs outside the
Licensee's control, and shall
Manweb 64 April 1998
<PAGE>
consider whether such movements in costs justify an increase in all
tariffs, a differential increase in tariffs or an increase in some tariffs
only.
Interpretation
13. In this Condition:
(a) all prices and revenue shall exclude value added tax (if any); and
(b) any reference to the first relevant year shall be a reference to the
relevant year commencing on 1 April 1990, and any reference to the
second financial year and so on shall be construed accordingly;
(c) in respect of any tariff described in column 2 of the Table the
following terms have the following meanings:
PSi(t) is the standing charge (or each of them) for that tariff
for the ninth relevant year t;
PSi0 is the standing charge (or each of them) for that tariff
given in column 5 of the Table;
QSi0 is the number in column 6 of the Table set against that
standing charge;
PUi(t) is the unit charge (or each of them) for that tariff for
the ninth relevant year t;
PUi0 is the unit charge (or each of them) for that tariff given
in column 5 of the Table;
QUi0 is the number in column 6 of the Table set against that unit
charge (or each of them);
Manweb 65 April 1998
<PAGE>
u(SIGMA)(1) means the summation across all unit charges for that
tariff;
s(SIGMA)(1) means the summation across all standings charges for
that tariff;
NC means the number given against tariff in column 7 of
the Table, and
(d) the following terms shall have the following meanings:
F(t) means the rate of the Fossil Fuel Levy applicable from
time to time during relevant year t;
F(d) has the value of 2.2;
RPI(t) means the percentage change (whether of a positive or a
negative value) in the arithmetic average of the Retail
Price Index numbers published or determined with
respect to each of the six months July to December
(inclusive) in relevant year t-1 and the arithmetic
average of the Retail Price Index numbers published or
determined with respect to the same months in relevant
year t-2; and
the Table means the table given under the Licensee's name in Annex D to
this Condition.
Manweb 66 April 1998
<PAGE>
ANNEX A to Condition 3B
Tariffs Generally Available
EASTERN ELECTRICITY Plc
Tariff No. Tariff
1 Domestic General Table 2
2 Domestic General Table 1
3 Domestic General Prepayment
4 Domestic General Prepayment - Lock Off Meter
5 Domestic Economy 7 Table 1
6 Domestic Economy 7 Table 2
7 Domestic Economy 7 Prepayment
8 Domestic Night/Day Table 1
9 Domestic Night/Day Table 2
10 Domestic Low User Tariff Table 1
11 Domestic Low User Tariff Table 2
12 Domestic Economy 10 Table 1
13 Domestic Economy 10 Table 2
14 Restricted Hours 1 - Table 1
15 Restricted Hours 1 - Table 2
16 Restricted Hours 2 - Table 1
17 Restricted Hours 2 - Table 2
18 Restricted Hours 3 - Table 1
19 Restricted Hours 3 - Table 2
20,21 Business & Enterprise General Table 1
22,23 Business & Enterprise General Table 2
24 Business & Enterprise General Prepayment
25,26 Business & Enterprise Economy 7 Table 1
27,28 Business & Enterprise Economy 7 Table 2
29 Business & Enterprise Economy 7 Prepayment
30,31 Business & Enterprise Evening Weekend Economy 7 Table 1
32,33 Business & Enterprise Evening Weekend Economy 7 Table 2
34,35 Business & Enterprise Night/Day Table 1
36,37 Business & Enterprise Night/Day Table 2
38,39 Business & Enterprise Evening/Weekend Table 1
40,41 Business & Enterprise Evening/Weekend Table 2
EAST MIDLANDS ELECTRICITY Plc
Tariff No. Tariff
1 Domestic Standard
2 Domestic Economy 7
3 Cardmeter Domestic
4 Domestic Heatwise
5 Restricted Hours Tariff 1 - Domestic
6 Restricted Hours Tariff 2 - Domestic
7 Restricted Hours Tariff 3 - Domestic
8,16 Direct Debit Discount
9 Non-Domestic Block
Manweb 67 April 1998
<PAGE>
10 Non-Domestic Economy 7 block
11 Non-Domestic Evening & Weekend
12 Non-Domestic Evening & Weekend Economy 7
13 Restricted Hours Tariff 1 - Non-Domestic
14 Restricted Hours Tariff 2 - Non-Domestic
15 Restricted Hours Tariff 3 - Non-Domestic
LONDON ELECTRICITY Plc
Tariff No. Tariff
1 Domestic General - Quarterly
2 Domestic General - Powerkey
3 Domestic General - Direct Debit
4 Domestic Economy 7 - Quarterly
5 Domestic Economy 7 - Powerkey
6 Domestic Economy 7 - Direct Debit
7 Domestic Economy 9 - Quarterly
8 Domestic Economy 9 - Direct Debit
9 White Meter Tariff
10 Off Peak Rate 4
11 Off Peak Rate 5
12 Off Peak Rate 6
13 Domestic Unpublished Supplies
14 Business Standard - Quarterly
15 Business Standard - Powerkey
16 Business Standard - Direct Debit
17 Business Economy 7 - Quarterly
18 Business Economy 7 - Powerkey
19 Business Economy 7 - Direct Debit
20 Business Evening/Weekend - Quarterly
21 Business Evening/Weekend - Powerkey
22 Business Evening/Weekend - Direct Debit
23 Off Peak Rate 7
24 Off Peak Rate 8
25 Off Peak Rate 9
26 Business Unmetered supplies
27, 28 Business Staircase
29 Catering
MANWEB Plc
Tariff No. Tariff
1 Domestic S
2 Select
3,16 Prepayment
4 Economy 7
5 Off Peak
6 White Meter
7 Option 14
8 3S
9 3T
10 3E
Manweb 68 April 1998
<PAGE>
11 M3
12 4S
13 4T
14 4E
15 M4
17 Direct Debit
MIDLANDS ELECTRICITY Plc
Tariff No. Tariff
1 D1 - Domestic Credit Meter Tariff
2 D1 DD - Domestic Direct Debit Tariff
3 D8 - Domestic Token Meter Tariff
4 D5 - Domestic Economy 7
5 D5 DD - Domestic Economy 7 Direct Debit Tariff
6 D6 - Domestic Economy 7 Token Meter Tariff
7 OP1 - Off Peak Tariff
8 OP2 - Off Peak Tariff
9 OP3 - Off Peak Tariff
10 S - Small Supplies Tariff
11 S DD - Small Supplies Direct Debit Tariff
12 S1 - Small Supplies Economy 7 Tariff
13 S1 DD - Small Supplies Economy 7 Direct Debit Tariff
14 W - Weekend Supplies
15 W DD - Weekend Supplies Direct Debit Tariff
16 OP1 - Off Peak Non-Domestic Tariff
17 OP2 - Off Peak Non-Domestic Tariff
18 OP3 - Off Peak Non-Domestic Tariff
NORTHERN ELECTRICITY Plc
Tariff No. Tariff
1 D1 Unrestricted
2 DIT Economy 7
3 Small Domestic Users tariff
4 K1 Prepayment
5 KIT Prepayment Economy 7
6 Super Tariff
7 RH1 - Off Peak
8 RH2 - Off Peak
9 RH3 & RHB - Off Peak
10 Staff Tariff
11 Heat Plan
12 Non-Domestic Evening & Weekend
13 Evening & Weekend Small Users
14 Q1
15 QIT Economy 7
16 Super Tariff - Business
17 RH1 - Off Peak
18 RH2 - Off Peak
19 RH3 & RHB - Off Peak
20 C7 Catering Staff
Manweb 69 April 1998
<PAGE>
21 Premier Payment Plan
22 Prompt Payment Discount
NORWEB plc
Tariff No. Tariff
1 D13 Domestic Tariff
2 D11 Domestic Monthly Budget Scheme
3 D11 Domestic Prepayment
4 D56 Domestic Economy 7 Tariff
5 D22 Domestic Economy 7 Monthly Budget Scheme
6 D22 Domestic Economy 7 Prepayment
7 D92 Domestic Smart 7 Tariff
8 R16 7 Hour Off Peak Tariff
9 R11 Tariff
10 R21 Domestic Tariff
11 G13 All Purpose Quarterly Tariff
12 G11 All Purpose Monthly Budget Scheme
13 G15 Combined Premises Quarterly
14 G16 Combined Premises Monthly
15 G63 All Purpose Economy 7 Quarterly Tariff
16 G66 All Purpose Economy 7 Monthly Tariff
17 G65 Combined Premises Economy 7 Quarterly Tariff
18 G67 Combined Premises Economy 7 Monthly Tariff
19 G71 Evening & Weekend Tariff
20 G61 Economy 7 Evening/Weekend Quarterly Tariff
21 G54 Economy 7 Evening/Weekend Monthly Tariff
22 R31 Non-Domestic
23 R41 Tariff
24 R42 Tariff
25 R43 Tariff
26 R51 Floor Warming Tariff
27 Q64 Farm Crop-Drying Tariff
SEEBOARD Plc
Tariff No. Tariff
1 Domestic Standard
2 Domestic Economy 7
3 Domestic White Meter
4 Warmwise
5 Business Standard
6 Business Economy 7
7 Business White Meter
8 Business Evening/Weekend/Night
9 Off Peak
10,11,12 Prepayment
13 Direct Debit Discount
Manweb 70 April 1998
<PAGE>
SOUTHERN ELECTRIC Plc
Tariff No. Tariff
1 General Domestic (Quarterly)
2 General Domestic (Keypayment)
3 General Domestic (Direct Debit)
4 Flexiheat
5 Flexiheat (Direct Debit)
6 Super Deal
7 Super Deal (Direct Debit)
8 Economy 7 (Quarterly)
9 Economy 7 (Direct Debit)
10 Economy 7 (Keypayment)
11 Domestic White Meter
12 Domestic White Meter (Direct Debit)
13,23 Restricted Hours
14,24 Restricted Hours (Direct Debit)
15 Q1 Block
16 Q1 Block (Direct Debit)
17 Q2 Day/Night
18 Q2 Day/Night (Direct Debit)
19 Q3 Evening/Weekend
20 Q3 Evening/Weekend (Direct Debit)
21 Q4 Night/Evening/Weekend
22 Q4 Night/Evening/Weekend (Direct Debit)
25 3 Phase Meter
SOUTH WALES ELECTRICITY Plc
Tariff No. Tariff
1 Domestic Basic Tariff - Credit
2 Domestic Basic Tariff - Direct Debit
3 Domestic Restricted Hours Tariff - Credit
4 Domestic Restricted Hours Tariff - Direct Debit
5 Domestic White Meter Tariff - Credit
6 Domestic White Meter Tariff - Direct Debit
7 Domestic Economy 7 Tariff - Credit
8 Domestic Economy 7 Tariff - Direct Debit
9 Domestic Winter Warmth
10 Domestic Prepayment Meter Surcharge
11 Domestic Basic Tariff - Token Meter
12 Domestic Economy 7 Tariff - Token Meter
13 Farm Domestic Basic Tariff - Credit
14 Farm Domestic Basic Tariff - Direct Debit
15 Farm Domestic White Meter Tariff - Credit
16 Farm Domestic White Meter Tariff - Direct Debit
17 Farm Domestic Economy 7 - Credit
18 Farm Domestic Economy 7 - Direct Debit
19 Farm Basic Tariff - Credit
20 Farm Basic Tariff - Direct Debit
21 Commercial Standard Tariff - Credit
22 Commercial Standard Tariff - Direct Debit
Manweb 71 April 1998
<PAGE>
23 Commercial S/A - Credit
24 Combined Standard Tariff - Credit
25 Combined Standard Tariff - Direct Debit
SOUTH WALES ELECTRICITY Plc
Tariff No. Tariff
26 Small Industrial Tariff - Credit
27 Small Industrial Tariff - Direct Debit
28 Farm Economy 7 - Credit
29 Farm Economy 7 - Direct Debit
30 Commercial Day/Night Tariff - Credit
31 Commercial Day/Night Tariff - Direct Debit
32 Commercial 17/7 Tariff - Credit
33 Commercial 17/7 Tariff - Direct Debit
34 Industrial Day/Night Tariff - Credit
35 Industrial Day/Night Tariff - Direct Debit
36 Industrial 17/7 Tariff - Credit
37 Industrial 17/7 Tariff - Direct Debit
38,39 Industrial Unmetered Supplies
40 Commercial Evening/Weekend Tariff - Credit
41 Commercial Evening/Weekend Tariff - Direct Debit
42 Industrial Evening/Weekend Tariff - Credit
43 Industrial Evening/Weekend Tariff - Direct Debit
44 Farm Restricted Hours Tariff - Credit
45 Farm Restricted Hours Tariff - Direct Debit
46 Commercial Restricted Hours Tariff - Credit
47 Commercial Restricted Hours Tariff - Direct Debit
48 Industrial Restricted Hours Tariff - Credit
49 Industrial Restricted Hours Tariff - Direct Debit
SOUTH WESTERN ELECTRICITY Plc
Tariff No. Tariff
1 Domestic Tariff
2 Key Meter Domestic
3 Economy 7
4 Key Meter Economy 7
5 Domestic Night/Day (LA)
6 3 Rate Heating Tariff
7 Domestic Seasonal Tariff
8 Off Peak (7 Hour) Tariff (LA)
9 Off Peak (Night Only) Tariff (LA)
10 Off Peak (LA) Tariff
11 Block Tariff
12 Key Meter Block Tariff
13 Economy 7 Block Tariff
14 Key Meter Economy 7 Block Tariff
15 Non-Domestic Seasonal
16 Economy 7 Day/Night
17 Day and Night Tariff (LA)
18 Flat Rate (LA)
Manweb 72 April 1998
<PAGE>
19 Farm Tariff
20 Farm Economy 7 Tariff
21 Farm Day/Night Tariff (LA)
22 Off Peak (7 Hour) Tariff
23 Off Peak (Night Only) Tariff
24 Off Peak (LA) Tariff
25 Direct Debit Discount
YORKSHIRE ELECTRICITY GROUP Plc
Tariff No. Tariff
1 Domestic Unrestricted
2 Economy 7
3 Domestic Off-Peak
4 Prepayment
5 Prompt Payment
6 Automated Payment
7 General Quarterly
8 Economy 7 Quarterly
9 Evening/Weekend Quarterly
10 Evening/Weekend E7 Quarterly
11 Farm Off-Peak
12 Commercial 2 Rate Tariff
13 Commercial Off Peak
14 Industrial Off Peak Tariff
15 Prompt Payment
16 Automated Payment
Manweb 73 April 1998
<PAGE>
ANNEX B to Condition 3B
Preserved Tariffs
EASTERN ELECTRICITY Plc
Tariff No. Tariff
4 Domestic General Prepayment - Lock Off Meter
8 Domestic Night/Day Table 1
9 Domestic Night/Day Table 2
13 Restricted Hours 1 - Table 1
14 Restricted Hours 1 - Table 2
15 Restricted Hours 2 - Table 1
16 Restricted Hours 2 - Table 2
17 Restricted Hours 3 - Table 1
18 Restricted Hours 3 - Table 2
33,34 Business & Enterprise Night/Day Table 1
35,36 Business & Enterprise Night/Day Table 2
37,38 Business & Enterprise Evening/Weekend Table 1
39,40 Business & Enterprise Evening/Weekend Table 2
EAST MIDLANDS ELECTRICITY Plc
Tariff No. Tariff
5 Restricted Hours Tariff 1 - Domestic
6 Restricted Hours Tariff 2 - Domestic
7 Restricted Hours Tariff 3 - Domestic
13 Restricted Hours Tariff 1 - Non-Domestic
14 Restricted Hours Tariff 2 - Non-Domestic
15 Restricted Hours Tariff 3 - Non-Domestic
LONDON ELECTRICITY Plc
Tariff No. Tariff
10 Off Peak Rate 4
11 Off Peak Rate 5
12 Off Peak Rate 6
13 Domestic Unpublished Supplies
23 Off Peak Rate 7
24 Off Peak Rate 8
25 Off Peak Rate 9
26 Business Unmetered supplies
27,28 Business Staircase
29 Catering
MANWEB Plc
Tariff No. Tariff
5 Off Peak
6 White Meter
9 3T
12 4S
Manweb 74 April 1998
<PAGE>
13 4T
14 4E
15 M4
MIDLANDS ELECTRICITY Plc
Tariff No. Tariff
7 OP1 - Off Peak Tariff
8 OP2 - Off Peak Tariff
9 OP3 - Off Peak Tariff
16 OP1 - Off Peak Non-Domestic Tariff
17 OP2 - Off Peak Non-Domestic Tariff
18 OP3 - Off Peak Non-Domestic Tariff
NORTHERN ELECTRIC Plc
Tariff No. Tariff
10 Staff Tariff
11 Heat Plan
NORWEB Plc
Tariff No. Tariff
8 R16 7 Hour Off Peak Tariff
9 R11 Tariff
10 R21 Domestic Tariff
22 R31 Non-Domestic
23 R41 Tariff
24 R42 Tariff
25 R43 Tariff
26 R51 Floor Warming Tariff
SEEBOARD Plc
Tariff No. Tariff
3 Domestic White Meter
7 Business White Meter
9 Off Peak
SOUTHERN ELECTRIC Plc
Tariff No. Tariff
11 Domestic White Meter
12 Domestic White Meter (Direct Debit)
13,23 Restricted Hours
14,24 Domestic Hours (Direct Debit)
SOUTH WALES ELECTRICITY Plc
Tariff No. Tariff
3 Domestic Restricted Hours Tariff - Credit
4 Domestic Restricted Hours Tariff - Direct Debit
Manweb 75 April 1998
<PAGE>
5 Domestic White Meter Tariff - Credit
6 Domestic White Meter Tariff - Direct Debit
15 Farm Domestic White Meter Tariff - Credit
16 Farm Domestic White Meter Tariff - Direct Debit
30 Commercial Day/Night Tariff - Credit
31 Commercial Day/Night Tariff - Direct Debit
34 Industrial Day/Night Tariff - Credit
35 Industrial Day/Night Tariff - Direct Debit
44 Farm Restricted Hours Tariff - Credit
45 Farm Restricted Hours Tariff - Direct Debit
46 Commercial Restricted Hours Tariff - Credit
47 Commercial Restricted Hours Tariff - Direct Debit
48 Industrial Restricted Hours Tariff - Credit
49 Industrial Restricted Hours Tariff - Direct Debit
SOUTH WESTERN ELECTRICITY Plc
Tariff No. Tariff
5 Domestic Day/Night (LA)
8 Off Peak (7 hour) Tariff (LA)
9 Off Peak Night Only Tariff (LA)
10 Off Peak (LA) Tariff
17 Day and Night Tariff (LA)
18 Flat Rate (LA)
21 Farm Day/Night Tariff (LA)
22 Off Peak (7 hour) Tariff (LA)
23 Off Peak Night Only Tariff (LA)
24 Off Peak (LA) Tariff
YORKSHIRE ELECTRICITY Plc
Tariff No. Tariff
3 Domestic Off-Peak
11 Farm Off-Peak
12 Commercial 2 Rate Tariff
13 Commercial Off Peak
14 Industrial Off Peak Tariff
Manweb 76 April 1998
<PAGE>
ANNEX C to Condition 3B
Value of X(a)
EASTERN ELECTRICITY Plc X(a) 8.9
EAST MIDLANDS ELECTRICITY Plc X(a) 6.3
LONDON ELECTRICITY Plc X(a) 11.8
MANWEB Plc X(a) 5.8
MIDLANDS ELECTRICITY Plc X(a) 7.1
NORTHERN ELECTRICITY Plc X(a) 4.2
NORWEB Plc X(a) 3.4
SEEBOARD Plc X(a) 6.0
SOUTHERN ELECTRIC Plc X(a) 3.2
SWALEC Plc X(a) 8.5
SOUTH WESTERN ELECTRICITY Plc X(a) 6.6
YORKSHIRE ELECTRICITY GROUP Plc X(a) 3.7
Manweb 77 April 1998
<PAGE>
ANNEX D TO CONDITION 3B
THE TABLE
EASTERN ELECTRICITY PLC
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic General Table 2 Domestic Standing Charge 2548 1146144 1146144
Primary Unit 7.15 27799.08
Additional Unit 6.70 1245.83
2 Domestic General Table 1 Domestic Standing Charge 2444 530239 530239
Primary Unit 7.02 1338.23
Additional Unit 6.57 594.54
3 Domestic General Prepayment Domestic Standing Charge 3744 118172 118172
Primary Unit 7.15 404.80
4 Domestic General Domestic Standing Charge 3640 4543 4543
Prepayment Lock-Off Meter Primary Unit 7.15 14.23
Addition Unit 6.70 6.33
5 Domestic Economy 7 Table 1 Domestic Standing Charge 3692 287625 287625
Primary Day Units 7.22 670.21
Additional Day Units 7.02 298.30
Night Units 2.51 800.30
6 Domestic Economy 7 Table 2 Domestic Standing Charge 3796 466260 466260
Primary Day Units 7.35 1133.43
Additional Day Units 7.15 504.47
Night Units 2.55 1558.10
7 Domestic Economy 7 PPM Domestic Standing Charge 4992 244936 244936
Primary Day Units 7.35 678.09
Night Units 2.55 385.90
8 Domestic Night/Day Tariff Domestic Standing Charge 3692 14259 14259
Table 1 Day Units 8.23 46.33
Primary Night Units 3.59 25.30
Additional Night Units 3.19 11.26
9 Domestic Night/Day Tariff Domestic Standing Charge 3796 33932 33932
Table 2 Day Units 8.36 108.5
Primary Night Units 3.64 76.23
Additional Night Units 3.24 33.93
10 Domestic Low User Tariff Domestic Unit Rate 9.55 0.07 83
Table 1
11 Domestic Low User Tariff Domestic Unit Rate 9.70 0.15 167
Table 2
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 78 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
12 Domestic Economy 10 Table 1 Domestic Standing Charge 3692 7660 7660
Primary Day Units 7.22 19.24
Additional Units 7.02 8.56
Night Units 3.23 3.70
Heating Units 3.23 90.70
13 Domestic Economy 10 Table 2 Domestic Standing Charge 3796 14825 14825
Primary Day Units 7.35 33.7
Additional Units 7.15 15.00
Night Units 3.27 10.40
Heating Units 3.27 94.81
14 Restricted Hours Tariff 1 Domestic Standing Charge 832 4173 4173
Table 1 Unit Rate 4.06 1.86
15 Restricted Hours Tariff 1 Domestic Standing Charge 884 12164 12164
Table 2 Unit Rate 4.11 82.50
16 Restricted Hours Tariff 2 Domestic Standing Charge 832 1532 1532
Table 1 Unit Rate 4.50 0.83
17 Restricted Hours Tariff 2 Domestic Standing Charge 884 3355 3355
Table 2 Unit Rate 4.55 27.64
18 Restricted Hours Tariff 3 Domestic Standing Charge 832 495 495
Table 1 Unit Rate 3.23 0.10
19 Restricted Hours Tariff 3 Domestic Standing Charge 884 1562 1562
Table 2 Unit Rate 3.27 11.79
20 Business & Enterprise Non- Stdg Chrg - Single Phase 2444 6795 6795
General Table 1 Domestic Bus. Primary Units 7.32 11.49
Bus. Additional Units 7.07 5.12
Dom. Primary Units 7.02 1.06
Dom. Additional Units 6.57 0.47
21 Business & Enterprise Non- Stdg Chrg - Three Phase 4940 3989 3989
General Table 1 Domestic Bus. Primary Units 7.32 17.44
Bus. Additional Units 7.07 7.76
22 Business & Enterprise Non- Stdg Chrg - Single Phase 2548 52511 52511
General Table 2 Domestic Bus. Primary Units 7.45 95.23
Bus. Additional Units 7.20 218.95
Dom. Primary Units 7.15 3.52
Dom. Additional Units 6.70 1.57
23 Business & Enterprise Non- Stdg Chrg - Three Phase 5044 18189 18189
General Table 2 Domestic Bus. Primary Units 7.45 72.21
Bus. Additional Units 7.20 32.14
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 79 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
24 Business & Enterprise Non- Stdg Chrg 4888 330 330
General Prepayment Domestic Bus. Primary Units 7.45 1.06
25 Business & Enterprise Non- Stdg Chrg - Single Phase 3692 1336 1336
Economy 7 Table 1 Domestic Bus. Primary Units 7.47 4.54
Bus. Additional Units 7.22 2.02
Bus. Night 2.51 3.30
Dom. Primary Units 7.22 1.15
Dom. Additional Units 7.02 0.51
Domestic Night 2.51 0.54
26 Business & Enterprise Non- Stdg Chrg - Three Phase 4940 2953 2953
Economy 7 Table 1 Domestic Bus. Primary Units 7.47 12.88
Bus. Additional Units 7.22 5.73
Night Units 2.51 9.97
27 Business & Enterprise Non- Stdg Chrg - Single Phase 3796 6253 6253
Economy 7 Table 2 Domestic Bus. Primary Units 7.60 15.16
Bus. Additional Units 7.35 6.75
Bus. Night Units 2.55 10.52
Dom. Primary Units 7.35 2.44
Dom. Additional Units 7.15 1.09
Dom. Night Units 2.55 2.03
28 Business & Enterprise Non- Stdg Chrg - Three Phase 5044 7167 7167
Economy 7 Table 2 Domestic Bus. Primary Units 7.60 33.00
Bus. Additional Units 7.35 14.69
Night Units 2.55 20.00
29 Business & Enterprise Non- Stdg Chrg 6136 1066 1066
Economy 7 Prepayment Domestic Bus. Primary Units 7.60 0.98
Night Units 2.55 0.45
30 B & E Evening/Weekend E7 Non- Stdg Chrg - Single Phase 3692 893 893
Table 1 Domestic Primary Units 9.26 2.44
Additional Units 9.01 1.09
WE Units 4.55 2.44
Night Units 2.51 2.89
31 B & E Evening/Weekend E7 Non- Stdg Chrg - Three Phase 4940 1497 1497
Table 1 Domestic Primary Units 9.26 4.52
Additional Units 9.01 2.01
WE Units 4.55 3.95
Night Units 2.51 4.06
32 B & E Evening/Weekend E7 Non- Stdg Chrg - Single Phase 3796 1782 1782
Table 2 Domestic Primary Units 9.40 5.77
Additional Units 9.15 2.57
WE Units 4.60 4.99
Night Units 2.55 3.54
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 80 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
33 B & E Evening/Weekend E7 Non- Stdg Chrg - Three Phase 5044 3152 3152
Table 2 Domestic Primary Units 9.40 11.01
Additional Units 9.15 4.90
WE Units 4.6 8.57
Night Units 2.55 6.31
34 B & E Night/Day Tariff Non- Stdg Chrg - Single Phase 3692 3440 3440
Table 1 Domestic Day Units 8.58 0.96
Night Units 3.59 1.19
35 B & E Night/Day Tariff Non- Stdg Chrg - Three Phase 4940 360 360
Table 1 Domestic Day Units 8.58 1.98
Night Units 3.59 1.56
36 B & E Night/Day Tariff Non- Stdg Chrg - Single Phase 3796 5765 5765
Table 2 Domestic Day Units 8.72 3.20
Night Units 3.64 2.74
37 B & E Night/Day Tariff Non- Stdg Chrg - Three Phase 5044 1466 1466
Table 2 Domestic Day Units 8.72 6.41
Night Units 3.64 5.25
38 B & E Evening/Weekend Non- Stdg Chrg - Single Phase 3692 1501 1501
Table 1 Domestic Primary Day Units 9.26 4.13
Additional Units 9.01 1.84
Weekend Units 4.35 7.00
39 B & E Evening/Weekend Non- Stdg Chrg - Three Phase 4940 3472 3472
Table 1 Domestic Primary Day Units 9.26 10.73
Additional Units 9.01 4.78
Weekend Units 4.35 18.87
40 B & E Evening/Weekend Non- Stdg Chrg - Single Phase 3796 5881 5881
Table 2 Domestic Primary Day Units 9.40 9.30
Additional Units 9.15 4.13
Weekend Units 4.40 15.33
41 B & E Evening/Weekend Non- Stdg Chrg - Three Phase 5044 5353 5353
Table 2 Domestic Primary Day Units 9.40 16.74
Additional Units 9.15 7.45
Weekend Units 4.40 28.51
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 81 April 1998
<PAGE>
EAST MIDLANDS ELECTRICITY PLC
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Standard Domestic Standing Charge 3372 1061207 1061207
Unit Rate 6.69 3015.13
2 Economy 7 Domestic Standing Charge 5040 1054502 1054502
Day Units 6.88 3319.00
Night Units 2.45 2094.04
3 Card Meter Domestic Standing Charge 2144 279957 279957
4 Heatwise Domestic Standing Charge 1524 44022 44022
Night/Eve Units 2.67 170.43
Afternoon Units 2.67 97.11
Boost Units 6.88 1.09
5 Restricted Hour Tariff 1 Domestic Standing Charge 1368 678 678
Unit Charge 3.25 2.47
6 Restricted Hour Tariff 2 Domestic Standing Charge 1368 3364 3364
Unit Charge 3.77 16.35
7 Restricted Hour Tariff 3 Domestic Standing Charge 1368 2357 2357
Unit Charge 4.09 10.89
8 Direct Debit Discount Domestic Standing Charge -500 707301 707301
Discount
9 Block Non- Standing Charge 4896 61113 61113
Domestic Primary Units 8.64 111.69
Secondary Units 6.69 100.36
10 Economy 7 Block Non- Standing Charge 6612 25149 25149
Domestic Primary Units 8.64 55.53
Secondary Units 6.84 44.84
Night Units 2.45 44.07
11 Evening and Weekend Non- Standing Charge 6612 1877 1877
Domestic Primary Units 10.07 2.70
Secondary Units 8.55 0.78
EWE Units 3.13 5.37
12 Evening and Weekend Non- Standing Charge 7164 4344 4344
Economy 7 Domestic Primary Units 10.07 6.47
Secondary Units 8.55 1.70
EWE Units 3.32 8.30
Night Units 2.45 4.97
13 Restricted Hour Tariff 1 Non- Standing Charge 1368 182 182
Domestic Unit Charge 3.25 0.49
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 82 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
14 Restricted Hour Tariff 2 Non- Standing Charge 1368 407 407
Domestic Unit Charge 3.77 0.98
15 Restricted Hour Tariff 3 Non- Standing Charge 1368 333 333
Domestic Unit Charge 4.09 0.72
16 Direct Debit Discount Non- Standing Charge -1200 17299 17299
Domestic Discount
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 83 April 1998
<PAGE>
LONDON ELECTRICITY PLC
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic General Purpose Rate - Domestic Standing Charge 4635.5 897732 897732
Quarterly Bill
Domestic General Purpose Rate - Domestic Unit Rate 6.83 2942.00
Quarterly Bill
2 Domestic General Purpose Rate Domestic Standing Charge 6533.5 361274 361274
- Powerkey Meter
Domestic General Purpose Rate Domestic Unit Rate 6.60 1071.00
- Powerkey Meter
3 Domestic General Purpose Rate Domestic Standing Charge 4453 333211 333211
- Direct Debit
Domestic General Purpose Rate Domestic Unit Rate 6.55 1278.00
- Direct Debit
4 Domestic Economy 7 Rate - Domestic Standing Charge 5803.5 76096 76096
Quarterly Bill
Domestic Economy 7 Rate - Domestic Day Units 7.40 238.00
Quarterly Bill
Domestic Economy 7 Rate - Domestic Night Units 2.70 303.00
Quarterly Bill
5 Domestic Economy 7 Rate - Domestic Standing Charge 7300 31495 31495
Powerkey Meter
Domestic Economy 7 Rate - Domestic Day Units 7.15 87.00
Powerkey Meter
Domestic Economy 7 Rate - Domestic Night Units 2.61 97.00
Powerkey Meter
6 Domestic Economy 7 Rate - Domestic Standing Charge 5584.5 39528 39528
Direct Debit
Domestic Economy 7 Rate - Domestic Day Units 7.10 137.00
Direct Debit
Domestic Economy 7 Rate - Domestic Night Units 2.59 161.00
Direct Debit
7 Domestic Economy 9 Rate - Domestic Standing Charge 6205 608 608
Quarterly Bill
Domestic Economy 9 Rate - Domestic Day Units 7.40 2.00
Quarterly Bill
Domestic Economy 9 Rate - Domestic Night Units 2.99 2.00
Quarterly Bill
8 Domestic Economy 9 Rate - Domestic Standing Charge 5949.5 209 209
Direct Debit
Domestic Economy 9 Rate - Domestic Day Units 7.10 1.00
Direct Debit
Domestic Economy 9 Rate - Domestic Night Units 2.87 1.00
Direct Debit
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 84 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9 White Meter Rate Domestic Standing Charge 5803.5 3667 3667
White Meter Rate Domestic Day Units 7.40 12.00
White Meter Rate Domestic Night Units 3.25 12.00
10 Rate D4 Domestic Standing Charge 1168 1545 1545
Rate D4 Domestic Unit Rate 3.25 7.00
11 Rate D5 Domestic Standing Charge 1168 6016 6016
Rate D5 Domestic Unit Rate 3.91 29.00
12 Rate D6 Domestic Standing Charge 1168 2117 2117
Rate D6 Domestic Unit Rate 4.38 16.00
13 Domestic Unpublished Domestic Standing Charge 8852 2190 2190
Domestic Unpublished Domestic Unit Rate 7.68 8.00
14 Business Standard Rate - Non- Standing Charge 5000.5 45867 45867
Quarterly Bill Domestic
Business Standard Rate - Non- Primary Unit Rate 8.16 136.00
Quarterly Bill Domestic
Business Standard Rate - Non- Secondary Unit Rate 6.79 33.00
Quarterly Bill Domestic
15 Business Standard Rate - Non- Standing Charge 6862 4058 4058
Powerkey Meter Domestic
Business Standard Rate - Non- Unit Rate 7.68 14.00
Powerkey Meter Domestic
16 Business Standard Rate - Direct Non- Standing Charge 4818 12007 12007
Debit Domestic
Business Standard Rate - Direct Non- Primary Unit Rate 7.83 38.00
Debit Domestic
Business Standard Rate - Direct Non- Secondary Unit Rate 6.52 9.00
Debit Domestic
17 Business Economy 7 Rate - Non- Standing Charge 6205 2644 2644
Quarterly Bill Domestic
Business Economy 7 Rate - Non- Primary Unit Rate 8.51 8.00
Quarterly Bill Domestic
Business Economy 7 Rate - Non- Secondary Unit Rate 7.35 0.00
Quarterly Bill Domestic
Business Economy 7 Rate - Non- Night Units 2.70 6.00
Quarterly Bill Domestic
18 Business Economy 7 Rate - Non- Standing Charge 7701.5 54 54
Powerkey Meter Domestic
Business Economy 7 Rate - Non- Primary Unit Rate 8.03 0.13
Powerkey Meter Domestic
Business Economy 7 Rate - Non- Night Units 2.61 0.09
Powerkey Meter Domestic
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 85 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
19 Business Economy 7 Rate - Non- Standing Charge 5949.5 1479 1479
Direct Debit Domestic
Business Economy 7 Rate - Non- Primary Unit Rate 8.16 4.00
Direct Debit Domestic
Business Economy 7 Rate - Non- Secondary Unit Rate 7.06 0.00
Direct Debit Domestic
Business Economy 7 Rate - Non- Night Units 2.59 2.00
Direct Debit Domestic
20 Business Evening/Weekend Rate - Non- Standing Charge 6314.5 1346 1346
Quarterly Bill Domestic
Business Evening/Weekend Rate - Non- Primary Unit Rate 10.29 2.00
Quarterly Bill Domestic
Business Evening/Weekend Rate - Non- Secondary Unit Rate 8.80 0.00
Quarterly Bill Domestic
Business Evening/Weekend Rate - Non- Other Units 3.83 5.00
Quarterly Bill Domestic
21 Business Evening/Weekend Rate - Non- Standing Charge 7811 7 7
Powerkey Meter Domestic
Business Evening/Weekend Rate - Non- Primary Unit Rate 9.71 0.01
Powerkey Meter Domestic
Business Evening/Weekend Rate - Non- Other Units 3.71 0.02
Powerkey Meter Domestic
22 Business Evening/Weekend Rate - Non- Standing Charge 6059 1525 1525
Direct Debit Domestic
Business Evening/Weekend Rate - Non- Primary Unit Rate 9.88 2.00
Direct Debit Domestic
Business Evening/Weekend Rate - Non- Secondary Unit Rate 8.45 0.00
Direct Debit Domestic
Business Evening/Weekend Rate - Non- Other Units 3.68 5.00
Direct Debit Domestic
23 Business Tariff D7 Non- Standing Charge 1168 477 477
Domestic
Business Tariff D7 Non- Unit Rate 3.25 2.00
Domestic
24 Business Tariff D8 Non- Standing Charge 1168 91 91
Domestic
Business Tariff D8 Non- Unit Rate 3.99 0.38
Domestic
25 Business Tariff D9 Non- Standing Charge 1168 164 164
Domestic
Business Tariff D9 Non- Unit Rate 4.38 1.00
Domestic
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 86 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate in QO (Unit
pence per kWh) rate in
GWh)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
26 Business Unmetered Supplies Non- Unit Rate 6.73 0.00
Domestic
27 Business Staircase Rate Non- Standing Charge 2956.5 3454 3454
Domestic
Business Staircase Rate Non- Primary Unit Rate 8.16 1.00
Domestic
Business Staircase Rate Non- Secondary Unit Rate 6.79 0.00
Domestic
28 Business Staircase Rate Non- Standing Charge 2956.5 4001 4001
Domestic
Business Staircase Rate Non- Primary Unit Rate 7.83 2.00
Domestic
Business Staircase Rate Non- Secondary Unit Rate 6.52 0.00
Domestic
29 Business Catering Rate Non- Unit Rate 7.68 1.00
Domestic
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 87 April 1998
<PAGE>
MANWEB PLC
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic Domestic Standing Charge 4621 1117013 1117013
Unit Rate 6.97 3981.00
2 Select Domestic Unit Rate 11.42 5.00
3 Prepayment Domestic Standing Charge 2121 270000 270000
4 Economy 7 Domestic Standing Charge 5920 99740 99740
Day Units 7.31 269.00
Night Units 2.71 572.00
5 Off Peak Domestic Standing Charge 1299 17345 17345
'A' Unit 3.99 11.00
'C' Unit 3.15 25.00
'D' Unit 3.76 21.00
'E' Unit 2.72 44.00
'S' Unit 4.73 3.00
6 White Meter Domestic Standing Charge 5920 2118 2118
Day Units 8.02 7.00
Night Units 3.15 8.00
7 Option 14 Domestic Standing Charge 6643 1234 1234
Peak Units 8.49 3.00
Day Units 3.25 8.00
8 3S Non-Domestic Standing Charge 6752 48424 48424
Unit Rate 6.98 217.87
9 3T Non-Domestic Standing Charge 14636 70 70
Peak Units 22.53 0.02
Other Units 6.08 0.47
10 3E Non-Domestic Standing Charge 8067 4005 4005
Day Units 7.36 14.85
Night Units 2.57 9.31
11 M3 Non-Domestic Standing Charge 8431 863 863
Weekday Units 9.00 2.07
Evenings 4.40 0.67
Weekends 4.40 1.12
Night 2.34 1.14
12 4S Non-Domestic Standing Charge 6752 79 79
Unit Rate 6.89 0.42
13 4T Non-Domestic Standing Charge 14636 1 1
Other Units 6.03 0.00
Peak Units 22.54 0.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 88 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
14 4E Non-Domestic Standing Charge 8067 2 2
Day Units 7.17 0.01
Night Units 2.53 0.01
15 M4 Non-Domestic Standing Charge 8431 12 12
Weekday 7.88 0.02
Evening 4.28 0.00
Night 4.28 0.01
Peak 2.33 0.01
21.64 0.00
16 Prepayment Domestic Discount -481.5 270000 270000
17 Direct Debit Domestic Discount -1000 330000 330000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 89 April 1998
<PAGE>
MIDLANDS ELECTRICITY PLC
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 D1 Domestic Standing Charge 3172 967658 967658
Units 6.84 3366.48
2 D1 DD Domestic Standing Charge 3172 478000 478000
Units 6.61 1685.00
3 D8 Domestic Standing Charge 4120 253000 253000
Units 6.84 930.00
4 D5 Domestic Standing Charge 4568 200612 200612
Day Units 7.41 607.74
Night Units 2.75 789.00
5 D5 DD Domestic Standing Charge 4568 105500 105500
Day Units 7.15 369.00
Night Units 2.75 406.00
6 D6 Domestic Standing Charge 6252 61250 61250
Day Units 7.41 190.00
Night Units 2.75 212.00
7 OP1 Domestic Standing Charge 1132 9617 9617
Units 3.17 32.79
8 OP2 Domestic Standing Charge 1132 13020 13020
Units 3.52 62.23
9 OP3 Domestic Standing Charge 1132 12368 12368
Units 3.77 35.87
10 S Non-Domestic Standing Charge 3516 71937 71937
Units 7.16 255.63
11 S DD Non-Domestic Standing Charge 3516 14630 14630
Units 7.16 52.60
12 S1 Non-Domestic Standing Charge 5060 8129 8129
Units 7.70 20.86
Night Units 2.75 23.05
13 S1 DD Non-Domestic Standing Charge 5060 1215 1215
Day 7 Units 7.55 2.90
Night Units 2.75 3.76
14 W Non-Domestic Standing Charge 5060 2366 2366
Weekday Units 9.27 2.43
Other Units 4.35 5.67
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 90 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
15 W DD Non-Domestic Standing Charge 5060 292 292
Weekday Units 9.09 0.31
Other Units 4.35 0.73
16 OP1 Non-Domestic Standing Charge 1132 1797 1797
Units 3.17 6.62
17 OP2 Non-Domestic Standing Charge 1132 899 899
Units 3.52 3.55
18 OP3 Non-Domestic Standing Charge 1132 403 403
Units 3.77 1.66
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 91 April 1998
<PAGE>
NORTHERN ELECTRIC PLC
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 D1 Unrestricted Domestic Standing Charge 4372 1040796 1040796
D1 Unrestricted Domestic Units 7.20 2361.33
D1 Unrestricted Domestic Units 6.46 1068.50
2 DIT E7 Domestic Standing Charge 5464 72971 72971
DIT E7 Domestic Day Units 7.5 102.07
DIT E7 Domestic Day Units 6.75 125.84
DIT E7 Domestic Night Units 2.45 344.26
3 SUD (Small Users Domestic Units 9.90 0.40 403
Dom.)
4 K1 Prepayment Domestic Standing Charge 6560 110061 110061
K1 Prepayment Domestic Units 6.82 289.83
5 KIT E7 Prepayment Domestic Standing Charge 7648 7908 7908
KIT E7 Prepayment Domestic Day Units 7.32 21.63
KIT E7 Prepayment Domestic Night Units 2.45 34.68
6 Super Tariff Domestic Standing Charge 6112 23860 23860
Super Tariff Domestic Day Units 7.20 61.38
Super Tariff Domestic Night Units 3.08 13.13
Super Tariff Domestic Heat Units 2.34 172.96
7 RH1 Off-Peak Domestic Off-Peak Units 3.03 2.44
8 RH2 Off-Peak Domestic Off-Peak Units 3.73 19.54
9 RH3 & RHB Domestic Off-Peak Units 4.05 4.91
Off-Peak
10 Staff Rates Domestic Units 7.00 0.14
11 Heatplan Domestic Units 2.60 0.52
12 Evening & Weekend Non-Domestic Standing Charge 5764 686 686
Non-Domestic Weekday Daytime 10.41 1.77
Units
Non-Domestic Evening & Weekend 4.90 0.10
Units
13 EWS (EW small user) Non-Domestic Standing Charge 4372 0.00 0
EWS Non-Domestic Units 9.90 0.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 92 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
14 Q1 Non-Domestic Standing Charge 4636 52714 52714
Q1 Non-Domestic Units less than 6000 8.30 89.45
Q1 Non-Domestic Units greater than 6000 7.60 104.60
15 Q1T Non-Domestic Standing Charge 5752 2293 2293
Q1T Non-Domestic Day Units less than 6000 8.60 2.13
Q1T Non-Domestic Day Units greater than 6000 7.90 7.32
Q1T Non-Domestic Night Units 2.51 2.75
16 Super Tariff Non-Domestic Standing Charge 1880 381 381
Business
Super Tariff Non-Domestic Normal Units 7.60 0.89
Business
Super Tariff Non-Domestic Heat Units 2.34 2.62
Business
17 RH1 Off-Peak Non-Domestic Off-Peak Units 3.03 1.76
18 RH2 Off-Peak Non-Domestic Off-Peak Units 3.73 1.76
19 RH3 & RHB Non-Domestic Off-Peak Units 4.05 0.27
Off-Peak
20 C7 Catering Tariff Non-Domestic Units 6.45 5.23 1400
Discount Schemes
21 Premier Payment Plan Domestic Discount -866 358077 358077
Prompt Payment Domestic Standing Charge -400 585766 585766
22 Discount
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 93 April 1998
<PAGE>
NORWEB PLC
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 D13 Domestic Tariff Domestic Standing Charge 3432 939533 939533
D13 Domestic Tariff Domestic Units 6.50 2797.29
2 D11 Domestic Monthly Domestic Standing Charge 3332 630329 630329
Budget Scheme
D11 Domestic Monthly Domestic Units 6.28 2693.28
Budget Scheme
3 D11 Domestic Prepayment Domestic Standing Charge 5804 202371 202371
D11 Domestic Prepayment Domestic Units 6.28 705.41
4 D56 Economy 7 Tariff Domestic Standing Charge 4740 127586 127586
D56 Economy 7 Tariff Domestic Day Units 7.04 345.05
D56 Economy 7 Tariff Domestic Night Units 2.46 649.17
5 D22 Domestic Economy 7 Domestic Standing Charge 4640 82326 82326
Monthly Budget Scheme
D22 Domestic Economy 7 Domestic Day Units 6.83 320.05
Monthly Budget Scheme
D22 Domestic Economy 7 Domestic Night Units 2.46 508.39
Monthly Budget Scheme
6 D22 Domestic Economy 7 Domestic Standing Charge 7112 21931 21931
Prepayment
D22 Domestic Economy 7 Domestic Day Units 6.83 71.92
Prepayment
D22 Domestic Economy 7 Domestic Night Units 2.46 117.90
Prepayment
7 D92 Domestic Smart 7 Tariff Domestic Standing Charge 5268 332 332
D92 Domestic Smart 7 Tariff Domestic Day Units 8.79 0.42
D92 Domestic Smart 7 Tariff Domestic Evening/ Weekend 4.58 0.93
Units
D92 Domestic Smart 7 Tariff Domestic Night Units 2.33 3.15
8 R16 7 Hour Off Peak Tariff Domestic Standing Charge 1308 14498 14498
R16 7 Hour Off Peak Tariff Domestic Unit Rate 2.46 60.48
9 R11 Tariff Domestic Standing Charge 1308 501 501
R11 Tariff Domestic Unit Rate 2.98 2.83
10 R21 Domestic Domestic Standing Charge 1308 10551 10551
R21 Domestic Domestic Unit Rate 3.31 34.45
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 94 April 1998
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11 G13 All Purpose Quarterly Non-Domestic Standing Charge 4436 55505 55505
Tariff
G13 All Purpose Quarterly Non-Domestic Primary Units 7.90 58.80
Tariff
G13 All Purpose Quarterly Non-Domestic Secondary Units 6.08 158.90
Tariff
12 G11 All Purpose Monthly Non-Domestic Standing Charge 4400 9450 9450
Budget Scheme Tariff
G11 All Purpose Monthly Non-Domestic Primary Units 7.89 19.70
Budget Scheme Tariff
G11 All Purpose Monthly Non-Domestic Secondary Units 5.96 55.32
Budget Scheme Tariff
13 G15 Combined Premises Non-Domestic Standing Charge 4436 9963 9963
Quarterly
G15 Combined Premises Non-Domestic Primary Units 7.90 16.85
Quarterly
G15 Combined Premises Non-Domestic Secondary Units 5.96 24.59
Quarterly
14 G16 Combined Premises Non-Domestic Standing Charge 4400 1898 1898
Monthly
G16 Combined Premises Non-Domestic Primary Units 7.89 4.19
Monthly
G16 Combined Premises Non-Domestic Secondary Units 5.96 7.18
Monthly
15 G63 Economy 7 All Purpose Non-Domestic Standing Charge 5744 2874 2874
Quarterly Tariff
G63 Economy 7 All Purpose Non-Domestic Primary Units 8.26 3.86
Quarterly Tariff
G63 Economy 7 All Purpose Non-Domestic Secondary Units 6.51 11.42
Quarterly Tariff
G63 Economy 7 All Purpose Non-Domestic Night Units 2.46 10.30
Quarterly Tariff
16 G66 Economy 7 All Purpose Non-Domestic Standing Charge 5708 644 644
Monthly Tariff
G66 Economy 7 All Purpose Non-Domestic Primary Units 8.17 0.81
Monthly Tariff
G66 Economy 7 All Purpose Non-Domestic Secondary Units 6.38 2.56
Monthly Tariff
G66 Economy All Purpose Non-Domestic Night Units 2.46 2.20
Monthly Tariff
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 95 April 1998
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
17 G65 Economy 7 Combined Non-Domestic Standing Charge 5744 980 980
Premises Quarterly
G65 Economy 7 Combined Non-Domestic Primary Units 8.26 0.57
Premises Quarterly
G65 Economy 7 Combined Non-Domestic Secondary Units 6.51 0.96
Premises Quarterly
G65 Economy 7 Combined Non-Domestic Night Units 2.46 2.12
Premises Quarterly
18 G67 Economy 7 Combined Non-Domestic Standing Charge 5708 195 195
Premises Monthly
G67 Economy 7 Combined Non-Domestic Primary Units 8.17 0.14
Premises Monthly
G67 Economy 7 Combined Non-Domestic Secondary Units 6.38 0.25
Premises Monthly
G67 Economy 7 Combined Non-Domestic Night Units 2.46 0.48
Premises Monthly
19 G71 Evening & Weekend Non-Domestic Standing Charge 5796 2780 2780
Tariff
G71 Evening & Weekend Non-Domestic Primary Units 9.83 2.91
Tariff
G71 Evening & Weekend Non-Domestic Secondary Units 7.94 2.29
Tariff
G71 Evening & Weekend Non-Domestic Evening/Weekend 4.09 8.55
Tariff Units
20 G61 Economy 7 Evening/ Non-Domestic Standing Charge 6488 390 390
Weekend Quarterly
G61 Economy 7 Evening/ Non-Domestic Primary Units 9.83 0.32
Weekend Quarterly
G61 Economy 7 Evening/ Non-Domestic Secondary Units 7.94 0.65
Weekend Quarterly
G61 Economy 7 Evening/ Non-Domestic Evening/Weekend 4.09 1.31
Weekend Quarterly Units
G61 Economy 7 Evening/ Non-Domestic
Weekend Quarterly Night Units 2.46 0.67
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 96 April 1998
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
21 G54 Economy 7 Evening/ Non-Domestic Standing Charge 6424 26 26
Weekend Monthly
G54 Economy 7 Evening/ Non-Domestic Primary Units 9.76 0.02
Weekend Monthly
G54 Economy 7 Evening/ Non-Domestic Secondary Units 7.88 0.05
Weekend Monthly
G54 Economy 7 Evening/ Non-Domestic Evening/Weekend 4.07 0.10
Weekend Monthly Units
G54 Economy 7 Evening/ Non-Domestic Night Units 2.46 0.05
Weekend Monthly
22 R31 Non Domestic Non-Domestic Standing Charges 1308 169 169
R31 Non Domestic Non-Domestic Unit Rate 3.42 0.70
23 R41 Tariff Non-Domestic Standing Charge 1308 3679 3679
R41 Tariff Non-Domestic Unit Rate 3.59 13.97
24 R42 Non-Domestic Standing Charge 1308 43 43
R42 Non-Domestic Unit Rate 4.02 0.16
25 R43 Non-Domestic Standing Charge 1308 61 61
R43 Non-Domestic Unit Rate 4.17 0.34
26 R51 Floor Warming Tariff Non-Domestic Standing Charge 1308 5732 5732
R51 Floor Warming Tariff Non-Domestic Unit Rate 3.59 16.91
27 Q64 Farm Crop Drying Non-Domestic Standing Charge 1308 96 96
Tariff
Q64 Farm Crop Drying Non-Domestic Unit Rate 5.34 0.33
Tariff
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 97 April 1998
<PAGE>
SPAGE>
SEEBOARD PLC
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic Standard Domestic Units 7.14 4526.00 1244349
Standing Charge 1300 1244349
2 Domestic Economy Domestic Day Units 7.14 1962.00 562551
Night Units 2.66 1488.00
Standing Charge 2100 562551
3 Domestic White Meter Domestic Day Units 7.73 47.00 13735
Night Units 3.35 37.00
Standing Charge 2100 13735
4 Warm Wise Domestic Day Units 8.03 16.00 11232
Night Units 2.96 10.00
Standard Charge 2920 11232
Heating Units 2.46 98.00
Evening/Weekend 6.36 18.00
5 Business Standard Commercial/Ind. Units 7.14 215.17 77916
Standard Charge 1300 77916
6 Business Economy Commercial/Ind. Day Units 7.14 89.00 14766
Night Units 2.66 30.00
Standard Charge 2100 14766
7 Business White Meter Commercial/Ind. Day Units 7.73 1.29 434
Night Units 3.35 0.86
Standard Charge 2100 434
8 Business Evening/ Commercial/Ind. Day Units 9.40 3.51 1313
Weekend/Night Evening/Weekend 4.30 4.06
Night Units 2.66 2.14
Standing Charge 2560 1313
9 Off Peak Domestic/ Average Units 4.12 18.58 5258
Commercial Standing Charge 688 5258
10 Prepayment Meter Domestic Standing Charge- 2540 60 60
Com.
11 Prepayment Meter Domestic Standard Charge- 2200 215000 215000
Budget
12 Prepayment Meter Domestic Discount -800 215060 215060
13 Direct Debit Discount Domestic Standing Charge -800 685000 685000
Discount
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 98 April 1998
<PAGE>
SOUTHERN ELECTRIC PLC
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in
per kWh) GWh)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 General Domestic (Qrtly) Domestic Standing Charge 3720 1383722 1383722
Units 6.31 4847.43
2 General Domestic Domestic Units 6.23 722.30 228166
(Kepayment) Standing Charge 3720 228166
Keyprepayment 1800 228166
Charge
3 General Domestic (DD) Domestic Standing Charge 3720 456719 456719
Units 6.16 2455.82
4 Flexiheat Domestic Day Units 9.51 4.43 1294
Other Units 4.43 2.07
Heat Units 2.14 8.27
Standing Charge 4720 1294
Meter Charge 1000 1294
5 Flexiheat (DD) Domestic Day Units 9.28 1.94 431
Other Units 4.32 0.90
Heat Units 2.09 3.61
Standing Charge 4720 431
Meter Charge 1000 431
6 Super Deal Domestic Day Units 7.02 51.72 19658
Other Units 3.45 17.33
Heat Units 2.14 55.70
Standing Charge 4720 19658
Meter Charge 1000 19658
7 Super Deal (DD) Domestic Day Units 6.85 22.64 6553
Other Units 3.37 7.56
Heat Units 2.09 24.30
Standing Charge 4720 6553
Meter Charge 1000 6553
8 Economy 7 Domestic Day Units 7.02 417.44 154649
Night Units 2.38 831.70
Standing Charge 4720 154649
9 Economy 7 (DD) Domestic Day Units 6.85 258.72 72271
Night Units 2.32 474.42
Standard Charge 4720 72271
10 Economy 7 (Keypayment) Domestic Day Units 6.93 169.32 51051
Night Units 2.35 244.27
Standing Charge 4720 51051
Meter Surcharge 1800 51051
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 99 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11 White Meter Domestic Day Units 7.18 9.71 3014
Night Units 2.77 12.42
Standing Charge 4720 3014
12 White Meter (DD) Domestic Day Units 7.01 4.24 952
Night Units 2.7 5.37
Standing Charge 4720 952
13 Restricted Hour Domestic 'A' Units 3.88 16.62 51152
'B' Units 4.3 9.55
'BN' Units 4.19 32.57
'E' Units 2.71 133.32
'F' Units 3.81 30.85
'FN' Units 3.62 90.75
Standing Charge 1080 51152
14 Restricted Hour (DD) Domestic 'A' Units 3.79 7.27 17050
'B' Units 4.2 4.18
'BN' Units 4.09 14.23
'E' Units 2.65 58.03
'F' Units 3.72 13.47
'FN' Units 3.53 39.561
Standing Charge 1080 17050
15 Q-1 Block Non-Domestic Units 6.61 341.13 85282
Standing Charge 4520 85282
16 Q1 Block (DD) Non-Domestic Units 6.45 113.71 28644
Standing Charge 4520 28644
17 Q2 Day/Night Non-Domestic Day Units 7.17 20.5 6197
Night Units 2.38 12.04
Standing Charge 5520 6197
18 Q2 Day/Night (DD) Non-Domestic Day Units 7 6.79 2052
Night Units 2.32 3.99
Standing Charge 5520 2052
19 Q3 Evening/ Non-Domestic Day Units 8.31 3.87 1602
Weekend Evening/Weekend 3.84 4.54
Standing Charge 5520 1602
20 Q3 Evening/ Weekend (DD) Non-Domestic Other Units 8.11 1.29 534
Evening/Weekend 3.75 1.51
Standing Charge 5520 534
21 Q4 Night/Evening/ Non-Domestic Other Units 8.31 2.07 1124
Weekend Night Units 2.38 1.83
Evening/Weekend 4.35 2.01
Standing Charge 6240 1124
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 100 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
22 Q4 Night/Evening/ Non-Domestic Day Units 8.11 0.69 375
Weekend (DD) Night Units 2.32 0.61
Evening/Weekend 4.25 0.67
Standing Charge 6240 375
23 Restricted Hour Non-Domestic `Ac' Units 3.88 3.7 4993
`Bc' Units 4.3 2.86
`Ec' Units 2.71 8.25
`Fc' Units 3.81 2.02
Standing Charge 1080 4993
24 Restricted Hour (DD) Non-Domestic `Ac' Units 3.79 1.25 1664
`Bc' Units 4.2 0.97
`Ec' Units 2.65 2.78
`Fc' Units 3.72 0.68
Standing Charge 1080 1664
25 3 Phase Meter Surcharge 1240 5930 5930
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 101 April 1998
<PAGE>
SOUTH WALES ELECTRICITY PLC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic Basic Tariff - Credit Domestic Standing Charge 4400 446472 446472
Domestic Basic Tariff - Credit Domestic Unit Rate 7.82 1214.05
2 Domestic Basic Tariff -Direct Domestic Standing Charge 4288 220382 220382
Debit
Domestic Basic Tariff -Direct Domestic Unit Rate 7.62 807.92
Debit
3 Domestic Restricted Hours Domestic Unit Rate 4.33 6.87
Tariff - Credit
4 Domestic Restricted Hours Domestic Unit rate 4.22 3.83
Tariff - Direct Debit
5 Domestic White Meter Tariff Domestic Standing Charge 5536 371 371
-Credit
Domestic White Meter Tariff Domestic Day Units 8.71 1.27
-Credit
Domestic White Meter Tariff Domestic Night Units 3.78 1.16
-Credit
6 Domestic White Meter Tariff- Domestic Standing Charge 5396 229 229
Direct Debit
Domestic White Meter Tariff- Domestic Day Units 8.49 0.63
Direct Debit
Domestic White Meter Tariff- Domestic Night Units 3.69 0.84
Direct Debit
7 Domestic Economy 7 Tariff - Domestic Standing Charge 5536 40037 40037
Credit
Domestic Economy 7 Tariff - Domestic Day Units 8.26 103.78
Credit
Domestic Economy 7 Tariff - Domestic Night Units 2.91 197.46
Credit
8 Domestic Economy 7 Tariff - Domestic Standing Charge 5396 22609 22609
Direct Debit
Domestic Economy 7 Tariff - Domestic Day Units 8.05 80.76
Direct Debit
Domestic Economy 7 Tariff - Domestic Night Units 2.83 138.10
Direct Debit
9 Domestic Winter Warmth Tariff Domestic Winter Warmth 3.17 0.79
10 Domestic Payment Meter Domestic Token/PP Surcharge 3220 158000 158000
Surcharge
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 102 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11 Domestic Basic Tariff - Token Domestic Standing Charge 4332 147446 147446
Meter
Domestic Basic Tariff - Token Domestic Unit Rate 7.70 483.03
Meter
12 Domestic Economy 7 - Token Meter Domestic Standing Charge 5452 10554 10554
Domestic Economy 7 - Token Meter Domestic Day Units 8.14 31.66
Domestic Economy 7 - Token Meter Domestic Night Unit 2.87 49.34
13 Farm Domestic Basic Tariff- Domestic Standing Charge 4400 5927 5927
Credit
Farm Domestic Basic Tariff- Domestic Unit Rate 7.82 27.78
Credit
14 Farm Domestic Basic Tariff - Domestic Standing Charge 4288.00 1273 1273
Direct Debit
Farm Domestic Basic Tariff - Domestic Unit Rate 7.62 6.32
Direct Debit
15 Farm Domestic White Meter Domestic Standing Charge 5536 30 30
Tariff - Credit
Farm Domestic White Meter Domestic Day Units 8.71 0.17
Tariff - Credit
Farm Domestic White Meter Domestic Night Units 3.78 0.16
Tariff - Credit
16 Farm Domestic White Meter Domestic Standing Charge 5396 7 7
Tariff - Direct Debit
Farm Domestic White Meter Domestic Day Units 8.49 0.03
Tariff - Direct Debit
Farm Domestic White Meter Domestic Night Units 3.69 0.04
Tariff - Direct Debit
17 Farm Domestic Economy 7 Tariff Domestic Standing Charge 5536 1407 1407
- Credit
Farm Domestic Economy 7 Tariff Domestic Day Units 8.26 8.74
- Credit
Farm Domestic Economy 7 Tariff Domestic Night Units 2.91 8.44
- Credit
18 Farm Domestic Economy 7 Tariff Domestic Standing Charge 5396 393 393
- Direct Debit
Farm Domestic Economy 7 Tariff Domestic Day Units 8.05 2.36
- Direct Debit
Farm Domestic Economy 7 Tariff Domestic Night Units 2.83 2.66
- Direct Debit
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 103 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
19 Farm Basic Tariff - Credit Non-Domestic Standing Charge 5232 2000 2000
Farm Basic Tariff - Credit Non-Domestic Unit Rate 7.82 8.90
20 Farm Basic Tariff - Direct Debit Non-Domestic Standing Charge 5100 200 200
Farm Basic Tariff - Direct Debit Non-Domestic Unit Rate 7.62 0.80
21 Commercial Standard Tariff- Non-Domestic Standing Charge 5232 27500 27500
Credit
Commercial Standard Tariff- Non-Domestic Primary Units 9.20 66.50
Credit
Commercial Standard Tariff- Non-Domestic Secondary Units 7.82 33.60
Credit
22 Commercial Standard Tariff- Non-Domestic Standing Charge 5100 4400 4400
Direct Debit
Commercial Standard Tariff- Non-Domestic Primary Units 8.97 8.00
Direct Debit
Commercial Standard Tariff- Non-Domestic Secondary Units 7.62 5.00
Direct Debit
23 Commercial S/A -Credit Non-Domestic Unit Rate 7.82 0.40
24 Combined Standard Tariff - Non-Domestic Standing Charge 5232 1408 1408
Credit
Combined Standard Tariff - Non-Domestic Primary Units 9.20 4.60
Credit
Combined Standard Tariff - Non-Domestic Secondary Units 7.82 2.70
Credit
25 Combined Standard Tariff - Non-Domestic Standing Charge 5100 400 400
Direct Debit
Combined Standard Tariff - Non-Domestic Primary Units 8.97 1.30
Direct Debit
Combined Standard Tariff - Non-Domestic Secondary Units 7.62 0.80
Direct Debit
26 Small Industrial Tariff - Credit Non-Domestic Standing Charge 5232 2700 2700
Small Industrial Tariff - Credit Non-Domestic Primary Units 9.20 5.90
Small Industrial Tariff - Credit Non-Domestic Secondary Units 7.82 4.60
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 104 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
27 Small Industrial Tariff -Direct Non-Domestic Standing Charge 5100 400 400
Debit
Small Industrial Tariff -Direct Non- Domestic Primary Units 8.97 0.70
Debit
Small Industrial Tariff -Direct Non-Domestic Secondary Units 7.62 0.60
Debit
28 Farm Economy 7 - Credit Non-Domestic Standing Charge 6368 1200 1200
Farm Economy 7 - Credit Non-Domestic Day Units 8.26 7.70
Farm Economy 7 - Credit Non-Domestic Night Units 2.91 4.70
29 Farm Economy 7 - Direct Debit Non-Domestic Standing Charge 6208 200 200
Farm Economy 7 - Direct Debit Non-Domestic Day Units 8.05 1.20
Farm Economy 7 - Direct Debit Non-Domestic Night Units 2.83 0.70
30 Commercial Day/Night Tariff- Non-Domestic Standing Charge 6368 112 112
Credit
Commercial Day/Night Tariff- Non-Domestic Primary Units 9.75 0.40
Credit
Commercial Day/Night Tariff- Non-Domestic Secondary Units 8.09 0.10
Credit
Commercial Day/Night Tariff- Non-Domestic Night Units 3.78 0.30
Credit
31 Commercial Day/Night Tariff- Non-Domestic Standing Charge 6208 15 15
Direct Debit
Commercial Day/Night Tariff- Non-Domestic Primary Units 9.51 0.10
Direct Debit
Commercial Day/Night Tariff- Non-Domestic Secondary Units 7.89 0.00
Direct Debit
Commercial Day/Night Tariff- Non-Domestic Night Units 3.69 0.00
Direct Debit
32 Commercial 17/7 Tariff - Credit Non-Domestic Standing Charge 6368 1800 1800
Commercial 17/7 Tariff - Credit Non-Domestic Primary Units 9.75 4.60
Commercial 17/7 Tariff - Credit Non-Domestic Secondary Units 7.95 1.50
Commercial 17/7 Tariff - Credit Non-Domestic Night Units 3.19 5.50
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 105 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
33 Commercial 17/7 Tariff - Direct Non-Domestic Standing Charge 6208 337 337
Debit
Commercial 17/7 Tariff - Direct Non-Domestic Primary Units 9.51 0.80
Debit
Commercial 17/7 Tariff - Direct Non-Domestic Secondary Units 7.75 0.10
Debit
Commercial 17/7 Tariff - Direct Non-Domestic Night Units 3.11 1.00
Debit
34 Industrial Day/Night Tariff - Non-Domestic Standing Charge 6368 37 37
Credit
Industrial Day/Night Tariff - Non-Domestic Primary Units 9.75 0.10
Credit
Industrial Day/Night Tariff - Non-Domestic Secondary Units 8.09 0.20
Credit
Industrial Day/Night Tariff - Non-Domestic Night Units 3.78 0.10
Credit
35 Industrial Day/Night Tariff - Non-Domestic Standing Charge 6208 0 0.00
Direct Debit
Industrial Day/Night Tariff - Non-Domestic Primary Units 9.51 0.00
Direct Debit
Industrial Day/Night Tariff - Non-Domestic Secondary Units 7.89 0.00
Direct Debit
Industrial Day/Night Tariff - Non-Domestic Night Units 3.69 0.00
Direct Debit
36 Industrial 17/7 Tariff - Credit Non-Domestic Standing Charge 6368 201 201
Industrial 17/7 Tariff - Credit Non-Domestic Primary Units 9.75 0.50
Industrial 17/7 Tariff - Credit Non-Domestic Secondary Units 7.95 0.10
Industrial 17/7 Tariff - Credit Non-Domestic Night Units 3.19 1.30
37 Industrial 17/7 Tariff - Direct Non-Domestic Standing Charge 6208 35 35
Debit
Industrial 17/7 Tariff - Direct Non-Domestic Primary Units 9.51 0.03
Debit
Industrial 17/7 Tariff - Direct Non-Domestic Secondary Units 7.75 0.27
Debit
Industrial 17/7 Tariff - Direct Non-Domestic Night Units 3.11 0.10
Debit
38 Industrial Unmetered Supplies Non-Domestic Day Units 9.75 0.39
39 Industrial Unmetered Supplies Non-Domestic Night Units 3.19 0.91
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 106 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
40 Commercial Evening/Weekend Non-Domestic Standing Charge 6368 1500 1500
Tariff-Credit
Commercial Evening/Weekend Non-Domestic Primary Units 13.32 2.50
Tariff-Credit
Commercial Evening/Weekend Non-Domestic Secondary Units 9.42 0.20
Tariff-Credit
Commercial Evening/Weekend Non-Domestic Night Units 4.57 4.90
Tariff-Credit
41 Commercial Evening/Weekend Non-Domestic Standing Charge 6208 525 525
Tariff - Direct Debit
Commercial Evening/Weekend Non-Domestic Primary Units 12.99 0.80
Tariff - Direct Debit
Commercial Evening/Weekend Non-Domestic Secondary Units 9.18 0.00
Tariff - Direct Debit
Commercial Evening/Weekend Non-Domestic Night Units 4.45 1.60
Tariff - Direct Debit
42 Industrial Evening/Weekend Non-Domestic Standing Charge 6368 72 72
Tariff - Credit
Industrial Evening/Weekend Non-Domestic Primary Units 13.32 0.08
Tariff - Credit
Industrial Evening/Weekend Non-Domestic Secondary Units 9.42 0.00
Tariff - Credit
Industrial Evening/Weekend Non-Domestic Night Units 4.57 0.10
Tariff - Credit
43 Industrial Evening/Weekend Non-Domestic Standing Charge 6208 2 2
Tariff - Direct Debit
Industrial Evening/Weekend Non-Domestic Primary Units 12.99 0.00
Tariff - Direct Debit
Industrial Evening/Weekend Non-Domestic Secondary Units 9.18 0.01
Tariff - Direct Debit
Industrial Evening/Weekend Non-Domestic Night Units 4.45 0.01
Tariff - Direct Debit
44 Farm Restricted Hours Tariff - Non-Domestic Unit Rate 4.19 0.70
Credit
45 Farm Restricted Hours Tariff - Non-Domestic Unit Rate 4.09 0.10
Direct Debit
46 Commercial Restricted Hours Non-Domestic Unit Rate 4.23 2.00
Tariff - Credit
47 Commercial Restricted Hours Non-Domestic Unit Rate 4.12 0.10
Tariff - Direct Debit
48 Industrial Restricted Hours Non-Domestic Unit Rate 3.52 0.20
Tariff - Credit
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 107 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
49 Industrial Restricted Hours Non-Domestic Unit Rate 3.44 0.00
Tariff - Direct Debit
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 108 April 1998
<PAGE>
SOUTH WESTERN ELECTRICITY PLC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic Tariff Domestic Standing Charge 3420 801437 801437
Unit Rate 7.26 2917.35
2 Keymeter Domestic Tariff Domestic Standing Charge 5020 147134 147134
Unit Rate 7.11 556.96
3 Economy 7 Domestic Standing Charge 4640 194900 194900
Day Units 7.79 596.06
Night Units 2.67 1045.74
4 Key Meter Economy 7 Domestic Standing Charge 6220 46812 46812
Day Units 7.63 155.65
Night Units 2.62 189.48
5 Domestic Night/Day (LA) Domestic Standing Charge 4640 2561 2561
Day Units 7.79 11.00
Night Units 3.47 10.10
6 3 Rate Heating Tariff Domestic Standing Charge 5040 164 164
Day Units 10.13 0.22
Weekend Units 5.44 0.27
Night Units 2.67 0.60
7 Domestic Seasonal Tariff Domestic Standing Charge 5040 104 104
Summer Units 4.21 0.26
Winter Units 11.72 0.07
Night Units 2.67 0.22
8 Off Peak (7hrs) Tariff (LA) Domestic Standing Charge 1220 19583 19583
Unit Rate 2.67 104.04
9 Off Peak Night Only Tariff Domestic Standing Charge 1220 2767 2767
(LA) Unit Rate 3.47 11.72
10 Off Peak (LA) Tariff Domestic Standing Charge 1220 22832 22832
A Unit Rate 4.03 112.24
'B(i)' Primary Units 4.28 0.14
'B(i)' Additional Units 3.47 0.01
'B(ii)' Primary Units 4.41 9.76
'B(ii)' Additional Units 4.03 0.74
11 Block Tariff Non-Domestic Standing Charge 3960 53893 53893
Primary Units 10.05 116.02
Additional Units 7.26 82.37
12 Key Meter Block Tariff Non-Domestic Standing Charge 5540 682 682
Primary Units 9.85 0.52
Additional Units 7.11 1.12
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 109 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
13 Economy 7 Block Tariff Non-Domestic Standing Charge 5180 5658 56585
Primary Day Units 10.58 12.46
Additional Day Units 7.79 4.50
Night Units 2.67 17.88
14 Key Meter E7 Block Tariff Non-Domestic Standing Charge 6740 57 57
Primary Units 10.37 0.07
Additional Day Units 7.63 0.03
Night Units 2.62 0.01
15 Non-Domestic Seasonal Non-Domestic Standing Charge 5580 240 240
Primary Summer Units 7.00 0.10
Additional Summer 4.21 0.60
Units
Primary Winter Units 14.31 0.10
Additional Winter Units 11.72 0.10
Night Units 2.67 0.20
16 Economy 7 Day & Night Non-Domestic Standing Charge 5580 234 234
Day Units 11.32 0.44
Weekend Units 5.28 0.56
Night Units 2.67 0.36
17 Day & Night Tariff (LA) Non-Domestic Standing Charge 5180 1040 1040
Day Units 11.32 0.87
Night Units 4.82 1.59
18 Flat Rate (LA) Non-Domestic Rate 1 19.6 0.60
Rate 2 7.26 6.80
Primary Rate 3 9.22 0.10
Additional Rate 3 8.39 0.27
19 Farm Tariff Non-Domestic Standing Charge 5280 6930 6930
Units Rate 7.26 15.95
20 Economy 7 Farm Tariff Non-Domestic Standing Charge 6500 1778 1778
Day Units 7.79 5.47
Night Units 2.67 5.77
21 Farm Day/Night Tariff (LA) Non-Domestic Standing Charge 6500 31 31
Day Units 7.79 0.10
Night Units 3.47 0.08
22 Off Peak (7 Hrs.) Tariff Non-Domestic Standing Charge 1220 1358 1358
Units 2.67 4.84
23 Off Peak Night Only Tariff Non-Domestic Standing Charge 1220 355 355
Units 3.47 0.56
24 Off Peak (LA) Non-Domestic Standing Charge 1220 702 702
A Units 4.03 2.58
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 110 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
25 Direct Debit Discount Domestic Discount -787 317743 317743
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 111 April 1998
<PAGE>
YORKSHIRE ELECTRICITY PLC
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description of Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Domestic UR Domestic Standing Charge 4000 1702844 1702844
Unit Charge 6.19 5774.61
2 Economy 7 Domestic Standing Charge 5200 162799 162799
Day Units 6.56 516.67
Night Units 2.49 798.21
3 Domestic Off Peak Domestic Standing Charge 1200 34147 34147
Units 3.82 146.53
4 Prepayment Domestic Standing Charge 2360 248125 248125
5 Prompt Payment Standing Charge 0 361700 361700
Discount
6 Automated Payment Domestic Standing Charge -1200 533512 533512
Discount
7 General Quarterly Non-Domestic Standing Charge 5200 60745 60745
1st 1000 Units 6.96 157.60
Excess Units 6.37 89.77
8 Economy 7 Quarterly Non-Domestic Standing Charge 6400 6076 6076
Night Units 2.49 16.71
First 1000 Day Units 7.33 15.34
Excess Day Units 6.74 5.10
9 Weekend/Evening Quarterly Non-Domestic Standing Charge 6400 1224 1224
WE Units 3.60 3.20
First 1000 Units 9.31 1.94
Excess Units 8.72 0.16
10 Weekend/Evening E7 Quarterly Non-Domestic Standing Charge 7200 939 939
Nights Units 2.49 1.40
WE7 Units 3.60 2.17
First 1000 Units 9.31 1.93
Excess Units 8.72 0.10
11 Farm Off Peak Non-Domestic Standing Charge 1200 509 509
Units 4.32 4.57
12 Commercial 2 Rate Tar Non-Domestic Units 3.48 0.78
13 Commercial Off Peak Non-Domestic Standing Charge 1200 1428 1428
Units 3.64 7.01
14 Industrial Off Peak Non-Domestic Standing Charge 1200 89 89
Units 4.05 0.50
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 112 April 1998
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Number Description Tariff Category Component Price PO Quantity NC
(Unit Rate QO (Unit
in pence rate in GWb)
per
kWh)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
15 Prompt Payment Standing Charge 0.00 32132 32132
Discount
16 Automated Payment Automated Standing Charge -1296.2 15430 15430
Payment Discount
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manweb 113 April 1998
<PAGE>
Condition 3C. [No longer used]
- ------------------------------
Manweb 114 April 1998
<PAGE>
Condition 3D. Restriction of distribution charges and of supply charges:
- ------------------------------------------------------------------------
adjustments
- -----------
1. If, in respect of any relevant year, the average charge per unit
distributed exceeds the maximum average charge per unit distributed by more
than 3 per cent, the Licensee shall furnish an explanation to the Director
and in the next following relevant year the Licensee shall not effect any
increase in charges unless it has demonstrated to the reasonable
satisfaction of the Director that the average charge per unit distributed
would not be likely to exceed the maximum charge per unit distributed in
that next following relevant year.
2. If, in respect of any two successive relevant years, the sum of the amounts
by which the average charge per unit distributed has exceeded the maximum
average charge per unit distributed is more than 4 per cent, then in the
next following relevant year the Licensee shall, if required by the
Director, adjust its charges such that the average charge per unit
distributed would not be likely, in the judgment of the Director, to exceed
the maximum average charge per unit in that next following relevant year.
3. If, in respect of two successive relevant years, the average charge per
unit distributed is less than 90 per cent of the maximum average charge per
unit distributed, the Director, after consultation with the Licensee, may
direct that in calculating K(dt) for the purposes of paragraph 1 of
Condition 3A in respect of the next following relevant year, there shall be
substituted for R(dt-1) in the formula at paragraph 1 of Condition 3A such
figure as the Director may specify being not less than R(dt-1) and not more
than 0.90 (Dt-1.M(dt-1)).
4.1 If, in respect of the eighth relevant year, the average charge per
regulated unit supplied exceeds the maximum average charge per regulated
unit supplied, but by not more than 1 1/2 per cent, the Licensee shall
ensure that the excess above the maximum average charge per regulated unit
supplied, with interest thereon at a rate 2 per cent above the average
specified rate, shall be paid to all 0.1 MW customers who continue to be
supplied by the Licensee in the ninth relevant year.
Manweb 115 April 1998
<PAGE>
4.2 If, in respect of the eighth relevant year, the average charge per
regulated unit supplied exceeds the maximum average charge per regulated
unit supplied by more than 1 1/2 per cent, the Licensee shall use all
reasonable endeavours to return the excess above the maximum average charge
per unit supplied, with interest theron at a rate 4 per cent above the
average specified rate, during the ninth relevant year to all 0.1 MW
customers supplied by the Licensee in the eighth relevant year.
4.3 For the purpose of Condition 3B, no sum payable under paragraphs 4.1 or 4.2
shall be regarded as paid or payable under a tariff applicable to the ninth
relevant year or any subsequent relevant year.
5. No later than three months after the end of the eighth relevant year, the
Licensee shall send to the Director a statement accompanied by such
forecasts, estimates and calculations as may be necessary, showing the
basis by which the Licensee intends to comply with paragraph 4.
6. The powers exercisable under paragraphs F6 and F8 of Part F of Schedule 3
in the form of licence in force on 31 March 1998 shall continue to be
exercisable after that date, but only in respect of a relevant year ending
before 1 April 1998.
Manweb 116 April 1998
<PAGE>
Condition 3E. Information to be provided to the Director in connection with the
- -------------------------------------------------------------------------------
charge restriction conditions
- -----------------------------
1. Where the Licensee is intending to make any change in charges for the
provision of distribution services regulated under Condition 3A the
Licensee shall (unless otherwise agreed by the Director) not later than the
date of publication of such charges provide the Director with:
(a) written forecast of the maximum average charge per unit distributed,
together with its components, in respect of the relevant year t in
which such a change is to take effect and in respect of the next
following relevant year t+1; and
(b) a written estimate of the maximum average charge per unit distributed,
together with its components, in respect of the relevant year t-1
immediately preceding the relevant year in which the change is to take
effect unless a statement complying with paragraph 7 in respect of
relevant year t-1 has been furnished to the Director before the
publication of the proposed change.
2. Where, at any time during the eighth relevant year, the Licensee intends to
change the principles of attribution or any provisional attribution
specified in a statement already made to the Director or to purchase or
sell an electricity sale contract, the change or the provisional
attribution in relation to the purchase or sale shall be specified in a
written statement signed by a person authorised to sign the statement by
the directors of the Licensee which statement shall not provide for a
retrospective change of principles or for any re-attribution of payments
already made or any payment where the event giving rise to that payment has
already occurred.
3. If within three months of the commencement of any relevant year t the
Licensee has not made any such change in charges as is referred to in
paragraph 1, the Licensee shall provide the Director with a written
forecast of the maximum average charge per unit distributed, together with
its components, in respect of the relevant year t.
Manweb 117 April 1998
<PAGE>
4. The Director may issue directions providing that any forecast or estimate
provided in accordance with paragraphs 1, 2 or 3 shall be accompanied by
such information as regards the assumptions underlying the forecast or
estimate as may be necessary to enable the Director to be satisfied that
the forecast or estimate has been properly prepared on a consistent basis.
5. Subject as provided in sub-paragraph (b) below, not later than six weeks
after the commencement of each relevant year t, the Licensee shall send to
the Director a statement as to:
(a) whether or not the provisions of Condition 3D are likely to be
applicable in consequence of the average charge per unit distributed
in the preceding relevant year t-1 or the two preceding relevant years
t-1 and t-2; and
(b) its best estimate as to the relevant correction factor K(dt) to be
applied in calculating the maximum average charge per unit distributed
in respect of the relevant year t.
1. Not later than 15 January in the ninth and tenth relevant years the
Licensee shall send to the Director a written estimate of the value of the
term TA for that year (TA(dt)), together with an estimate of the value of
each of its component parts, as detailed in paragraph 4 of Condition 3A.
2. Not later than three months after the end of a relevant year the Licensee
shall send the Director a statement, in respect of that relevant year,
showing the specified items referred to in paragraph 9.
3. The statement referred to in the preceding paragraph shall be:
(a) accompanied by a report from the Auditors that in their opinion (i)
such statement fairly presents each of the specified items referred to
in paragraph 9 in accordance with the requirements of the charge
restriction conditions and (ii)
Manweb 118 April 1998
<PAGE>
the amounts shown in respect of each of those specified items are in
accordance with the Licensee's accounting records which have been
maintained in respect of each of the relevant Separate Businesses in
accordance with condition 2; and
(b) certified by a director of the Licensee on behalf of the Licensee that
to the best of his knowledge, information and belief having made all
reasonable enquiries:
(i) there is no amount included in its calculations under Condition
3A and Schedule 3 which represents other than:
(a) bona fide consideration for the provision of distribution
services in the course of its Distribution Business; or
(b) an amount permitted under the charge restriction conditions
to be so included;
(xxvii)(in respect of the eight relevant year only) there is no amount
included in its calculations under Condition 3B and Schedule 3
(in each case in the form of licence in force on 31 March 1998)
which represents other than:
(b) bona fide consideration for electricity supplied to
regulated customers (as defined in the form of licence in
force on 31 March 1998); or
(c) an amount permitted under the charge restriciton conditions
to be so included;
(xxvii)there is no amount included in its calculations of allowed
security costs under Condition 3F which represents other than an
amount permitted under the charge restriction conditions to be
so included;
Manweb 119 April 1998
<PAGE>
(xxviii)no service has been treated as an excluded service which was
not properly so treated and no amount included in the revenues
in respect thereof represents other than bona fide consideration
for the provision of the excluded service to which it relates,
(xxix)all amounts which should properly be taken into account for the
purposes of the charge restriction conditions have been taken
into account; and
(xxx)(in respect of the eighth relevant year only) there is no amount
included in its calculations under Condition 3B and Schedule 3
in respect of electricity purchase or sale costs which does not
result from an attribution or method of attribution contained in
the statement under either paragraph 2(a) or paragraph 2(b) in
the form of licence in force on 31 March 1998.
9. The specified items to be contained in the statement referred to in
paragraph 7 shall be the following:
(a) the regulated quantity distributed;
(b) the quantity distributed in each regulated distribution unit category;
(c) the average charge per unit distributed;
(d) the amount in respect of the Terms AL(t), and L(t), in paragraph 3 of
Condition 3A calculated as therein provided;
(e) the value of the term TA(dt), together with the value of each of its
component parts, as detailed in paragraph 4 of Condition 3A;
(f) the information referred to at paragraph 8 of Condition 3F;
Manweb 120 April 1998
<PAGE>
(g) the statements and information referred to in paragraph A6, B2, C8, D1
and E10 of Schedule 3; and
(h) in respect of the eighth relevant year only, the statements and
information referred to in paragraph F7 of Schedule 3 of the Licence
in the form in force on 31 March 1997;
Provided that the statement to be provided in the ninth relevant year in
respect of the immediately preceding relevant year shall contain the
information required by paragraph 10 of Condition 3E of the Licence in the
form in force on 31 March 1998.
10. Where the Director issues directions in accordance with paragraph 9 of
Condition 3F or paragraphs A7, B3, C9, D5 or E11 of Schedule 3 then such
directions shall not have effect from a date earlier than the commencement
of the relevant year to which the statement last furnished to the Director
pursuant to paragraph 7 prior to the issue of the directions related,
unless such statement (or the accompanying report or certificate under
paragraph 8) or any statement, report or certificate in respect of an
earlier relevant year was incorrect or was misleading in any material
respect.
11. Where the Director issues such directions as are referred to in the
preceding paragraph the Director may require the Licensee to provide a
revised statement in respect of such of the specified items as may be
affected by the directions, and the Licensee shall comply with such
request.
Manweb 121 April 1998
<PAGE>
Condition 3F. Allowance in respect of security costs
1. At any time during a security period, the Licensee may give notice in
writing to the Director suspending, with effect from the date of receipt of
the notice by the Director, application of such of the charge restriction
conditions as may be specified in the notice for the unexpired term of the
security period.
2. At any time during a security period, the Director may (having regard to
his duties under the Act) by means of directions:
(a) suspend or modify for the unexpired term of the security period the
charge restriction conditions or any part or parts thereof; or
(b) introduce for the unexpired term of the security period new charge
restriction conditions
in either case, so as to make such provision as in the opinion or
estimation of the Director is requisite or appropriate:
(i) to enable the Licensee to recover by means of increased charges
an amount estimated as being equal to the Licensee's allowed
security costs during such period;
(ii) to ensure that such part of the amount referred to in
sub-paragraph (i) above as is estimated as being equal to the
allowed security costs incurred by the Licensee as costs in its
Distribution Business are recovered by means of appropriate
equitable increases on the charges made by the Licensee in its
Distribution Business; and
(iii) to ensure that such part of the amount referred to in
sub-paragraph (i) above as is estimated as being equal to the
allowed security costs incurred by the Licensee as costs in its
Supply Business and its Second-Tier Supply
Manweb 122 April 1998
<PAGE>
Business respectively are recovered by appropriate equitable
increases in the charges made by the Licensee in those
Businesses.
and the Licensee shall comply with the terms of any directions so issued.
3. At any time following a security period, the Director may (following such
consultation with the Licensee and others as the Director may consider
appropriate) issue directions suspending or modifying the charge
restriction conditions or any part or parts thereof or replacing such
directions as may have been made during the security period and introducing
such new charge restriction conditions as in the opinion of the Director
are appropriate in all the circumstances (including at the Director's
discretion an appropriate adjustment having regard to any profit gained or
foregone by the Licensee during the security period), and the Licensee
shall comply with any directions so issued.
4. At any time within three months after the issue of directions by the
Director under paragraph 3, the Licensee may serve on the Director a
disapplication request in respect of such of the charge restriction
conditions or any part or parts thereof as are specified in the request.
5. If within three months of the receipt by the Director of the disapplication
request referred to in paragraph 4, the Director has either not agreed in
writing to such disapplication request or has not made a reference to the
Monopolies Commission under Section 12 of the Act relating to the
modification of the charge restriction conditions, the Licensee may deliver
one month's written notice to the Director terminating the application of
the charge restriction conditions (or any part or parts thereof) as were
specified in the disapplication request.
6. Subject to paragraphs 7 and 9, the Licensee shall in any relevant year be
entitled to recover an aggregate amount equal to its allowed security costs
in that year or (insofar as not previously recovered) any previous year, by
means of appropriate equitable increases on the charges made by the
Licensee in each of its Distribution, Supply and Second-Tier Supply
Businesses.
Manweb 123 April 1998
<PAGE>
7. Paragraph 6 shall not apply in so far as such allowed security costs:
(a) were otherwise recovered by the Licensee; or
(b) were taken into account by the Director in setting charge restriction
conditions by means of directions issued under paragraph 3 above.
8. The Licensee shall following the end of each relevant year provide to the
Director, as being one of the specified items to be contained in the
statement referred to at paragraph 8 of Condition 3E, details in respect of
that relevant year of:
(a) the amount of the Licensee's allowed security costs; and
(b) the aggregate amounts charged under paragraph 6 on account of the
Licensee's allowed security costs; and
(c) the bases and calculations underlying the increases in charges made by
the Licensee in its Distribution, Supply and Second-Tier Supply
Businesses under paragraph 6.
9. Where the Director is satisfied that the Licensee has recovered amounts in
excess of the allowed security costs, the Director may issue directions
requiring the Licensee to take such steps as may be specified to reimburse
customers of or purchasers from the Distribution, Supply and Second-Tier
Supply Business (as the case may be) for the excess amounts charged to
them, and the Licensee shall comply with any directions so issued provided
that if the excess amounts relate to allowed security costs paid to any
authorised electricity operator, the Licensee shall not be obliged to make
any such reimbursement unless and until it has recovered such costs from
the relevant authorised electricity operator.
10. No amounts charged by the Licensee under this Condition (whether or not
subsequently required to be reimbursed) shall be taken into account for the
purpose of applying the charge restriction provisions of Conditions 3A and
3B.
Manweb 124 April 1998
<PAGE>
11. In this Condition:
"allowed security cost" shall have the meaning ascribed to that term in the
Fuel Security Code.
"security period" means a period commencing on the date on which any
direction issued by the Secretary of State under
Section 34(4)(b) of the Act enters effect and
terminating on the date (being not earlier than the
date such direction, as varied, is revoked or expires)
as the Director, after consultation with such
persons (including without limitation, licence holders
liable to be principally affected) as he shall
consider appropriate, may with the consent of the
Secretary of State by notice to all licence holders
determine after having regard to the views of such
persons.
Manweb 125 April 1998
<PAGE>
Condition 3G. Duration of charge restriction conditions
1. The charge restriction conditions shall apply so long as this licence
continues in force but shall cease to have effect (in whole or in part, as
the case may be) if the Licensee delivers to the Director a disapplication
request made in accordance with paragraph 2 and:
(a) the Director agrees in writing to the disapplication request; or
(b) their application (in whole or in part) is terminated by notice given
by the Licensee in accordance with either paragraph 4 or paragraph 5.
2. A disapplication request pursuant to this Condition 3G shall (a) be in
writing addressed to the Director, (b) specify the charge restriction
conditions (or any part or parts thereof) to which the request relates and
(c) state the date from which the Licensee wishes the Director to agree
that the specified charge restriction conditions shall cease to have
effect.
3. Save where the Director otherwise agrees, no disapplication following
delivery of a disapplication request pursuant to this Condition 3G shall
have effect earlier than that date which is the later of:
(a) a date being not less than 18 months after delivery of the
disapplication request; and either
(b) in the case of distribution charges regulated under Condition 3A,
31st March 2000; or
(c) in the case of supply charges regulated under Condition 3B, 31st
March 2000.
4. If the Director has not made a reference to the Monopolies Commission under
Section 12 of the Act relating to the modification of the charge
restriction conditions before the beginning of the period of 12 months
which will end with the disapplication date, the Licensee may deliver
written notice to the Director terminating the application of such of
Manweb 126 April 1998
<PAGE>
the charge restriction conditions (or any part or parts thereof) as are
specified in the disapplication request with effect from the disapplication
date or a later date.
5. If the Monopolies Commission makes a report on a reference made by the
Director relating to the modification of the charge restriction conditions
(or any part or parts thereof) specified in the disapplication request and
such report does not include a conclusion that the cessation of such charge
restriction conditions, in whole or in part, operates or may be expected
to operate against the public interest, the Licensee may within 30 days
after the publication of the report by the Director in accordance with
Section 13 of the Act deliver to him written notice terminating the
application of such charge restriction conditions with effect from the
disapplication date or later.
6. A disapplication request or notice served under this Condition may be
served in respect of a specific geographic area.
Manweb 127 April 1998
<PAGE>
Condition 4. Prohibition of cross-subsidies and of discrimination in electricity
sale contracts
1. The Licensee shall procure that no Separate Business gives any cross-
subsidy to, or receives any cross-subsidy from, any other business of the
Licensee or an affiliate or related undertaking of the Licensee or any
other member of the ScottishPower Group (whether or not a Separate
Business).
2. The Licensee shall not, and shall procure that any affiliate or related
undertaking of the Licensee shall not, sell or offer to sell electricity
under any electricity sale contract to any one relevant purchaser or person
seeking to become a relevant purchaser on terms as to price which are
materially more or less favourable than those on which it sells or offers
to sell electricity under any electricity sale contract to comparable
relevant purchasers. For these purposes, due regard shall be had to the
circumstances of sale to such purchasers including (without limitation)
volumes, load factors, conditions of interruptibility and the dates and
duration of the relevant agreements.
3. For the purposes of paragraph 2:
"relevant purchaser" means any purchaser of electricity from
the Licensee or any affiliate or related
undertaking of the Licensee under an
electricity purchase contract.
Manweb 128 April 1998
<PAGE>
Condition 4A. Prohibition of discrimination in supply
1. This Condition applies where the Licensee is in a dominant position in a
market for the supply of electricity to customers at premises.
2. Where this Condition applies the Licensee shall not supply or offer to
supply electricity to customers in any market in which it is dominant on
terms which are predatory.
3. Where this Condition applies, but subject to paragraph 4, the Licensee
(taken together with its affiliates and related undertakings) shall not, in
supplying or offering terms for the supply of electricity to customers in
any market in which it is dominant:
(a) show undue preference to any person (or class of persons) within such
market;
(b) exercise undue discrimination between any persons (or classes of
person) within such market; or
(c) set terms which are unduly onerous.
4. Nothing in paragraph 3 shall prohibit the Licensee, within any area or
class of customers (the "relevant area or class") in respect of which
there is established competition in the supply of electricity, from
supplying or offering to supply electricity on terms which are reasonably
necessary to meet that competition, save that the Licensee (taken together
with its affiliates and related undertakings) shall not, in supplying or
offering terms for the supply of electricity:
(a) show undue preference to any person (or class of persons) or exercise
undue discrimination between any persons (or classes of person) within
the relevant area or class of customers; or
Manweb 129 April 1998
<PAGE>
(b) set terms in respect of any person (or class of persons) in a market
in which the Licensee is dominant, save such persons who are within
the relevant area or class of customers, which are unduly onerous.
5. For the purposes of this Condition, terms are unduly onerous if the revenue
from the supply of electricity to customers on those terms:
(a) significantly exceeds the costs of that supply; and
(b) exceeds such costs to a significantly greater degree than the revenue
from supply to all other customers of the Licensee (and of its
affiliates and related undertakings) within the same market exceeds
the costs of supply to those customers.
6. For the purposes of this Condition, a market may be defined by reference to
a geographical area, or to a class of customer or both, save that no market
defined by reference to Designated Customers shall comprise fewer than
50,000 such customers.
7. In determining, for the purposes of this Condition, whether any persons
constitute a class of person, due regard shall be had to the circumstances
of supply to such persons including (without limitation) volumes, load
factors, conditions of interruptibility, location of premises being
supplied and date and duration of the supply contract.
8. For the purposes of this Condition, the Director shall determine any
question as to:
(a) whether any area or class of customers constitutes a market for the
supply of electricity;
(b) whether the Licensee is dominant in any market for the supply of
electricity;
(c) whether there is established competition in respect of the supply of
electricity in any area or to any class of customers; and
Manweb 130 April 1998
<PAGE>
(d) whether any terms are predatory, having due regard to whether such
terms:
(i) incorporate charges which do not reasonably cover the avoidable
costs incurred in consequence of supplying the customers in
question; and
(ii) are intended or are likely to restrict, distort or prevent
competition in the supply of electricity.
9. The Director may determine that the Licensee is dominant in a specified
market:
(a) at any time prior to this Condition coming into force; or
(b) having first consulted with the Licensee and such other persons as he
considers appropriate (and having taken into account any
representations made to him), at any time after this Condition has
come into force.
and where the Director does make such a determination he shall immediately
notify the Licensee.
10. Where the Director has notified the Licensee of his determination in
accordance with paragraph 9 that it is dominant in a specified market, the
provisions of paragraphs 11 to 16 shall apply in respect of that market.
11. Where this paragraph applies the Licensee shall, prior to supplying or
offering to supply electricity under a tariff or Designated Supply Contract
on any new terms, give to the Director at least 28 days' notice in writing
of its intention to supply on such terms.
12. For the purposes of this Condition, a tariff or Designated Supply Contract
is on "new terms" if:
Manweb 131 April 1998
<PAGE>
(a) it is a form of tariff or Designated Supply Contract under which the
Licensee has not previously supplied or offered to supply electricity;
(b) it is a tariff or Designated Supply Contract in respect of which the
Licensee is varying the terms as to price; or
(c) it is a tariff or Designated Supply Contract in respect of which the
Licensee is varying any other terms in such a manner as to
significantly affect the evaluation of that tariff or contract.
13. Where the Licensee has given notice to the Director of its intention to
supply on new terms it shall not supply or offer to supply electricity on
such terms until either the period of notice given to the Director has
expired and:
(a) the Director has not given or sent to the Licensee a counter-notice
(the "counter-notice") in accordance with paragraph 14; or
(b) prior to the expiry of such period, the Director has informed the
Licensee that he will not issue a counter-notice in respect of such
terms.
14. The Director may issue a counter-notice where, having considered the new
terms and having had regard to the likely effects of issuing such counter-
notice (including, but not limited to, the likely effect upon the business
of the Licensee), he determines that further consideration is required to
assess whether such terms are in breach of the provisions of this
Condition.
15. Where the Director issues a counter notice in respect of any new terms the
Licensee shall not supply or offer to supply electricity on such terms
until either:
(a) a period of 3 months from the date of the counter-notice has expired;
or
132 April 1998
Manweb
<PAGE>
(b) prior to the expiry of such period, the Director indicates to the
Licensee that he has no present intention of taking enforcement action
under Section 25 of the Act in respect of such terms.
16. Where the Director issues a counter-notice he may:
(a) give or send a copy of that counter-notice to any Interested Person;
(b) invite representations from Interested Persons as to the matters to
which the counter-notice relates; and
(c) require the Licensee, within a reasonable period determined by the
Director, to provide him with such further information relating to the
new terms as he may specify (save that he may not virtue of this
paragraph require the Licensee to furnish him with information for the
purpose of exercising his functions under Section 48 of the Act),
and the Director shall take into account any representations made to him by
the Licensee in respect of such terms.
17. The Director may, at any time after notifying the Licensee of his
determination in accordance with paragraph 9 that it is dominant in a
specified market, determine that the Licensee is no longer dominant in that
market, and where he does make such a determination:
(a) the Director shall immediately notify the Licensee; and
(b) the provisions of paragraphs 11 to 16 shall cease to apply in respect
of the specific market.
Manweb 133 April 1998
<PAGE>
18. For the purposes of this Condition, any reference to the Licensee being
dominant in a market for the supply of electricity shall be treated as a
reference to the Licensee, taken together with its affiliates and related
undertakings, being so dominant.
19. In this Condition:
"Interest Persons" means all Electricity Suppliers which supply
electricity within the market or area or to
the class of customers in question, the
Relevant Consumers' Committee and such other
persons or bodies as in the opinion of the
Director have a legitimate interest in the
terms on which the Licensee supplies
electricity.
"terms" means all the terms on which a supply of
electricity is offered or provided which
significantly affect the evaluation of that
supply, and shall include all terms as to
price
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Condition 4B. Duration of discrimination conditions
1. Condition 4A shall cease to have effect (in whole or in part, as the case
may be) if the Licensee makes a disapplication request in accordance with
this Condition and:
(a) the Director agrees in writing to that request; or
(b) the application of Condition 4A (in whole or in part) is terminated by
notice given by the Licensee in accordance with paragraph 4 or 5 of
this Condition.
2. A disapplication request pursuant to this Condition may be made by the
Licensee only where the Director has notified it, in accordance with
paragraph 9 of Condition 4A, of his determination that the Licensee is
dominant in a specified market, and any such request shall:
(a) be made in writing to the Director;
(b) specify whether the request relates to the whole of Condition 4A or
any part or parts thereof; and
(c) state the date (the "disapplication date") from which the Licensee
wishes the specified provisions of Condition 4A to cease to have
effect, which date shall be in accordance with paragraph 3 and not
earlier than 12 months after the date on which the request is made.
3. Where the Licensee was notified by the Director prior to this Condition
coming into force of his determination that the Licensee is dominant in a
specified market, no disapplication request made by the Licensee shall be
effective to disapply any of the provisions of Condition 4A prior to 31
March 2000.
4. If the Director has not by the date which is 6 months prior to the
disapplication date made a reference to the Monopolies Commission (under
Section 12 of the Act)
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relating to the modification of Condition 4A, the Licensee may give to the
Director a notice in writing terminating the application of such of the
provisions of Condition 4A as are specified in the disapplication request
with effect from the disapplication date or from any later date specified
in the notice.
5. If the Monopolies Commission reports on a reference made by the Director
relating to the modification of Condition 4A and does not conclude that the
disapplication of any of the provisions of that Condition (being provisions
specified in the disapplication request) would or may be expected to
operate against the public interest, the Licensee may within 30 days of the
publication of the report under Section 13 of the Act give to the Director
notice in writing terminating the application of such provisions with
effect from the disapplication date or any later date specified in the
notice.
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Condition 5. Obligation on economic purchasing
1. Subject to paragraph 6, the provisions of paragraph 2 shall apply
separately in relation to purchases of electricity from the following
sources:
(a) qualifying renewable generation;
(b) qualifying non-fossil generation; and
(c) generation from any source other than as referred to in sub-paragraphs
(a) and (b) above.
2. In respect of each category referred to in paragraph 1 above, and subject
to paragraph 4 below, the Licensee shall:
(a) itself purchase;
(b) procure any affiliate of the Licensee (other than any member of the
ScottishPower Group) to purchase; and
(c) in so far as it is able through the exercise of voting rights or
otherwise to do so, procure any related undertaking of the Licensee or
any defined undertaking to purchase
electricity at the best effective price reasonably obtainable having regard
to the sources available.
3. In determining the effective price at which electricity is purchased by the
Licensee or any affiliate or related undertaking of the Licensee or any
defined undertaking, regard shall be had to any payments made or received
or to be made or received for the grant of or pursuant to any electricity
purchase contract.
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4. In the discharge of its obligations under paragraph 2 above, the Licensee
may additionally have regard to any considerations liable to affect its
ability and that of any affiliate of the Licensee to discharge its
obligations under this Condition in the future, including the future
security, reliability and diversity of sources of electricity available for
purchase.
5. In this Condition (and subject to paragraph 6) references to qualifying
renewable generation and to qualifying non-fossil generation shall refer to
generation from capacity of that description which:
(a) has been contracted by the Licensee or any defined undertaking under
an arrangement certified by the Secretary of State under Section 32(7)
of the Act which was entered into prior to the date this License
enters force; or
(b) is available to be contracted under arrangements to be produced to the
Director in satisfaction of an obligation imposed on the Licensee by
Order made under Section 32 of the Act after this License enters
force.
6. Notwithstanding that generation may previously have been contracted as
being qualifying renewable generation or qualifying non-fossil generation
(as the case may be), it shall cease to be so treated to the extent that:
(a) the Licensee (or any affiliate or related undertaking of the Licensee
or any defined undertaking) enjoys contractual freedom to vary or
discontinue its obligation to purchase such generation; and
(b) capacity from which qualifying renewable or non-fossil generation (as
the case may be) is otherwise contracted by the Licensee or any
affiliate or related undertaking of the Licensee or any defined
undertaking is equal to or exceeds the aggregate capacity specified in
any Orders previously made under Section 32 of the Act and continuing
in force, as being required to be available to the Licensee at that
time or in respect of any future period covered by such Orders.
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7. Paragraphs 2, 3 and 4 of this Condition shall apply mutatis mutandis where
the Licensee exercises a discretion or (by agreement or otherwise) varies
the terms of an existing contract (whether or not entered into prior to the
date of entry into force of this Licence) in such a manner as to alter the
effective price under such contract.
8. In this Condition:
"defined undertaking" means Non-Fossil Purchasing Agency
Limited or other entity through which
the Licensee enters into qualifying
arrangements within the meaning of
Section 33 of the Act.
"purchase" includes the acquisition of electricity
from sources falling to be treated as
own-generation for the purpose of
Condition 6, and the purchase of
electricity under electricity purchase
contracts.
"qualifying non-fossil shall include generation from renewable
generation" sources which for the time being has not
been contracted as being qualifying
renewable generation.
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Condition 6. Restriction on own generation capacity
1. The Licensee shall procure that, with effect from the transfer date, the
Generation Business of the Licensee is held as a Separate Business by or
through a wholly-owned subsidiary of the Licensee.
2. Save with the prior written consent of the Director or in the circumstances
described in paragraph 3 below, the Licensee shall at all times ensure that
the sum of the amounts in megawatts (calculated as provided under
paragraphs 4 and 5 below) represented by the declared net capacity of the
Licensee's own-generation sets and the appropriate share of the declared
net capacity of generation sets in which the Licensee has an accountable
interest shall not exceed 550 megawatts.
3. Where the Licensee is in breach of paragraph 2 by reason of the acquisition
of own-generation sets or an accountable interest in other generation sets
in consequence of the occurrence of a specified event affecting the
operator or any third party, the Licensee shall forthwith notify the
Director for the purpose of obtaining such consent as is specified in
paragraph 2.
4. For the purposes of calculating the limit under paragraph 2 and subject to
paragraph 5, there shall be attributed to the Licensee:
(a) the whole of the declared net capacity represented by own-generation
sets; and
(b) the appropriate share (namely the share representing the Licensee's
economic interest therein) of the declared net capacity of generation
sets in which it has an accountable interest, ascertained in such
manner as the Licensee with the approval of the Director may
determine.
5. Where the Director is satisfied that by virtue of the Licensee's economic
interest (ascertained in such manner as the Director may determine)
therein:
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(a) generation sets in which the Licensee has only an accountable interest
should more properly be treated as own-generation sets; or
(b) own-generation sets should more properly be treated as sets in which
the Licensee only has an accountable interest; or
(c) own-generation sets, or generation sets in which the Licensee has an
accountable interest, should not be treated as falling in either
category; or
(d) generation sets not declared as sets in which the Licensee has an
accountable interest, should be treated as generation sets in which
the Licensee has an accountable interest
the Director may issue directions to the effect.
6. For the purpose of this Condition and subject to paragraphs 5 and 9, the
Licensee shall have an accountable interest in a generation set in
circumstances where (such generation set not being an own-generation set of
the Licensee):
(a) the operator is related undertaking of the Licensee or any affiliate
of the Licensee; or
(b) the Licensee or any affiliate of the Licensee is in partnership with
or is party to any arrangement for sharing profits or cost-savings or
any joint venture with the operator or with any third party with
regard to the operator; or
(c) the Licensee or any affiliate of the Licensee has (directly or
indirectly):
(i) any beneficial shareholding interest in the operator; or
(ii) any beneficial underlying interest in the generation set; or
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(iii) provided or agreed to provide finance to the operator otherwise
than on arm's length terms; or
(iv) provided or agreed to provide, or has determined or is
responsible for determining the price (or other terms affecting
the financial value) of, the fuel used in the generation sets
and is entitled under a contract of no less than 5 years' duration:
(aa) to a share of the declared net capacity of the generation
set; or
(bb) to a share of the declared net capacity of a generation set
being the own-generation set of another Authorised
Electricity Operator or in which such Authorised Electricity
Operator has an accountable interest, under arrangements for
the exchange of capacity entitlement or supplies of
electricity representing such entitlement between the
Licensee or its affiliate and such Authorised Electricity
Operator.
7. Paragraph 6 shall be applied in relation to the calculation of an
accountable interest in generation sets of any other Authorised Electricity
Operator as if the references therein to the Licensee were replaced by
references to such Authorised Electricity Operator.
8. References in paragraph 6 to contracts giving entitlements to a share of
declared net capacity shall include electricity sale or purchase contracts
where rights under such contract are exercisable by reference to an
identified generation set or to amounts generated at such set.
9. The Licensee shall not be deemed to have an accountable interest in a
generation set where:
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(a) such generation set is owned and operated by the National Grid Company
plc or a wholly-owned subsidiary thereof under a licence granted
pursuant to Section 6 of the Act; or
(b) the Licensee's interest arises wholly under the terms of the Pooling
and Settlement Agreement or (other than as provided in paragraph 8)
under any electricity purchase or sale contract; or
(c) the Licensee's interest arises solely by virtue of arrangements for
the sharing with the operator of any generation set of the risks
associated with changes in the price of fuel used by the generation
set during the term of any such contract as is referred to in
paragraph 6 or 8 above.
10. The Licensee shall, on each such occasion as it provides to the Director
separate accounts for the Generation Business pursuant to paragraph 3(b)(i)
of Condition 2 and at any other time upon request of the Director, provide
to the Director a statement:
(a) confirming compliance with paragraphs 1, 2 and 3 above as at the date
of the statement and throughout the period since the last such
statement; and
(b) identifying (in such detail and with such supporting documents or
information as the Director may require) the amount of capacity in
megawatts represented by the declared net capacity of own-generation
sets attributable to the Licensee and the appropriate share of the
Licensee in the declared net capacity of generation sets in which the
Licensee has an accountable interest, as at the date of the statement.
11. Where the Director is satisfied that the basis of calculation used by the
Licensee is not in conformity with paragraphs 4 and 5 above, the Director
may issue directions specifying an alternative basis of calculation, and
the basis of calculation by the Licensee shall be adjusted accordingly with
effect from the date of issue of the directions or such other date as may
be specified in the directions.
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12. In this Condition:
"operator" means, in relation to any generation
set, the Authorised Electricity Operator
or any person for the time being
responsible (under contract or
otherwise) for the generation or sale of
electricity from such plant.
"own-generation set" means any generation set the majority
beneficial ownership of which is vested
in the Licensee or an affiliate of the
Licensee or in respect of which the
Licensee or an affiliate of the Licensee
is the operator and references to
own-generation sets of another
Authorised Electricity Operator shall be
construed as if the references herein to
the Licensee were replaced by references
to that Authorised Electricity Operator.
"specified event" means any such event as is described in
paragraph (1)(f) of Schedule 2 to this
Licence but for this purpose as if
references to the Licensee were replaced
by references to the operator or third
party in question.
"underlying interest" in relation to any generation set means
any interest arising by reason of the
Licensee or affiliate or any related
undertaking of the Licensee or affiliate
(whether alone or with others):
(a) holding or being entitled to
acquire an interest in the land on
which the
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generation set, or any part
thereof, is built;
(b) being in partnership with or party
to any arrangement for sharing of
profits or cost-savings or any
joint venture with any person
holding or entitled to acquire an
interest in the land on which the
generation set, or any part
thereof, is built;
(c) owning any electrical plant
situated on or operated as a unit
with the generation set (and for
such purpose, any electrical plant
or equipment to the possession of
which the Licensee, affiliate or
related undertaking is entitled
under any agreement for hire, hire
purchase, conditional sale or loan
shall be deemed to be owned by such
person) provided always that such
electrical plant shall not be
deemed to be operated as a unit
with any generation set by reason
only of connections with any other
system for the transmission or
distribution of electricity; or
(d) having obtained any consent under
Section 36 of the Act required for
the construction or extension of
the generation set or any part
thereof.
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Condition 7. Tariffs
1. The Licensee shall ensure that any tariffs fixed under Section 18 of the
Act shall be so framed as separately to identify:
(a) the use of system element in the Licensee's charges; and
(b) the charges in respect of the supply of electricity to tariff
customers.
2. Where the Director considers that by reason of the complexity of any such
tariffs fixed by the Licensee, simplified explanatory statements are
required or expedient for the understanding of tariff customers, the
Director may direct the Licensee to draw up such explanatory statements and
thereafter to publish them with the tariffs to which they relate.
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Condition 7A. Arrangements for informing customers on revocation of Licence
1. The Licensee shall comply with a direction from the Director in the
following terms where the Director:
(a) is, or is aware that the Secretary of State is, about to revoke a
Licence granted to another Electricity Supplier to supply electricity
(in this Condition known as the "First Supplier"); and
(b) considers that the Licensee is able to supply electricity to the
customers of the First Supplier without significantly prejudicing the
supplies of electricity which the Licensee makes or is contracted to
make.
2. The Director shall only issue a direction in accordance with paragraph 1
when the Secretary of State or, as the case may be, the Director has served
the First Supplier with a notice that he is revoking the First Supplier's
Licence to supply electricity in accordance with the terms of the First
Supplier's Licence, or such earlier date as the Director may agree with the
First Supplier.
3. A direction issued in accordance with paragraph 1 shall require that the
Licensee shall, within the period specified by the Director, send a written
notice in a form approved by the Director to each of the persons or
premises specified or described in the direction:
(a) informing the customer in question that, notwithstanding any contract
he may have with the First Supplier, the First Supplier is no longer
supplying him with electricity and has not done so since the
revocation took effect or, where the notice has been sent before the
revocation has taken effect, will be no longer supplying him with
electricity when it takes effect.
(b) informing the customer that the customer must from the moment the
revocation takes effect enter into a new contract for supply with
another
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Electricity Supplier of the customer's choice, and that he is free to
request a supply from the Licensee; and
(c) setting out the terms upon which the Licensee is prepared to supply
electricity if requested.
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Condition 7B. The Programme Implementation Agreement
1. The Licensee shall, where the Director has given it a written direction to
do so, enter into and comply with the Programme Implementation Agreement
established in accordance with paragraph 4.
2. The Programme Implementation Agreement shall be concerned with matters
relating to the effective implementation of trading and other arrangements
between the Licensee and other Relevant Parties which, in the reasonable
opinion of the Director following consultation with all Relevant Parties,
are or are likely to be necessary and appropriate to provide for the
effective and timely facilitation of competition in the supply of
electricity.
3. The Programme Implementation Agreement may include provisions relating to:
(a) the operation and management of procedures for the testing, trialing
and integration of those systems, processes and procedures required to
facilitate competition in the supply of electricity;
(b) the obligations of each of the Relevant Parties in respect of the
procedures defined under sub-paragraph (a);
(c) limitations of the liability of the Licensee and of such other persons
as are specified in the Agreement in respect of actions taken in
connection with the Agreement;
(d) the provision of information as between Relevant Parties and to other
persons specified in the Agreement;
(e) the determination of the specification of systems, processes and
procedures to be tested, trialed and integrated in accordance with the
Agreement, except in those circumstances where the Director considers
that any of the Relevant
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Parties has entered into another agreement which adequately provides
for such specification to be otherwise determined;
(f) the settling by the Director of disputes between Relevant Parties in
relation to matters covered by the Agreement; and
(g) the establishment of a board (the "Implementation Board"), comprising
appropriate persons appointed by the Director following consultation
with the Relevant Parties, which shall:
(i) oversee the conduct of the Agreement;
(ii) advise the Director and the Relevant Parties of any matters upon
which they may reasonably seek advice in relation to matters
covered by the Agreement, including the operation and management
of procedures established under the Agreement; and
(iii) undertake such other functions as in the reasonable opinion of
the Director are necessary to provide for the effective and
timely facilitation of competition in electricity supply.
4. The Programme Implementation Agreement shall be that established by
agreement between the Relevant Parties with the approval of the Director
or, where the Relevant Parties cannot agree (or where in the opinion of the
Director such agreement is unlikely to be reached within a reasonable
period) and where:
(a) the Director has sent to each of the Relevant Parties a notice (the
"proposals notice") setting out his own proposals in relation to the
content of the Programme Implementation Agreement; and
(b) following consideration of any comments received from any of the
Relevant Parties within 21 days of the issue of the proposals notice,
and having made
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such changes to his proposals as the Director considers appropriate,
the Director has given to each of the Relevant Parties a notice
setting out his final proposals (the "confirmation notice"),
the Programme Implementation Agreement shall, unless within 7 days of the
issue of the confirmation notice the parties have reached agreement with
the approval of the Director as to an alternative, be established in
accordance with the terms of the Director's confirmation notice.
5. With regard to the provisions of paragraph 1 to 4, and following
consultation with the Relevant Parties and with such other persons or
bodies as appear to the Director to represent the interests of those likely
to be affected, the Director may issue a direction that specified parts of
the Relevant Conditions shall take effect at such time and in such cases or
circumstances as he shall direct.
6. In issuing a direction in accordance with paragraph 5 the Director shall
have regard to the need to provide for effective arrangements to facilitate
competition in the supply of electricity to customers and for the effective
maintenance of existing trading arrangements in respect of the supply of
electricity.
7. This Condition shall cease to be in force on whichever is the latest of the
following dates:
(a) 30 September 1998;
(b) the date which is 6 months after the latest date upon which any
provision in accordance with paragraph 3 (but excluding sub-paragraph
3(c)) ceases to have effect; or
(c) such other date as may be agreed between the Director and the
Licensee.
8. In this Condition:
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"Relevant Conditions" means Conditions 7A, 7B, 8B, 11A to 11F,
18 to 23C, 30 to 33 and the Contract
Terms Conditions of this Licence.
"Relevant Parties" means the Licensee, other Authorised
Electricity Operators, the Electricity
Pool of England and Wales and Scottish
Electricity Settlements Ltd.
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Condition 8. Basis of charges for top-up and standby supplies or sales of
electricity, exempt supply services, use of system and connection to the
system: requirements for transparency
1. The Licensee shall as soon as practicable and in any event within 28 days
after this Licence has come into force prepare statements in a form
approved by the Director setting out the basis upon which the charges for
the provision of top-up and standby supplies or sales of electricity and
for exempt supply services (in each case, as part of the Supply or Second
Tier Supply Business ), for use of system and for connection to the
Licensee's Distribution System (in each case, as part of the Distribution
Business) will be made, in all cases in such form and with such detail as
shall be necessary to enable any person to make a reasonable estimate of
the charges to which he would become liable for the provision of such
services, and (without prejudice to the foregoing) including the
information set out in paragraphs 2 to 5.
2. The statement referred to in paragraph 1 shall, in respect of the provision
of top-up and standby supplies or sales of electricity, set out the methods
by which and the principles on which the charges for the provision of each
top-up supplies or sales and standby supplies or sales will be made.
3. The statement referred to in paragraph 1 shall, in respect of the provision
of exempt supply services, set out the methods by which and the principles
on which charges for the provision of such services will be made.
4. The statement referred to in paragraph 1 shall in respect of use of system
include:
(a) a schedule of charges for the distribution of electricity under use of
system;
(b) a schedule of adjustment factors to be made in respect of distribution
losses, in the form of additional supplies required to cover those
distribution losses;
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(c) the methods by which and the principles on which the charges (if any)
for availability of distribution capacity on the Licensee's
Distribution System will be made; and
(d) save to the extent that such matters are included in any statement
prepared in accordance with Condition 11E:
(i) a schedule of charges in respect of meter reading, accounting and
administrative services; and
(ii) a schedule of the charges (if any) which may be made for the
provision and installation of any meters or electrical plant at
entry or exit points, the provision and installation of which is
ancillary to the grant of use of system, and for the maintenance
of such meters or electrical plant.
5. The statement referred to in paragraph 1 shall in respect of connections to
the Licensee's Distribution System include (save to the extent that such
matters are included in any statement prepared in accordance with Condition
11E):
(a) a schedule listing those items (including the carrying out of works
and the provision and installation of electric lines or electrical
plant or meters) of significant cost liable to be required for the
purpose of connection (at entry or exit points) to the Licensee's
Distribution System for which connection charges may be made or levied
and including (where practicable) indicative charges for each such
item and (in other cases) an explanation of the methods by which and
the principles on which such charges will be calculated;
(b) the methods by which and the principles on which any charges will be
made in respect of extension or reinforcement of the Licensee's
Distribution System rendered (in the Licensee's discretion) necessary
or appropriate by virtue of providing connection to or use of system
to any person seeking connection;
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(c) the methods by which and the principles on which connection charges
will be made in circumstances where the electric lines or electrical
plant to be installed are (at the Licensee's discretion) of greater
size or capacity than that required for use of system by the person
seeking connection;
(d) the methods by which and the principles on which any charges
(including any capitalised charge) will be made for maintenance,
repair, and replacement required of electric lines, electrical plant
or meters provided and installed for making a connection to the
Licensee's Distribution System;
(e) the methods by which and principles on which any charges will be made
for the provision of special metering or telemetry or data processing
equipment by the Licensee for the purposes of enabling any person
which is party to the Pooling and Settlement Agreement to comply with
its obligations in respect of metering thereunder, or for the
performance by the Licensee of any service in relation thereto; and
(f) the methods by which and principles on which any charges will be made
for disconnection from the Licensee's Distribution System and the
removal of electrical plant, electric lines and ancillary meters
following disconnection.
6. The basis on which charges for the provision of top-up and standby supplies
or sales of electricity shall be set shall reflect the costs directly
incurred in the provision thereof, together with a reasonable rate of
return on the capital represented by such costs.
7. The basis on which charges for the provision of exempt supply services
shall be set shall reflect the costs directly incurred in the provision
thereof, together with a reasonable rate of return on the capital
represented by such costs.
8. Use of system charges for those items referred to in paragraph 4 shall be
determined on the same basis as is applied by the Licensee when determining
the use of system element of tariffs fixed pursuant to Section 18 of the
Act and Condition 7.
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9. Connection charges for those items referred to in paragraph 5 shall be set
at a level which will enable the Licensee to recover:
(a) the appropriate proportion of the costs directly or indirectly
incurred in carrying out any works, the extension or reinforcement of
the Licensee's Distribution System or the provision and installation,
maintenance, repair, and replacement or (as the case may be) removal
following disconnection of any electric lines, electrical plant or
meters; and
(b) a reasonable rate of return on the capital represented by such costs.
10. If so requested and subject to paragraphs 11 and 16, the Licensee shall, as
soon as practicable and in any event within 28 days (or where the Director
so approves such longer period as the Licensee may reasonably require
having regard to the nature and complexity of the request) after the date
referred to in paragraph 17 give or send to any person making such request
a statement showing present and future circuit capacity, forecast power
flows and loading on the part or parts of the Licensee's Distribution
System specified in the request and fault levels for each distribution node
covered by the request and containing:
(a) such further information as shall be reasonably necessary to enable
such person to identify and evaluate the opportunities available when
connecting to and making use of the part or parts of the Licensee's
Distribution System specified in the request; and
(b) if so requested, a commentary prepared by the Licensee indicating the
Licensee's views as to the suitability of the part or parts of the
Licensee's Distribution System specified in the request for new
connections and the distribution of further quantities of electricity.
11. The Licensee shall include in every statement given or sent under paragraph
10 the information required by that paragraph except that the Licensee may:
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(a) with the prior consent of the Director omit from any such statement
any details as to circuit capacity, power flows, loading or other
information, disclosure of which would, in the view of the Director,
seriously and prejudicially affect the commercial interests of the
Licensee or any third party; and
(b) omit information the disclosure of which would place the Licensee in
breach of Condition 12.
12. The Licensee may periodically revise the information set out in and, with
the approval of the Director, alter the form of the statements prepared in
accordance with paragraph 1 and shall, at least once in every year this
Licence is in force, make any necessary revisions to such statements in
order that the information set out in the statements shall continue to be
accurate in all material respects.
13. The Licensee shall send a copy of the statements prepared in accordance
with paragraph 1, and of each revision of such statements in accordance
with paragraph 12, to the Director.
14. The Licensee shall give or send a copy of the statements prepared in
accordance with paragraph 1, or (as the case may be) of the latest revision
of such statements in accordance with paragraph 12, to any person who
requests a copy of such statement or statements.
15. The Licensee may make a charge for any statement given or sent pursuant to
paragraph 14 of an amount which shall not exceed the amount specified in
directions issued by the Director for the purposes of this Condition based
on the Director's estimate of the Licensee's reasonable costs of providing
such a statement.
16. The Licensee may within 10 days after receipt of the request provide an
estimate of its reasonable costs in the preparation of any statement
referred to in paragraph 10, and its obligation to provide such statement
shall be conditional on the person requesting such statement agreeing to
pay the amount estimated or such other amount as the Director may, upon
application of the Licensee or the person requesting such statement,
direct.
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17. For the purposes of paragraph 10, the date referred to shall be the latest
of
(a) the date of receipt of the request referred to in paragraph 10, or
(b) the date on which the Licensee receives agreement from the person
making the request to pay the amount estimated or such other amount as
is determined by the Director (as the case may be) under paragraph 16.
18. The Licensee shall, not less than 5 months prior to the date on which it
proposes to amend its use of system charges in respect of any agreement for
use of system, send to the Director a notice setting out the Licensee's
proposals in relation to such amendment together with an explanation of the
proposed amendment (including a statement of any assumptions on which such
proposals are based), and the Licensee shall send a copy of such notice to
any person who has entered into an agreement for use of system under
Condition 8B.
19. Except with the prior consent of the Director, the Licensee shall not amend
its use of system charges in respect of any agreement for use of system
save to the extent that is has given prior notice of the amendment in
accordance with paragraph 18 and such amendment reflects the proposals made
in the notice (subject only to revisions consequent upon material changes
in the matters which were expressed, in the statement which accompanied the
notice, to be assumptions on which the proposals were based).
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Condition 8A. Non-discrimination in the provision of top-up or standby supplies
or sales of electricity, exempt supply services, use of system and connection to
the system
1. In the provision of top-up or standby supplies or sales of electricity, in
the carrying out of works for the purpose of connection to the Licensee's
Distribution System or in providing for the retention of a connection to
its Distribution System, the Licensee shall not discriminate:
(a) between any persons or class or classes of persons; or
(b) as between the Licensee (in the provision of connections by the
Licensee as part of its Distribution Business to itself for the
purpose of its Supply or Second-Tier Supply Business) and any person
or class or classes of persons.
2. In the provision of use of system the Licensee shall not discriminate:
(a) between any Authorised Electricity Operators or class of classes
thereof, or
(b) as between the Licensee (in the provision of use of system by the
Licensee as part of its Distribution Business to itself for the
purpose of its Supply or Second-Tier Supply Business) and any
Authorised Electricity Operator or class or classes thereof.
3. In the provision of exempt supply services the Licensee shall not
discriminate between any Exempt Suppliers or class or classes thereof.
4. Without prejudice to paragraphs 1 to 3, the Licensee shall not:
(a) make charges for the provision of top-up or standby supplies or sales
of electricity to any person or class or classes of persons;
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(b) make charges for use of system to any Authorised Electricity Operator
or class or classes thereof; or
(c) make charges for exempt supply services to any Exempt Supplier or
class or classes thereof
which differ from the charges for such provision:
(i) (in the case of top-up or standby supplies or sales of electricity) to
any other person or class or classes of person,
(ii) (in the case of use of system):
(aa) to any other Authorised Electricity Operator or to any class or
classes thereof; or
(bb) to the Licensee (in the provision of use of system by the
Licensee as part of its Distribution Business to itself for the
purposes of the Supply Business or the Second-Tier Supply
Business); or
(iii) (in the case of exempt supply services) to any other Exempt Supplier
or class or classes thereof
except in so far as such differences reasonably reflect differences in the
costs associated with such provision.
5. The Licensee shall not in setting its charges for provision of top-up or
standby supplies or sales of electricity, for exempt supply services or for
use of system restrict, distort or prevent competition in the generation,
distribution or supply of electricity.
Manweb 160 April 1998
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Condition 8B. Requirement to offer terms
1. On application made by any Authorised Electricity Operator the Licensee
shall (subject to paragraph 7) offer to enter into an agreement for use of
system:
(a) to accept into the Licensee's Distribution System at such entry point
or points and in such quantities as may be specified in the
application, electricity to be provided by or on behalf of such
Authorised Electricity Operator; and/or
(b) to distribute such quantities of electricity as are referred to in
sub-paragraph (a) (less any distribution losses) at such exit point or
points on the Licensee's Distribution System and to such person or
persons as the Authorised Electricity Operator may specify; and
(c) specifying the use of system charges to be paid by the Authorised
Electricity Operator, such charges (unless manifestly inappropriate)
to be referable to the statement referred to at paragraphs 1 and 4 of
Condition 8 or any revision thereof, and to be in conformity with the
requirements of paragraph 8 of Condition 8;
(d) containing (where appropriate) the provisions referred to in paragraph
2 of Condition 21;
(e) including terms requiring and entitling the Authorised Electricity
Operator to act (where appropriate) as agent of the Licensee in order
to procure an agreement on the Standard Terms of Connection between
the Licensee and each customer of the Authorised Electricity Operator
at premises which are to be supplied with electricity through an
established connection;
(f) where the applicant is an Exempt Supplier, requiring such Exempt
Supplier either to enter into an agreement with the Licensee for
exempt supply services or to enter into an equivalent agreement with
another Electricity Supplier; and
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(g) containing such further terms as are or may be appropriate for the
purposes of the agreement.
2. On application made by any person, the Licensee shall (subject to paragraph
7) offer to enter into an agreement for the provision of a connection or
for the modification of an existing connection to the Licensee's
Distribution System and such offer shall make detailed provision regarding:
(a) the carrying out of works (if any) required to connect the Licensee's
Distribution System to any other system for the transmission or
distribution of electricity, and for the obtaining of any consents
necessary for such purpose;
(b) the carrying out of works (if any) in connection with the extension or
reinforcement of the Licensee's Distribution System rendered (in the
Licensee's discretion) appropriate or necessary by reason of making
the connection or modification to an existing connection and for the
obtaining of any consents necessary for such purpose;
(c) (save to the extent that such matters are included in any agreement
offered in accordance with Condition 11C) the installation of
appropriate meters (if any) required to enable the Licensee to measure
electricity being accepted into the Licensee's Distribution System at
the specified entry point or points or leaving such system at the
specified exit point or points;
(d) the installation of such switchgear or other apparatus (if any) as may
be required for the interruption of supply where the person seeking
connection or modification of an existing connection does not require
the provision by the Licensee of top-up or standby supplies or sales
of electricity;
(e) (save to the extent that such matters are included in any agreement
offered in accordance with Condition 11C) the installation of special
metering, telemetry or data processing (if any) for the purpose of
enabling any person which is
Manweb 162 April 1998
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party to the Pooling and Settlement Agreement to comply with its
obligations in respect to metering or the performance by the Licensee
of any service in relation to such metering thereunder;
(f) the date by which any works required to permit access to the
Licensee's Distribution System (including for this purpose any works
to reinforce or extend the Licensee's Distribution System) shall be
completed (time being of the essence unless otherwise agreed by the
person seeking connection);
(g) the connection charges to be paid to the Licensee, such charges
(unless manifestly inappropriate):
(i) to be presented in such a way as to be referable to the statement
referred to in paragraphs 1 and 5 of Condition 8 or any revision
thereof; and
(ii) to be set in conformity with the requirements of paragraph 9 of
Condition 8 and (where relevant) of paragraph 5 of this
Condition; and
(h) containing such further terms as are or may be appropriate for the
purpose of the agreement.
3. On application made by any person the Licensee shall (subject to paragraph
7) offer to enter into an agreement to provide top-up or standby supplies
or sales of electricity, such offer to make provision for the charges to be
made in respect of top-up or standby supplies or sales of electricity,
which shall:
(a) be presented in such a way as to be referable to the statement
referred to at paragraphs 1 and 2 of Condition 8 or any revision
thereof; and
(b) be set in conformity with the requirements of paragraph 6 of Condition
8.
163
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4. On application made by any Exempt Supplier the Licensee shall (subject to
paragraph 7) offer to enter into an agreement for exempt supply services
within its authorised area and such offer shall make detailed provision
regarding:
(a) the making, maintenance and termination by the Licensee of
registrations under and in accordance with the Master Registration
Agreement in relation to premises to which the Exempt Supplier
supplies or is required to supply electricity;
(b) the exchange between the Licensee and Exempt Supplier of such
information as is required for the performance of the Licensee's
obligations in accordance with sub-paragraph (a);
(c) the appointment by the Exempt Supplier of an appropriate provider of
meter operation, data retrieval, data processing and data aggregation
services in relation to premises to which it supplies electricity;
(d) the apportionment and settlement by the Licensee of charges incurred
by it by virtue of registrations under the Master Registration
Agreement which are made, maintained and terminated in accordance with
sub-paragraph (a);
(e) the payment by the Exempt Supplier of charges for exempt supply
services, such charges (unless manifestly inappropriate) to be
referable to the statement referred to at paragraphs 1 and 3 of
Condition 8 or any revision thereof and to be in conformity with the
requirements of paragraph 7 of Condition 8;
(f) the reimbursement by the Exempt Supplier (by way of indemnity) of all
charges incurred by the Licensee by virtue of registrations made and
maintained in accordance with sub-paragraph (a);
(g) the provision by the Exempt Supplier to the Licensee of reasonable
security or collateral for the performance of its obligations under
the agreement;
Manweb 164 April 1998
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(h) the varying of the agreement including the making of amendments
necessary to give effect to any determination made by the Director in
respect of the agreement; and
(i) such further matters as are or may be appropriate for the purposes of
the agreement.
5. For the purpose of determining an appropriate proportion of the costs
directly or indirectly incurred in carrying out works under an agreement
for making a connection or modification to an existing connection, the
Licensee shall have regard to:
(a) the benefit (if any) to be obtained or likely in the future to be
obtained by the Licensee or any other person as a result of the
carrying out of such works whether by reason of the reinforcement or
extension of the Licensee's Distribution System or the provision of
additional entry or exit points on such system or otherwise;
(b) the ability or likely future ability of the Licensee to recoup a
proportion of such costs from third parties; and
(c) the principles that:
(i) no charge will normally be made for reinforcement of the existing
Distribution System if the new or increased load requirement does
not exceed 25 per cent. of the existing effective capacity at the
relevant points on the system; and
(ii) changes will not generally take into account system reinforcement
carried out at more than one voltage level above the voltage of
connection.
Manweb 165 April 1998
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6. The Licensee shall offer terms for agreements in accordance with paragraphs
1 to 4 as soon as practicable and (save where the Director consents to a
longer period) in any event not more than the period specified in paragraph
8 after receipt by the Licensee (or its agent) from:
(a) in the case of paragraph 1, an Authorised Electricity Operator;
(b) in the case of paragraphs 2 and 3, any person; and
(c) in the case of paragraph 4, an Exempt Supplier
of all such information as the Licensee may reasonably require for the
purpose of formulating the terms of the offer.
7. The Licensee shall not be obligated pursuant to this Condition to offer to
enter or to enter into any agreement if:
(a) to do so would be likely to involve the Licensee being:
(i) in breach of its duties under section 9 of the Act;
(ii) in breach of the Electricity Supply Regulations 1988 or of any
regulations made under section 29 of the Act or of any other
enactment relating to safety or standards applicable in respect
to the Distribution Business;
(iii) in breach of the Grid Code or the Distribution Code; or
(iv) in breach of the Conditions;
Manweb 166 April 1998
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(b) the person making the application does not undertake to be bound, in
so far as applicable, by the terms of the Distribution Code or the
Grid Code from time to time in force;
(c) in the case of a person making application for use of system under
paragraph 1, such person ceases to be an Authorised Electricity
Operator; or
(d) in the case of a person making application for exempt supply services
under paragraph 4, such person ceases to be an Exempt Supplier.
8. For the purpose of paragraph 6, the period specified shall be:
(a) in the case of persons seeking use of system, exempt supply services
or top-up or standby supplies or sales of electricity only, 28 days;
(b) in the case of persons seeking connection or a modification to an
existing connection, 3 months; and
(c) in the case of persons seeking use of system or top-up or standby
supplies or sales of electricity in conjunction with connection, 3
months.
9. The Licensee shall within 28 days following receipt of a request from any
person, give or send to such person such information in the possession of
the Licensee as may be reasonably required by such person for the purpose
of completing paragraph 8 of Part 1 and paragraphs 2(v) and (vi) of Part 2
of Schedule 2 to The Electricity (Application for Licences and Extensions
of Licences) Regulations 1990 or such provisions to like effect contained
in any further regulations then in force made pursuant to sections 6(3), 60
and 64(1) of the Act.
Manweb 167 April 1998
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Condition 8C. Requirement to offer Standard Terms of Connection
1. The Licensee shall, within 28 days after this Condition has come into
force, prepare and submit to the Director for his approval the standard
terms of an agreement (the "Standard Terms of Connection") to provide, as
between the Licensee and any customer, for the retention of an established
connection at premises which are to be supplied with electricity through
such a connection.
2. The Licensee may, subject to the approval of the Director, prepare
different Standard Terms of Connection for different cases or classes of
customer or premises, clearly identifying the criteria used to distinguish
between such cases or classes.
3. The Licensee shall from time or time, and whenever requested to do so by
the Director, review the Standard Terms of Connection with a view to
determining whether any revision should be made to such terms, and in the
course of the review the Licensee shall consult with the Relevant
Consumers' Committee, all other public electricity suppliers and all Second
Tier Suppliers which supply electricity within the authorised area.
4. At the conclusion of any review in accordance with paragraph 3 the Licensee
shall submit to the Director:
(a) a proposal for the revision of the Standard Terms of Connection (or,
where the Licensee considers it appropriate in all the circumstances,
a proposal that no revision should be made to the Standard Terms of
Connection); and
(b) the reasons for its proposal, together with a summary of responses
received from such parties as were consulted by the Licensee.
5. A proposal made by the Licensee in accordance with paragraph 4 shall
require to be approved by the Director and, following such approval in
writing, the Licensee shall
Manweb 168 April 1998
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accordingly revise (or, as the case may be, shall make no revision to) the
Standard Terms of Connection.
6. The Licensee shall, in such manner as will in the opinion of the Licensee
secure adequate publicity therefor:
(a) publish, no later than 31 December 1997, the Standard Terms of
Connection approved by the Director in accordance with paragraph 1;
and
(b) publish, within 21 days after receiving the approval of the Director,
any revision to the Standard Terms of Connection in accordance with
paragraph 5.
7. The Licensee shall not:
(a) subject to paragraph 8, enter into a contract with a customer for the
supply of electricity to premises which are to be supplied through an
established connection without at the same time (in respect of such
premises) entering into an agreement with the customer on the Standard
Terms of Connection; or
(b) do anything to prevent the conclusion of an agreement on the Standard
Terms of Connection between itself and a customer of any Authorised
Electricity Operator which is acting as agent for the Licensee in
accordance with an agreement for use of system.
8. The Licensee may at any time agree with any person (by way of variation to
the Standard Terms of Connection) terms for the retention of a particular
established connection which differ from the Standard Terms of Connection
where such different terms are appropriate in all the circumstances.
Manweb 169 April 1998
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Condition 8D. Functions of the Director
1. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with any person
entitled or claiming to be entitled thereto pursuant to a request under
Condition 8B or 8C, the Director may, on the application of such person or
the Licensee, settle any terms of the agreement in dispute between the
Licensee and that person in such manner as appears to the Director to be
reasonable having (in so far as relevant) regard in particular to the
following considerations:
(a) that such person should pay to the Licensee:
(i) in the case of the provision of top-up or standby supplies or
sales of electricity, such sum as is determined in accordance
with paragraph 6 of Condition 8;
(ii) in the case of exempt supply services, such sum as is determined
in accordance with paragraph 7 of Condition 8.
(iii) in the case of provision of use of system, the use of system
charges determined in accordance with paragraph 8 of Condition 8;
and
(iv) in the case of provision of a connection or a modification to an
existing connection to the system, the whole or an appropriate
proportion (as determined in accordance with paragraph 5 of
Condition 8B) of the costs referred to in sub-paragraph 9(a) of
Condition 8, together with a reasonable rate of return on the
capital represented by such costs;
(b) that the performance by the Licensee of its obligations under the
agreement should not cause it to be in breach of those provisions
referred to at sub-paragraph 7(a) of Condition 8B;
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(c) that any methods by which the Licensee's Distribution System is
connected to any other system for the transmission or distribution of
electricity accord (in so far as applicable to the Licensee) with the
Distribution Code and with the Grid Code;
(d) that the terms and conditions of the agreement so settled by the
Director and of any other agreements entered into by the Licensee
pursuant to an application under Condition 8B or 8C should be, so far
as circumstances allow, in as similar a form as is practicable; and
(e) in the case of exempt supply services, that the agreement for the
provision of exempt supply services should make provision for all the
matters set out at paragraph 5 of Condition 8B.
2. In so far as any person entitled or claiming to be entitled to an offer
under Condition 8B or 8C wishes to proceed on the basis of the agreement as
settled by the Director, the Licensee shall forthwith enter into and
implement such agreement in accordance with its terms.
3. If either party to such agreement proposes to vary the contractual terms of
any agreement for exempt supply services, for the provision of a connection
or for the modification of an existing connection to the Licensee's
Distribution System, for the retention of an established connection to such
Distribution System or for use of system entered into pursuant to Condition
8B or 8C or under this Condition in any manner provided for under such
agreement, the Director may, at the request of that party, settle any
dispute relating to such variation in such manner as appears to the
Director to be reasonable.
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Condition 9. Distribution system planning standard and quality of service
1. The Licensee shall plan and develop the Licensee's Distribution System in
accordance with a standard not less than that set out in Engineering
Recommendation P.2/5 (October 1978 revision) of the Electricity Council
Chief Engineers' Conference in so far as applicable to it or such other
standard of planning as the Licensee may, following consultation (where
appropriate) with the Transmission Company and any other Authorised
Electricity Operator liable to be materially affected thereby and with the
approval of the Director, adopt from time to time.
2. The Licensee shall within 3 months after this Licence enters into force
draw up and submit to the Director for his approval a statement setting out
criteria by which the quality of performance of the Licensee in maintaining
distribution system security and availability and quality of service may be
measured.
3. The Licensee shall within 2 months after the end of each financial year
submit to the Director a report providing details of the performance of the
Licensee during the previous financial year against the criteria referred
to in paragraph 2.
4. The Director may (following consultation with the Licensee and, where
appropriate, with the Transmission Company and any other Authorised
Electricity Operator liable to be materially affected thereby) issue
directions relieving the Licensee of its obligation under paragraph 1 in
respect of such parts of the Licensee's Distribution System and to such
extent as may be specified in the directions.
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Condition 9A. Security and Safety of Supplies
1. The Licensee shall establish and operate an enquiry service for use by any
person for the purposes of receiving reports and offering information,
guidance or advice about any matter or incident that:
(a) causes danger or requires urgent attention, or is likely to cause
danger or require urgent attention, in relation to the supply or
distribution of electricity in the Licensee's authorised area; or
(b) affects or is likely to affect the maintenance of the security,
availability and quality of service of the Licensee's Distribution
System.
2. The service established by the Licensee in accordance with paragraph 1
shall:
(a) be provided without charge by the Licensee to the user at the point of
use;
(b) ensure that all reports and enquiries are processed in a prompt and
efficient manner whether made by telephone, in writing or in person;
(c) be available to receive and process telephone reports and enquiries at
all times on every day of each year; and
(d) be operational no later than 31 March 1998.
3. In the establishment and operation of the enquiry service in accordance
with paragraph 1 the Licensee shall not discriminate:
(a) between any persons or class or classes thereof; or
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(b) between the Licensee (in the provision of such services by the
Licensee as part of its Distribution Business to itself for the
purpose of its Supply Business) and any private electricity supplier
or any customer thereof.
4. In the establishment and operation of the enquiry service in accordance
with paragraph 1 the Licensee shall not restrict, distort or prevent
competition in the supply of electricity.
5. The Licensee shall by 1 January 1998 prepare and submit to the Director for
his approval a statement setting out details of the service to be provided
in accordance with paragraph 1, and the Licensee shall, following the
Director's approval, give or send a copy of such statement to any person
requesting it.
6. The Licensee shall give to the Director notice of any amendments it
proposes to make to the statement prepared under paragraph 5, and shall not
make such amendments until either:
(a) a period of one month from the date of the notice has expired, or
(b) prior to the expiry of such period, the Licensee has obtained the
written approval of the Director to the amendments.
7. The Licensee shall make arrangements to keep each of its customers informed
of a postal address and telephone number at which the service established
in accordance with paragraph 1 may be contacted.
8. The Licensee may discharge the duty imposed by paragraph 7 by providing the
requisite information to each of its customers:
(a) on the occasion of the customer first commencing to take a supply from
the Licensee; and
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(b) either:
(i) where bills or statements in respect of charges for the supply of
electricity are rendered to the customer, on a quarterly basis
(it being sufficient that the information is included on or with
any bill or statement); or
(ii) where no bills or statements in respect of charges for the supply
of electricity are rendered to the customer, on an annual basis
and by publishing such information in such manner as will in the opinion of
the Licensee secure adequate publicity for it.
9. The Licensee shall take steps to inform each of its customers, and each
Authorised Electricity Operator which uses the service, of any change to
the address or telephone number of the service established in accordance
with paragraph 1 as soon as is practicable prior to such change becoming
effective.
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Condition 9B. Procedures for the detection and prevention of theft, damage and
meter interference
l. The Licensee shall (and shall ensure that its agents) take all reasonable
steps to detect and prevent:
(a) the theft of electricity at premises which are supplied by it;
(b) damage to any electrical plant, electric line or electricity meter
through which such premises are supplied; and
(c) interference with any electricity meter through which such premises
are supplied.
2. Where a person other than the Licensee is the owner of any electrical
plant, electric lines or meter the Licensee shall, as soon as is reasonably
practicable, inform that person of any incident where it has reason to
believe:
(a) there has been damage to such electrical plant, electric line or
meter; or
(b) there has been interference with the meter to alter its register or
prevent it from duly registering the quantity of electricity supplied.
3. Where a person other than the Licensee is the supplier of electricity to
premises within the authorised area the Licensee shall, as soon as is
reasonably practicable, inform that person of any incident where it has
reason to believe:
(a) there has been damage to any electrical plant, electric line or meter
through which such premises are supplied with electricity; or
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(b) there has been interference with the meter through which such premises
are supplied to alter its register or prevent it from duly registering
the quantity of electricity supplied.
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Condition 9C. Provisions relating to the connection of metering equipment
1. On application made by any person the Licensee shall, subject to paragraph
5, offer to enter into an agreement authorising that person to connect
metering equipment to the Licensee's Distribution System.
2. In making an offer to enter into an agreement specified in paragraph 1, the
Licensee shall set out:
(a) the date from which the applicant is authorised to undertake
connections;
(b) the procedures to be adopted by the applicant when making connections,
with particular regard to those relating to safety; and
(c) such other detailed terms as are or may be appropriate for the
purposes of the agreement.
3. The Licensee shall offer terms for agreements in accordance with paragraph
1 as soon as practicable and (save where the Director consents to a longer
period) in any event not more than 28 days after receipt by the Licensee
from any person of an application containing all such information as the
Licensee may reasonably require for the purpose of formulating the terms of
the offer.
4. In the offering of the terms in accordance with paragraph 1, the Licensee
shall not show undue preference to or exercise undue discrimination against
any person or class of persons.
5. The Licensee shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement:
(a) (in respect of non-half-hourly metering equipment) which comes into
effect prior to 1 April 2000; or
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(b) where to do so would be likely to cause the Licensee to be in breach
of those provisions referred to at sub-paragraph 7(a) of Condition 8B.
6. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with any person
entitled or claiming to be entitled thereto pursuant to a request under
this Condition, the Director may, pursuant to section 7(3)(c) of the Act
and on the application of such person or the Licensee, settle any terms of
the agreement in dispute between the Licensee and that person in such
manner as appears to the Director to be reasonable.
7. In so far as any person entitled or claiming to be entitled to an offer
under this Condition wishes to proceed on the basis of the agreement as
settled by the Director, the Licensee shall forthwith enter into and
implement such agreement in accordance with its terms.
8. If the Licensee or other party to such agreement proposes to vary the terms
of any agreement entered into pursuant to this Condition in any manner
provided for under such agreement, the Director may, at the request of the
Licensee or other party to such agreement, settle any dispute relating to
such variation in such manner as appears to the Director to be reasonable.
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Condition 9D. Agreements for the provision of meters
1. The Licensee shall not, in the course of its Supply Business, enter into an
agreement with any person for the provision of an electricity meter at any
premises (whatever the nature of that agreement) which is intended or is
likely to restrict, distort or prevent competition in the supply of
electricity.
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Condition 10. Generation Security Standard
1. The Licensee shall make arrangements sufficient to meet the generation
security standard.
2. The duty imposed by paragraph 1 shall be discharged either by the Licensee
complying with the provisions of paragraph 3 below or by the making by the
Licensee of such other arrangements as may have been previously approved in
writing for the purpose by the Director.
3. The Licensee may discharge the duty imposed by paragraph 1 by:
(a) for so long as the relevant condition is met, purchasing as a pool
member under the terms of the Pooling and Settlement Agreement
quantities of electricity which are at all times sufficient to meet
the demands of all qualifying customers of the Licensee; and
(b) for so long as the relevant condition is met, and save by reason of
planned maintenance undertaken on the Licensee's Distribution System
or in circumstances of force majeure affecting either the Licensee's
Distribution System or the quantities of electricity delivered into
that system, not:
(i) making voltage reductions outside statutory limits; or
(ii) interrupting or reducing supplies to any qualifying customer
otherwise than as instructed pursuant to the Grid Code by the Transmission
Company or in accordance with the Distribution Code.
4. The relevant condition referred to in paragraph 3 is that there should at
any relevant time be electricity available to be purchased under the terms
of the Pooling and Settlement Agreement at a price less than the ceiling
price.
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5. The Licensee shall upon request by the Director provide to the Director
such information as the Director may require for the purpose of monitoring
compliance with this Condition and to enable the Director (having regard to
his statutory duties) to review the operation of the generation security
standard.
6. The provisions of this Condition are without prejudice to the duties of the
Licensee under the Electricity Supply Regulations 1988.
7. In this Condition:
"ceiling price" means such price as would be equal to
the Pool Selling Price in circumstances
where the corresponding Pool Purchase
Price was an amount equal to the Value
of Lost Load.
"generation security standard" means such standard of generation
security as will ensure that:
(a) the supply of electricity to
qualifying customers will not be
discontinued in more than 9 years
in any 100 years; and
(b) the voltage or frequency of
electricity supplied to qualifying
customers will not be reduced below
usual operational limits in more
than 30 years in any 100 years
by reason of insufficiency of
electricity generation available for the
purposes of supply by the Licensee to
its qualifying customers at times of
annual system peak demand.
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"Pool Purchase Price" and shall each have the meaning from time to
"Pool Selling Price" time ascribed to them in Schedule 9 to
the Pooling and Settlement Agreement.
"qualifying customer" means any purchaser from the Licensee
entitled and requiring at any time to be
supplied by the Licensee at premises
within the authorised area of the
Licensee but shall exclude:
(a) a contract purchaser under an
interruptible contract or a
contract containing load management
terms to the extent that supplies
to that purchaser may be
interrupted or reduced in
accordance with the terms of that
contract; and
(b) a tariff customer on special
tariffs which restrict supplies to
particular time periods to the
extent that supplies to that
customer may be interrupted or
reduced in accordance with such
tariff.
"Value of Lost Load" means in respect of the first financial
year, the sum of (pound) 2 per kWh and,
in respect of each succeeding financial
year, the sum which corresponds to
(pound) 2 per kWh as adjusted to reflect
the percentage change in the Retail
Price Index between the index published
or determined in respect to the December
prior to the start of that financial
year and the index published or
determined for December 1989.
Manweb 183 April 1998
<PAGE>
Condition 11. Distribution Code
1. The Licensee shall in consultation with Authorised Electricity Operators
liable to be materially affected thereby prepare and at all times have in
force and shall implement and (subject to paragraph 10 of this Condition)
comply with a Distribution Code:
(a) covering all material technical aspects relating to connections to and
the operation and use of the Licensee's Distribution System or (in so
far as relevant to the operation and use of the Licensee's
Distribution System) the operation of electric lines and electrical
plant connected to the Licensee's Distribution System or the
distribution system of any Authorised Electricity Operator and
(without prejudice to the foregoing) making express provision as to
the matters referred to in paragraph 5 below; and
(b) which is designed so as:
(i) to permit the development, maintenance and operation of an
efficient, co-ordinated and economical system for the
distribution of electricity; and
(ii) to facilitate completion in the generation and supply of
electricity.
2. The Distribution Code in force at the date this Licence enters force shall
be sent to the Director for his approval. Thereafter the Licensee shall (in
consultation with Authorised Electricity Operators liable to be materially
affected thereby) periodically review (including upon the request of the
Director) the Distribution Code and its implementation. Following any such
review, the Licensee shall send to the Director:
(a) a report on the outcome of such review; and
(b) any proposed revisions to the Distribution Code from time to time as
the Licensee (having regard to the outcome of such review) reasonably
thinks fit for the achievement of the objective referred to in
sub-paragraph (b) of paragraph 1; and
Manweb 184 April 1998
<PAGE>
(c) any written representations or objections from Authorised Electricity
Operators (including any proposals by such operators for revisions to
the Distribution Code not accepted by the Licensee in the course of
the review) arising during the consultation process and subsequently
maintained.
3. Revisions to the Distribution Code proposed by the Licensee and sent to the
Director pursuant to paragraph 2 shall require to be approved by the
Director.
4. Having regard to any written representations or objections referred to in
sub-paragraph (c) of paragraph 2, and following such further consultation
(if any) as the Director may consider appropriate, the Director may issue
directions requiring the Licensee to revise the Distribution Code in such
manner as may be specified in the directions, and the Licensee shall
forthwith comply with any such directions.
5. The Distribution Code shall include:
(a) a distribution planning and connection code containing:
(i) connection conditions specifying the technical, design and
operational criteria to be complied with by any person connected
or seeking connection with the Licensee's Distribution System;
and
(ii) planning conditions specifying the technical and design criteria
and procedures to be applied by the Licensee in the planning and
development of the Licensee's Distribution System and to be taken
into account by persons connected or seeking connection with the
Licensee's Distribution System in the planning and development of
their own plant and systems; and
(b) a distribution operating code specifying the conditions under which
the Licensee shall operate the Licensee's Distribution System and
under which persons shall operate their plant and/or distribution
systems in relation to the Licensee's
Manweb 185 April 1998
<PAGE>
Distribution System, in so far as necessary to protect the security
and quality of supply and safe operation of the Licensee's
Distribution System under both normal and abnormal operating
conditions.
6. The Licensee shall give or send a copy of the Distribution Code (as from
time to time revised) to the Director.
7. The Licensee shall (subject to paragraph 8) give or send a copy of the
Distribution Code (as from time to time revised) to any person requesting
the same.
8. The Licensee may make a charge for any copy of the Distribution Code (as
from time to time revised) given or sent pursuant to paragraph 7 of an
amount which will not exceed any amount specified for the time being for
the purposes of this Condition in directions issued by the Director.
9. In preparing, implementing and complying with the Distribution Code
(including in respect of the scheduling of maintenance of the Licensee's
Distribution System), the Licensee shall not unduly discriminate against or
unduly prefer:
(a) any one or any group of persons; or
(b) the Licensee in the conduct of any business other than the
Distribution Business
in favour of or as against any one other or any other group of persons.
10. The Director may (following consultation with the Licensee) issue
directions relieving the Licensee of its obligations under the
Distribution Code in respect of such parts of the Licensee's Distribution
System and to such extent as may be specified in the directions.
11. Compliance with this Condition shall not require the Licensee to impose any
contractual obligation on tariff customers to comply with the Distribution
Code (as from time to time revised).
Manweb 186 April 1998
<PAGE>
Condition 11A. The Metering Point Administration Service and the Master
Registration Agreement
1. The Licensee shall establish, and shall subsequently operate and maintain,
a service to be known as the Metering Point Administration Service.
2. The Metering Point Administration Service shall, within the authorised
area, fulfil the following functions:
(a) the maintenance of such a register of technical and other data as is
necessary to facilitate supply by any Electricity Supplier or Exempt
Supplier to all premises within the authorised area and to meet the
reasonable requirements of Electricity Suppliers in respect of such
premises for information for settlement purposes, including (where so
required):
(i) the identity of the Electricity Supplier responsible under the
Pooling & Settlement Agreement for the supply to each such
premises;
(ii) the type of metering equipment installed at each such premises;
and
(iii) the address of each such premises;
(b) the amendment of the register maintained in accordance with
sub-paragraph (a) to reflect changes of supplier in respect of any
premises;
(c) the provision, in a timely and efficient manner, of such data
contained in the register as is reasonably required and requested to:
(i) any Electricity Supplier or agent thereof;
(ii) any person identified in the Pooling and Settlement Agreement as
an appropriate person for the receipt of data for settlement
purposes; and
Manweb 187 April 1998
<PAGE>
(iii) any person identified in the Master Registration Agreement as
entitled to such data for the purpose of facilitating changes of
supplier in respect of any premises; and
(d) the maintenance of an enquiry service for the provision to any
customer of an Electricity Supplier, on request and free of charge to
that customer, of such data contained in the register as is relevant
to the supply of electricity to premises which are (or are to be)
owned or occupied by the customer, and the taking of such steps as
will in the opinion of the Licensee secure adequate publicity for the
operation of the enquiry service.
3. In fulfilling its obligation in accordance with paragraph 1 the Licensee
shall not restrict, distort or prevent competition in the provision of
meter operation, data retrieval, data processing, data aggregation or
prepayment meter services.
4. The Licensee shall use its best endeavours, in conjunction and co-operation
with all other public electricity suppliers, to prepare a form of agreement
to be known as the Master Registration Agreement.
5. The Master Registration Agreement shall be an agreement made between:
(a) on the one part, the Licensee and all other public electricity
suppliers in their capacity as providers of metering point
administration services; and
(b) on the other part, all Electricity Suppliers who require the provision
of metering point administration services from at least one public
electricity supplier, together with such other persons as are, for
settlement purposes, appropriate parties to the agreement
and shall comprise all the matters set out at paragraph 6.
6. The Master Registration Agreement shall comprise:
Manweb 188 April 1998
<PAGE>
(a) terms for the provision of metering point administration services in
accordance with the requirements of paragraph 2 and the equivalent
requirements in the licences of all other public electricity
suppliers;
(b) provisions to facilitate, and procedures and practices to be followed
by Electricity Suppliers in relation to changes of Electricity
Supplier in respect of any premises;
(c) a catalogue of definitions, flows and forms of such data as may
require to be transferred by or to parties to the Master Registration
Agreement, or as between any persons for settlement purposes or for
any related purposes (the "Data Transfer Catalogue");
(d) arrangements for the variation of the Master Registration Agreement
following consultation with the parties, or representatives of the
parties, to that agreement;
(e) provisions (which shall require to be approved in advance by the
Director) by virtue of which the whole or specified parts of the
Master Registration Agreement shall not be capable of variation
without the prior approval of the Director; and
(f) such other matters as are or may be appropriate for the development,
maintenance and operation of an efficient, co-ordinated and economical
system for the supply of electricity and for the purpose of
facilitating competition in electricity supply.
7. The Licensee shall be a party to and shall comply with the provisions of
the Master Registration Agreement.
Manweb 189 April 1998
<PAGE>
Condition 11B. Establishment of a Data Transfer Service
1. The Licensee shall use its best endeavours, in conjunction and co-operation
with all other public electricity suppliers:
(a) to establish, or to procure the establishment by a third party of, a
service to be known as the Data Transfer Service; and
(b) subsequently to operate and maintain, or to procure the subsequent
operation and maintenance by a third party of such Data Transfer
Service in accordance with the provisions of this Condition.
2. The Data Transfer Service shall:
(a) provide a network over which may be made all of the electronic data
transfers specified at paragraph 3;
(b) operate and maintain that network; and
(c) provide a connection to that network, on request, to any person who is
or will be a party to any of the electronic data transfers specified
at paragraph 3.
3. The electronic data transfers specified at this paragraph are those which
are reasonably required for any of the purposes set out at paragraph 4 and
which are made between:
(a) a Metering Point Administration Service (MPAS) Operator and an
Electricity Supplier (including the Licensee in the course of its
Supply Business) or any agent thereof;
(b) an MPAS Operator and any person identified in the Pooling and
Settlement Agreement or the Settlement Agreement for Scotland as an
appropriate person for the receipt of data from the MPAS Operator for
settlement purposes;
Manweb 190 April 1998
<PAGE>
(c) the Electricity Pool of England and Wales or Scottish Electricity
Settlements Limited (or any agent thereof) and an Electricity Supplier
(or any agent thereof);
(d) an Electricity Supplier (or any agent thereof) and another Electricity
Supplier (or any agent thereof);
(e) an Electricity Supplier and any of its agents;
(f) different agents of the same Electricity Supplier;
(g) public electricity suppliers (or their agents) and generators (or
their agents) which are parties to the Settlement Agreement for
Scotland; and
(h) Scottish Electricity Settlements Limited (or any agent thereof) and
generators which are parties to the Settlement Agreement for Scotland.
4. The purposes of this paragraph are:
(a) meeting obligations with respect to the transfer of data for
settlement purposes;
(b) communicating meter reading and meter standing data;
(c) facilitating the provision of metering point administration services;
(d) communicating distribution use of system information; and
(e) fulfilling such other requirements relating to the transfer of data as
may be requisite for the supply of electricity to customers and
compliance by Electricity Suppliers with the Master Registration
Agreement.
Manweb 191 April 1998
<PAGE>
5. The Data Transfer Service shall, where relevant, transmit data in a form
which complies with the provision of the Data Transfer Catalogue.
6. In fulfilling its obligation under paragraph 1 the Licensee shall not, or
(if appropriate) shall ensure that the third party shall not, restrict,
distort or prevent competition in the provision of meter operation, data
retrieval, data processing, data aggregation or prepayment meter services.
7. Any obligation placed on the Licensee under Condition 11C to 11F in respect
of the provision of data transfer services shall (for the purposes of those
Conditions) be treated as a requirement on the Licensee to use its best
endeavours, in conjunction and co-operation with all other public
electricity suppliers, to fulfill that obligation or to procure the
fulfillment of that obligation by a third party, and Conditions 11C to 11F
shall apply mutatis mutandis to the provision of data transfer services.
8. Further, in relation to the provision of data transfer services the
reference at paragraph 1 of Condition 11F to the Licensee failing to enter
into an agreement shall be a reference to the Licensee, in conjunction with
all public electricity suppliers, failing to enter into or failing to
procure that a third party enters into an agreement.
9. In this Condition:
"Metering Point Administration means the Licensee or any other public
Service (MPAS) Operator" electricity supplier in its capacity as
a provider of metering point
administration services.
Manweb 192 April 1998
<PAGE>
Condition 11C. Requirement to offer terms for the provision of Metering and Data
Services
1. On application made by any private electricity supplier, or in the case of
sub-paragraphs 1(a) and (b) by any person, the Licensee shall (subject to
paragraph 6)offer to enter into an agreement for the provision within its
authorised area of such of the following services as may be required:
(a) the provision of metering equipment whether, at the discretion of the
Licensee, by way of sale, hire or loan ("meter provision services");
(b) the installation, commissioning, testing, repair and maintenance of
metering equipment ("meter operating services");
(c) the retrieval and verification of meter reading data from electricity
meters and the delivery of such data to any relevant person for the
purpose of data processing ("data retrieval services");
(d) the:
(i) processing, validation and (where necessary) estimation of meter
reading data; and
(ii) creation, processing and validation of data in respect of the
consumption of electricity at premises which receive an unmetered
supply,
and in each case the delivery of such data to any relevant person for
the purpose of data aggregation ("data processing services");
(e) the collation and summation of meter reading (whether actual or
estimated) and of data in respect of the consumption of electricity at
premises
Manweb 193 April 1998
<PAGE>
which receive an unmetered supply, and the delivery of such data to
any relevant person for settlement purposes ("data aggregation
services"); and
(f) the access to a system which supports the supply of electricity to
Designated Customers with prepayment meters ("prepayment meter
services"), such system providing as may be reasonably appropriate for
prepayment meters which require tokens, cards or keys for their
operation and comprising facilities for:
(i) (where requested) the purchase by private electricity suppliers
and/or encoding with data of tokens, cards or keys;
(ii) the use by customers of local outlets for the purchase of tokens
and the crediting with value of cards or keys;
(iii) the making of payments to suppliers in respect of sums received
by the Licensee on behalf of customers; and
(iv) where relevant, the transfer of customer data to private
electricity suppliers.
2. On application made by any Electricity Supplier the Licensee shall (subject
to paragraph 6) offer to provide metering point administration services
within its authorized area pursuant to and in accordance with the Master
Registration Agreement.
3. On application made by any person the Licensee shall (subject to paragraph
6) offer to enter into an agreement for the provision of data transfer
services.
4. In making an offer to enter into any agreement specified in paragraphs
1 to 3, the Licensee shall set out:
Manweb 194 April 1998
<PAGE>
(a) the date by which the services required shall be provided (time being
of the essence unless otherwise agreed between parties);
(b) the charges to be paid in respect of the services required, such
charges (unless manifestly inappropriate):
(i) to be presented in such a way as to be referable to the
statements prepared in accordance with paragraph 1 of Condition
11E or any revision thereof; and
(ii) to be set in conformity with the requirements of Condition 11E;
and
(c) such other detailed terms in respect of each of the services required
as are or may be appropriate for the purpose of the agreement.
5. The Licensee shall offer terms for agreements in accordance with paragraphs
1 to 3 as soon as practicable and (save where the Director consents to a
longer period) in any event not more than 28 days after receipt by the
Licensee from any person of an application containing all such information
as may reasonably be required for the purpose of formulating the terms of
the offer.
6. The License shall not be obliged pursuant to this Condition to offer to
enter or to enter into any agreement if to do so would be likely to cause
the Licensee to be in breach of any of the provisions referred to at
sub-paragraph 7(a) of Condition 8B.
7. The Licensee shall undertake each of the services referred to in paragraphs
1 to 3 in the most efficient and economic manner practicable having regard
to the alternatives available and the other requirements of this Licence
and of the Act in so far as they relate to the provision of those services.
Manweb 195 April 1998
<PAGE>
8. In the provision of any of the services referred to in paragraphs 1 to 3
(excepting prepayment meter services) the Licensee shall not restrict,
distort or prevent competition in the supply of electricity.
9. The services referred to in paragraph 1 to 3 shall collectively be
described as Metering and Data Services.
Manweb 196 April 1998
<PAGE>
Condition 11D. Non-discrimination in the provision of Metering and Data Services
1. In the provision of any of the Metering and Data Services the Licensee
shall not discriminate:
(a) between any persons or class or classes thereof; or
(b) as between the Licensee (in the provision of such services by the
Licensee as part of its Distribution Business to itself for the
purpose of its Supply or Second Tier Supply Business) and any persons
or class or classes thereof.
2. Without prejudice to paragraph 1, and subject to the provisions of
Condition 11E, the Licensee shall not make charges of the provision of any
of the Metering and Data Services to any person or class or classes thereof
which differ from the charges for such provision:
(a) to any other person or class or classes of person; or
(b) to the Licensee in the provision of such services by the Licensee (as
part of its Distribution Business to itself for the purposes of its
Supply or Second Tier Supply Business)
except in so far as such differences reasonably reflect differences in the
costs associated with such provision.
3. In relation to the provision of prepayment meter services paragraphs 1 and
2 shall have effect as if after "Distribution Business" were inserted
therein "or any other business."
Manweb 197 April 1998
<PAGE>
Condition 11E. Basis of charges for Metering and Data Services: requirements
for transparency
1. The Licensee shall as soon as reasonably practicable prepare statements in
a form approved by the Director setting out:
(a) the basis upon which charges for the provision of each of the Metering
and Data Services will be made; and
(b) information relating to the other terms that will apply to the
provision of each service,
in each case in such form and with such detail as shall be necessary to
enable any person to make a reasonable estimate of the charges to which he
would become liable for the provision of such services and of the other
terms, likely to have a material impact on the conduct of his business,
upon which the service would be provided and (without prejudice to the
foregoing) including the information set out in paragraph 2.
2. The statements referred to in paragraph 1 shall include:
(a) a schedule of charges for such services; and
(b) an explanation of the methods by which and the principles on which
such charges will be calculated.
3. The Director may, upon the written request of the Licensee, issue a
direction relieving the Licensee of its obligations under paragraphs 1 and
2 to such extent and subject to such terms and conditions as he may specify
in that direction.
4. The Licensee shall not in setting its charges or in setting the other terms
that will apply to the provision of any of the Metering and Data Services
restrict, distort or prevent competition in generation, distribution or
supply of electricity or in the
Manweb 198 April 1998
<PAGE>
provision of meter operation, data retrieval, data processing or data
aggregation services.
5. The Licensee may periodically review the information set out in and, with
the approval of the Director, alter the form of the statements prepared in
accordance with paragraph 1 and shall, at least once in every year that
this Licence is in force, make any necessary revisions to such statements
in order that the information set out in the statements shall continue to
be accurate in all material respects.
6. The Licensee shall send a copy of the statements prepared in accordance
with paragraph 1, and of each revision of such statements in accordance
with paragraph 5, to the Director.
7. The Licensee shall give or send a copy of statements prepared in accordance
with paragraph 1, or (as the case may be) of the latest revision of such
statements in accordance with paragraph 5, to any person who requests a
copy of such statement or statements.
8. The Licensee may make a charge for any statement given or sent pursuant to
paragraph 7 of an amount which shall not exceed the amount specified in
directions issued by the Director for the purposes of this Condition based
on the Director's estimate of the Licensee's reasonable costs of providing
such a statement.
Manweb 199 April 1998
<PAGE>
Condition 11F. Functions of the Director
1. If, after a period which appears to the Director to be reasonable for the
purpose, the Licensee has failed to enter into an agreement with any person
entitled or claiming to be entitled thereto pursuant to a request under
Condition 11C, the Director may, on the application of such person or the
Licensee, settle any terms of the agreement in dispute between the Licensee
and that person in such manner as appears to the Director to be reasonable
having (in so far as relevant) regard in particular to the following
considerations:
(a) that such person should pay in respect of the services required the
whole or the appropriate proportion of such sum as is determined in
accordance with paragraph 4 of Condition 11E;
(b) that the performance by the Licensee of its obligations under the
agreement should not cause it to be in breach of those provisions
referred to at subparagraph 7(a) of Condition 8B; and
(c) that the terms and conditions of the agreement so settled by the
director and of any other agreements entered into pursuant to a
request under Condition 11C should be, so far as circumstances allow,
in as similar a form as is practicable.
2. In so far as any person entitled or claiming to be entitled to an offer
under Condition 11C wishes to proceed on the basis of the agreement as
settled by the Director; the Licensee shall forthwith enter into and
implement such agreement in accordance with its terms.
3. If any party to such agreement proposes to vary the contractual terms of
any agreement for any Metering and Data Services entered into pursuant to
Condition 11C or this Condition in any manner provided for under such
agreement, the Director may, at the request of that party, settle any
dispute relating to such variation in such manner as appears to the
Director to be reasonable.
Manweb 200 April 1998
<PAGE>
4. The Director may (following consultation with the Licensee) issue
directions relieving the Licensee of its obligations under Condition 11C in
respect of such parts of that Condition and to such extent as may be
specified in the directions.
Manweb 201 April 1998
<PAGE>
Condition 12. Restrictions on use of certain information
1. Where the Licensee or any affiliate or related undertaking of the Licensee
receives, in the course of the operation of the Distribution Business,
information from any person:
(a) pursuant to the provisions of the Distribution Code;
(b) pursuant to the provisions of the Master Registration Agreement;
(c) in accordance with any agreement to provide a Metering or Data Service
pursuant to Condition 11C (but excluding prepayment meter services);
or
(d) in accordance with any agreement for Standard Terms of Connection,
such information shall be treated as confidential information for the
purposes of this Condition and, subject to paragraph 7, the provisions of
this Condition shall apply to that information, save where the person
providing the information notifies (or otherwise agrees with) the Licensee
that the information need not be treated as confidential.
2. The Licensee shall not (and shall procure that its affiliates and related
undertakings shall not) use confidential information in a manner which may
obtain for the Licensee or any affiliate or related undertaking of the
Licensee any commercial advantage in the operation of the Supply Business
or of the Second Tier Supply Business.
3. The Licensee shall not (and shall procure that its affiliates or related
undertakings shall not) authorise access to confidential information to any
of its (or its affiliates and related undertakings') employees, agents,
consultants or contractors save insofar as such persons require access to
the information for the effective operation of the Distribution Business.
Manweb 202 April 1998
<PAGE>
4. The Licensee shall use all reasonable endeavors to ensure that any person
with authorised access to confidential information in accordance with
paragraph 3 shall use such information only for the purposes for which it
was provided.
5. The Licensee shall not (and shall procure that its affiliates and related
undertakings shall not) disclose confidential information other than:
(a) subject to paragraph 6, to any professional or other advisers who
require such information for the purpose of providing advice which is
necessary for the effective operation of the Distribution Business.
(b) to the Director; and
(c) where the Licensee (or any affiliate or relate undertaking of the
Licensee) is required or permitted to disclose such information:
(i) in compliance with its duties under the Act or any other
requirement of a Competent Authority;
(ii) in compliance with the conditions of any licence granted under
the Act or any document referred to in such a licence with which
it is required by virtue of the Act or that licence to comply;
(iii) in compliance with any other requirement of law;
(iv) in response to a requirement of any Stock Exchange, the Panel on
Take-overs and Mergers or any other regulatory authority; or
(v) pursuant to the arbitration rules for the Electricity Arbitration
Association or pursuant to any judicial or other arbital process
or tribunal of competent jurisdiction.
Manweb 203 April 1998
<PAGE>
6. Where confidential information is disclosed in accordance with
sub-paragraph 5(a), the Licensee shall ensure that any persons to whom that
information is disclosed are aware of its confidential nature, and shall
take reasonable steps to ensure that such persons do not disclose that
confidential information save in accordance with the provisions of this
Condition.
7. The Director may, upon the written request of the Licensee, issue a to
direction relieving the Licensee of its obligations under paragraphs 1 to 6
to such extent and subject to such terms and conditions as he may specify
in that direction.
8. the Licensee shall no later than 1 January 1998 prepare a statement in a
form approved by the Director setting out the practices, procedures and
systems the Licensee has adopted (or intends to adopt) to ensure its
compliance;
(a) with paragraphs 2 to 6 of this Condition; and
(b) in the provision of services in accordance with Condition 9A, 11A, 11B
and 11C (excluding prepayment meter services), with its obligations
not to restrict, distort or prevent competition.
9. The Licensee may periodically revise the information set out in and, with
the approval of the Director, alter the form of the statement prepared in
accordance with paragraph 8 and shall, at least once every year during
which this Licensee is in force, review such statement in order that the
information set out therein shall continue to be accurate in all material
respects.
10. The Licensee shall take all reasonable steps to ensure that it complies
with the practices and procedures set out in the statement prepared in
accordance with paragraph 8 (as from time to time revised).
Manweb 204 April 1998
<PAGE>
11. The Licensee shall send a copy of the statement prepared in accordance with
paragraph 8, and of each revision of such statement in accordance with
paragraph 9, to the Director.
12. The Licensee shall give or send a copy of the statement prepared in
accordance with paragraph 8, or (as the case may be) of the latest revision
of such statement in accordance with paragraph 9, to any person who
requests a copy of such statement.
13. As soon as is reasonably practicable after the end of each calendar year
the Licensee shall produce a report as to its compliance during that year
with the practices and procedures set out in the statement prepared in
accordance with paragraph 8, and such report shall:
(a) detail the procedures followed by the Licensee during that year for
monitoring its compliance with paragraph 10;
(b) refer to such other matters as are or may be appropriate in relation
to the operation of the practices, procedures and systems adopted by
the Licensee during that year;
(c) outline the content of any representations received by the Licensee in
respect of practices and procedures set out in the statement prepared
in accordance with paragraph 8, and detail such steps as were taken by
the Licensee in response to those representations; and
(d) specify any remedial action taken by the Licensee to ensure its
conformity with the statement prepared in accordance with paragraph 8.
14. The Licensee shall submit to the Director a copy of the report produced in
accordance with paragraph 13, and shall give or send a copy of the report
to any person who requests such a copy.
Manweb 205 April 1998
<PAGE>
15. In this Condition:
"Competent Authority" means the Secretary of State, the Director and any
local or national agency, authority, department,
inspectorate, minister, ministry, official or
public or statutory person (whether autonomous or
not) of, or of the government of, the United
Kingdom or the European Community.
"confidential information" means all information required to be treated as
confidential under paragraph 1, but shall exclude
all information that is in or enters into the
public domain otherwise than as a consequence of
unauthorised disclosure by the Licensee or any
affiliate or related undertaking of the Licensee
(or by any person to whom the same is disclosed or
suffered to be disclosed by the Licensee or such
affiliate or related undertaking).
"Electricity Arbitration means the unincorporated members' club of that
Association" name formed inter alia to promote the efficient
and economic operation of the procedure for the
resolution of disputes within the electricity
supply industry by means of arbitration or
otherwise in accordance with its arbitration
rules.
Manweb 206 April 1998
<PAGE>
Condition 13. Compliance with the Grid Code
1. The Licensee shall comply with the provisions of the Grid Code in so far as
applicable to it.
2. The Director may (following consultation with the Transmission Company)
issue directions relieving the Licensee of its obligation under paragraph 1
in respect of such parts of the Grid Code and to such extent as may be
specified in those directions.
Manweb 207 April 1998
<PAGE>
Condition 14. Security arrangements
1. The Licensee shall comply with the provisions of the Fuel Security Code and
such provisions shall have effect as if they were set out in this Licence.
Manweb 208 April 1998
<PAGE>
Condition 15. Pooling and Settlement Agreement
1. The Licensee shall be a pool member under, and comply with the provisions
of, the Pooling and Settlement Agreement.
Manweb 209 April 1998
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Condition 16. Conditions of supply affecting customers' statutory rights
1. The Licensee shall not include in or send with any notice given under
Section 16(3) of the Act, or any form provided to customers for use in
giving notice under Section 16(2) of the Act, or any notice sent to
customers prior to their entering into a tariff or special agreement, an
invitation to agree to anything which, by virtue of the Act, may only be
done or (as the case may be) not done:
(a) with the agreement of that customer; or
(b) in any case where that customer withholds his agreement or makes that
agreement subject to terms and conditions to which the Licensee
objects, with the approval or consent or by order of the Secretary of
State
unless the form and terms of such invitation have first been submitted to
and approved by the Director.
2. Nothing in paragraph 1 shall prevent the Licensee from:
(a) inviting or requiring a customer to take a supply of electricity under
a special agreement in accordance with Section 22 of the Act;
(b) including in any such notice any provision or condition which the
Licensee is required or permitted to include in such notice by virtue
of Section 16(4) of the Act; or
(c) including in any such notice concerning the provision of a supply to
premises:
(i) not previously supplied by the Licensee; or
Manweb 210 April 1998
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(ii) where any modification is required to any electric line,
electrical plant or electric meter through which such premises
are supplied, or where any change is required to the location
thereof
an invitation to any customer to agree to any provision or condition
concerning the installation or location of any or all of an electric
line, electrical plant or an electric meter
in any such case without having submitted the form and terms of such
agreement or notice to the Director.
3. The Licensee shall include in any form provided to a customer for use in
giving notice under Section 16(2) of the Act a prominent statement of the
right of such customer to apply to the Director for the determination of
any dispute arising out of the proposed terms of supply.
Manweb 211 April 1998
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Condition 17. Licensee's apparatus on customers' side of meter
1. This Condition applies where the Licensee, whether on its own behalf or as
a provider of meter operation services to another Electricity Supplier,
installs a second meter or other apparatus for the purpose of ascertaining
or regulating the amount of electricity supplied, the period of supply, or
any other quantity or time connected with the supply on the customer's side
of non half-hourly metering equipment registering the quantity of the
supply to that customer.
2. Any second meter or other apparatus installed by the Licensee in the
postion and for a purpose described in paragraph 1 shall be such that the
power consumed by it, when aggregated with the power consumed by any other
meter or apparatus installed by the Licensee in the like position and for a
like purpose in relation to the customer, does not exceed 10 watts except
where otherwise agreed with the customer.
Manweb 212 April 1998
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Condition 18. Code of practice on payment of bills and guidance for dealing with
customers in difficulty
1. The Licensee shall, no later than 1 January 1998, prepare and submit to the
Director for his approval a code of practice concerning the payment of
electricity bills by its Domestic Customers, including appropriate guidance
for the assistance of such customers who, through misfortune or inability
to cope with electricity supplied on credit terms, may have difficulty in
paying such bills.
2. The code of practice shall include procedures by which the Licensee can
distinguish customers in difficulty (the "relevant customers") from others
in default and can:
(a) provide general information as to how relevant customers might reduce
their bills in the future by the more efficient use of electricity;
(b) where such a facility is available, accept in payment for electricity
supplied sums which are deducted at source from social security
benefits payable to relevant customers;
(c) detect failures by relevant customers to comply with arrangements
entered into for paying by installments charges for electricity
supplied;
(d) make such arrangements so as to take into account the customers'
ability to comply with them;
(e) ascertain with the assistance of other persons or organisations, the
ability of customers to comply with such arrangements;
(f) provide for customers who have failed to comply with such
arrangements, or procure for them the provision of, a prepayment meter
(where safe and practicable to do so); and
Manweb 213 April 1998
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(g) arrange for the calibration of any prepayment meter so provided so as
to take into account the customers' ability to pay any of the charges
due from them under such arrangements in addition to the other charges
lawfully being recovered through the prepayment meter.
3. In formulating the procedures referred to at paragraph 2 the Licensee shall
have particular regard:
(a) to the purpose of avoiding, in so far as is practicable, the
disconnection of premises occupied by relevant customers otherwise
than following compliance by the Licensee with such procedures; and
(b) to the interests of relevant customers who are of pensionable age or
disabled or chronically sick and to the purpose of avoiding, in so far
as is practicable, the disconnection of premises occupied by such
customers during the winter months of each year,
and the procedures shall be designed for the achievement of such purposes.
4. This Condition is subject to the provisions of Condition 23A
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Condition 19. Record of and report on performance
1. The Licensee shall keep a record of its general operation of the
arrangements mentioned in Conditions 18, 20, 20A, 21, 22 and 23 and if the
Director so directs in writing, of its operation of any particular cases
specified, or of a description specified, by him.
2. The Licensee shall keep a statistical record of its performance in relation
to the provision of electricity supply to its Designated Customers under
the terms of contracts or in accordance with tariffs fixed under Section 18
of the Act, including services relating to:
(a) the amounts of electricity supplied and the recovery of electricity
charges for each of the principal payment methods and for each set of
the contract or tariff terms offered;
(b) the disconnection of customers for non-payment of bills and breach of
payment arrangements agreed following such non-payment;
(c) the holding of security deposits;
(d) the installation of prepayment meters calibrated to recover customer
debts;
(e) the offering of appointments and the making of visits to customers'
premises;
(f) the response made to enquiries concerning electricity supply matters;
(g) the nature of guidance as to the efficient use of electricity given
and the measures to improve the efficient use of electricity
introduced by the Licensee; and
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(h) payments made to customers and to suppliers pursuant to the standards
of performance prescribed by the Director in accordance with
regulations made under Section 39 of the Act or in accordance with
paragraphs 2 and 3 of Condition 21.
3. The Licensee shall, from time to time as required by the Director, provide
to the Director and to the Relevant Consumers' Committee such of the
information contained in the records prepared in accordance with paragraphs
1 and 2 as the Director may request in writing.
4. As soon as is reasonably practicable after the end of each calendar year,
the Licensee shall submit to the Director and the Relevant Consumer's
Committee a report dealing with the matters mentioned in paragraphs 1 and 2
in relation to that year and shall:
(a) publish the report so submitted in such manner as will in the
reasonable opinion of the Licensee secure adequate publicity for it;
and
(b) send a copy of it free of charge to any person requesting one,
except that, in performing its obligation under sub-paragraphs 4(a) and
(b), the Licensee shall exclude from the report such information as appears
to it to be necessary or expedient to ensure that, save where they consent,
individual Designated Customers referred to therein cannot readily be
identified.
5. The report shall be presented, so far as is reasonably practicable, in a
standard form designated by the Director for the purposes of this
Condition.
Manweb 216 April 1998
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Condition 20. Provision of services for persons who are of pensionable age
or disabled or chronically sick
1. The Licensee shall, no later than 1 January 1998, prepare and submit to the
Director for his approval a code of practice detailing the special services
the Licensee will make available for Domestic Customers who are of
pensionable age or chronically sick.
2. The code of practice shall include arrangements by which the Licensee will
where appropriate, in respect of its customers:
(a) provide where practicable special controls and adaptors for electrical
appliances and meters (including prepayment meters) and reposition
meters (and shall set out any charges to be made for the provision of
such services);
(b) provide special means of identifying persons acting on behalf of the
Licensee;
(c) give advice on the use of electricity;
(d) send bills in respect of the supply of electricity to a customer to
any person who is willing to be sent such bills and is nominated by
that customer (without prejudice, however, to the right of the
Licensee to send such bills both to the customer and to the nominated
person where that appears appropriate to the Licensee);
(e) make available (free of charge) to blind and partially sighted
customers, by telephone or other appropriate means, information
concerning the details of any bill relating to the supply of
electricity to them and a facility for enquiring or complaining in
respect of any such bill or any service provided by the Licensee; and
(f) make available (free of charge) to deaf and hearing impaired
customers, being in possession of appropriate equipment, facilities to
assist them in enquiring or complaining about any bill relating to the
supply of electricity to them or any service provided by the Licensee.
Manweb 217 April 1998
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3. The code of practice shall further include arrangements whereby the
Licensee will:
(a) take reasonable steps to draw the attention of its customers to the
existence of a register of customers who may be expected, by virtue of
being of pensionable age or disabled or chronically sick, to require:
(i) information and advice in respect of the matters set out at
paragraph 2; or
(ii) advance notice of interruptions to the supply of electricity;
(b) maintain such a register, comprising the relevant details of each
customer who requests (or, in the case of a customer supplied by a
private electricity supplier, whose supplier requests) his inclusion
on it and:
(i) give to those of its own customers so registered, in respect of
the matters set out at paragraph 2; and
(ii) give to all customers so registered, in respect of interruptions
to the supply of electricity,
such information and advice as may be appropriate and is of such
nature as shall be set out in the code of practice.
4. This Condition is subject to the provisions of Condition 23A.
Manweb 218 April 1998
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Condition 20A. Code of practice on procedures with respect to site access
1. The Licensee shall, no later than 1 January 1998, prepare and submit to the
Director for his approval a code of practice setting out the principles and
procedures the Licensee will follow in respect of any person acting on its
behalf who requires access to customers' premises.
2. The code of practice shall include procedures calculated to ensure that
persons visiting customers' premises on behalf of the Licensee:
(a) possess the skills necessary to perform the required duties;
(b) are readily identifiable to members of the public;
(c) use passwords provided for vulnerable customers;
(d) are appropriate persons to visit and enter customers' premises; and
(e) are able to inform customers, on request, of a contact point for help
and advice they may require in relation to the supply of electricity.
3. This Condition is subject to the provisions of Condition 23A.
Manweb 219 April 1998
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Condition 21. Standards of performance
1. The Licensee shall conduct its Supply and Distribution Businesses in the
manner which it reasonably considers to be the best calculated to achieve
any standards of overall performance or standards of performance in
connection with the promotion of the efficient use of electricity by
customers, as may be determined by the Director pursuant to Sections 40 and
41 respectively of the Act.
2. The Licensee shall not enter into a use of system agreement with any
Electricity Supplier that does not provide for the Licensee to make
payments in respect of the performance of the Distribution Business to the
Electricity Supplier for the benefit of any customer of that Electricity
Supplier equivalent to such sums as would have been paid pursuant to the
standards of performance prescribed by the Director in accordance with
regulations made under Section 39 of the Act had that customer been a
tariff customer of the Licensee in those situations where the Licensee
would have been obliged to make such a payment.
3. In making payments in accordance with any standards of performance or in
accordance with paragraph 2, the Licensee shall not discriminate:
(a) between any persons or class or classes thereof; or
(b) as between the Licensee and any persons or class or classes thereof.
Manweb 220 April 1998
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Condition 22. Efficient use of electricity
1. The Licensee shall, no later than 1 January 1998, prepare and submit to the
Director for his approval a code of practice setting out the ways in which
the Licensee will make available to customers such guidance on the
efficient use of electricity as will, in the opinion of the Licensee,
enable them to make informed judgements on measures to improve the
efficiency with which they use the electricity supplied to them. Such code
of practice shall include, but shall not be limited to:
(a) the preparation and making available free of charge to any customer
who requests it of a statement, in form approved by the Director,
setting out information and advice for the guidance of customers in
the efficient use of electricity supplied to them;
(b) the making of arrangements for maintaining sources from which
customers may obtain further information about the efficient use of
electricity supplied to them, including the maintenance of a telephone
information service; and
(c) the preparation and making available free of charge to any customer
who requests it of a statement or statements of sources (to the extent
that the Licensee is aware of the same) outside the Licensee's
organisation from which customers may obtain additional information or
assistance about measures to improve the efficiency with which they
use the electricity supplied to them, such statement or statements to
include basic information which is publicly available in financial
assistance towards the costs of such measures from Central or Local
Government or through bodies in receipt of financial support from
Government in connection with measures to promote the efficiency of
energy use.
2. Where the Director (who may have regard to the need for economy, efficiency
and effectiveness before giving directions under this paragraph) gives
directions to do so, the Licensee shall:
Manweb 221 April 1998
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(a) review and prepare a revision of the code of practice;
(b) take steps to bring to the attention of customers information on the
efficient use of electricity supplied to them; and
(c) send to each customer a copy of any information published by the
Director pursuant to Section 48 of the Act
in such manner and at such times as will comply with those directions.
3. This Condition is subject to the provisions of Condition 23A.
Manweb 222 April 1998
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Condition 23. Complaint handling procedure
1. The Licensee shall, no later than 1 January 1998, prepare and submit to the
Director for his approval a code of practice detailing the procedure for
handling complaints from customers about the manner in which the Licensee
conducts its Supply and Distribution Businesses.
2. Any procedure established in accordance with this Condition shall specify
the periods within which it is intended that different descriptions of
complaint should be processed and resolved.
3. This Condition is subject to the provisions of Condition 23A.
Manweb 223 April 1998
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Condition 23A. Preparation, review of and compliance with customer service codes
1. This Condition applies to any code of practice required to be prepared by
the Licensee pursuant to Conditions 18, 20, 20A, 22 and 23 of this Licence.
2. In first preparing such a code the Licensee shall, prior to submitting that
code to the Director, consult the Relevant Consumers' Committee and shall
have regard to any representations made by the committee about such code or
the manner in which it is likely to be operated.
3. Where before the expiry of 30 days of the Licensee first submitting such
code to the Director for his approval the Director notifies the Licensee
that the Director considers the code is not sufficient for the purposes of
meeting the requirements of this Licence the Licensee shall forthwith make
such changes as the Director may require.
4. The Licensee shall, whenever requested to do so by the Director, review
such code and the manner in which it has been operated, with a view to
determining whether any modification should be made to it or to the manner
of its operation.
5. In carrying out any such review the Licensee shall consult the Relevant
Consumers' Committee and shall have regard to any representations made by
it about such code or the manner in which it is likely to be or (as the
case may be) has been operated.
6. The Licensee shall submit any revision of such code which, after consulting
the Relevant Consumers' Committee in accordance with paragraph 5, it wishes
to make, to the Director for his approval and following his approval in
writing shall then revise the code.
7. The Licensee shall:
(a) as soon as practicable following the preparation of any code or any
revision made to it send to the Director and the Relevant Consumers'
Committee a
Manweb 224 April 1998
<PAGE>
copy of such code or such revision (in each case in the form approved
by the Director);
(b) draw the attention of those of its customers to whom such code applies
to the existence of the code and of each substantive revision of it
and to the means by which they may inspect a copy of such code in its
latest form; and
(c) give or send free of charge a copy of such code (as from time to time
revised) to any person who requests it.
8. No changes may be made to any code otherwise than in accordance with the
foregoing procedures.
9. The Licensee shall ensure, so far as reasonably practicable, that it
complies with such arrangements or procedures (as the case may be) as are
contained in or described by any code to which this condition applies and
approved by the Director or any revision to such code approved by the
Director.
Manweb 225 April 1998
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Condition 23B. Information given to Designated Customers
1. The Licensee shall keep each of its Designated Customers (save insofar as
he receives an unmetered supply) informed of the amount of electricity
which, since he was last informed, its records show as having been consumed
by that customer:
(a) according to the meter through which he is supplied; or
(b) where no meter reading is available, according to the estimate of the
Licensee.
2. The Licensee shall keep each of its Designated Customers informed:
(a) that the Relevant Consumers' Committee or the Director can assist in
resolving complaints which the Licensee has not resolved to the
customer's satisfaction, and
(b) of how the appropriate office of the Committee or the Director can be
contacted.
3. The Licensee may discharge its duties under paragraphs 1 and 2 by providing
the relevant information on or with each bill or statement given to a
customer in respect of charges for the supply of electricity, and annually
to each customer to whom no such bills or statements are rendered.
Manweb 226 April 1998
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Condition 23C. Publication of information to customers
1. Subject to paragraph 5, the Licensee shall by 31 December 1997 inform each
customer of a number or numbers ("The Supply Number(s)") relevant to the
registration, under the Master Registration Agreement, of a supplier of
electricity to the premises owned or occupied by such customer.
2. The Licensee shall, at the same time as it informs a customer of the
relevant Supply Number in accordance with paragraph 1, send to that
customer a statement in writing which provides a clear and sufficient
explanation of the nature and function of the Supply Number, such statement
having received the prior approval of the Director.
3. The Supply Number shall consist of a number of data items, each of which
shall be represented by a numerical identifier which shall:
(a) have the number of digits specified in a direction issued by the
Director;
(b) be approved by the Director; and
(c) be used by the Licensee in common with all Electricity Suppliers.
4. Subject to paragraph 5, the Licensee shall inform each of its customers of
the Supply Number relevant to such customer:
(a) in a form in accordance with the terms of a direction issued by the
Director, on each bill or statement given to the customer in relation
to the supply of electricity; and
(b) annually where the customer does not receive such a bill or statement.
Manweb 227 April 1998
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5. The Director may issue a direction relieving the Licensee of its obligation
under paragraphs 1 and 4 to such extent and subject to such terms and
conditions as he may specify in that direction.
Manweb 228 April 1998
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Condition 24. Relations with the Relevant Consumers' Committee
1. The Licensee shall meet with the Relevant Consumers' Committee whenever
requested to do so by that committee, up to a maximum of six times in every
year during the period of this Licence.
2. Without prejudice to paragraph 1, the Licensee shall meet the Relevant
Consumers' Committee at least once in every year during the period of this
Licence.
3. In at least one meeting with the Relevant Consumers' Committee in every
year during the period of this Licence, the Licensee shall be represented
by one or more directors of the Licensee.
Manweb 229 April 1998
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Condition 25. Health and safety of employees
1. The Licensee shall, together with all other licensees, consult with
appropriate representatives of persons employed by itself and by those
licensees in order to establish and maintain an appropriate machinery or
forum for the joint consideration of matters of mutual concern in respect
of the health and safety of such persons.
2. In this Condition:
"licensees" means all holders of licences granted under
Section 6(1)(a), 6(1)(b), 6(1)(c) and 6(2) of the
Act.
Manweb 230 April 1998
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Condition 26. (No longer used)
Manweb 231 April 1998
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Condition 27. Disposal of relevant assets
1. The Licensee shall not dispose of or relinquish operational control over
any relevant asset otherwise than in accordance with the following
paragraphs of this Condition.
2. Save as provided in paragraph 3, the Licensee shall give to the Director
not less than two months' prior written notice of its intention to dispose
of or relinquish operational control over any relevant asset, together with
such further information as the Director may request relating to such asset
or the circumstances of such intended disposal or relinquishment of control
or to the intentions in regard thereto of the person proposing to acquire
such asset or operational control over such asset.
3. Notwithstanding paragraphs 1 and 2, the Licensee may dispose of or
relinquish operational control over any relevant asset:
(a) where:
(i) the Director has issued directions for the purposes of this
Condition containing a general consent (whether or not subject to
conditions) to:
(aa) transactions of a specified description; or
(bb) the disposal of or relinquishment of operational control
over relevant assets of a specified description; and
(ii) the transaction or the relevant assets are of a description to
which such directions apply and the disposal or relinquishment is
in accordance with any conditions to which the consent is
subject;
(b) where the disposal or relinquishment of operational control in
question is required by or under any enactment or subordinate
legislation.
Manweb 232 April 1998
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4. Notwithstanding paragraph 1, the Licensee may dispose of or relinquish
operational control over any relevant asset as is specified in any notice
given under paragraph 2 in circumstances where:
(a) the Director confirms in writing that he consents to such disposal or
relinquishment (which consent may be made subject to the acceptance by
the Licensee or any third party in favour of whom the relevant asset
is proposed to be disposed or operational control is proposed to be
relinquished of such conditions as the Director may specify); or
(b) the Director does not inform the Licensee in writing of any objection
to such disposal or relinquishment of control within the notice period
referred to in paragraph 2.
5. Without prejudice to paragraphs 1 to 4, the Licensee shall not after 14
February 1996 without the written consent of the Director after the
disclosure of all material facts;
(a) create any mortgage, charge, pledge, lien or other form of security or
encumbrance whatsoever, undertake any indebtedness to any other person
or enter into any guarantee or any obligation otherwise than:
(i) on an arm's length basis;
(ii) on normal commercial terms;
(iii) for Permitted Purpose; and
(iv) (if the transaction is within the ambit of paragraph 1) in
accordance with paragraphs 3 and 4;
Manweb 233 April 1998
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provided that nothing in this Condition shall prevent the Licensee
guaranteeing any obligation owed by an affiliated or related undertaking of
the Licensee which has been or is to be incurred for a Permitted Purpose
(b) transfer, lease, license or lend any sum or sums, asset, right or
benefit to any affiliate or related undertaking of the Licensee
otherwise than by way of:
(i) a dividend or other distribution out of distributable reserves;
(ii) repayment of capital;
(iii) payment properly due for any goods, services or assets provided
on an arm's length basis and on normal commercial terms;
(iv) a transfer, lease, licence or loan of any asset, right or benefit
on an arm's length basis and on normal commercial terms;
(v) repayment of any loan or payment of any interest on such a loan
on an arm's length basis and on normal commercial terms;
(vi) payments for group corporation tax relief or for the surrender of
Advance Corporation Tax;
(vii) a transfer for the purpose of satisfying paragraph 3 of
Condition 2A;
(viii) an acquisition of shares in conformity with paragraph 2 of
Condition 2A; or
(ix) a loan not prohibited by sub-paragraph (c);
(c) make loans to any affiliated or related undertaking of the Licensee,
other than loans for a Permitted Purpose.
Manweb 234 April 1998
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6. In this Condition:
"disposal" includes any sale, gift, lease, licence, loan,
mortgage, charge or the grant of any other
encumbrance or the permitting of any encumbrance
to subsist or any other disposition to a third
party, and "dispose" shall be construed
accordingly.
"indebtedness" means all liabilities now or hereafter due, owing
or incurred, whether actual or contingent, whether
solely or jointly with any other person and
whether as principal or surety, together with any
interest accruing thereon and all costs, charges,
penalties and expenses incurred in connection
therewith.
"relevant asset" means any asset for the time being forming part of
the Licensee's Distribution System, any control
centre for use in conjunction therewith and any
legal or beneficial interest in land upon which
any of the foregoing is situate.
Manweb 235 April 1998
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Condition 28. Provision of information to the Director
1. Subject to paragraphs 6 and 7, the Licensee shall furnish to the Director,
in such manner and at such times as the Director may require, such
information and shall procure and furnish to him such reports, as the
Director may consider necessary in the light of the Conditions or as he may
require for the purpose of performing:
(a) the functions assigned to him by or under the Act; and
(b) any functions transferred to him under the Act.
2. The Licensee shall by 1 March 1996 procure from the holding company of the
Licensee a legally enforeceable undertaking in favour of the Licensee in a
form already specified by the Director; such undertaking shall remain in
force for as long as the Licensee remains the holder of this Licence and
the giver of the undertaking remains the holding company of the Licensee;
such undertaking shall provide that the holding company will give to the
Licensee, and will procure that each subsidiary of that holding company
(other than the Licensee and its subsidiaries) will give to the Licensee,
all such information as may be necessary to enable the Licensee to comply
fully with paragraph 1. Such undertaking shall remain in force for as long
as the Licensee remains the holder of this Licence and the giver of the
undertaking remains the holding company of the Licensee.
3. The Licensee shall deliver to the Director evidence (including a copy of
such undertaking) that the Licensee has complied with the obligation to
procure an undertaking pursuant to paragraph 2.
4. The Licensee shall not, save with the consent in writing of the Director,
enter (directly or indirectly) into any agreement or arrangement with the
holding company of the Licensee or any of its subsidiaries of the holding
company (other than the subsidiaries of the Licensee) at a time when:
(i) an undertaking complying with paragraph 2 is not in place; or
Manweb 236 April 1998
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(ii) there is an unremedied breach of such undertaking.
5. Without prejudice to the generality of paragraph 1, the Director may call
for the furnishing of accounting information which is more extensive than
or differs from that required to be prepared and supplied to the Director
under Condition 2.
6. The Licensee may not be required by the Director to furnish him under this
Condition with information for the purpose of the exercise of his functions
under Section 48 of the Act.
7. The Licensee may not be required by the Director to furnish him under this
Condition with any information in relation to an enforcement matter which
the Licensee could not be compelled to produce or give under Section 28(3)
of the Act.
8. The power of the Director to call for information under paragraph 1 is in
addition to the power of the Director to call for information under or
pursuant to any other Condition.
9. The Licensee shall, if so requested by the Director, give reasoned comments
on the accuracy and text of any information and advice (so far as relating
to the Supply and Distribution Businesses) which the Director proposes to
publish pursuant to Section 48 of the Act.
10. In this Condition "information" shall include any documents, accounts,
estimates, returns or reports (whether or not prepared specifically at the
request of the Director) of any description specified by the Director.
Manweb 237 April 1998
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Condition 29. Payment of fees
1. The Licensee shall, at the times stated hereunder, pay to the Secretary of
State fees of the amount specified in, or determined under, this Condition.
2. In respect of the year beginning 1 April 1991 and in each subsequent year,
the Licensee shall pay to the Secretary of State a fee which is the
aggregate of the following amounts:
(a) the amount which is a proportion as determined by the Director of the
amount estimated by the Director, according to a method which has
previously been disclosed in writing to the Licensee, as likely to be
his total costs during the coming year;
(b) the amount (or, where the Relevant Consumers' Committee in question is
the consumers' committee for more than one public electricity
supplier, the amount which is a proportion as determined by the
Director, according to a method which has previously been disclosed in
writing to the Licensee, of such amount) estimated by the Director
(having regard to any statement under paragraph 8(2) of Schedule 2 to
the Act), as being likely to be the costs during the coming year of
the Relevant Consumers' Committee in the exercise of the functions
assigned to it by or under the Act and any other such functions as it
has been or may be required to exercise by the Director;
(c) an amount which is a proportion as determined by the Director of the
amount estimated by the Director (in consultation with the Monopolies
Commission) as having been incurred in the calendar year immediately
preceding the 1st April in question by the Monopolies Commission in
connection with references made to it under section 12 of the Act with
respect to this Licence or any other licence issued under section
6(1)(c) of the Act; and
(d) the difference (being a positive or a negative amount), if any,
between:
Manweb 238 April 1998
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(i) the amount of the fee paid by the Licensee in respect of the year
immediately preceding the lst April in question; and
(ii) the amount which that fee would have been in respect of that year
had the amounts comprised therein been calculated by reference
to:
(aa) in the case of sub-paragraph 2(a), the actual total costs of
the Director during that year and the proportion thereof
attributable to the Licensee; and
(bb) in the case of sub-paragraph 2(b), the actual total costs of
the Relevant Consumers' Committee during that year and where
appropriate, the proportion thereof attributable to the
Licensee,
(such costs being apportioned in each case as determined by the
Director according to a method previously disclosed in writing to
the Licensee),
and the fee shall be paid by the Licensee to the Secretary of State within one
month of the Director giving notice to the Licensee of its amount if that notice
is given within 6 months of the beginning of the year in respect of which the
fee is payable.
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Condition 30. Designated Premises
1. For the purposes of this Licence, the question whether any premises are
"Designated Premises" shall be determined in accordance with the provisions
of this Condition.
2. Premises are Designated Premises if they are either:
(a) Domestic Premises; or
(b) premises at which, in the reasonable expectation of the Licensee at
the time of entering into a contract for the supply of electricity to
such premises, the normal annual consumption of electricity will
amount to no more than 12,000 kWh,
but excluding premises referred to at sub-paragraph (b) which receive
an unmetered supply, or which are supplied through half-hourly or
maximum demand metering equipment or under the terms of a multi-site
contract.
3. For the purposes of this Condition, a "multi-site contract" is a contract
for the supply of electricity both to any premises which do not fall within
the terms of sub-paragraphs 2(a) or (b) and to one or more other premises
(not being Domestic Premises), all of which premises are owned or occupied
by:
(a) the same person or body of persons whether corporate or unincorporate;
or
(b) an undertaking (the "principal undertaking") and any holding company,
subsidiary, or subsidiary of the holding company of that principal
undertaking, or any other undertaking in which the principal
undertaking has a participating interest.
4. Any premises supplied by the Licensee which (in accordance with paragraphs
1 to 3) were not Designated Premises at the time at which the Licensee
entered into a contract
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<PAGE>
for their supply shall, notwithstanding subsequent changes to the nature or
level of the consumption of electricity at those premises, not become
Designated Premises for the purposes of this Licence prior to the time at
which they cease to be supplied by the Licencee.
5. Any premises supplied by the Licensee which (in accordance with paragraphs
1 to 3) were Designated Premises at the time at which the Licensee entered
into a contract for their supply shall cease to be Designated Premises for
the purposes of this Licence where:
(a) they have been continuously supplied by the Licensee for a period of
at least 12 months and:
(i) they are not, or are no longer, Domestic Premises; and
(ii) it is reasonably to be expected that the normal annual
consumption of electricity at the premises will amount to more
than 12,000 kWh; or
(b) (not being, or being no longer, Domestic Premises) the premises
commence receipt of an unmetered supply or a supply through
half-hourly or maximum demand metering equipment or under the terms of
a multi-site contract.
6. In this Condition:
"maximum demand metering means metering equipment which is
equipment" capable of recording the demand for
electricity supplied to premises during
the half hour of maximum demand in any
period of supply.
Manweb 241 April 1998
<PAGE>
Condition 31. Terms for supply of electricity incompatible with Licence
Conditions
1. Without prejudice to its rights and obligations under the Act, the Licensee
shall not enter into, offer to enter into, or enter into a variation of any
contract for the supply of electricity to a customer at Designated Premises
otherwise than on terms which comply with the Licensee's obligations under
the Licence.
2. The Licensee shall not enforce or take advantage of any term of a contract
for the supply of electricity to a customer at Designated Premises if the
inclusion of that term was in breach of the provisions of this Licence.
3. The Licensee shall not take advantage of the omission of any term from a
contract for the supply of electricity to a customer at Designated Premises
if the omission of that term was in breach of the provisions of this
Licence.
Manweb 242 April 1998
<PAGE>
Condition 32. Limitation on requirements for termination fees
1. Where the Licensee enters into any Designated Supply Contract in the
circumstances set out at paragraph 2 it may not in such contract provide
for the payment of any termination fee by the Designated Customer.
2. Paragraph 1 applies in respect of any Designated Supply Contract entered
into prior to the date which is 90 days following the earliest date
specified (and not subsequently withdrawn or varied to a later date) in any
direction or variation of a direction issued by the Director, pursuant to
condition 3 of the licence held by any Second Tier Supplier, in relation to
the supply of electricity to all premises within the authorised area.
Manweb 243 April 1998
<PAGE>
Condition 33. Revision of the Contract Terms Conditions
1. The Director, in accordance with the provisions of this Condition, may from
time to time review (in whole or in part) the provisions and operation of
the Contract Terms Conditions in the licences of all Electricity Suppliers
with a view to establishing whether any revision should be made to the
Contract Terms Conditions in all such licences.
2. At the commencement of any review by the Director, the Director shall:
(a) give to all Relevant Parties a notice in writing which sets out the
terms of the review and of any proposals in connection therewith and
which invites the submission of any representations by a specified
date (being not less than 28 days after the date of the notice); and
(b) publish such notice or an accurate summary of it in a manner which
will, in the opinion of the Director, secure adequate publicity for
it.
3. On receiving from the Director notice of such review the Licensee may
submit any representations on matters within the terms of the review by the
date specified in the notice.
4. As soon as practicable following the completion of any such review, the
Director shall send to each Relevant Party, and to any person who has made
representation to him by virtue of the notice published under sub-paragraph
2(b), a copy of:
(a) a report on the outcome of such review;
(b) any revisions which he proposes to make, having regard to any
representations received during such review, to the Contract Terms
Conditions in the licences of all Electricity Suppliers;
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<PAGE>
(c) a statement of his reasons for proposing those revisions; and
(d) a notice specifying the time (being not less than 28 days from the
date the Director issues the notice) within which Electricity
Suppliers which are entitled to supply electricity to Designated
Premises shall state whether or not they consent to the proposed
revisions to the Contract Terms Conditions in their licences.
5. A revision proposed to be made by the Director to the Contract Terms
Conditions of all Electricity Suppliers may be made only where the Director
is satisfied that the figures determined in accordance with paragraphs 6
and 7 (expressed as a percentage) are each not less than 90 per cent.
6. The figure determined in accordance with this paragraph shall be calculated
under the following formula:
C
--- x 100
C+N
where:
C= the number of Designated Premises supplied on contract by
consenting Electricity Supplies; and
N= the number of Designated Premises supplied on contract by
non-consenting Electricity Suppliers
as estimated (in each case) by the Director on the basis of the information
most recently available to him.
7. The figure determined in accordance with this paragraph shall be calculated
under the following formula:
Manweb 245 April 1998
<PAGE>
C x 100
---
C+N
where:
C = the number of consenting Electricity Suppliers; and
N = the number of non-consenting Electricity Suppliers
8. In paragraphs 6 and 7 the expressions "consenting" and
"non-consenting" refer (as the case may be) to the consent or
otherwise of Electricity Suppliers which are entitled to supply
electricity to Designated Premises to the proposed revision to the
Contract Terms Conditions in their licences.
9. Where the Director is satisfied that the figures determined in
accordance with paragraphs 6 and 7 (expressed as a percentage) are
each not less than 90 per cent the Director may amend the Contract
Terms Conditions of the Licensee in accordance with the proposed
revision.
10. No revision made to the Contract Terms Conditions by virtue of this
Condition may introduce an obligation in respect of any matter other
than one which:
(a) is provided for, or is reasonably ancillary to a matter provided
for, under the Contract Terms Conditions on the date on which
such Conditions come into force;
(b) concerns the terms of contracts offered or entered into by the
Licensee for the supply of electricity to Designated Premises; or
(c) concerns any dealings with customers by or on behalf of the
Licensee prior to and for the purpose of offering or entering
into contracts for the supply of electricity to Designated
Premises.
Manweb 246 April 1998
<PAGE>
11. In this Condition:
"Relevant Parties" means the Licensee, all other
Electricity Suppliers, the Electricity
Consumers' Committees and such other
persons or bodies as in the opinion of
the Director are representative of those
likely to be affected by a revision to
the Contract Terms Conditions.
Manweb 247 April 1998
<PAGE>
SECTION C. THE CONTRACT TERMS CONDITIONS
Condition 34. Designated Supply Contracts
1. A Designated Supply Contract is a contract for the supply of electricity to
Designated Premises, as varied from time to time, which complies with the
provisions of this Condition.
2. Without prejudice to its rights and obligations under the Act, the Licensee
shall not supply electricity to Designated Premises on contract except
under a Designated Supply Contract.
3. A Designated Supply Contract shall:
(a) be in a standard form, save that there may be different forms for
different areas, cases and circumstances:
(b) set out all the terms and conditions, including terms as to price, on
which the Licensee will supply electricity in the relevant case; and
(c) contain terms reflecting the termination provisions of Conditions 38
and 39.
4. Any Designated Supply Contract for both the supply of electricity and the
provision of goods or services shall identify separately the charge for
that supply from the charge for the goods or services.
5. Where a Designated Supply Contract may be terminated by a customer by
virtue of any provision included in that contract in compliance with
Conditions 38 and 39, the Licensee may at its discretion accept a lesser
period of notice than is specified in that provision.
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<PAGE>
6. Nothing in this Licence shall prevent the Licensee from entering into a
Designated Supply Contract which contains provisions for its termination
that are additional to and do not derogate from those set out at Conditions
38 and 39.
Manweb 249 April 1998
<PAGE>
Condition 35. Contractual terms
1. Where the Licensee offers to supply electricity to Domestic Premises under
Designated Supply Contracts, it shall have available forms of Designated
Supply Contract which provide for the payment of charges for electricity
supplied to Domestic Premises:
(a) by prepayment through a prepayment meter;
(b) by different methods, including:
(i) by cash, at such places and to such persons as are reasonable in
all the circumstances; and
(ii) by cheque, and
(c) at a reasonable range of different intervals, including:
(i) paying monthly a predetermined sum; and
(ii) paying quarterly in arrears.
2. Before entering into any contract to supply electricity to Domestic
Premises (other than through a prepayment meter) the Licensee shall inform
the customer of and offer to enter into Designated Supply Contracts which
comply with sub-paragraphs 1(b) and (c).
3. The Licensee shall process all requests for a supply of electricity to
Designated Premises without undue preference or undue discrimination.
4. The Licensee shall send copies of each of the forms of Designated Supply
Contract (as revised from time to time) under which it supplies or offers
to supply electricity:
Manweb 250 April 1998
<PAGE>
(a) on receipt of a request, to any person; and
(b) not later than the date on which it first offers to supply electricity
under each such form of Designated Supply Contract (or revision
thereof), to the Director.
5. The Licensee shall prepare, in respect of each form of Designated Supply
Contract:
(a) a document which sets out an accurate summary of the Principal Terms
of that form of Designated Supply Contract; and
(b) particulars of inducements offered to any person entering into such a
contract which might reasonably be expected materially to influence
the decision whether or not to enter into it.
6. The Licensee shall publish the documents and particulars referred to at
paragraph 5 in a manner that will in the opinion of the Licensee secure
adequate publicity for them, and shall send copies of them to the Director
no later than the date on which they are published.
Manweb 251 April 1998
<PAGE>
Condition 36. Notification of terms
1. Before entering into any Designated Supply Contract the Licensee shall take
all reasonable steps to draw the attention of the customer to the Principal
Terms of the contract.
2. Where the Licensee has entered into a Designated Supply Contract it shall
(except where it has already done so) provide the customer within 2 working
days of the date of the contract with a copy of its full terms and
conditions.
3. Subject to paragraph 4 the Licensee shall, at least 30 days before any
Designated Supply Contract to supply electricity for a specified period is
due to expire, send to the customer:
(a) a written offer to enter into a new contract for supply from the date
of expiry of the existing contract, drawing the attention of the
customer to the Principal Terms relevant to that offer.
(b) an accurate summary of the Principal Terms of other contracts which
the Licensee will make available to the customer; and
(c) details of how the customer can obtain continuity of supply from the
Licensee.
4. Paragraph 3 shall not apply where:
(a) the customer has informed the Licensee that he does not wish to
continue to be supplied by it after the expiry of the existing
contract; or
(b) it is not reasonable in all the circumstances for the Licensee to be
required to continue to supply that customer and the Licensee has (at
least 30 days before the contract was due to expire) both notified the
customer to that effect and
Manweb 252 April 1998
<PAGE>
informed him that he must make arrangements to obtain a supply from
another Electricity Supplier.
5. Where a Designated Supply Contract allows for its unilateral variation (in
any respect) by the Licensee and is so varied to the significant
disadvantage of the customer, the Licensee shall within 10 days of the
variation give to the customer written notice:
(a) of the variation;
(b) of the customer's right to terminate the contract; and
(c) of the effect of paragraph 6.
6. Where a customer gives to the Licensee a valid notice of termination within
14 days of receiving notice under paragraph 5, the Licensee shall treat the
variation as ineffective and shall neither enforce nor take advantage of
it.
7. Where the Licensee believes that any of its customers no longer occupies or
is about to vacate Designated Premises to which it supplies electricity, it
shall as soon as reasonably practicable provide any new occupier of those
premises with an accurate summary of the Principal Terms of contracts it
will make available to him.
Manweb 253 April 1998
<PAGE>
Condition 37. Security deposits
1. The Licensee shall not, in respect of the supply of electricity under any
Designated Supply Contract, require a deposit:
(a) where the customer is prepared to be supplied through a prepayment
meter and it is reasonably practicable in all the circumstances
(including in particular the risk of loss or damage) for the Licensee
to provide such a meter; or
(b) where it is otherwise unreasonable in all the circumstances to do so.
2. Any deposit required of a Designated Customer may be 1 1/2 times the value
of the average quarterly consumption of electricity reasonably expected at
the relevant premises, or more if that is reasonable in all the
circumstances.
3. Where the Licensee requires a deposit of a Designated Customer it shall at
the same time inform that customer of the effect of paragraphs 5 and 7.
4. Where the Licensee holds any deposit it shall pay interest, at a rate it
shall fix from time to time with the approval of the Director, on every sum
of 50p deposited for every 3 months during which that sum is held.
5. Subject to paragraph 6, any deposit given by a Designated Customer shall be
repaid (with interest) by the Licensee.
(a) within 14 days where, in the previous 12 months, the customer has paid
all charges for electricity supplied within 28 days of each written
demand made; or
(b) as soon as reasonably practicable, and in any event within 1 month,
where the Licensee has ceased to supply the customer and the customer
has paid all charges for electricity supplied.
Manweb 254 April 1998
<PAGE>
6. Sub-paragraph 5(a) shall not apply where it is reasonable in all the
circumstances for the Licensee to retain the deposit.
7. Any dispute arising under this Condition between the Licensee and a
Designated Customer may be referred by either party to the Director. The
Director shall determine any such dispute, following such practice and
procedure as he considers appropriate.
Manweb 255 April 1998
<PAGE>
Condition 38. Termination of contracts on notice
1. Each Designated Supply Contract shall contain a term allowing the customer
to terminate such contract at any time by:
(a) giving to the Licensee a valid notice of termination; and
(b) subject to paragraph 6, paying to the Licensee on demand a termination
fee.
2. A notice of termination is valid where it is given at least 28 days in
advance of the date on which it is to take effect and where, not later than
that date, the requirements of paragraphs 3 and (unless the Licensee
expressly agrees to waive it) 4 are satisfied.
3. The requirement of this paragraph is that either:
(a) another Electricity Supplier commences a supply of electricity to the
relevant premises; or
(b) the relevant premises are cut off because the customer at those
premises has ceased to require a supply.
4. The requirement of this paragraph is that no charges for electricity
supplied to the customer (whether at the relevant premises or at any
premises previously occupied by him), having been demanded in writing prior
to the notice of termination being given, remain owing to the Licensee more
than 28 days after that demand was made.
5. Each Designated Supply Contract shall provide that a notice of termination
which is not valid shall not be effective to terminate such contract.
6. A termination fee shall not be demanded of a customer where:
Manweb 256 April 1998
<PAGE>
(a) the contract was terminated under any provision of Condition 39;
(b) the contract was a contract of indefinite length, and was terminated
other than during a fixed term period;
(c) the Licensee notified the customer, under paragraph 5 of Condition 36,
of a unilateral variation of the contract and the customer gave notice
of termination in accordance with paragraph 6 of that Condition; or
(d) the contract was a contract to which paragraph 4 of Condition 39
applied and the Licensee did not, before entering into it, take all
reasonable steps to draw the attention of the customer to the effect
of the term set out at that paragraph.
7. Where a termination fee is payable, it shall be of an amount not greater
than that which the Licensee may in all the circumstances reasonably
require.
Manweb 257 April 1998
<PAGE>
Condition 39. Termination of contracts in specified circumstances
1. Each Designated Supply Contract shall provide that the contract will
terminate:
(a) on the date on which the customer ceases to own or occupy the relevant
premises, having given the Licensee at least 2 working days' notice of
that date; or
(b) where the customer has ceased to own or occupy the premises without
giving the Licensee at least 2 working days' notice, on the first in
time of:
(i) the second working day after he has given notice to the Licensee;
(ii) the next day on which the meter is due to be read; and
(iii) the date on which any subsequent owner or occupier enters into a
contract or tariff agreement for the supply of electricity to the
premises.
2. Each Designated Supply Contract shall provide that where it is terminated
by virtue of a term included in the contract in compliance with paragraph
1, the customer shall remain liable for any charges for the supply of
electricity until the date of termination.
3. Each Designated Supply Contract shall provide that it may be terminated
immediately by either party at any time after the Director or the Secretary
of State has revoked this Licence.
4. Any Designated Supply Contract which:
(a) provides for the Licensee to supply electricity for a specified period
of more than 12 months; or
Manweb 258 April 1998
<PAGE>
(b) contains an initial fixed term period,
shall provide that it may be terminated immediately by the customer at
any time within 5 working days of the date of the contract.
5. Where a Designated Supply Contract is for both the supply of electricity
and the provision of goods or services:
(a) any reference in the Contract Terms Conditions to its termination is a
reference to its termination in respect of the supply of electricity
alone; and
(b) on its termination by virtue of any provisions of the Contract Terms
Conditions, the Licensee may require the customer to give any
reasonable security for his future compliance with the contract for
the provision of goods or services.
Manweb 259 April 1998
<PAGE>
Condition 40. Assignment of outstanding charges
1. This Condition shall apply where:
(a) the Licensee has commenced the supply of electricity to Domestic
Premises at which a supply was previously given to its customer by the
Previous Supplier;
(b) the customer has failed to pay, within 28 days of receiving a demand
in writing, any charges due from him to the Previous Supplier for the
supply of electricity at those premises;
(c) that failure occurred after either the Previous Supplier was informed
of the change of supplier or the Licensee commenced supply to the
premises (whichever is the earlier);
(d) the Previous Supplier has given written notice to the customer that it
proposes to assign the debt to the Licensee, which may be entitled to
reclaim from him its costs in recovering the debt; and
(e) the Licensee has received from the Previous Supplier a notice in
accordance with paragraph 2.
2. A notice in accordance with this paragraph is one which:
(a) is given at least 14 days after the notice referred to at
sub-paragraph 1(d) and is received by the Licensee within 90 days of
it commencing a supply to the premises;
(b) specifies the amount of the debt which remains unpaid;
Manweb 260 April 1998
<PAGE>
(c) states that the Previous Supplier has used all reasonable endeavors to
recover the debt, which remains unpaid at least 42 days after being
demanded in writing; and
(d) states that the Previous Supplier intends to assign to the Licensee
the debt, up to a maximum sum of one-third of the value (calculated in
accordance with the charges of the Previous Supplier to the customer
immediately before it ceased to supply him) of the average annual
consumption reasonably expected of the customer.
3. Where this Condition applies the Licensee shall, within 60 days of
receiving a notice under paragraph 2 and in consideration of the assignment
of the debt, pay to the Previous Supplier the sum specified under
sub-paragraph 2(d) (less, where they cannot be reclaimed from the customer,
its reasonable costs of recovering that debt).
4. For the purposes of this Condition, a customer shall not be regarded as
being in debt to the Previous Supplier to the extent to which that debt is
genuinely in dispute.
5. In this Condition:
"Previous Supplier" means, in relation to any premises, the
Electricity Supplier which supplied
electricity to those premises
immediately prior to the commencement of
supply by the Licensee.
Manweb 261 April 1998
<PAGE>
Condition 41. Modification of provisions under Conditions 38 and 40
1. In this Condition, the "relevant provisions" are the provisions of
paragraph 4 of Condition 38 and Condition 40 of this Licence (or any of
them).
2. Where the Director considers (having regard to any representations made to
him) that in any specified class of cases the relevant provisions do not
fulfil the requirements of paragraph 4, he may direct that they shall
cease to have effect in that class of cases.
3. Where a direction under paragraph 2 has been made and the Director
considers (having regard to any representations made to him) that in the
specified class of cases the relevant provisions would fulfil the
requirements of paragraph 4, he may direct that they shall again have
effect in those cases.
4. The requirements of this paragraph are that, in the specified class of
cases, the operation of the relevant provisions:
(a) significantly reduces the number of unrecovered debts otherwise to be
expected; or
(b) involves expenditure in debt recovery which is less than the reduction
in the value of unrecovered debts which it achieves.
5. Any direction under paragraphs 2 or 3 shall be made by a notice given to
the Relevant Parties which shall specify:
(a) the relevant provisions to which it applies;
(b) the class of cases to which it applies; and
(c) the date on which it shall have effect (being, in a direction under
paragraph 3, at least 3 months after the notice is given).
Manweb 262 April 1998
<PAGE>
6. In this Condition:
"Relevant Parties" means the Licensee, all other
Electricity Suppliers, the Electricity
Consumers' Committees and such other
persons or bodies as in the opinion of
the Director are representative of those
likely to be affected by a revision to
the relevant provisions.
Manweb 263 April 1998
<PAGE>
Condition 42. Marketing of electricity to Designated Customers
1. This Condition applies to the marketing activities of the Licensee in
respect of the supply or the proposed supply of electricity to the
Designated Premises.
2. This Condition shall cease to have effect on a date (the "termination
date") which shall be 31 March 2000, provided that:
(a) if the Director, after consultation with the Licensee, all other
Electricity Suppliers, the electricity consumers' committee and such
other persons or bodies as in the opinion of the Director are
representative of those likely to be affected, gives notice for the
purposes of this Condition generally:
(i) by publishing the notice in such a manner as the Director
considers appropriate for the purpose of bringing it to the
attention of persons likely to be affected by it; and
(ii) by sending a copy of the notice to all Electricity Suppliers and
electricity consumers' committees.
that he considers that the development of competition in electricity
supply is such as to require the continuation of any part of this
Condition until such date - not later than two years from the
termination date - as may be specified in the notice (the "new
termination date"), then such part of this Condition as may be
specified in the notice shall continue to apply as if for the
termination date there were substituted the new termination date; and
(b) notice under sub-paragraph (a) may be given on more than one occasion.
PES Licence:Manweb 264 July 1998
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3. The Licensee shall:
(a) set up appropriate procedures for the selection of staff employed or
engaged in roles the principal duties of which involve oral
communication with Designated Customers for the purposes of the
marketing activities of the Licensee:
(b) take all reasonable steps to ensure that each such person is trained
so as to have a sufficient understanding of:
(i) the arrangements for competition in electricity supply in England
& Wales; and
(ii) the principal Term of Designated Supply Contracts made available
by the Licensee;
such that any relevant advice given by him to Designated Customers is
not misleading;
(c) take all reasonable steps to ensure that:
(i) a Designated Customer may readily identify the Licensee whenever
he is contacted by a representative of the Licensee; and
(ii) any unsolicited contact made on behalf of the Licensee with any
Designated Customer takes place at a reasonable time; and
(d) take all reasonable steps to ensure that any agents or sub-contractors
of the Licensee set up equivalent procedures and take equivalent steps
to those set out at sub-paragraphs (a), (b) and (c).
PES Licence:Manweb 265 July 1998
<PAGE>
(4) Where a contract has been entered into by a Designated Customer in the
course either of a visit to his premises by a representative of the
Licensee or of a telephone conversation between him and a representative of
the Licensee, the Licensee shall, through a representative who is not
engaged in activities leading to the making of contracts between the
Licensee and customers, and not less than 24 hours nor more than 14 days
after the date of the contract:
(a) use its reasonable endeavors to contact the customer by telephone or
by letter seeking his confirmation that:
(i) he understands that he has entered into an electricity supply
contract;
(ii) he is content to have entered into that contract; and
(iii) he is content with the way in which the marketing activities of
the Licensee were conducted;
(b) if in the course of such telephone contact, or within a reasonable
period of the dispatch of such a letter, the customer indicates that
he is not content to have entered into the contract and wishes to
terminate it, take all reasonable steps to ensure that the contract is
terminated and, where reasonably practicable, that the Licensee does
not commence a supply to the customer; and
(c) if the response of the customer, alone or when considered with the
responses of other customers, suggests weaknesses in the methods,
systems of personnel employed or engaged by the Licensee or its agents
or sub-contractors for the purpose of its marketing activities, ensure
that all reasonable steps to remedy the matter are taken.
5. Where, by virtue of any Designate Supply Contract, electricity is not to be
supplied to premises before the expiry of 60 days after the date of the
contract, the Licensee shall take reasonable steps during the period after
that date and prior to the
PES Licence:Manweb 266 July 1998
<PAGE>
commencement of supply to keep the customer informed that he has entered
into an electricity supply contract with the Licensee.
6. The complaint handling procedures to be established by the Licensee in
accordance with Condition 23 shall provide in appropriate cases for the
payment of compensation to Designated Customers adversely affected by
failure by the Licensee to perform its obligations under this Condition.
7. The Licensee shall keep a record of its compliance with its obligations
under this Condition including -
(a) the contacting of customers in pursuance of sub-paragraph 4(a) and the
response of customers to such contact;
(b) the termination of contracts in pursuance of sub-paragraph 4(b); and
(c) compensation paid in pursuance of paragraph 6.
8. Except as the Director may for the purposes of this Condition determine, as
soon as reasonably practicable after the end of each period of three months
ending on 31 March, 30 June, 30 September and 31 December in every year,
the Licensee shall submit to the Director and to all Relevant Electricity
Consumers' Committees a report dealing with the matters specified in
paragraph 7 in that period and shall:
(a) publish the report so submitted in such manner as will in the opinion
of the Licensee secure adequate publicity for it; and
(b) send a copy of it free of charge to any person requesting one.
except that, in performing its obligations under sub-paragraphs (a) and
(b), the Licensee shall exclude from the report such information as appears
to it to be
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necessary or expedient to ensure that, save where they consent, individual
customers referred to therein cannot readily be identified.
9. Reports in pursuance of paragraph 8 shall be presented by the Licensee. In
so far as is reasonably practicable, in a standard format submitted to and
approved by the Director for the purposes of this Condition.
10. Except as the Director may approve:
(a) for the purpose of protecting the interests of any Designated Customer
who, prior to the date on which this Condition came into force, may
have made a payment in advance with a view to arranging a supply of
electricity; or
(b) where any payment in advance is wholly or mainly for services other
than arranging the supply of energy,
the Licensee shall not enter into any commercial relations connected
with the supply of electricity to Designated Premises with any person
who has sought, after the coming into force of this Condition, payment
in advance (other than a security deposit) from any Designated
Customer with a view to arranging a supply of electricity, and the
Licensee shall not enter into a contract for the supply of electricity
to any such customer made through the agency (either for the Licensee
or for any customer) of such a person.
11. In this Condition:
"marketing activities" means any activities of the Licensee
directed at or incidental to the
identification of and communication with
Designated Customers supplied or to be
supplied with electricity by the
Licensee, and includes entering into
PES Licence: Manweb 268 July 1998
<PAGE>
contracts with such customers.
"representative" in relation to the Licensee, means any
person directly or indirectly authorised
to represent the Licensee in its
dealings with customers.
PES Licence: Manweb 269 July 1998
<PAGE>
Schedule I. Description of authorised area
The authorised area shall comprise that area which is outlined on the attached
map and shall additionally include those premises listed in List A (the
"Additional Premises") but shall not include those premises listed in List B
(the "Excluded Premises").
A: ADDITIONAL PREMISES
None
B: EXCLUDED PREMISES
(a) TO BE SUPPLIED BY NORWEB PLC
Address Grid Ref
------- --------
Halsall Lane Pumping Station SD 4080 0864
Halsall Lane
Ormskirk
L39 3AT
Manweb 270 April 1998
<PAGE>
Manweb 271 April 1998
<PAGE>
Schedule 2. Terms as to revocation
1. The Secretary of State may at any time revoke this Licence by not less than
30 days' notice in writing to the Licensee:
(a) if the Licensee agrees in writing with the Secretary of State that
this Licence should be revoked;
(b) if any amount payable under Condition 29 is unpaid 30 days after it
has become due and remains unpaid for a period of 14 days after the
Secretary of State has given the Licensee notice that the payment is
overdue. Provided that no such notice shall be given earlier than the
sixteenth day after the day on which the amount payable became due;
(c) if the Licensee fails to comply with a final order (within the meaning
of Section 25 of the Act) or with a provisional order (within the
meaning of that section) which has been confirmed under that section
and (in either case) such failure is not rectified to the satisfaction
of the Secretary of State within three months after the Secretary of
State has given notice of such failure to the Licensee. Provided that
no such notice shall be given by the Secretary of State before the
expiration of the period within which an application under Section 27
of the Act could be made questioning the validity of the final or
provisional order or before the proceedings relating to any such
application are finally determined;
(d) if the Licensee fails to comply with any order made by the Secretary
of State under Section 56, 73, 74 or 89 of the Fair Trading Act 1973
or under Section l0(2)(a) of the Competition Act 1980;
(e) if the Licensee ceases to carry on its business as a public
electricity supplier;
(f) if the Licensee:
Manweb 272 April 1998
<PAGE>
(i) is unable to pay its debts (within the meaning of Section
123(1) or (2) of the Insolvency Act 1986, but subject to
paragraph 2 of this Schedule) or any voluntary arrangement is
proposed in relation to it under Section 1 of that Act or if it
enters into any scheme of arrangement (other than for the purpose
of reconstruction or amalgamation upon terms and within such
period as may previously have been approved in writing by the
Secretary of State);
(ii) has a receiver (which expression shall include an administrative
receiver within the meaning of Section 29 of the Insolvency Act
1986) of the whole or any material part of its assets or
undertaking appointed;
(iii) has an administration order under Section 8 of the Insolvency
Act 1986 made in relation to it;
(iv) passes any resolution for winding-up other than a resolution
previously approved in writing by the Secretary of State; or
(v) becomes subject to an order by the High Court for winding-up; or
(g) if the Licensee is convicted of having committed an offence under
Section 59 of the Act in making its application for this Licence.
2. For the purposes of paragraph 1(f)(i) of this Schedule Section 123(1)(a)
of the Insolvency Act 1986 shall have effect as if for "(pound)750" there
was substituted "(pound)250,000" or such higher figure as the Director may
from time to time determine by notice in writing to the Secretary of State
and the Licensee.
3. The Licensee shall not be deemed to be unable to pay its debts for the
purposes of paragraph 1(f)(i) of this Schedule if any such demand as is
mentioned in Section 123(l)(a) of the Insolvency Act 1986 is being
contested in good faith by the Licensee with recourse to all appropriate
measures and procedures or if any such demand is satisfied before the
Manweb 273 April 1998
<PAGE>
expiration of such period as may be stated in any notice given by the
Secretary of State under paragraph 1 of the Schedule.
4. The provisions of Section 109 of the Act shall apply for the purposes of
the service of any notice under this Schedule.
Manweb 274 April 1998
<PAGE>
Schedule 3. Supplementary provisions of the charge restriction conditions
Part A. Principles for Attribution
General Principles
Al. Where for the purposes of the charge restriction conditions, a share of
costs borne by the Licensee requires to be attributed to any part of the
market, the Licensee shall make that attribution on a basis which ensures
that no more than a fair proportion of those costs, reflecting the costs
incurred by the Licensee in supplying that part of the market, are so
attributed.
A2. The following paragraphs of this Part of Schedule 3 are without prejudice
to paragraph Al.
Fossil Fuel Levy and payments in lieu thereof
A3. The fossil fuel levy requiring to be attributed to supplies to Designated
Customers shall be attributed on the basis of the amount of the levy
incorporated in the prices actually charged or to be charged by the
Licensee on supplies to such customers in the relevant year in respect of
which the attribution falls to be made. Amounts in lieu of the fossil fuel
levy in respect of purchases of electricity other than leviable electricity
requiring to be calculated and then attributed to supplies to Designated
Customers in any relevant year for the purposes of Condition 3B shall:
(a) be calculated as being such amounts as correspond to the lesser of:
(i) the premium actually payable (measured on an accruals basis) by
the Licensee during the relevant year on purchases of
electricity other than leviable electricity as representing the
benefit to the Licensee of being
Manweb 275 April 1998
<PAGE>
able to treat such electricity as being other than leviable
electricity for the purposes of Section 33 of the Act and
Regulations thereunder: and
(ii) the additional amount that would have been payable (measured on
an accruals basis) by the Licensee in respect of the fossil fuel
levy pursuant to Regulations made under Section 33 of the Act had
such electricity been leviable electricity: and
(b) be attributed to supplies to Designated Customers pro rata to the
amount which the quantity supplied to Designated Customers bears to
the total quantity supplied (in each case in the relevant year in
respect of which the attribution falls to be made) or on the basis of
the amount referred to in paragraph (a) incorporated in the prices
actually charged or to be charged by the Licensee on supplies to such
customers in the relevant year in respect of which the attribution
falls to be made or on such other basis of attribution as the Licensee
shall previously have agreed with the Director.
Transmission connection point charges and remote transmission asset
rentals
A4. The transmission connection point charges and remote transmission asset
rentals requiring to be attributed between the regulated quantity
distributed and other quantities distributed shall be attributed in
proportion to the transmission connection point and remote transmission
asset capacity required for the purpose of distributing those quantities.
Distribution losses
A5. Where an amount (in units) in respect of distribution losses requires to be
calculated and attributed in respect of EHV units and units distributed by
the Licensee for the
Manweb 276 April 1998
<PAGE>
purpose of supply to premises outside the licensee's authorised area, such
calculation and attribution shall be made consistently with the principles
underlying the schedule of adjustment factors referred to at sub-paragraph
(b) of paragraph 3 of Condition 8.
Information to be provided by Licensee
A6. The Licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 7 of Condition 3E, a statement of the
actual attribution of electricity purchase costs between regulated and
other customers and reconciling the attribution with any statements made in
respect of the relevant year under paragraph 2 of Condition 3E, and
a statement confirming that the calculation of amounts in lieu of the
fossil fuel levy and the attribution of the fossil fuel levy, amounts in
lieu thereof, the transmission connection point charges, the remote
transmission asset rentals and of distribution losses was made in
accordance with the provisions of this Part of Schedule 3, accompanied
(where appropriate) by
(i) a statement of the total amounts attributed to regulated Designated
Customers and other customers; and
(ii) copies of statements prepared under paragraph 2 of Condition 3E and
an explanation of the basis therefore.
A7. Where the Director is satisfied that the basis of calculation or
attribution (as the case may be) used by the Licensee is not in conformity
with paragraph AI, the Director may issue directions specifying an
alternative basis of calculation or attribution, and the basis of
calculation or attribution by the Licensee (as the case may be) shall be
adjusted accordingly with effect from the date of issue of the directions
or (subject to paragraph 10 of Condition 3E) such other date as may be
specified in those directions.
Manweb 277 April 1998
<PAGE>
Part B. EHV premises
B1. EHV premises shall comprise:
(a) in relation to premises connected to the Licensee's Distribution
System as at the date this licence enters into force, those premises
specified in the list of EHV premises notified in writing to the
Director by the Licensee within twenty-eight days after this licence
enters into force; and
(b) in relation to premises connected to the Licensee's Distribution
System which are either first connected or (having been previously
connected) have had their connections materially altered following the
date this licence enters into force, means premises connected to the
Licensee's Distribution System as a voltage at or higher than 22
kilovolts or at a sub-station with a primary voltage of 66 kilovolts
or above.
B2. The Licensee shall following the end of each relevant year furnish to the
Director; as being one of the specified items to be included in the
statement referred to at paragraph 7 of Condition 3E, a statement listing
any changes in the premises falling to be treated as EHV premises.
B3. Where the Director is satisfied that any premises treated by the Licensee
as EHV premises should not in conformity with sub-paragraph B1(b) above be
so treated, the Director may issue directions to that effect, and such
premises shall cease to be treated as EHV premises from the date of issue
of the directions or (subject to paragraph 10 of Condition 3E) such other
date as may be specified in those directions.
Part C. Excluded services
Distribution Business
Manweb 278 April 1998
<PAGE>
Cl. There may be treated as excluded services provided by the Licensee in its
Distribution Business such services in respect of which charges are made
which:
(a) do not fall within paragraph C2 of this Part; and
(b) may (subject to paragraph C9) be determined by the Licensee as falling
under one of the principles set out in paragraphs C3 to C6 of this
Part.
C2. No service provided by the Licensee as part of its Distribution Business
shall be treated as an excluded service in so far as it consists of the
provision of services remunerated under the use of system charges in
accordance with paragraph 3 of Condition 8 including (without prejudice to
the foregoing)
(i) (subject to paragraph C3 of this Part) the transport of electricity;
(ii) the carrying out of works for the installation of electric lines or
electrical plant (not otherwise payable in the form of connection
charges);
(iii) the carrying out of works or the provision of maintenance or repair
or other services for the purpose of enabling the Licensee to comply
with Conditions 9, 11 and 13, the Electricity Supply Regulations 1988
or any regulations made under Section 29 of the Act or any other
enactment relating to safety or standards applicable in respect of the
Distribution Business; and
(iv) (subject to paragraph C5 of this Part) the provision, installation and
maintenance of any meters, switchgear or other electrical plant (not
being part of connection charges).
C3. The Licensee may treat as being an excluded service for the purposes of
its Distribution Business the transport of:
Manweb 279 April 1998
<PAGE>
(a) units of electricity not consumed in the licensee's authorised area;
or
(b) EHV units.
C4. Charges of the type described in paragraph 4 of Condition 8 and borne in
accordance with the principles set out in paragraph 7 of Condition 8 by any
person as connection charges, and charges in respect of the statements
referred to in paragraph 8 of Condition 8, may each be treated as excluded
services for the purposes of the Distribution Business.
C5. A service provided by the Licensee as part of its Distribution Business may
be treated as an excluded service in so far as it consists in the provision
of services (including metering, electric lines or electrical plant) for
the specific benefit of any third party requesting the same and not made
available by the Licensee as a normal part of its Distribution Business
remunerated by use of system charges including (without prejudice to the
foregoing):
(i) special metering (including "time of day" metering) to facilitate
energy saving programmes for the benefit of customers requesting the
same;
(ii) charges for moving mains, services or meters forming part of the
Licensee's Distribution System to accommodate extension, re-design or
re-development of any premises on which the same are located or to
which they are connected;
(iii) the provision of electric lines and electrical plant (a) insofar as
the same are required for the specific purpose of enabling the
provision of top-up or standby supplies or sales of electricity or (b)
to provide a higher degree of security than is required for the
purposes of complying with Condition 9;
Manweb 280 April 1998
<PAGE>
(iv) the amount by which charges for the provision of prepayment meters to
customers exceed charges for the provision of standard meters for
such customers; and
(v) special metering or telemetry or data processing equipment for the
purposes of enabling any person which is a party to the Pooling and
Settlement Agreement to comply with its obligations in respect of
metering thereunder, or for the performance by the Licensee of any
service in relation thereto.
C6. There may be treated as an excluded service for the purposes of the
Distribution Business, charges for the relocation of electric lines or
electrical plant and the carrying out of works associated therewith
pursuant to a statutory obligation (other than under Section 9(1) or
Section 16 of the Act) imposed on the Licensee
Supply Business
C7. Subject to paragraph C9, a service provided by the Licensee as part of its
Supply Business may be treated as an excluded service in so far as it
consists of the provision of services for the specific benefit of customers
requesting the same and not made available by the Licensee as a normal part
of such Business. For the avoidance of doubt, the provision of facilities
for prepayment may not be treated as an excluded service except the
provision of prepayment meters as an excluded service by the Distribution
Business.
Information to be provided to the Director
C8. The Licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 7 of Condition 3E, details specifying
separately the nature of all services provided as part of its Distribution
Business or Supply Business by the Licensee and treated as excluded
services by the Licensee during the course of such year and stating the
revenues derived by the Licensee in respect of each such service so
treated.
Manweb 281 April 1998
<PAGE>
C9. Where the Director is satisfied that in light of the principles set out in
paragraphs C2 to C7 inclusive any service treated by the Licensee as an
excluded service should not be so treated, the Director shall issue
directions to that effect, and the service or services specified in the
directions shall cease to be treated as excluded services from the date of
issue of the directions or (subject to paragraph 10 of Condition 3E) such
other date as may be specified in the directions.
Manweb 282 April 1998
<PAGE>
Part D. Regulated distribution unit categories
D1. The Licensee shall following the end of each relevant year furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 7 of Condition 3E, details specifying
separately those use of system charges in respect of which the
Licensee has during the course of such year treated the units distributed
as falling within the definition of each of LV1 units and LV2 units and
LV3 units respectively.
D2. The definition of LV1 units includes units distributed under the following
tariffs:
Economy 7 (day) - domestic, quarterly
White Meter (day) - domestic, qurarterly
3E (day) - non-domestic, quarterly, Economy 7
4E (day) - non-domestic, quarterly tariff for customers supplied at LV
from a sub-station
M4 (day, evening and weekend) - non-domestic quarterly time of day tariff
for customers supplied at LV from a sub-station
D3. The definition of LV2 units includes units distributed under the
following tariffs:
Economy 7 (night) - domestic, quarterly
White Meter (night) - domestic, quarterly
Off peak A )
Off peak C )
Off peak D ) Restricted hours off-peak, quarterly
Off peak E )
Off peak S )
3E(night) - non-domestic, quarterly, Economy 7
Manweb 283 April 1998
<PAGE>
M3 (night) - non-domestic, quarterly, tariff for customers supplied
at LV from a sub-station
M4 (night) - non-domestic, quarterly, time of day tariff for customers
supplied at LV from a sub-station
D4. The definition of LV3 units includes units distributed under the following
tariffs:
Domestic 's' - domestic, quarterly
Public Lighting Misc. charges
3S, 3T
4S, 4T - non-domestic, quarterly
5N, 6N, 7N
M6, M7
D5. Notwithstanding the provisions of paragraphs D2 to D4 above, where the
Director is satisfied that a tariff or tariffs in respect of which the
Licensee has treated the units distributed as falling within one of the
categories in paragraphs D2 to D4 above should not be so treated, the
Director shall issue directions to that effect and the tariff or tariffs
specified in the directions shall cease to be so treated from the date of
issue of the directions or (subject to paragraph 10 of Condition 3E) such
other date as may be specified in the directions and shall with effect from
such date be treated in such manner as may be specified in the directions.
Manweb 284 April 1998
<PAGE>
Part E. Calculation of factor in respect of distribution losses
E1. For the purposes of calculation of the terms AL\1\ and L\1\ as used in
paragraph 1 of Condition 3A shall each be determined for relevant years
commencing on or 1st April 1995 using the consistent methodological basis
set out in paragraphs E2 to E5 below.
Consistent methodological basis for determination of AL\1\ and L\1\
E2. Adjusted distribution losses shall be determined as being the difference
between adjusted grid supply point purchases and adjusted units
distributed.
E3. Units metered on entry to the Licensee's Distribution System shall be
adjusted to obtain adjusted grid supply point purchases by:
(a) excluding that number of units which is equal to the sum of:
(i) EHV units; and
(ii) units distributed by the Licensee for the purpose of supply to
premises outside the licensee's authorised area; and
(iii) an amount in respect of distribution losses between the grid
supply point and the exit point attributable to the units
referred to in (i) and (ii) above, as determined in accordance
with paragraph A5 in Part A of Schedule 3; and
(b) including an amount (in units) to represent the effect of units
entering the Licensee's Distribution System otherwise than at grid
supply points, being the difference between the number of units so
entering and the number of units that would have been required to
have entered at grid supply points in their absence (such latter
number of units being calculated consistently with the
Manweb 285 April 1998
<PAGE>
principles underlying the schedule of adjustment factors in respect of
distribution losses referred to at sub-paragraph (b) of paragraph 3 of
Condition 8).
E4. For so long as units are metered on entry to the Licensees Distribution
System at bulk supply points instead of at grid supply points, such units
shall be calculated by:
(i) applying the procedures in paragraph E3 as if all references to units
metered at grid supply points were to units metered at bulk supply
points; and
(ii) grossing-up units metered at the bulk supply points by the relevant
grid supply point conversion factor being either:
(a) 0.5 percent of the units metered at the bulk supply points; or
(b) such other factor to take account of losses occurring between the
grid supply points and the bulk supply points as the Licensee may
with the prior approval of the Director determine to be
appropriate.
E5. Adjusted units distributed shall be obtained by:
(a) calculating all units distributed by the Licensee metered at exit
points on leaving the Licensee's Distribution System; and
(b) deducting therefrom EHV units and units distributed for the
purpose of supply to premises outside the licensee's authorised
area; and
Manweb 286 April 1998
<PAGE>
(c) adding thereto an amount equal to the units consumed on the
licensee's premises in the authorised area (insofar as not
otherwise taken into account in determining units distributed
under sub-paragraph (a) above).
Initial relevant loss percentage in the term Al\1\
E6. In the first relevant year, the initial relevant loss percentage in the
term AL, shall (consistently with the methodology set out in paragraphs
E2 to E5 above) be determined as being:
adjusted GSP purchase units less adjusted units distributed
adjusted units distributed
where adjusted GSP purchase units are calculated as provided in paragraph
E7 and adjusted units distributed are calculated as provided in paragraph
E8.
E7. Adjusted GSP purchase units shall be calculated in accordance with the
procedures successively described in the following sub-paragraphs:
(a) the actual losses in each of relevant years t-1, t-2 and t-3 (the
"historic losses") shall be calculated as the difference in each of
those years between units purchased at entry points to the Licensee's
Distribution System and units sold;
(b) the historic loss percentage shall be calculated as the proportion
(expressed as a percentage) which the aggregate historic losses were
of the aggregate units purchased at entry points to the Licensee's
Distribution System, in each case over the three relevant years t-1
to t-3;
(c) the total number of units sold in relevant year t-1 shall be grossed
up by the historic loss percentage ("BSP purchase units"); and
Manweb 287 April 1998
<PAGE>
(d) the figure for BSP purchase units resulting from sub-paragraph (c)
shall be adjusted to obtain adjusted GSP purchase units in accordance
with the provisions of paragraphs E3 and E4 above.
E8. Adjusted units distributed shall be calculated by applying the methodology
of paragraph E5 in respect of those units referred to in sub-paragraphs (a)
to (c) of paragraph E5 in relevant year t-1.
Information to be provided to the Director
E9. The Licensee shall within three months after the entry into force of this
licence furnish to the Director a statement showing the initial relevant
loss percentage and the underlying calculations.
E10. The Licensee shall, following the end of each relevant year, furnish to the
Director, as being one of the specified items to be included in the
statement referred to at paragraph 7 of Condition 3E, a statement showing
adjusted distribution losses for that relevant year, accompanied by the
underlying calculations and (where appropriate) an explanation of any
changes in the basis of calculation or estimation thereof.
E1l. Where the Director is satisfied that any statement or underlying
calculation provided has not been drawn up in conformity with paragraphs E2
to E8 above, the Director may issue directions, and the statement or
underlying calculation shall be adjusted with effect from the date of issue
of the directions or (subject to paragraph 10 of Condition 3E) such other
date as may be specified in the directions.
Manweb 288 April 1998
<PAGE>
EXHIBIT 2(c)
CONFORMED COPY
AGREEMENT
DATED 12th March, 1999
(Pounds)600,OOO,OOO
MULTICURRENCY REVOLVING CREDIT FACILITY
FOR
SCOTTISH POWER PLC
ARRANGED BY
THE ROYAL BANK OF SCOTLAND PLC
ALLEN & OVERY
London
BK: 207112.5
<PAGE>
INDEX
Clause Page
1. Interpretation ..........................................................1
2. The Facilities .........................................................17
3. Purpose ................................................................18
4. Conditions precedent ...................................................18
5. Drawdown ...............................................................18
6. Repayment ..............................................................20
7. Prepayment and cancellation ............................................20
8. Interest ...............................................................21
9. Optional Currencies ....................................................22
10. Payments ...............................................................24
11. Taxes ..................................................................26
12. Market disruption ......................................................28
13. Increased costs ........................................................29
14. Illegality and mitigation ..............................................30
15. Guarantee ..............................................................31
16. Representations and warranties .........................................33
17. Undertakings ...........................................................35
18. Default ................................................................41
19. The Agent and the Arranger .............................................45
20. Fees ...................................................................50
21. Expenses ...............................................................51
22. Stamp duties ...........................................................51
23. Indemnities ............................................................51
24. Evidence and calculations ..............................................52
25. Amendments and waivers .................................................53
26. Changes to the Parties .................................................53
27. Disclosure of information ..............................................56
28. Set-off ................................................................57
29. Pro rata sharing .......................................................57
30. Severability ...........................................................58
31. Counterparts ...........................................................58
32. Notices ................................................................59
33. Governing law ..........................................................59
34. Jurisdiction ...........................................................59
Schedules
1. Banks and Commitments ..................................................61
2. Part 1 - Conditions precedent documents to be delivered before
the first Loan .........................................................62
Part 2 - Conditions precedent documents to be delivered by
Holdco in accordance with Clause 26.4 (Accession) ......................64
3. Calculation of the Mandatory Cost ......................................66
4. Part 1 - Form of Request ...............................................68
Part 2 - Form of Selection Notice ......................................69
5. Form of Novation Certificate ...........................................70
6. Form of legal opinion of Allen & Overy .................................71
7. Form of legal opinion of Maclay Murray & Spens .........................74
8. Guarantor Accession Agreement ..........................................78
Signatories ..................................................................79
<PAGE>
- --------------------------------------------------------------------------------
THIS AGREEMENT is dated 12th March, 1999 between:
(1) SCOTTISH POWER PLC (to be renamed "Scottish Power UK plc" on the Scheme
Date) (Registered No. SC117120P) (the "Company");
(2) THE ROYAL BANK OF SCOTLAND PLC as arranger (in this capacity the
"Arranger");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the "Banks");
and
(4) THE ROYAL BANK OF SCOTLAND PLC as agent (in this capacity the "Agent").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Affiliate"
means a Subsidiary or a Holding Company (as defined in Section 736 of the
Companies Act 1985) of a person and any other Subsidiary of that Holding
Company.
"Agent's Spot Rate of Exchange"
means the Agent's spot rate of exchange for the purchase of the relevant
Optional Currency in the London foreign exchange market with Sterling at
or about 11.00 a.m. on a particular day.
"Appointee"
means Southern Water Services Limited (registered number 2366670) a wholly
owned subsidiary of SWP.
"Appointment"
means the instrument of appointment dated August 1989 of the Appointee as
water undertaker and sewerage undertaker for the Franchise Area under the
Water Act 1989 as subsequently repealed and replaced by the Water Act.
"Balance Sheet"
means, at any time, the latest published audited consolidated balance
sheet of the Group on a historic cost basis.
"Borrowings"
means any indebtedness in respect of:
(a) moneys borrowed and debit balances at banks and other financial
institutions;
(b) any debt security including any bond, note or loan stock;
- --------------------------------------------------------------------------------
<PAGE>
2
- --------------------------------------------------------------------------------
(c) any acceptance under any acceptance credit facility opened by a bank
or other financial institution;
(d) the sale or discounting of receivables (except to the extent that
such sale or discounting is on a non-recourse basis);
(e) any lease which the Company accounts for as a finance lease as such
term is described in the Statement of Standard Accounting Practices
No. 21 (or any successor statement or financial reporting standard);
(f) any accrued fixed or minimum premium payable on the repayment or
redemption of any instrument referred to in sub-paragraph (b) above;
(g) for the purposes of Clause 18.5 (Cross-default) only, interest rate
swaps, currency swaps (including spot and forward exchange
contracts), caps, collars, floors and similar obligations;
(h) the acquisition cost of any asset to the extent payable before or
after the time of acquisition or possession by the party liable
where the advance or deferred payment is arranged primarily as a
method of raising finance or financing the acquisition of that
asset; and
(i) any guarantee, indemnity and/or other form of assurance against
financial loss by any member of the Group in respect of any
indebtedness of any person of a type referred to in sub-paragraphs
(a) to (h) above (in the case of (g), for the purposes of Clause
18.5 (Cross default) only),
and any amount outstanding in a currency other than Sterling is to be
taken into account at its Sterling equivalent calculated on the basis of
the Agent's spot rate of exchange at 11.00 a.m. on the day the relevant
amount falls to be calculated. However, indebtedness owing by one member
of the Group to another member of the Group shall not be taken into
account as Borrowings and, for the purposes of calculating the amount of
Borrowings at any time:
(i) deep discount borrowings will be valued at the amount attributed to
them in the then latest Balance Sheet; and
(ii) no item of indebtedness will be double counted by the inclusion of
both the primary indebtedness and indebtedness arising under a
guarantee, indemnity and/or other form of assurance with respect to
that primary indebtedness.
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks are open
for business in:
(a) London; and
(b) Glasgow; and
(c) in relation to a transaction involving an Optional Currency (other
than euros) the principal financial centre of the country of that
Optional Currency; and
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(d) in relation to a transaction involving euros, a day on which the
Trans-European Automated Realtime Gross Settlement Express System
("Target") is operating.
"Commitment"
means:
(a) in relation to a Bank which is a Bank on the date of this Agreement,
the amount set opposite its name in Schedule 1; and
(b) in relation to a Bank which becomes a Bank after the date of this
Agreement the amount of Commitment acquired by it under Clause 26
(Changes to the Parties) or pursuant to any Finance Document,
in each case, to the extent not cancelled, reduced or transferred under
this Agreement.
"Consolidated EBITDA"
means in respect of any financial year of the Group, the consolidated
profits of the Group before:
(a) Net Interest Payable;
(b) tax;
(c) depreciation;
(d) amortisation (including, for the avoidance of doubt, of goodwill);
and
(e) extraordinary and exceptional items,
but adjusted by deducting any amount attributable to minority interests.
"Dangerous Substance"
means any radioactive emissions and any natural or artificial substance
(whether in solid or liquid form or in the form of a gas or vapour and
whether alone or in combination with any other substance) capable (in each
case) of causing harm to man or any other living organism or damaging the
environment or public health or welfare, including (without limitation)
any controlled, special, hazardous, toxic, radioactive or dangerous waste.
"Default"
means an Event of Default or an event which, with the giving of notice,
lapse of time, or fulfilment of any other applicable condition (or any
combination of the foregoing), would constitute an Event of Default.
"Drawdown Date"
means the date of the advance of a Loan.
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"EC"
means the European Community and its successors.
"EMU"
means European Economic and Monetary Union as contemplated by the treaty
establishing the EC.
"EMU Legislation"
means legislative measures of the European Council in relation to EMU.
"Environmental Law"
means all laws, regulations, codes of practice, circulars, guidance
notices and the like (whether in the United Kingdom or elsewhere) whether
or not having the force of law but if not having the force of law
compliance with which is customary in the industry concerning the
protection of human health or the environment or the conditions of the
work place or the generation, transportation, storage, treatment or
disposal of Dangerous Substances.
"Environmental Licence"
means any permit, licence, authorisation, consent or other approval
required by any Environmental Law.
"euro"
means the single currency of the Participating Member States.
"euro unit"
means a currency unit of the euro as defined in EMU Legislation.
"Event of Default"
means an event specified as such in Clause 18.1 (Events of Default).
"Existing Facilities"
means the credit facilities made available to the Company under the
Existing Facility Agreements.
"Existing Facility Agreements"
means:
(a) the (pound)25,000,000 bilateral facility agreement dated August 1994
made between the Company and The Royal Bank of Scotland plc;
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(b) the (pound)25,000,000 bilateral facility agreement dated August 1994
made between the Company and Warburg Dillon Read;
(c) the (pound)25,000,000 bilateral facility agreement dated August 1994
made between the Company and The Sanwa Bank, Limited; and
(d) the (pound)25,000,000 bilateral facility agreement dated August 1994
made between the Company and The Chase Manhattan Bank.
"Facilities"
means the facilities referred to in Clause 2.1 (Facilities).
"Facility Office"
means, subject to Clause 26.7 (Change of Facility Office), the office(s)
notified by a Bank to the Agent:
(a) on or before the date it becomes a Bank; or
(b) by not less than five Business Days' notice.
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Fee Letter"
means the letter dated the date of this Agreement between the Agent, the
Arranger and the Company setting out the amount of various fees referred
to in Clause 20 (Fees).
"Final Repayment Date"
means:
(a) in the case of a Revolving Loan, the Term Date; or
(b) if the Term-out Option is exercised, 24th June, 2001.
"Finance Document"
means this Agreement, the Fee Letter, a Guarantor Accession Agreement, a
Novation Certificate or any other document designated as such by the Agent
and the Company.
"Finance Party"
means the Arranger, a Bank or the Agent.
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"Franchise Area"
means each of:
(a) the area described in paragraph 1 of Schedule 1 of the Appointment
in respect of the Appointee's appointment as a water undertaker; and
(b) the area described in paragraph 2 of Schedule 1 of the Appointment
in respect of the Appointee's appointment as a sewerage undertaker.
"Guarantor Accession Agreement"
means a deed substantially in the form of Schedule 8 with such amendments
as the Agent may approve or reasonably require.
"Group"
means at any time the Company and its Subsidiaries at that time.
"Hedging Liabilities"
means indebtedness arising in respect of obligations of the type referred
to in paragraph (g) of the definition of "Borrowings" in this Clause 1.1.
"Holdco"
means New Scottish Power plc (to be renamed "Scottish Power plc" on the
Scheme Date) (Registered No. SC193794) which shall, following the Scheme
Date, be the Holding Company of the Company.
"Holdco Group"
means at any time Holdco and its Subsidiaries at that time.
"Interest Payable"
means, in respect of any financial period, all interest, discount and
acceptance commission and all other continuing, regular or periodic costs,
charges and expenses in the nature of Interest (whether paid, payable or
capitalised) or treated for accounting purposes as interest, incurred by
the Group in effecting, servicing or maintaining Total Consolidated
Borrowings during that period.
"Interest Period"
has the meaning given to it in Clause 8.2 (Interest Periods for Term
Loans).
"Interest Receivable"
means, in respect of any financial period, interest and amounts in the
nature of interest received during that period by the Group from persons
outside the Group.
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"Investments"
means:
(a) cash on current account or cash on deposit with, or certificates of
deposit issued by, or bills of exchange accepted by, any bank
incorporated in an OECD country from which proceeds are readily
remittable to the United Kingdom, and in each case, where the
deposit or the maturity is for a duration of six months or less; and
(b) bonds or treasury bills issued by an OECD government or agency,
bonds rated single-A or above by a major rating agency and
commercial paper rated A1 or P1 by a major rating agency, in each
case, where the proceeds of which are readily remittable to the
United Kingdom.
"Licence"
means each public electricity licence granted by the Secretary of State to
a member of the Group under section 6(1) of the Electricity Act 1989.
"Loan"
means a Revolving Loan or a Term Loan.
"LIBOR"
means, in relation to a Loan:
(a) the rate per annum which appears on Telerate Page 3750 or Telerate
Page 3740 (as appropriate); or
(b) if no such offered quotation appears on Telerate Page 3750 or
Telerate Page 3740, the arithmetic mean (rounded upward to four
decimal places) of the rates, as supplied to the Agent at its
request quoted by the Reference Banks to leading banks in the London
interbank market,
in each case, at or about 11.00 a.m. on the applicable Rate Fixing Day for
the offering of deposits in the currency of the relevant Loan for a period
comparable to its Term or Interest Period (as appropriate).
For the purposes of this definition, "Telerate Page 3750" or "Telerate
Page 3740" means the display designated as "Page 3750" or "Page 3740" (as
appropriate) on the Telerate Service (or other such page as may replace
Page 3750 or Page 3740 on that service) or such other service as may be
nominated by the British Bankers' Association as the information vendor
for the purpose of displaying British Bankers' Association Interest
Settlement Rates for various currencies.
"Majority Banks"
means, at any time, Banks whose Commitments:
(a) then aggregate more than 66 2/3 per cent. of the Total Commitments;
or
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(b) if the Term-Out Option has been exercised, then aggregate more than
66 2/3 per cent. of the Term Loans; or
(c) if no Loans are then outstanding and the Total Commitments have been
reduced to zero, aggregated more than 66 2/3 per cent. of the Total
Commitments immediately before the reduction.
"Mandatory Cost"
means the cost imputed to the Banks of compliance with the regulations of
the Bank of England, the Financial Services Authority or other reserve or
mandatory liquid asset costs or special deposit costs during each Term or
Interest Period under this Agreement expressed as a rate per annum
determined in accordance with Schedule 3.
"Margin"
means 0.45 per cent per annum.
"national currency unit"
means the currency unit (other than a euro unit) of a Participating Member
State.
"Net Gearing Percentage"
means the amount of Total Consolidated Net Borrowings expressed as a
percentage of the amount of Tangible Consolidated Net Worth.
"Net Interest Payable"
means, in respect of any financial period, Interest Payable during that
period less Interest Receivable during that period.
"Novation Certificate"
means a duly completed certificate, substantially in the form of
Schedule 5.
"Obligor"
means the Company or Holdco when it executes and delivers a Guarantor
Accession Agreement in accordance with Clause 26.4 (Accession).
"Operating Profit"
means the consolidated net pre-taxation profits (after adding back Net
Interest Payable) of the Group for a financial year of the Group before
taking account of any extraordinary profits (or losses).
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"Optional Currency"
means US Dollars or any other currency (other than Sterling) which is for
the time being freely transferable and convertible into Sterling and
deposits of which are readily available in the London interbank market.
"Original Group Accounts"
means the audited consolidated accounts of the Group for the year ended
31st March, 1998.
"Original Sterling Amount"
means:
(a) the principal amount of a Loan denominated in Sterling; or
(b) the principal amount of a Loan denominated in an Optional Currency:
(i) translated into Sterling on the basis of the Agent's Spot Rate
of Exchange three Business Day's before its Drawdown Date; or
(ii) in the case of a Term Loan which is outstanding, the
equivalent in Sterling of the amount of that Term Loan if it
had first been drawn down and had remained denominated in
Sterling.
"Outstandings"
means at any time, the aggregate of each outstanding Loan.
"Participating Member State"
means a member state of the European Union that adopts a single currency
in accordance with the treaty establishing the EC.
"Party"
means a party to this Agreement.
"Permitted Security Interest"
means:
(a) any Security Interest created or outstanding with the prior written
consent of the Majority Banks;
(b) any lien or hypothecation arising by operation of law or contained
in a contract for the sale of goods, supply of services or joint
operation of assets entered into in the ordinary course of trade of
the company creating the same;
(c) Security Interests not otherwise permitted under paragraphs (a) and
(b) above provided that the aggregate principal amount of the
indebtedness secured by Security
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10
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Interests permitted under this paragraph (c) shall not at any time
exceed an amount equal to 15 per cent. of Tangible Consolidated Net
Worth at that time; and
(d) any Security Interest created by a Project Finance Subsidiary to
secure its Project Finance Borrowings.
"Principal Subsidiary"
means any Subsidiary of the Company:
(a) whose profits (before taxation and before extraordinary items and
any taxation relating thereto) are 10 per cent. or more of the
consolidated net profits of the Group (before taxation and before
extraordinary items and any taxation relating thereto); or
(b) whose gross assets are 10 per cent. or more of the consolidated
gross assets of the Group; or
(c) whose Net Assets are 10 per cent. or more of the consolidated Net
Assets of the Group,
all as shown (in the case of any Subsidiary) in its most recent annual
accounts and (in the case of the Group) in the most recent annual
consolidated accounts of the Group and for this purpose "Net Assets" in
relation to any Subsidiary means its total assets (excluding goodwill)
less its total liabilities and in relation to the Group means the total
assets (excluding goodwill) of the Group less its total liabilities; and
(d) any other Subsidiary or Subsidiaries of the Company to whom all or
substantially all of the assets or business of a Principal
Subsidiary are transferred.
"Project Finance Borrowings"
means any Borrowing which finances, and any Hedging Liabilities incurred
in the financing of the acquisition, development, ownership and/or
operation of an asset:
(a) which is incurred by a Project Finance Subsidiary; or
(b) in respect of which the person or persons to whom such Borrowing is
or may be owed by the relevant debtor (whether or not a member of
the Group) has or have no recourse whatsoever to any member of the
Group (other than to a Project Finance Subsidiary) for the repayment
thereof other than:
(i) recourse to such debtor for amounts limited to the cash flow
or net cash flow (other than historic cash flow or historic
net cash flow) from such asset; and/or
(ii) recourse to such debtor for the purpose only of enabling
amounts to be claimed in respect of such Borrowing in an
enforcement of any Security Interest given by such debtor over
such asset or the income, cash flow or other proceeds deriving
therefrom (or given by any shareholder or the like in the
debtor over its shares or like interest in the capital of the
debtor) to secure such Borrowing, provided that (I) the extent
of such recourse to such debtor
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is limited solely to the amount of any recoveries made on any
such enforcement, and (II) such person or persons are not
entitled, by virtue of any right or claim arising out of or in
connection with such Borrowing, to commence proceedings for
the winding up or dissolution of the debtor or to appoint or
procure the appointment of any receiver, trustee or similar
person or officer in respect of the debtor or any of its
assets (save only for the assets the subject of such Security
Interest); and/or
(iii) recourse to such debtor generally, or directly or indirectly
to a member of the Group, under any form of assurance,
undertaking or support, which recourse is limited to a claim
for damages (other than liquidated damages and damages
required to be calculated in a specified way) for breach of an
obligation (not being a payment obligation or an obligation to
procure payment by another or an indemnity in respect thereof
or any obligation to comply or to procure compliance by
another with any financial ratios or other tests of financial
condition) by the person against whom such recourse is
available.
"Project Finance Subsidiary"
means any Subsidiary of the Company:
(a) which is a company whose principal assets and business are
constituted by the ownership, acquisition, development and/or
operation of an asset whether directly or indirectly;
(b) none of whose Borrowings in respect of the financing of such
ownership, acquisition, development and/or operation of an asset
benefits from any recourse whatsoever to any member of the Group
(other than the Subsidiary itself or another Project Finance
Subsidiary) in respect of the repayment thereof, except as expressly
referred to in paragraph (b)(iii) of the definition of Project
Finance Borrowings in this Clause 1.1; and
(c) which has been designated as such by the Company by written notice
to the Agent, provided that the Company may give written notice to
the Agent at any time that any Project Finance Subsidiary is no
longer a Project Finance Subsidiary, whereupon it shall cease to be
a Project Finance Subsidiary.
"Qualifying Bank"
means an institution which is:
(a) for the time being a bank as defined in the Income and Corporation
Taxes Act 1988 for the purpose of section 349 of that Act and which
is within the charge to corporation tax as regards all interest
receivable by it under this Agreement; or
(b) a financial institution lending through any other branch, affiliate
or agency if, at the time such financial institution becomes a
Party, the financial institution or affiliate (as the case may be)
is a resident in a country with which the United Kingdom has an
appropriate double taxation treaty pursuant to which the Company,
upon receiving an appropriate direction from the UK Inland Revenue
Financial Intermediaries and
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Claims Office, will be permitted to pay interest in respect of
advances made by that financial institution under this Agreement
without withholding of United Kingdom income tax.
"Rate Fixing Day"
means:
(a) the Drawdown Date for a Loan denominated in Sterling; or
(b) the second Business Day before the Drawdown Date for a Loan
denominated in an Optional Currency (other than euros); or
(c) the second Target Business Day before the Drawdown Date for a Loan
denominated in euros.
"Reference Banks"
means, subject to Clause 26.5 (Reference Banks), the principal London
offices of The Royal Bank of Scotland plc, National Westminster Bank Plc
and Bayerische Landesbank Girozentrale, London Branch.
"Relevant Group"
means:
(a) in the case of the Company, the Group; or
(b) in the case of Holdco, the Holdco Group.
"Repayment Date"
means:
(a) in respect of a Revolving Loan, the last day of its Term; or
(b) in respect of a Term Loan, the Final Repayment Date.
"Request"
means a request made by the Company for a Loan, substantially in the form
of Part 1 of Schedule 4.
"Reservations"
means the qualifications as to matters of law only contained in the legal
opinions set out in Schedules 6 and 7.
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"Revolving Loan"
means the principal amount of a borrowing by the Company under this
Agreement made before the exercise of the Term-out Option or the principal
amount outstanding of that borrowing.
"Ring Fenced Group"
means Holdco and any Affiliate of Holdco that is not also a member of the
Group.
"Scheme"
means the proposed scheme of arrangement pursuant to which (amongst other
things) the Company will become a Subsidiary of Holdco.
"Scheme Date"
means the date on which the Scheme becomes effective.
"Security Interest"
means any mortgage, pledge, lien, charge, assignment by way of security or
subject to a proviso for redemption, assignation in security, standard
security, hypothec or security interest or any other agreement or
arrangement having the effect of conferring security.
"Selection Notice"
means a notice substantially in the form of Part 2 of Schedule 4.
"Sterling"
means the lawful currency for the time being of the U.K.
"Subsidiary"
means a subsidiary within the meaning of Section 736 of the Companies Act
1985, as amended by Section 144 of the Companies Act 1989.
"Supplemental Agreement"
means an agreement dated on or about the date of this Agreement between
The Royal Bank of Scotland plc as agent ("RBS") and the Company amending a
credit agreement dated 24th June, 1996 as amended by a letter dated 29th
January, 1998 (the "Credit Agreement") between, amongst others, the
Company and RBS whereby the Banks (as defined in the Credit Agreement)
agreed to make a (pound)2,600,000,000 facility available to the Company.
"SWP"
means Southern Water PLC (registered number 2366620).
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"Tangible Consolidated Net Worth"
means at any time the aggregate of:
(a) the amount paid up or credited as paid up on the issued share
capital of the Company; and
(b) the amount standing to the credit of the consolidated capital and
revenue reserves of the Group;
based on the Balance Sheet but adjusted by:
(i) adding any amount standing to the credit of the profit and loss
account for the Group for the period ending on the date of the
Balance Sheet, to the extent not included in sub-paragraph (b) above
and to the extent the amount is not attributable to any dividend or
other distribution declared, recommended or made by any member of
the Group;
(ii) deducting any amount standing to the debit of the profit and loss
account for the Group for the period ending on the date of the
Balance Sheet, to the extent not included in sub-paragraph (b)
above;
(iii) deducting any amount attributable to goodwill or any other
intangible asset;
(iv) deducting any amount attributable to a revaluation of assets after
31st March, 1998 or, in the case of assets of a company which
becomes a member of the Group after that date, the date on which
that company becomes a member of the Group unless in either case
such revaluation is based on valuations by independent valuers;
(v) reflecting any variation in the amount of the issued share capital
of the Company and the consolidated capital and revenue reserves of
the Group after the date of the Balance Sheet;
(vi) reflecting any variation in the interest of the Company in any other
member of the Group since the date of the Balance Sheet;
(vii) excluding any amounts required to be set aside for taxation payable
by the Group;
(viii) excluding any amount attributable to minority interests; and
(ix) eliminating inconsistencies between the accounting principles
applied in connection with the Balance Sheet and those applied in
connection with the Original Group Accounts.
"Target Business Day"
means a day on which Target is operating.
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"Term"
means the period selected by the Company in a Request (other than a
Request for a Term Loan) for which the relevant Loan is to be outstanding.
"Term Date"
means the date falling 364 days after the date of this Agreement.
"Term Loan"
means the principal amount of each borrowing by the Company under this
Agreement made after the exercise of the Term-out Option or the principal
amount outstanding of that borrowing.
"Term-out Option"
means the option of the Company in Clause 5.5 (Term-out Option) to convert
the revolving credit facility into a term loan facility.
"Total Commitments"
means the aggregate for the time being of the Commitments, being
(pound)600,000.000 at the date of this Agreement.
"Total Consolidated Borrowings"
means, at any time, the aggregate principal amount (or amounts equivalent
to principal, howsoever described) comprised in the Borrowings of the
Company and its Subsidiaries at that time calculated on a consolidated
basis. Any amount outstanding in a currency other than Sterling is to be
taken into account at its Sterling equivalent calculated on the basis of
the Agent's Spot Rate of Exchange on the day the relevant amount falls to
be calculated.
"Total Consolidated Net Borrowings"
means, at any time, Total Consolidated Borrowings less the aggregate
principal amount of Investments beneficially owned by the Group free from
Security Interests (to the extent the proceeds of the same are readily
remittable to the UK) at that time.
"U.K."
means the United Kingdom.
"Water Act"
means the Water Industry Act 1991 and any subordinate legislation,
regulations and codes of practice made or issued under it.
"US Dollars"
means the lawful currency for the time being of the United States of
America.
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1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) "assets" includes properties, revenues and rights of every
description;
an "authorisation" includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration and
notarisation;
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next calendar month, except that, if there is no numerically
corresponding day in the month in which that period ends, that
period shall end on the last Business Day in that calendar month;
a "regulation" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law) of any
governmental body, agency, department or regulatory, self-regulatory
or other authority or organisation;
(ii) a provision of a law is a reference to that provision as amended or
re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its successors and assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or that other document as amended, novated or
supplemented; and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in
this Agreement.
(c) (i) Terms used in the definitions of "Borrowings", "Consolidated
EBITDA", "Interest Payable", "Interest Receivable", "Net Interest
Payable", "Operating Profit", "Tangible Consolidated Net Worth",
"Total Consolidated Borrowings" and "Total Consolidated Net
Borrowings" in Clause 1.1 (Definitions) are to be calculated in
accordance with the accounting principles applied in connection with
the Original Group Accounts.
(ii) If there is a dispute as to any interpretation or computation for
sub-paragraph (i) above, the interpretation or computation of the
auditors for the time being of the Company will prevail.
(d) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
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2. THE FACILITIES
2.1 Facilities
(a) Subject to the terms of this Agreement, the Banks grant to the
Company the following facilities:
(i) prior to the exercise of the Term-out Option, a committed
multicurrency revolving credit facility under which the Banks
agree to make Revolving Loans to the Company; and
(ii) if the Term-out Option is exercised, a committed multicurrency
term loan facility under which the Banks agree to make Term
Loans to the Company.
(b) The Banks shall, when requested by the Company, make to the Company
Loans up to an aggregate principal amount not exceeding, at any
time, the Total Commitments at that time.
(c) No Bank is obliged to lend more than its Commitment.
2.2 Number of Requests and Drawdowns
No Request may specify a Drawdown Date which is within three Business
Day's of another Drawdown Date, although up to three Loans may be made on
the same day. Subject to the above, any number of Requests may be
delivered on the same day and/or specifying the same Drawdown Date,
whether or not the Terms or Interest Periods requested are similar.
2.3 Limits
(a) The aggregated Original Sterling Amount of all outstanding Loans
shall not exceed the Total Commitments.
(b) No Bank is obliged to participate if it would cause the Original
Sterling Amount of its participations in the Loans to exceed its
Commitment.
2.4 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents are
several. Failure of a Finance Party to carry out those obligations
does not relieve any other Party of its obligations under the
Finance Documents. No Finance Party is responsible for the
obligations of any other Finance Party under the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are
divided rights. A Finance Party may, except as otherwise stated in
the Finance Documents, separately enforce those rights.
2.5 Change of Currency
If a change in any currency of a country occurs, this Agreement will be
amended to the extent the Agent acting reasonably and in consultation with
the Company specifies to be necessary to reflect the change in currency
and to put the Banks in the same position, so far as possible, that they
would have been in if no change in currency had occurred.
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3. PURPOSE
(a) The Company shall apply each Loan towards its general corporate
purposes.
(b) Without affecting the obligations of the Company in any way, no
Finance Party is bound to monitor or verify the application of any
Loan.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to the Company under this Agreement
are subject to the condition precedent that the Agent has notified the
Company and the Banks that it has received all of the documents set out in
Part I of Schedule 2 in form and substance satisfactory to the Agent.
4.2 Further conditions precedent
The obligations of each Bank to participate in a Loan are subject to the
further conditions precedent that on both the date of the Request and the
Drawdown Date for that Loan:
(i) the representations and warranties in Clause 16 (Representations and
warranties) to be repeated on those dates are correct and will be
correct immediately after the Loan is made; and
(ii) no Default is outstanding or could reasonably be expected to result
from the making of the Loan.
5. DRAWDOWN
5.1 Receipt of Requests
The Company may utilise the Facility if the Agent receives a duly
completed Request, not later than:
(a) 9.30 a.m. on the proposed Drawdown Date for a Loan denominated in
Sterling which is to be used solely for the purposes of repayment of
commercial paper which is due for repayment on that Drawdown Date;
or
(b) 12.00 noon one Business Day before the applicable Rate Fixing Day
for a Loan denominated in:
(i) an Optional Currency; or
(ii) Sterling if borrowed for a purpose other than that set out in
paragraph (a) above.
5.2 Completion of Requests
A Request will not be regarded as having been duly completed unless:
(a) the Drawdown Date is a Business Day falling before the Term Date;
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(b) the principal amount of the Loan is a minimum of (pound)25,000,000
and an integral multiple of (pound)5,000,000 (or its equivalent in
an Optional Currency) or the principal amount of the Loan is equal
to the balance of the undrawn Total Commitments as at the proposed
Drawdown Date;
(c) subject to Clause 5.5 (Term-out Option), it specifies whether it is
a Term Loan or a Revolving Loan;
(d) in the case of a Revolving Loan only, one Term is specified which:
(i) does not extend beyond the Term Date; and
(ii) is a period of one, two, three or six months.
(e) in the case of a Term Loan the Interest Period selected complies
with Clause 8.2 (Interest Period for Term Loans);
(f) the payment instructions comply with Clause 10 (Payments);
(g) the amount selected under paragraph (b) above does not cause Clause
2.3 (Limits) to be contravened; and
(h) if the currency selected is an Optional Currency it complies with
Clause 9 (Optional Currencies).
5.3 Amount of each Bank's participation in a Loan
The amount of a Bank's participation in a Loan will be the proportion of
that Loan which its Commitment bears to the Total Commitments on the date
of receipt of the relevant Request.
5.4 Notification of the Banks
The Agent shall promptly notify each Bank of the details of the requested
Loan and the amount of its participation in the Loan.
5.5 Term-out Option
(a) The Company may, by giving not less than 10 days' prior notice to
the Agent, exercise the Term-out Option.
(b) Subject to the terms of this Agreement, any Loans borrowed after the
date the Term-out Option is exercised will be Term Loans.
(c) The unutilised portion of the Total Commitments shall be cancelled
by close of business on the Term Date.
5.6 Payment of proceeds
Subject to the terms of this Agreement, each Bank shall make its
participation in each Loan available to the Agent for the Company on the
relevant Drawdown Date.
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6. REPAYMENT
The Company shall repay each Loan in full on its Repayment Date to the
Agent for the Banks.
7. PREPAYMENT AND CANCELLATION
7.1 Automatic cancellation of the Total Commitments
The Commitment of each Bank shall be automatically cancelled at close of
business on the Term Date.
7.2 Voluntary prepayment
The Company may, by giving not less than 30 days' prior notice to the
Agent, prepay any Term Loan on the last day of its Interest Period in
whole or in part (but, if in part, in a minimum Original Sterling Amount
of (pound)25,000,000 and an integral multiple of (pound)5,000,000 (or its
equivalent in an Optional Currency) in which the relevant Loan is then
outstanding).
7.3 Voluntary cancellation
The Company may, by giving not less than 30 days' prior notice to the
Agent, cancel the unutilised portion of the Total Commitments in whole or
in part (but, if in part, in a minimum Original Sterling Amount of
(pound)25,000,000 and all integral multiple of (pound)5,000,000). Any
cancellation in part shall be applied against the Commitment of each Bank
pro rata.
7.4 Additional right of prepayment and cancellation
If any Obligor is required to pay any amount to or for the account of a
Bank under Clause 11 (Taxes) or Clause 13 (Increased costs) the Company
may, whilst the circumstances giving rise to the requirement continue,
serve a notice of prepayment and cancellation on that Bank through the
Agent. On the date falling five Business Day's after the date of service
of the notice:
(a) the Company shall prepay that Bank's participation in all the Loans
together with all other amounts payable by it to that Bank under
this Agreement; and
(b) the Bank's Commitment shall be cancelled.
7.5 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of
any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in accordance with
the express terms of this Agreement.
(d) Any amount of a Revolving Loan prepaid under this Agreement may
subsequently be reborrowed. Subject to Clause 9.3 (Change of
currency of Term Loan) and Clause 9.4 (Same
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Optional Currency), no amount of any Term Loan prepaid may subsequently be
reborrowed. No amount of the Total Commitments cancelled under this
Agreement may subsequently be reinstated.
8. INTEREST
8.1 Interest rate
The rate of interest on each Loan for its Term or Interest Period (as
appropriate) is the rate per annum determined by the Agent to be the
aggregate of the applicable:
(a) Margin;
(b) LIBOR; and
(c) Mandatory Cost.
8.2 Interest Periods for Term Loans
(a) The life of each Term Loan will be divided into successive periods
(each an "Interest Period") for the calculation of interest. The
first Interest Period will be the period selected in the Request for
that Term Loan, and in the case of a Term Loan that has been
borrowed, in a Selection Notice received by the Agent not later than
10.00 a.m. three Business Days before the end of the current
Interest Period (being one, two, three or six months).
(b) If an Interest Period extends beyond the Final Repayment Date, it
shall be shortened so that it ends on the Final Repayment Date.
(c) If the Company fails to select an Interest Period for an outstanding
Term Loan in accordance with paragraph (a) above, that Interest
Period will, subject to the other provisions of this Clause 8, be
one month.
8.3 Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if
there is not).
8.4 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Loan is payable by the Company on the last day of its Term or Interest
Period.
8.5 Default interest
(a) If an Obligor fails to pay any amount payable by it under the
Finance Documents, it shall forthwith on demand by the Agent pay
interest on the overdue amount from the due date up to the date of
actual payment, as well after as before judgment, at a rate (the
"default rate") determined by the Agent to be one per cent. per
annum above the higher of:
(i) the rate on the overdue amount under Clause 8.1 (Interest
rate) immediately before the due date (if of principal); and
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(ii) the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Loan in
the currency of the overdue amount for such successive Terms
or Interest Periods of such duration as the Agent may
determine (each a "Designated Term").
(b) The default rate will be determined on each Business Day or the
first day of the relevant Designated Term, as appropriate.
(c) If the Agent determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by the
Reference Banks to leading banks in the London interbank market, the
default rate will be determined by reference to the cost of funds to
the Agent from whatever sources it reasonably selects, after
consultation with the Reference Banks.
(d) Default interest will be compounded monthly (where paragraph (a)(i)
applies) and at the end of each Designated Term (in each other
case).
8.6 Notification of rates of interest
The Agent shall promptly notify each relevant Party of the determination
of a rate of interest under this Agreement.
9. OPTIONAL CURRENCIES
9.1 Selection
(a) The Company shall select the currency of a Revolving Loan in the
relevant Request.
(b) The Company shall select the currency of a Term Loan for an Interest
Period in either the relevant Request or, if a Term Loan is
outstanding, a notice received by the Agent not later than 5
Business Days' before the commencement of that Interest Period. In
the latter case, the Company may specify whether that Term Loan is
to be denominated in more than one currency, and, if so, the amount
in Sterling of each such currency (being a minimum Original Sterling
Amount of (pound)25,000,000 or an integral multiple of
(pound)5,000,000 or the balance of the Term Loan, if more).
(c) The currency of each Loan must be Sterling or an Optional Currency.
(d) If the Company fails to give a notice in respect of an outstanding
Term Loan in accordance with paragraph (b) above, that Term Loan
will remain denominated for its next Interest Period in the same
currency in which it is then denominated.
(e) Each part of a Term Loan which is to be denominated in a different
currency from any other part of that Term Loan shall be treated as a
separate Term Loan.
(f) The Company may not choose a currency if as a result the Loans would
be denominated at any time in more than 3 currencies.
(g) The Agent shall notify each Bank of the currency and the Original
Sterling Amount of each Loan and the applicable Agent's Spot Rate of
Exchange promptly after they are ascertained.
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9.2 Revocation of currency
If, before 9.30 a.m. on any Rate Fixing Day, the Agent receives notice
from a Bank that:
(a) it is impracticable for the Bank to fund its participation in the relevant
Loan in the relevant Optional Currency during its Term or Interest Period
(as appropriate) in the ordinary course of business in the London
interbank market; and/or
(b) the use of the proposed Optional Currency might contravene any law or
regulation,
the Agent shall give notice to the Company and to the Banks to that effect
before 11.00 a.m. on that day. In this event:
(i) the Company and the Banks may agree that the drawdown will not be
made; or
(ii) in the absence of agreement, that Bank's participation in the Loan
(or, if more than one Bank is similarly affected, those Banks'
participations in the Loan) shall be treated as a separate Loan
denominated in Sterling during the relevant Term or Interest Period
(as appropriate).
9.3 Change of currency of Term Loan
(a) If a Term Loan is to be continued during its next Interest Period in
a different currency (the "new currency") from that in which it is
currently denominated, that Term Loan shall be repaid by the Company
in full at the end of its current Interest Period in the currency in
which it is then denominated and, subject to the terms of this
Agreement, shall forthwith be re-advanced by the Banks in the new
currency.
(b) If the new currency is Sterling, the amount of each Bank's
participation in that Term Loan will be its participation in the
Original Sterling Amount (as such Original Sterling Amount has been
reduced by any repayment or prepayment of part of such Loan under
this Agreement) of that Term Loan for that Interest Period.
(c) If the new currency is an Optional Currency, the amount of each
Bank's participation in that Term Loan will be determined by
converting into the new currency its participation in the Original
Sterling Amount (as such Original Sterling Amount has been reduced
by any repayment or prepayment of part of such Loan under this
Agreement) of that Term Loan on the basis of the Agent's Spot Rate
of Exchange three Business Days before the commencement of that
Interest Period.
9.4 Same Optional Currency
(a) If a Term Loan is to be continued during its next Interest Period in
the same Optional Currency as that in which it is denominated during
its current Interest Period, the Agent shall calculate the
difference between the amount of the Term Loan (in that Optional
Currency) for the current Interest Period and for the next Interest
Period. The amount of the Term Loan for the next Interest Period
will be determined by notionally converting into that Optional
Currency the Original Sterling Amount of the Term Loan on the basis
of the Agent's Spot Rate of Exchange three Business Days before the
commencement of that Interest Period.
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(b) At the end of the current Interest Period (but subject always to
paragraph (c) below):
(i) if the amount of the Term Loan for the next Interest Period is
less than that of the preceding Interest Period, the Company
shall repay the difference in such Optional Currency; or
(ii) if the amount of the Term Loan for the next Interest Period is
greater than that of the preceding Interest Period, each Bank
shall forthwith make available to the Agent for the Company
its participation in the difference and the Agent shall pay to
the Company the difference in such Optional Currency.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period
shows an appreciation or depreciation of the Optional Currency
against Sterling of less than five per cent. when compared with the
Original Exchange Rate, no amounts are payable in respect of the
difference. In this Clause 9 (Optional Currencies) "Original
Exchange Rate" means the Agent's Spot Rate of Exchange used for
determining the amount of the Optional Currency for the Interest
Period which is the later of the following:
(i) the Interest Period during which the Term Loan was first
denominated in that Optional Currency if the Term Loan has
since then remained denominated in that Optional Currency; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 9.4.
9.5 Prepayments and repayments
If a Term Loan is to be repaid or prepaid by reference to an Original
Sterling Amount, the Optional Currency amount to be repaid or prepaid
shall be determined by reference to the Agent's Spot Rate of Exchange last
used for determining the Optional Currency amount of that Term Loan under
this Clause 9 or, if applicable, the Original Exchange Rate.
10. PAYMENTS
10.1 Place
All payments by an Obligor or a Bank under the Finance Documents shall be
made to the Agent to its account at such office or bank as it may notify
to the Obligors or that Bank for this purpose.
10.2 Funds
Payments under the Finance Documents to the Agent shall be made for value
on the due date at such times and in such funds as the Agent may specify
to the Party concerned as being customary at the time for the settlement
of transactions in the relevant currency in the place for payment.
10.3 Distribution
(a) Each payment received by the Agent under this Agreement for another
Party shall, subject to paragraphs (b) and (c) below, be made
available by the Agent to that Party by payment (on the date and in
the currency and funds of receipt) to its account with such office
or bank:
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(i) in the principal financial centre of the relevant currency; or
(ii) in the case of euro units or national currency units, in the
principal financial centre of a Participating Member State or
London,
as it may notify to the Agent for this purpose by not less than 5
Business Days' prior notice.
(b) The Agent may apply any amount received by it for an Obligor in or
towards payment (on the date and in the currency and funds of
receipt) of any amount due from an Obligor under the Finance
Documents.
(c) Where a sum is to be paid under the Finance Documents to the Agent
for the account of another Party, the Agent is not obliged to pay
that sum to that Party until it has established that it has actually
received that sum. The Agent may, however, assume that the sum has
been paid to it in accordance with this Agreement and, in reliance
on that assumption, make available to that Party a corresponding
amount. If the sum has not been made available but the Agent has
paid a corresponding amount to another Party, that Party shall
forthwith on demand refund the corresponding amount to the Agent
together with interest on that amount from the date of payment to
the date of refund, calculated at a rate determined by the Agent to
reflect its cost of funds.
10.4 Currency
(a) A repayment or prepayment of a Loan or any part of a Loan is payable
in the currency in which the Loan is denominated on its due date.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses, taxes and the like
are payable in the currency in which they are incurred.
(d) Any other amount payable under the Finance Documents is, except as
otherwise provided in this Agreement, payable in Sterling.
10.5 Set-off and counterclaim
All payments made by an Obligor under the Finance Documents shall be made
without set-off or counterclaim.
10.6 Non-Business Days
(a) If a payment under the Finance Documents is due on a day which is
not a Business Day, the due date for that payment shall instead be
the next Business Day in the same calendar month (if there is one)
or the preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal
under this Agreement interest is payable on the principal at the
rate payable on the original due date.
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10.7 Partial payments
(a) If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Obligors under the Finance
Documents, the Agent shall apply that payment towards the
obligations of the Obligors under the Finance Documents in the
following order:
(i) first, in or towards payment of any unpaid costs and expenses
of the Agent under the Finance Documents;
(ii) secondly, in or towards payment pro rata of any accrued fees
due but unpaid under Clause 20.2 (Commitment fee);
(iii) thirdly, in or towards payment pro rata of any accrued
interest due but unpaid under this Agreement;
(iv) fourthly, in or towards payment pro rata of any principal due
but unpaid under this Agreement; and
(v) fifthly, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents.
(b) The Agent shall, if so directed by all the Banks, vary the order set
out in sub-paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made
by an Obligor.
10.8 Netting of payments
(a) If on any date an amount (the "first amount") is to be advanced or
paid by a Bank under this Agreement and an amount (the "second
amount") is due from an Obligor to that Bank under the Finance
Documents, the Obligor instructs that Bank to apply the first amount
in or towards payment of the second amount.
(b) The relevant Bank shall remain obliged to advance any excess (or, as
the case may be, an Obligor shall remain obliged to pay any
shortfall) in accordance with this Clause 10. Nothing in this Clause
10.8 shall be effective to create a charge.
11. TAXES
11.1 Gross-up
All payments by an Obligor under the Finance Documents shall be made free
and clear of and without deduction for or on account of any taxes levied
or imposed by or on behalf of the UK or any taxing authority thereof or
therein except to the extent that the Obligor is required by law to make
payment subject to any taxes. If any tax or amounts in respect of tax must
be deducted from any amounts payable or paid by an Obligor, or paid or
payable by the Agent to a Bank, under the Finance Documents, the Obligor
shall pay such additional amounts as may be necessary to ensure that the
relevant Bank receives a net amount equal to the full amount which it
would have received had payment not been made subject to tax.
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11.2 Tax receipts
All taxes required by law to be deducted or withheld by an Obligor from
any amounts paid or payable under the Finance Documents shall be paid by
the relevant Obligor when due and the Obligor shall, within 30 days of the
payment being made, deliver to the Agent for the relevant Bank an original
or certified copy of an official receipt or such other evidence, if any,
as is then customary, evidencing that such deduction or withholding has
been made and has been accounted for to the appropriate authorities.
11.3 Qualifying Banks
(a) If, otherwise than as a result of the introduction of, change in, or
change in the interpretation, administration or application of, any
law, treaty or regulation or any practice or concession of the UK
Inland Revenue occurring after the date of this Agreement, a Bank is
not or has ceased to be a Qualifying Bank or is not or has ceased to
be beneficially entitled to all interest received by it in respect
of advances made by it under this Agreement, no Obligor will be
liable to pay to or for the account of that Bank under Clause 11.1
(Gross-up) any amount in respect of taxes levied or imposed by the
U.K. or any taxing authority of or in the UK in excess of the amount
it would have been obliged to pay if that Bank had been, or had not
ceased to be a Qualifying Bank and had been beneficially entitled to
all interest received by it in respect of advances made by it under
this Agreement.
(b) Each Bank warrants and represents to the Obligors on the date of
this Agreement or (if later) on the date on which it becomes a Party
that it is a Qualifying Bank and is beneficially entitled to all
interest receivable by it in respect of advances made by it under
this Agreement.
(c) Each Bank which ceases to be a Qualifying Bank or which ceases to be
beneficially entitled to interest received by it in respect of
advances made by it under this Agreement will notify the Company
forthwith upon becoming aware that it has so ceased.
11.4 Tax Credit
(a) If an Obligor makes a payment pursuant to Clause 11.1 (Gross-up) for
the account of any Bank and that Bank has received or been granted a
credit against, or relief or remission or repayment of, any tax paid
or payable by it (a "Tax Credit") which is attributable to that
payment or the corresponding payment under the Finance Document that
Bank shall, to the extent that it can do so without prejudice to the
retention of the amount of such credit, relief, remission or
repayment, pay to the Obligor concerned such amount as the Bank
shall have reasonably determined to be attributable to such payments
and which will leave the Bank (after such payment) in no better or
worse position than it would have been if the Obligor had not been
required to make any deduction or withholding.
(b) Nothing in this Clause 11.4 shall interfere with the right of a Bank
to arrange its tax affairs in whatever manner it thinks fit and
without limiting the foregoing no Bank shall be under any
obligation, except as expressly stated in sub-clause (a) above, to
claim a Tax Credit or to claim a Tax Credit in priority to any other
claims, relief, credit or deduction available to it. No Bank shall
be obliged to disclose any information relating to its tax affairs
or any computations in respect thereof.
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11.5 Double Tax Treaties
For the purposes of Clause 11.3(a) above, a financial institution which is
a Qualifying Bank by virtue of satisfying part (b) of the definition
thereof shall nevertheless not be treated as a Qualifying Bank until the
Obligors receive an appropriate direction as described in that part (b).
12. MARKET DISRUPTION
12.1 Market disturbance
(a) If LIBOR is to be determined in accordance with paragraph (b) of its
definition and a Reference Bank does not supply an offered rate by
l1.30 a.m. on the applicable Rate Fixing Day, the applicable LIBOR
shall, subject to paragraph (b) below, be determined on the basis of
the quotations of the remaining Reference Banks.
(b) If, in relation to any proposed Loan:
(i) LIBOR is to be determined in accordance with paragraph (b) of
its definition and no, or only one, Reference Bank supplies a
rate by 11.30 a.m. on the applicable Rate Fixing Day for the
purposes of determining the applicable LIBOR; or
(ii) the Agent otherwise determines (which determination shall be
conclusive and binding on all parties) that adequate and fair
means do not exist for ascertaining the applicable LIBOR,
the Agent shall promptly notify the Company and the relevant Banks of the
fact and that this Clause 12 is in operation.
12.2 Alternative rates
If the Agent gives a notice under Clause 12.1 (Market disturbance):
(a) the Company and the Banks may (through the Agent) agree that in the
case of a Loan which has not been borrowed, that Loan shall not be
borrowed; or
(b) in the absence of agreement, a Loan (if it has not been borrowed)
shall still be made: and
(i) the Term or the Interest Period (as appropriate) of the Loans
concerned shall be one month; and
(ii) during the Term or the Interest Period (as appropriate) of
each Loan the rate of interest applicable to that Loan shall
be the applicable Margin plus the Mandatory Cost plus the rate
per annum which is expressed as a percentage rate per annum of
the cost to the Bank concerned of funding that Loan from
whatever sources it may reason ably select, which rate shall
be notified by the Bank concerned to the Agent before that
last date of such Term or the Interest Period (as
appropriate).
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13. INCREASED COSTS
13.1 Increased costs
(a) Subject to Clause 13.2 (Exceptions), the Company shall forthwith on
demand by a Finance Party pay that Finance Party the amount of any
increased cost incurred by it as a result of any law or regulation
(including any relating to taxation or reserve asset, special
deposit, cash ratio, liquidity or capital adequacy requirements or
any other form of banking or monetary control).
(b) In this Agreement "increased cost" means:
(i) an additional cost incurred by a Finance Party as a result of
it having entered into, or performing, maintaining or funding
its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party
in making, funding or maintaining all or any advances
comprised in a class of advances formed by or including the
participations in the Loans made or to be made under this
Agreement as is attributable to it making, funding or
maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party under this Agreement or on
its capital; or
(iv) the amount of any payment made by a Finance Party, or the
amount of interest or other return foregone by a Finance
Party, calculated by reference to any amount received or
receivable by a Finance Party from any other Party under this
Agreement.
13.2 Exceptions
Clause 13.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the Mandatory Cost;
(b) attributable to any tax or amounts in respect of tax which must be
deducted from any amounts payable or paid by the Company or payable
or paid by the Agent to a Finance Party under the Finance Documents;
(c) attributable to any change in the rate of tax on the overall net
income, profits or gains of a Bank (or the overall net income,
profits or gains of a division or branch of the Bank) imposed in the
jurisdiction in which its principal office or Facility Office is
situate;
(d) arising directly out of the implementation by the applicable
authorities having jurisdiction over such Finance Party and/or its
Facility Office of the matters set out in the statement of the Basle
Committee on Banking Regulations and Supervisory Practices dated
July, 1988 and entitled "International Convergence of Capital
Measurement and Capital Standards or in the European Council
Directives of 17th April, 1989 (on the own funds of credit
institutions (89/299/EEC)) and 18th December, 1989 (on a solvency
ratio for credit institutions (89/647/EEC)), in each case, as
amended, modified, supplemented, restated or replaced up to the date
hereof,
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which is in terms or has effects reasonably foreseeable by such Finance
Party as at the date of this Agreement.
14. ILLEGALITY AND MITIGATION
14.1 Illegality
If it is or becomes unlawful in any jurisdiction for a Bank to give effect
to any of its obligations as contemplated by this Agreement or to fund or
maintain its participation in any Loan, then:
(a) the Bank may notify the Company through the Agent accordingly; and
(b) (i) the Company shall to the extent required and within the period
allowed or, if no period is allowed, forthwith prepay that Bank's
participation in all the Loans together with all other amounts
payable by it to that Bank under this Agreement; and
(ii) the Bank's Commitment shall be cancelled.
14.2 Mitigation
Notwithstanding the provisions of Clauses 11 (Taxes), 13 (Increased costs)
and 14.1 (Illegality), if in relation to a Bank or (as the case may be)
the Agent circumstances arise which would result in:
(a) any deduction, withholding or payment of the nature referred to in
Clause 11 (Taxes); or
(b) any increased cost of the nature referred to in Clause 13 (Increased
costs); or
(c) a notification pursuant to Clause 14.1 (Illegality),
then without in any way limiting, reducing or otherwise qualifying the
rights of that Bank or the Agent, that Bank shall upon becoming aware of
the same notify the Agent thereof (whereupon the Agent shall notify the
Company) and such Bank shall use reasonable endeavours to transfer its
participation in the Facility and its rights hereunder and under the
Finance Documents to another financial institution or Facility Office not
affected by the circumstances having the results set out in (a), (b) or
(c) above and shall otherwise take such reasonable steps as may be open to
it to mitigate the effects of such circumstances provided that such Bank
shall not be under any obligation to take any such action if, in its
reasonable opinion, to do so might have a material adverse effect upon its
business, operations or financial condition or might involve it in any
unlawful activity or any activity that is contrary to any request,
guidance or directive of any competent authority (whether or not having
the force of law) or (unless indemnified to its satisfaction) might
involve it in any expense or tax disadvantage.
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15. GUARANTEE
15.1 Guarantee
Holdco (if it becomes an Obligor by executing and delivering a Guarantor
Accession Agreement in accordance with Clause 26.4 (Accession)),
irrevocably and unconditionally and notwithstanding the release of the
Company or any other person under the terms of any composition or
arrangement with any creditors of any member of the Group:
(a) as principal obligor guarantees to each Finance Party prompt
performance by the Company of all its obligations under the Finance
Documents;
(b) undertakes with each Finance Party that, whenever the Company does
not pay any amount when due under or in connection with any Finance
Document. Holdco shall forthwith on demand by the Agent pay that
amount as if Holdco instead of the Company were expressed to be the
principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by such Finance Party if any obligation
guaranteed by Holdco is or becomes unenforceable, invalid or
illegal.
15.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Company under the Finance Documents and
shall not be discharged by any intermediate payment or discharge in whole
or in part.
15.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of any
Obligor or any security for those obligations or otherwise) is made
in whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without limitation,
the liability of Holdco under this Clause 15 shall continue as if
the discharge or arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
15.4 Waiver of defences
The obligations of Holdco under this Clause 15 will not be affected by an
act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Clause 15
or prejudice or diminish those obligations in whole or in part, including
(whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, the Company or other
person;
(b) the taking, variation, compromise, exchange, renewal or release of, or
refusal or neglect to perfect, take up or enforce, any rights against, or
security over assets of, the Company or other person or any
non-presentation or non-observance of any formality or other requirement
in respect of any instrument or any failure to realise the full value of
any security;
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(c) any incapacity or lack of powers, authority or legal personality of
or dissolution or change in the members of status of the Company or
any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Clause 15 shall include each variation
or replacement;
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that Holdco's obligations under this Clause
15 shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity;
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of Holdco under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from the law, regulation or order so that
each such obligation shall for the purposes of Holdco's obligations
under this Clause 15 be construed as if there were no such
circumstances; or
(g) the release of the Company or any other person under the terms of
any composition or arrangement with any creditor of any member of
the Group.
15.5 Immediate recourse
Holdco waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any
person before claiming from Holdco under this Clause 15.
15.6 Appropriations
If a notice has been served on the Company under Clause 18.19
(Acceleration) then, until all amounts which may be or become
payable by the Obligors under or in connection with the Finance
Documents have been irrevocably paid in full, each Finance Party (or
any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise), and Holdco shall not be
entitled to the benefit of the same; and
(b) hold in a suspense account any moneys received from Holdco or on
account of the Holdco's liability under this Clause 15 which shall
bear interest at an appropriate commercial rate as reasonably
determined by such Finance Party.
15.7 Non-competition
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, Holdco shall not, after a claim has been made or by virtue of any
payment or performance by it under this Clause 15:
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(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of
Holdco's liability under this Clause 15;
(b) claim, rank, prove or vote as a creditor of the Company or its
estate in competition with any Finance Party (or any trustee or
agent on its behalf) unless otherwise required by law; or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of the Company, or exercise any right of
set-off as against the Company.
Holdco shall hold in trust for and forthwith pay or transfer to the Agent
for the Finance Parties any payment or distribution or benefit of security
received by it contrary to this Clause 15.7 or if required by law as
contemplated by paragraph (b) above or as directed by the Agent.
15.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any
other security now or subsequently held by any Finance Party.
16. REPRESENTATIONS AND WARRANTIES
16.1 Representations and warranties
Each Obligor makes the representations and warranties (in respect of
itself and the Relevant Group only) set out in this Clause 16
(Representations and warranties) to each Finance Party.
16.2 Status
(a) It is a limited liability company, duly incorporated and validly
existing under the laws of Scotland; and
(b) each member of the Relevant Group has the power to own its assets
and carry on its business as it is being conducted.
16.3 Powers and authority
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of, the
Finance Documents to which it is or will be a party and the transactions
contemplated by those Finance Documents.
16.4 Legal validity
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid and binding obligation, enforceable (subject to the Reservations) in
accordance with its terms.
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16.5 Non-conflict
The entry into and performance by it of, and the transactions contemplated
by, the Finance Documents do not and will not conflict with:
(a) any law or regulation or judicial or official order; or
(b) the constitutional documents of any member of the Relevant Group; or
(c) to the best of the knowledge, information and belief of its
Directors, any document which is binding upon any member of the
Relevant Group or any asset of any member of the Relevant Group,
in any such case to an extent or in a manner which would have a material
adverse effect on its ability to perform its obligations under this
Agreement.
16.6 No default
(a) No Default is outstanding or would result from the making of any
Loan; and
(b) no other event is outstanding which constitutes (or, with the giving
of notice, lapse of time, determination of materiality or the
fulfilment of any other applicable condition or any combination of
the foregoing, is reasonably likely to constitute) a default under
any document which is binding on any member of the Relevant Group or
any asset of any member of the Relevant Group to an extent or in a
manner which might have a material adverse effect on its ability to
perform its obligations under the Finance Documents.
16.7 Authorisations
All authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or effected (as
appropriate) and are in full force and effect.
16.8 Licences
(a) Each member of the Relevant Group which requires a Licence from the
Secretary of State under Section 6(1) of the Electricity Act 1989
for the conduct of its business has been duly licensed under that
Section.
(b) The Appointee is the duly appointed water and sewerage undertaker
for the Franchise Area pursuant to the Appointment.
16.9 Accounts
The audited consolidated accounts of the Relevant Group most recently
delivered to the Agent (which in respect of the Company only, at the date
of this Agreement, are the Original Group Accounts):
(a) have been prepared in accordance with accounting principles and
practices generally accepted in the United Kingdom consistently
applied; and
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(b) fairly represent the consolidated financial condition of the
Relevant Group as at the date to which they were drawn up.
16.10 Litigation
Save as disclosed in writing to the Agent prior to the date of this
Agreement, no litigation, arbitration or administrative proceedings in
relation to any member of the Relevant Group are current or, to its
knowledge, pending or threatened, which are reasonably expected to be
adversely determined and which would, if adversely determined, be likely
to have a material adverse effect on the ability of any Obligor to perform
its obligations under this Agreement.
16.11 Information
(a) All of the factual information supplied by it to the Agent in
connection with the Finance Documents is true in all material
respects and not misleading in any respect and there are no facts or
matters not disclosed in writing to the Agent the omission of which
makes any such factual information incorrect or misleading in any
respect.
(b) Nothing has occurred since the date the information was provided
which renders the information contained in it untrue or misleading
in any material respect and which, if disclosed, may affect the
decision of a person considering whether to enter into this
Agreement.
16.12 Times for making representations and warranties
The representations and warranties set out in this Clause 16:
(a) (i) in the case of the Company, are made by it on the date of this
Agreement; and
(ii) in the case of Holdco will be deemed to be made by it on the
date it executes and delivers a Guarantor Accession Agreement
to the Agent in accordance with Clause 26.4 (Accession); and
(b) other than Clause 16.11 (Information), are deemed to be repeated by
the Obligors on the date of each Request, each Drawdown Date and the
first day of each Term or Interest Period with reference to the
facts and circumstances then existing.
17. UNDERTAKINGS
17.1 Duration
The undertakings in this Clause 17 (Undertakings) will remain in force
from the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.
17.2 Certificates
The Company shall, when it delivers consolidated accounts of the Group in
accordance with Clause 17.3 (a) and (b) (Financial Information), also
deliver a certificate as to the Net Gearing Percentage evidenced by those
accounts.
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17.3 Financial information
Each Obligor shall supply to the Agent in sufficient copies for all the
Banks:
(a) as soon as the same are available (and in any event within 180 days
of the end of each of its financial years) its audited financial
statements and the audited consolidated accounts of the Relevant
Group for that financial year;
(b) as soon as the same are available (and in any event within 90 days
of the end of the first half-year of each of its financial years)
the unaudited consolidated accounts of the Relevant Group for that
half-year;
(c) (in respect of the Company only), together with the accounts
specified in:
(i) paragraph (a) above, a certificate signed by one of its senior
officers on its behalf setting out in reasonable detail
computations establishing compliance with Clause 17.13
(Financial covenants) as at the date to which those accounts
were drawn up;
(ii) paragraph (b) above, a certificate signed by one of its senior
officers on its behalf setting out in reasonable detail
computations establishing compliance with Clause 17.13 (a)
(Financial covenants) as at the date to which those accounts
were drawn up; and
(d) as soon as the same are available (and in any event within 90 days
from the end of the period for which they are produced) the
quarterly unaudited consolidated accounts of the Relevant Group.
17.4 Information - Miscellaneous
Each Obligor shall supply to the Agent:
(a) all documents despatched by it to its shareholders (or any class of
them) or its creditors (or any class of them) at the same time as
they are despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which might, if adversely determined,
have a material adverse effect on its ability to perform its
obligations under the Finance Documents; and
(c) promptly, such further information in the possession or control of
any member of the Relevant Group regarding its financial condition
as any Finance Party through the Agent may reasonably request,
in sufficient copies for all of the Banks, if the Agent so requests.
17.5 Notification of Default
Each Obligor shall notify the Agent of any Default (and the steps, if any,
being taken to remedy it) promptly upon becoming aware of it.
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17.6 Compliance certificates
Each Obligor shall supply to the Agent promptly at any time, if the
Majority Banks so request and they have or the Agent has grounds for
believing that a Default may be outstanding, a statement signed by one of
its senior officers on its behalf incorporating such information as it has
in its possession which may be relevant as to whether any Default is
outstanding and, if a Default is stated to be outstanding, stating the
steps if any being taken to remedy it. Such statements shall contain such
certificates as the Majority Banks may reasonably require as to questions
of fact which are within the knowledge of the Obligor providing such
statements.
17.7 Authorisations
Each Obligor shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) if requested, supply certified copies to the Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Finance Document.
17.8 Pari passu ranking
Each Obligor shall procure that its obligations under the Finance
Documents do and will rank at least pari passu with all its other present
and future unsecured obligations, except for taxes, national insurance
contributions, employee remuneration and benefits and any other
obligations which from time to time are mandatorily preferred by law
applying to companies generally.
17.9 Negative pledge
(a) Subject to paragraph (b) below, the Company shall not, and shall
procure that no other member of the Group will, create or permit to
subsist, any Security Interest on any of its assets.
(b) Notwithstanding paragraph (a) above, the Company may create, or
permit to subsist, Permitted Security Interests on its assets.
(c) Holdco will not create or permit to subsist any Security Interest on
any of its assets.
17.10 Disposals
(a) Each Obligor shall not and shall procure that no other member of, in
the case of the Company, the Group and, in the case of Holdco, the
Ring Fenced Group will, either in a single transaction or in a
series of transactions, whether related or not and whether
voluntarily or in voluntarily, sell, transfer, grant or lease or
otherwise dispose of all or any material part of its assets.
(b) Paragraph (a) does not apply to:
(i) disposals made in the ordinary course of business of the
disposing entity;
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(ii) disposals of assets in exchange for other assets comparable or
superior as to type, value and quality;
(iii) the disposal of assets on arm's length terms;
(iv) sale and lease-back transactions the net financial effect of
each of which (looking at the sale and any related lease-back
together) represent a transaction on arm's length terms;
(v) the disposal of assets to other members of, in the case of the
Company, the Group and, in the case of Holdco, the Ring Fenced
Group; and
(vi) disposals to which the Majority Banks have agreed in writing.
17.11 Environmental matters
Each Obligor will comply and will procure that each member of the Relevant
Group complies in all material respects with:
(a) the terms and conditions of all Environmental Licences applicable to
it; and
(b) all other applicable Environmental Law,
where failure to comply with the relevant Environmental Licence or
Environmental Law might reasonably be expected to have a material adverse
effect on its ability to comply with its obligations under the Finance
Documents.
17.12 The Existing Facilities
The Company will procure that the Existing Facilities are cancelled in
full within 30 days of the date of this Agreement.
17.13 Financial covenants
(a) The Company shall procure that as at the last day of each period of
twelve months ending on the last day of each financial year and each
financial half-year of the Company, the ratio of Total Consolidated
Net Borrowings to Consolidated EBITDA does not at any time exceed
4.0:1.
(b) The Company shall procure that the ratio of Operating Profit for a
financial year of the Group to Net Interest Payable for the same
financial year is not, with respect to any financial year
(commencing with the financial year ended 31st March, 1998), less
than 2.75 to 1.
17.14 Restriction on Borrowings of Subsidiaries
The Company shall procure, at any time when the Net Gearing Percentage is
equal to or greater than 75 per cent., that none of its Subsidiaries will
have outstanding any Borrowings, except for:
(a) those incurred on the terms of the Finance Documents;
(b) Borrowings incurred with the prior consent of the Majority Banks;
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(c) Borrowings owed by a member of the Group to another member of the
Group;
(d) Borrowings of a Subsidiary of the Company which becomes a member of
the Group after the date of this Agreement, which is not created in
contemplation of or in connection with that company becoming a
member of the Group, so long as the same is discharged on or before
the date falling 6 months after it becomes a member of the Group or
(if later) the first date upon which it can be so discharged without
any premium or penalty (other than reimbursement to the relevant
lender of any costs for breaking any fixture period relating to that
lender's funding arrangements);
(e) Project Finance Borrowings not exceeding (pound)400,000,000 in
aggregate at any one time outstanding;
(f) Borrowings from the European Investment Bank for an initial term
exceeding 9 years and not exceeding (pound)100,000,000 in aggregate
at any one time outstanding;
(g) Borrowings comprised in tax based finance leases (being finance
leases as defined in the statement of Standard Accounting Principles
and Practices No. 21 or any successor statement or financial
reporting standard) in aggregate not exceeding at any one time
(pound)5O,000,000;
(h) Borrowings incurred by a Subsidiary of the Company which has entered
into a guarantee in favour of the Finance Parties, in form and
substance satisfactory to the Agent, of all of the Company's
obligations under the Finance Documents;
(i) Borrowings of Subsidiaries of the Company which are non-trading
financing vehicles:
(i) where the proceeds of the Borrowings are on lent to the
Company; or
(ii) which are Hedging Liabilities,
and where the only assets of those Subsidiaries are those loans to
the Company and receivables under instruments evidencing or creating
those Hedging Liabilities;
(j) Subject to paragraph (k) below, any other Borrowings of any
Subsidiary of the Company so long as:
(i) the aggregate amount of those Borrowings incurred by any one
Subsidiary does not exceed (pound)50,000,000 or its equivalent
in other currencies; and
(ii) the amount of those Borrowings, when aggregated with the
Borrowings of all other Subsidiaries of the Company permitted
under this paragraph (j) does not exceed, at any time,
(pound)100,000,000 (or its equivalent in other currencies) at
that time; and
(k) Borrowings made by way of a tradeable instrument in a maximum amount
of (pound)100,000,000 and for a maximum period of 10 years
commencing on 29th January, 1998 issued by the Appointee to assist
it in fulfilling its obligations to the Director General of Water
Services.
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In this Clause 17.14:
(A) Borrowings of a Subsidiary arising in respect of guarantees issued
by it, at any time, shall be taken into account in an amount equal
to the actual (and not the nominal) amount guaranteed by that
guarantee at that time; and
(B) Borrowings of Subsidiaries party to an intra-Group bank netting
arrangement in relation to the usual operation of current accounts,
at any time, shall be taken into account only in an amount equal to
the net debit balance outstanding in respect of all accounts subject
to that netting arrangement, at that time.
17.15 Distributions
(a) Subject to paragraph (b) and Clause 17.16(a) (Lending and
guarantees) below, the Company shall not make any loans, provide any
form of credit, or pay or make any dividends or distributions in
respect of any class of equity or preference shares in cash or in
kind (a "Distribution") to any member of the Ring Fenced Group.
(b) Notwithstanding paragraph (a) above and subject to Clause 17.16(b)
to (e) (inclusive) (Lending and guarantees) below, the Company may
make the following Distributions to Holdco:
(i) prior to completion of the acquisition by Holdco of the shares
in PacifiCorp (pursuant to the merger announced on 7th
December, 1998), Distributions in an amount not exceeding the
aggregate of:
(A) (pound)500,000,000 made on terms that the proceeds of
any such Distribution may only be used by Holdco for the
sole purpose of financing a share buy-back of its shares
in an equivalent amount; and
(B) payment of any initial establishment expenses incurred
by it in connection with its acquisition of the shares
in PacifiCorp; and
(ii) in any six month period Distributions in an aggregate amount
not exceeding an amount equal to the consolidated
post-taxation profits of the Company for that six month period
and, after the Scheme Date, Distributions in an aggregate
amount not exceeding an amount equal to the lower of:
(A) 100 per cent. of dividends on ordinary share capital
made in respect of that six month period by Holdco to
its shareholders; and
(B) the consolidated post-taxation profits of the Company
for that six month period.
17.16 Lending and guarantees
The Company shall not, and shall procure that no member of the Group will:
(a) subject to Clause 17.15(b) (Distributions), make any loans or
provide any form of credit to members of the Ring Fenced Group;
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(b) give any guarantee or indemnity to or for the benefit of members of
the Ring Fenced Group or for the benefit of any person in respect of
any obligation or enter into any document under which any member of
the Group assumes the liability of members of the Ring Fenced Group;
(c) either in a single transaction or in a series of transactions
whether related or not and whether voluntarily or involuntarily,
sell, transfer, grant or lease or otherwise dispose of all or any
part of its assets to a member of the Ring Fenced Group;
(d) create or permit to subsist any Security Interest on any of its
assets in respect of any indebtedness owed by members of the Ring
Fenced Group; or
(e) enter into any agreement with members of the Ring Fenced Group
unless it is on arm's length terms in the ordinary course of
business.
18. DEFAULT
18.1 Events of Default
Each of the events set out in Clauses 18.2 (Non-payment) to 18.18
(Enforceability) (inclusive) is an Event of Default (whether or not caused
by any reason whatsoever outside the control of any Obligor or any other
person).
18.2 Non-payment
Any Obligor does not pay, within three Business Days of notification by
the Agent that such amount is unpaid after having become due, any amount
payable by it under the Finance Documents at the place at and in the
currency in which it is expressed to be payable.
18.3 Breach of other obligations
Any Obligor does not comply with any provision of the Finance Documents
(other than those referred to in Clause 18.2 (Non-payment)) and such
failure (if capable of remedy before the expiry of such period) continues
unremedied for a period of 30 days from the date on which the Agent gives
notice to that Obligor requiring the same to be remedied.
18.4 Misrepresentation
A representation, warranty or statement made or repeated by any Obligor in
or in connection with any Finance Document or in any document delivered by
or on behalf of that Obligor under or in connection with any Finance
Document is incorrect in any material respect when made or deemed to be
made or repeated.
18.5 Cross-default
(a) Any Borrowings (other than Hedging Liabilities) of a member of the
Group are not paid when due or within any applicable grace period
provided in the original documentation therefor; or
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(b) any Hedging Liabilities are not paid within a period of five
Business Days of the due date or any applicable grace period
provided in the original documentation therefor, whichever is the
shorter; or
(c) any Borrowings of a member of the Group become prematurely due and
payable or are placed on demand in each case as a result of an event
of default or termination event (howsoever described) under the
document relating to those Borrowings; or
(d) any Security Interest securing Borrowings over any asset of a member
of the Group becomes enforceable and the holder thereof shall
commence proceedings or appoint a receiver, manager or similar
officer to take steps to enforce the same,
except that this Clause 18.5 shall not apply to:
(i) Project Finance Borrowings; or
(ii) Borrowings:
(A) liability for payment of which is being contested in
good faith by appropriate proceedings provided that if
the Company's auditors determine that the amount in
dispute should be provided for in the relevant accounts,
that the auditors verify that such amount is fully
provided against; or
(B) the aggregate principal amount of which (taking into
account, in the case of Hedging Liabilities, the net
payment due to the relevant counterparties as the
principal amount for this purpose) is (pound)10,000,000
or less or its equivalent in other currencies.
18.6 Insolvency
(a) Any Obligor or a Principal Subsidiary is, or is deemed for the
purposes of any law to be, unable to pay its debts (within the
meaning of Section 123(1) or, in the case of an Obligor only, 123(2)
of the Insolvency Act 1986 but, for the purposes of this Clause
18.6, Section 123(1)(a) of the Insolvency Act 1986 shall have effect
as if for "(pound)750" there was substituted "(pound)250,000" or
such higher figure as the Majority Banks may from time to time
agree);
(b) any Obligor or a Principal Subsidiary suspends making payments on
all or any class of its debts or announces an intention to do so, or
a moratorium is declared in respect of any of its indebtedness; or
(c) an Obligor or a Principal Subsidiary by reason of financial
difficulties, begins negotiations with one or more of its creditors
with a view to the readjustment or rescheduling of any of its
indebtedness.
18.7 Administration
(a) Any meeting of any Obligor or any Principal Subsidiary is convened
for the purpose of considering any resolution to present an
application for an administration order; or
(b) any Obligor or any Principal Subsidiary passes a resolution to
present an application for an administration order; or
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(c) an application for an administration order in relation to any
Obligor or any Principal Subsidiary is presented to the court and
either (i) that Obligor or such Principal Subsidiary does not apply
to the court within 30 days after the presentation of such petition
requesting the court to refuse such petition or (ii) it does so
apply but such petition is not refused by such court within 60 days
after such application for the refusal of such petition; or
(d) any Obligor or any Principal Subsidiary has an administration order
made in relation to it or a special administration order is made
under the Water Act in relation to the Appointee.
18.8 Compositions etc
(a) Subject to paragraph (b) below, an Obligor or any Principal
Subsidiary has any voluntary arrangement proposed in relation to it
under Section 1 of the Insolvency Act 1986 or enters into any other
composition, scheme of arrangement, compromise or arrangement
involving that Obligor or such Principal Subsidiary and their
respective creditors generally (other than for the purposes of
reconstruction or amalgamation upon terms and within such period as
may previously have been approved in writing by the Majority Banks).
(b) Paragraph (a) above will not apply to the Scheme provided that on or
before the Scheme Date the Agent receives the following documents:
(i) a copy of the circular sent to shareholders of the Company;
and
(ii) a copy of the interlocutor of the Court sanctioning the Scheme
under section 425 of the Companies Act 1985 (the "Act") and
confirming that in accordance with section 137 of the Act, the
reduction of the capital proposed under the Scheme has been
delivered to the Registrar of Companies for registration and
that this order and relevant minutes have been registered by
him.
18.9 Winding up
(a) Any meeting of the shareholders of any Obligor or any Principal
Subsidiary is convened for the purpose of considering any resolution
for (or to petition for) its winding up (other than in connection
with a reconstruction or amalgamation upon terms and within such
period as may previously have been approved in writing by the
Majority Banks); or
(b) Any Obligor or any Principal Subsidiary passes any resolution for
its winding up other than a resolution previously approved in
writing by the Majority Banks (other than in connection with a
reconstruction or amalgamation upon terms and within such period as
may previously have been approved in writing by the Majority Banks);
or
(c) A petition for the winding up of any Obligor or any Principal
Subsidiary is presented to the court and either (i) that Obligor or
such Principal Subsidiary does not apply to the court within 30 days
after the presentation of such petition requesting the court to
refuse such petition, or (ii) it does so apply but such petition is
not refused by such court within 60 days after such application for
the refusal of such petition; or
(d) Any Obligor or any Principal Subsidiary becomes subject to a winding
up order.
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18.10 Appointment of receivers and managers
(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like is
appointed in respect of any Obligor or any Principal Subsidiary or any
material part of its assets or undertaking and (in the case of a receiver
only) such appointment continues for more than 30 days; or
(b) the directors of any Obligor or any Principal Subsidiary request the
appointment of a liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator or
the like.
18.11 Creditors' process
Any attachment, sequestration, distress, execution or diligence (whether
on the dependence or otherwise) affects any material asset of any Obligor
or any Principal Subsidiary and is not discharged within 21 days.
18.12 Analogous proceedings
There occurs, in relation to any Obligor or any Principal Subsidiary, any
event anywhere which corresponds to any of those mentioned in Clauses 18.6
(Insolvency) to 18.11 (Creditors' process) (inclusive).
18.13 Unlawfulness
It is or becomes unlawful for any Obligor to perform any of its
obligations under the Finance Documents.
18.14 Revocation and Modification of Licences or Appointment etc
(a) Any Licence or the Appointment is:
(i) revoked, surrendered, terminated or disposed of (or any notice of
revocation or termination is issued by the relevant Secretary of
State); or
(ii) modified; or
(iii) in the case of the Appointment, varied under Section 7 of the Water
Act,
in any manner or circumstances which would have a material adverse effect
on the ability of any Obligor to perform its obligations under this
Agreement; or
(b) any final enforcement order is made or any provisional enforcement order
is confirmed with respect to the Appointee under the Water Act (other than
where the Appointee demonstrates to the satisfaction of the Majority Banks
that the order is being contested in good faith by the Appointee pursuant
to the Water Act) and failure to comply with such order is likely to have
a material adverse effect on the Company's ability to perform its
obligations under this Agreement.
18.15 Cessation of business
Any Obligor ceases to carry on all or a substantial part of its business.
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18.16 Change of control of SWP, Appointee or the Company
(a) SWP is not or ceases to be a Subsidiary of the Company; or
(b) the Appointee is not or at any time ceases to be a wholly owned Subsidiary
of SWP; or
(c) at any time after the Scheme Date, the Company ceases to be a wholly owned
Subsidiary of Holdco.
18.17 Guarantee
On the date (falling on or after the Scheme Date) upon which Holdco gives
any guarantee, Security Interest, indemnity or enters into any other
similar arrangement in respect of any of the obligations of any of its
Subsidiaries in the Ring Fenced Group, Holdco does not enter into a
Guarantor Accession Agreement in accordance with Clause 26.4 (Accession)
or the documents set out in Part 2 of Schedule 2 are either not provided
or are not in form or substance satisfactory to the Agent (acting
reasonably) on that date.
18.18 Enforceability
On or after the date Holdco enters into a Guarantor Accession Agreement,
the guarantee in Clause 15 (Guarantee) is not, or is alleged by Holdco not
to be, binding on or enforceable against Holdco.
18.19 Acceleration
On and at any time after the occurrence of an Event of Default while such
event is continuing the Agent may, and shall if so directed by the
Majority Banks, by notice to the Company:
(a) cancel the Total Commitments; and/or
(b) demand that all of the Loans, together with accrued interest, and
all other amounts accrued under this Agreement be immediately due
and payable, whereupon they shall become immediately due and
payable; and/or
(c) demand that all or part of the Loans be payable on demand, whereupon
they shall immediately become payable on demand.
19. THE AGENT AND THE ARRANGER
19.1 Appointment and duties of the Agent
Each Finance Party (other than the Agent) irrevocably appoints the Agent
to act as its agent under and in connection with the Finance Documents,
and irrevocably authorises the Agent on its behalf to perform the duties
and to exercise the rights, powers and discretions that are specifically
delegated to it under or in connection with the Finance Documents,
together with any other incidental rights, powers and discretions. The
Agent shall have only those duties which are expressly specified in this
Agreement. Those duties are solely of a mechanical and administrative
nature.
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19.2 Role of the Arranger
Except as otherwise provided in this Agreement, the Arranger has no
obligations of any kind to any other Party under or in connection with any
Finance Document.
19.3 Relationship
The relationship between the Agent and the other Finance Parties is that
of agent and principal only. Nothing in this Agreement constitutes the
Agent as trustee or fiduciary for any other Party or any other person and
the Agent need not hold in trust any moneys paid to it for a Party or be
liable to account for interest on those moneys.
19.4 Majority Banks' directions
The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of any
right, power or discretion or any matter not expressly provided for in the
Finance Documents. Any such instructions given by the Majority Banks will
be binding on all the Banks. In the absence of such instructions the Agent
may act as it considers to be in the best interests of all the Banks.
19.5 Delegation
The Agent may act under the Finance Documents through its personnel and
agents.
19.6 Responsibility for documentation
Neither the Agent nor the Arranger is responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
19.7 Default
(a) The Agent is not obliged to monitor or enquire as to whether or not
a Default has occurred. The Agent will not be deemed to have
knowledge of the occurrence of a Default. However, if the Agent
receives notice from a Party referring to this Agreement, describing
the Default and stating that the event is a Default, it shall
promptly notify the Banks.
(b) The Agent may require the receipt of security satisfactory to it
whether by way of payment in advance or otherwise, against any
liability or loss which it will or may incur in taking any
proceedings or action arising out of or in connection with any
Finance Document before it commences these proceedings or takes that
action.
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19.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent will not be liable to any
other Party for any action taken or not taken by it under or in connection
with any Finance Document, unless directly caused by its gross negligence
or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or agent
of the Agent in respect of any claim it might have against the Agent or in
respect of any act or omission of any kind (including negligence or wilful
misconduct) by that officer, employee or agent in relation to any Finance
Document.
19.9 Reliance
The Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any person
regarding any matters which may reasonably be assumed to be within
his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's employment and those
representing a Party other than the Agent).
19.10 Credit approval and appraisal
Without affecting the responsibility of each Obligor for information
supplied by it or on their behalf in connection with any Finance Document,
each Bank confirms that it:
(a) has made its own independent investigation and assessment of the
financial condition and affairs of the Obligors and their related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Agent or the Arranger in connection with any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of the Obligors and their related entities while
any amount is or may be outstanding under the Finance Documents or
any Commitment is in force.
19.11 Information
(a) The Agent shall promptly forward to the person concerned the original or a
copy of any document which is delivered to the Agent by a Party for that
person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clause 4 (Conditions precedent) upon the
request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent is
not obliged to review or check the accuracy or completeness of any
document it forwards to another Party.
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(d) Except as provided above, the Agent has no duty:
(i) either initially or on a continuing basis to provide any Bank with
any credit or other information concerning the financial condition
or affairs of any Obligor or any related entity of any Obligor
whether coming into its possession or that of any of its related
entities before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance with
this Agreement, to request any certificates or other documents from
any Obligor.
19.12 The Agent and the Arranger individually
(a) If it is also a Bank, each of the Agent and the Arranger has the same
rights and powers under this Agreement as any other Bank and may exercise
those rights and powers as though it were not the Agent or the Arranger.
(b) Each of the Agent and the Arranger may:
(i) carry on any business with any Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, any Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its activities
under this Agreement or in relation to any of the foregoing.
19.13 Indemnities
(a) Without limiting the liability of any Obligor under the Finance Documents,
each Bank shall forthwith on demand indemnify the Agent for its proportion
of any liability or loss incurred by the Agent in any way relating to or
arising out of its acting as the Agent, except to the extent that the
liability or loss arises directly from the Agent's gross negligence or
wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which the Original Sterling Amount of its
participation in the Loans (if any) bear to the Original Sterling Amount
of all the Loans on the date of the demand. If, however, there are no
Loans outstanding on the date of demand, then the proportion will be the
proportion which its Commitment bears to the Total Commitments at the date
of demand or, if the Total Commitments have been cancelled, bore to the
Total Commitments immediately before being cancelled.
19.14 Compliance
(a) The Agent may refrain from doing anything which might, in its opinion,
constitute a breach of any law or regulation or be otherwise actionable at
the suit of any person, and may do anything which, in its opinion, is
necessary or desirable to comply with any law or regulation of any
jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not disclose any
information relating to any Obligor or any of its related entities if the
disclosure might, in the opinion of the Agent,
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constitute a breach of any law or regulation or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
19.15 Resignation of Agent
(a) Notwithstanding its irrevocable appointment, the Agent may resign by
giving notice to the Banks and the Company, in which case the Agent may
forthwith appoint one of its Affiliates as successor Agent or, failing
that, the Majority Banks may appoint a successor Agent.
(b) If the appointment of a successor Agent is to be made by the Majority
Banks but they have not, within 30 days after notice of resignation,
appointed a successor Agent which accepts the appointment, the retiring
Agent may appoint a successor Agent.
(c) The resignation of the retiring Agent and the appointment of any successor
Agent will both become effective only upon the successor Agent notifying
all the Parties that it accepts the appointment. On giving the
notification, the successor Agent will succeed to the position of the
retiring Agent and the term "Agent" will mean the successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the successor
Agent such documents and records and provide such assistance as the
successor Agent may reasonably request for the purposes of performing its
functions as the Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 19 shall continue to
benefit the retiring Agent in respect of any action taken or not taken by
it under or in connection with the Finance Documents while it was the
Agent, and, subject to paragraph (d) above, it shall have no further
obligation under any Finance Document.
19.16 Banks
The Agent may treat each Bank as a Bank, entitled to payments under this
Agreement and as acting through its Facility Office(s) until it has
received notice from the Bank to the contrary by not less than five
Business Days prior to the relevant payment.
19.17 Extraordinary management time and resources
In addition to the fees (if any) paid or payable to the Agent pursuant to
Clause 20 (Fees), an Obligor shall, on demand by the Agent, reimburse it
for its own account at such reasonable daily or hourly rates as the Agent
may separately agree with that Obligor from time to time, the reasonable
cost of utilising its management time or other resources in connection
with taking all such steps or other action which:
(a) that Obligor requests, in connection with:
(i) the granting or proposed granting of any waiver or consent
under any Finance Document; or
(ii) any amendment or proposed amendment to any Finance Document;
or
(b) which any Obligor or the Majority Banks request(s) in connection
with:
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(i) any breach by any Obligor of its obligations under any Finance
Document or any investigations in respect of any such breach;
or
(ii) the preservation and enforcement of any of the rights of the
Finance Parties under the Finance Documents; or
(iii) the occurrence of a Default.
20. FEES
20.1 Front-end fees
The Company shall pay to the Agent for the Arranger front-end fees in the
amounts agreed in the Fee Letter on the date of this Agreement which the
Agent shall distribute to the Banks in the manner agreed between the Agent
and the Banks.
20.2 Commitment fee
(a) The Company shall pay to the Agent for each Bank a commitment fee computed
at the rate of 0.175 per cent. per annum on the undrawn, uncancelled
amount of that Bank's Commitment during the period from the date of this
Agreement up to and including the Term Date. For this purpose Loans are
taken at their Original Sterling Amount.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment
fee is also payable to the Agent for the relevant Bank(s) on the cancelled
amount of its Commitment at the time the cancellation takes effect.
20.3 Utilisation fee
(a) If, on any day, the Outstandings exceed (pound)200,000,000, a utilisation
fee shall be payable by the Company to the Agent, for the account of the
Banks, on the amount of the Outstandings on that day.
(b) Subject to paragraph (a) above, the utilisation fee, which shall accrue
from day to day during the period beginning on the date of this Agreement
and ending on the Final Repayment Date, shall be calculated at the rate of
0.05 per cent. per annum on the Outstandings on that day.
(c) The utilisation fee is payable quarterly in arrear.
20.4 Agent's fee
The Company shall pay to the Agent for its own account an agency fee in
the amount and at the times agreed in the Fee Letter.
20.5 VAT
Any fee referred to in this Clause 20 (Fees) is exclusive of any value
added tax or any other tax which might be chargeable in connection with
that fee. If any value added tax or other tax is so chargeable, it shall
be paid by the Company at the same time as it pays the relevant fee.
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21. EXPENSES
21.1 Initial and special costs
The Company shall forthwith on demand pay the Agent and the Arranger the
amount of all reasonable costs and expenses (including legal fees)
incurred by each of them in connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement and any other documents referred to in this
Agreement;
(ii) any other Finance Document (other than a Novation Certificate)
executed after the date of this Agreement;
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of an
Obligor and relating to a Finance Document or a document referred to
in any Finance Document; and
(c) any other matter, not of an ordinary administrative nature, arising
out of or in connection with a Finance Document.
21.2 Enforcement costs
The Company shall forthwith on demand pay to each Finance Party the amount
of all reasonable costs and expenses (including legal fees) incurred by
it:
(a) in connection with the enforcement of, or the preservation of any
rights under, any Finance Document; or
(b) in investigating any possible Default.
22. STAMP DUTIES
The Company shall pay and forthwith on demand indemnify each Finance Party
against any liability it incurs in respect of any stamp, registration and
similar tax which is or becomes payable in connection with the entry into,
performance or enforcement of any Finance Document.
23. INDEMNITIES
23.1 Currency indemnity
(a) If a Finance Party receives an amount in respect of an Obligor's liability
under the Finance Documents or if that liability is converted into a
claim, proof, judgment or order in a currency other than the currency (the
"contractual currency") in which the amount is expressed to be payable
under the relevant Finance Document:
(i) that Obligor shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
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(ii) if the amount received by that Finance Party, when converted into
the contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
the Obligor concerned shall forthwith on demand pay to that Finance
Party an amount in the contractual currency equal to the deficit;
and
(iii) the Obligor shall pay to the Finance Party concerned on demand any
exchange costs and taxes payable in connection with any such
conversion.
(b) Each Obligor waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable.
23.2 Other indemnities
The Company shall forthwith on demand indemnify each Finance Party against
any loss or liability which that Finance Party incurs as a consequence of:
(a) the occurrence of any Default;
(b) the operation of Clause 2.5 (Change of currency), 18.19
(Acceleration) or Clause 29 (Pro rata sharing);
(c) any payment of principal or an overdue amount being received from
any source otherwise than on its Repayment Date and, for the
purposes of this paragraph (c), the Repayment Date of an overdue
amount is the last day of each Designated Term (as defined in Clause
8.5 (Default interest)); or
(d) (other than by reason of negligence or default by a Finance Party) a
Loan not being made after the Company has delivered a Request for
that Loan.
The Company's liability in each case includes any loss of margin or other
loss or expense on account of funds borrowed, contracted for or utilised
to fund any amount payable under any Finance Document, any amount repaid
or prepaid or any Loan.
24. EVIDENCE AND CALCULATIONS
24.1 Accounts
Accounts maintained by a Finance Party in connection with this Agreement
are prima facie evidence of the matters to which they relate.
24.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount
under this Agreement is, in the absence of manifest error, conclusive
evidence of the matters to which it relates.
24.3 Calculations
Interest (including any applicable Mandatory Cost) and the fee payable
under Clause 20.2 (Commitment fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a year of
365 days or, in the case of interest payable on an
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amount denominated in an Optional Currency only or where the market
practice otherwise dictates, 360 days.
25. AMENDMENTS AND WAIVERS
25.1 Procedure
(a) Subject to Clause 25.2 (Exceptions), any term of the Finance Documents may
be amended or waived with the agreement of the Company (on behalf of each
Obligor), the Majority Banks and the Agent. The Agent may effect, on
behalf of the Banks, an amendment to which they or the Majority Banks have
agreed.
(b) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraph (a) above, and any such amendment or
waiver shall be binding on all the Parties.
25.2 Exceptions
An amendment or waiver which relates to:
(a) the definition of "Majority Banks" in Clause 1.1;
(b) an extension of the date for, or a decrease in an amount or a change
in the currency of, any payment under the Finance Documents;
(c) an increase in a Bank's Commitment;
(d) the incorporation of additional borrowers;
(e) a term of a Finance Document which expressly requires the consent of
each Bank; or
(f) Clause 29 (Pro rata sharing) or this Clause 25,
may not be effected without the consent of each Bank.
25.3 Waivers and remedies cumulative
The rights of each Finance Party under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
26. CHANGES TO THE PARTIES
26.1 Transfers by Obligors
No Obligor may assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Agreement.
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26.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement (in a minimum
amount equal to (pound)10,000,000 or, if less with respect to a particular
Bank, the balance of that Bank's Commitment at the time of transfer) to
another bank or financial institution which is a Qualifying Bank (the "New
Bank"). The prior consent of the Company is required for any such
assignment, transfer or novation, unless:
(i) the New Bank is another Bank or an Affiliate of a Bank; or
(ii) a Default is outstanding.
However, the prior consent of the Company must not be unreasonably
withheld or delayed and will be deemed to have been given if, within 14
days of receipt by the Company of an application for consent, it has not
been expressly refused.
(b) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 26.3
(Procedure for novations); or
(ii) the New Bank confirms to the Agent and the Company that it is a
Qualifying Bank and that it undertakes to be bound by the terms of
this Agreement as a Bank in form and substance satisfactory to the
Agent. On the transfer becoming effective in this manner the
Existing Bank shall be relieved of its obligations under this
Agreement to the extent that they are transferred to the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to sub-contract
an obligation if that Bank remains liable under this Agreement for that
obligation except that no Bank may subcontract any such obligation if the
effect of such contract would be that a person other than a Qualifying
Bank has any beneficial entitlement to any interest received by it under
this Agreement.
(d) On each occasion that an Existing Bank assigns, transfers or novates any
of its rights and/or obligations under this Agreement, the New Bank shall,
on the date the assignment, transfer and/or novation takes effect, pay to
the Agent for its own account a fee of (pound)750.
(e) An Existing Bank is not responsible to a New Bank for:
(i) the execution, genuineness, validity, enforceability or sufficiency
of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance Document; or
(iii) the accuracy of any statements (whether written or oral) made in or
in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance Parties
that it:
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(i) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement and
has not relied exclusively on any information provided to it by the
Existing Bank in connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while any
amount is or may be outstanding under this Agreement or any
Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights and/or
obligations assigned, transferred or novated under this Clause; or
(ii) support any losses incurred by the New Bank by reason of the
non-performance by the Company of its obligations under this
Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank, but
excludes a Bank if no amount is or may be owed to or by that Bank under
this Agreement and its Commitment has been cancelled or reduced to nil.
26.3 Procedure for novations
(a) A novation is effected if the Existing Bank and the New Bank deliver to
the Agent a Novation Certificate in the form of Schedule 5 and the Agent
executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate in
the form of Schedule 5 on its behalf.
(c) To the extent that they are expressed to be the subject of the novation in
the Novation Certificate:
(i) the Existing Bank and the other Parties (the "existing Parties")
will be released from their obligations to each other (the
"discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged obligations only
insofar as they are owed to or assumed by the New Bank instead of
the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties and
vice versa (the "discharged rights") will be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Bank instead of the
Existing Bank,
all on the date of execution of the Novation Certificate by the Agent or,
if later, the date specified in the Novation Certificate.
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26.4 Accession
(a) Prior to the date that Holdco guarantees any obligations of any of its
Subsidiaries in the Ring Fenced Group, the Company shall procure that
Holdco delivers to the Agent a Guarantor Accession Agreement, duly
executed by it.
(b) Upon execution and delivery of a Guarantor Accession Agreement and all
those other documents listed in Part 2 of Schedule 2, in each case in form
and substance satisfactory to the Agent (acting reasonably), Holdco agrees
to be bound by the terms of the Finance Documents.
26.5 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be one of the Banks, the Agent shall
(in consultation with the Company) appoint another Bank or an Affiliate of
a Bank to replace that Reference Bank.
26.6 Register
The Agent shall keep a register of all the Parties and shall supply any
other Party (at that Party's expense) with a copy of the register on
request.
26.7 Change of Facility Office
No Bank will change its Facility Office if, at the time of the change,
circumstances exist which would oblige the Company to pay that Bank any
amount under Clause 11.1 (Taxes) or Clause 13 (Increased costs) which it
would not have been obliged to pay if that Bank had retained the same
Facility Office.
27. DISCLOSURE OF INFORMATION
(a) A Bank may disclose to one of its Affiliates or any person with whom it is
proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in connection
with any Finance Document.
Provided that any such Affiliate or person has agreed in writing to
maintain the confidentiality of any such document or information on the
same terms (with appropriate consequential changes) as set out in
paragraph (c) below.
(b) The prior written consent of the Company is required for any disclosure
under paragraph (a) above unless:
(i) that person is another Bank or an Affiliate of a Bank; or
(ii) a Default is outstanding.
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However, the prior consent of the Company must not be unreasonably
withheld or delayed and will be deemed to have been given if, within 10
Business Days of receipt by an Obligor of an application for consent, it
has not been expressly refused.
(c) Subject to paragraph (a) above, each Bank shall keep confidential and not,
without the prior written consent of the Company, use any information
(other than information which is publicly available unless as a result of
a breach of this Clause 27) supplied by or on behalf of an Obligor under
this Agreement otherwise than in connection with this Agreement. However,
each Bank is entitled to disclose any information:
(i) in connection with any legal proceedings arising out of or in
connection with this Agreement; or
(ii) if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for discovering
documents or otherwise; or
(iii) pursuant to any law or regulation in accordance with which that Bank
is required to act; or
(iv) to any governmental, banking or taxation authority of competent
jurisdiction; or
(v) to its auditors or legal or other professional advisers.
28. SET-OFF
A Finance Party may set off any matured obligation owed by an Obligor
under this Agreement (to the extent beneficially owned by that Finance
Party) against any obligation (whether or not matured) owed by that
Finance Party to that Obligor, regardless of the place of payment, booking
branch or currency of either obligation. If the obligations are in
different currencies, the Finance Party may convert either obligation at a
market rate of exchange in its usual course of business for the purpose of
the set-off. If either obligation is unliquidated or unascertained, the
Finance Party may set off in an amount estimated by it in good faith to be
the amount of that obligation.
29. PRO RATA SHARING
29.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance Party
(the "recovering Finance Party") is discharged by payment, set-off or any
other manner other than through the Agent in accordance with Clause 10
(Payments) (a "recovery"), then:
(a) the recovering Finance Party shall, within three Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of the
amount which the recovering Finance Party would have received had
the recovery been received by the Agent and distributed in
accordance with Clause 10 (Payments);
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(c) subject to Clause 29.3 (Exception), the recovering Finance Party
shall, within three Business Days of demand by the Agent, pay to the
Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment by
that Obligor under Clause 10 (Payments) and shall pay the
redistribution to the Finance Parties (other than the recovering
Finance Party) in accordance with Clause 10.7 (Partial payments);
and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above, and that Obligor will owe the recovering
Finance Party a debt which is equal to the redistribution,
immediately payable and of the type originally discharged.
29.2 Reversal of redistribution
If under Clause 29.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a recovery, or
an amount measured by reference to a recovery, to an Obligor; and
(b) the recovering Finance Party has paid a redistribution in relation
to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid to
that Finance Party. Thereupon the subrogation in Clause 29.1(e)
(Redistribution) will operate in reverse to the extent of the
reimbursement.
29.3 Exception
A recovering Finance Party need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against the
Obligor concerned in the amount of the redistribution pursuant to Clause
29.1(e) (Redistribution).
30. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of any
other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other provision of the Finance Documents.
31. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Agreement.
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32. NOTICES
32.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:
(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
32.2 Addresses for notices
(a) The address and facsimile number of each Party (other than the Agent) for
all notices under or in connection with this Agreement are:
(i) that notified by that Party for this purpose to the Agent on or
before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent by
not less than five Business Days' notice.
(b) The address and facsimile number of the Agent is:
The Royal Bank of Scotland plc
Loans Administration
Corporate Banking Office
5-10 Great Tower Street
London EC3P 3HX
Facsimile number: 0171 220 7370
or such other as the Agent may notify to the other Parties by not less
than five Business Days' notice.
(c) The Agent shall, promptly upon request from any Party, give to that Party
the address, telex number or facsimile number of any other Party
applicable at the time for the purposes of this Clause.
33. GOVERNING LAW
This Agreement is governed by English law.
34. JURISDICTION
(a) Each of the parties hereto irrevocably agrees, for the benefit of the
Agent and the Banks, that the courts of England shall have jurisdiction to
hear and determine any suit, action or
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proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and, for such purposes, irrevocably submits
to the jurisdiction of such courts.
(b) The Company irrevocably waives any objection which it might now or
hereafter have to the courts referred to in paragraph (a) above being
nominated as the forum to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and agrees not to claim that any such court
is not a convenient or appropriate forum.
(c) The submission to the jurisdiction of the courts referred to in paragraph
(a) above shall not (and shall not be construed so as to) limit the right
of the Agent or the Banks to take proceedings in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
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SCHEDULE 1
BANKS AND COMMITMENTS
Banks Commitments
(Pounds)
The Royal Bank of Scotland plc (Pounds)30,000,000
Bayerische Landesbank Girozentrale, London Branch (Pounds)30,000,000
National Westminster Bank Plc (Pounds)30,000,000
Citibank N.A. (Pounds)25,000,000
Barclays Bank PLC (Pounds)25,000,000
National Australia Bank Limited (Pounds)25,000,000
Banca di Roma SpA (Pounds)20,000,000
Banque Nationale de Paris London Branch (Pounds)20,000,000
CIBC Wood Gundy Ireland Ltd (Pounds)20,000,000
Commerzbank Aktiengesellschaft, London Branch (Pounds)20,000,000
Deutsche Bank AG London (Pounds)20,000,000
ING Bank N.V. (Pounds)20,000,000
Midland Bank plc (Pounds)20,000,000
Morgan Guaranty Trust Company of New York (Pounds)20,000,000
Paribas (Pounds)20,000,000
The Bank of Nova Scotia (Pounds)20,000,000
The Sanwa Bank, Limited (Pounds)20,000,000
The Toronto-Dominion Bank (Pounds)20,000,000
Westdeutsche Landesbank Girozentrale (Pounds)20,000,000
ABN AMRO Bank N.V. (Pounds)15,000,000
Credit Lyonnais (Pounds)15,000,000
KBC Bank N.V. (Pounds)15,000,000
Australia and New Zealand Banking Group Limited (Pounds)10,000,000
Commonwealth Bank of Australia, London Branch (Pounds)10,000,000
Leonia Corporate Bank plc (Pounds)10,000,000
Banca Monte dei Paschi di Siena SpA (Pounds)10,000,000
Norddeutsche Landesbank Girozentrale, London Branch (Pounds)10,000,000
Bankgesellschaft Berlin AG, London Branch (Pounds)10,000,000
Bayerische Hypo- und Vereinsbank AG (Pounds)10,000,000
Chase Manhattan Bank (Pounds)10,000,000
Den Danske Bank Aktieselskab (Pounds)10,000,000
Landesbank Baden-Wurttemberg (Pounds)10,000,000
The Bank of Tokyo-Mitsubishi, Limited (Pounds)10,000,000
The Dai-Ichi Kangyo Bank, Limited (Pounds)10,000,000
The Governor and Company of the Bank of Scotland (Pounds)10,000,000
Total Commitments
-----------------
(Pounds)600,000,000
-----------------
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SCHEDULE 2
PART 1
CONDITIONS PRECEDENT DOCUMENTS TO BE DELIVERED BEFORE
THE FIRST LOAN
1. A copy of the memorandum and articles of association, certificate of
incorporation and certificate of incorporation on change of name (if any)
of the Company.
2. A copy of a resolution of the board of directors of the Company:
(i) approving the terms of, and the transactions contemplated by the
Finance Documents resolving that it execute the Finance Documents to
which it is a party and any related and/or ancillary documents;
(ii) authorising a specified person or persons to execute the Finance
Documents to which it is a party on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed and/or
despatched by it under or in connection with the Finance Documents.
3. A certificate of a director of the Company certifying that the utilisation
of the Facility in full would not cause any internal borrowing limit
binding on the Company to be exceeded.
4. A certificate of an authorised signatory certifying:
(a) that each copy document specified in this Part 1 of Schedule 2 is
correct, complete and in full force and effect as at a date no
earlier than the date of this Agreement; and
(b) the specimen signatures of its authorised signatories.
5. A legal opinion of Allen & Overy, legal advisers to the Agent, addressed
to the Finance Parties substantially in the form of Schedule 6.
6. A legal opinion of Maclay Murray & Spens, legal advisers to the Agent in
Scotland, addressed to the Finance Parties substantially in the form of
Schedule 7.
Miscellaneous
7. A copy of each Licence held by a member of the Group.
8. A copy of the Supplemental Agreement duly executed by the Company and the
Agent.
9. Evidence that Existing Facilities have been cancelled and any outstandings
under those Existing Facilities have been or will be repaid in full.
10. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary or desirable in connection with
the entry into and performance of,
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and the transactions contemplated by, any Finance Document or for the
validity and enforceability of any Finance Document and which, in either
case, is notified to the Company prior to the execution of this Agreement.
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PART 2
CONDITION PRECEDENT DOCUMENTS
TO BE DELIVERED BY HOLDCO IN ACCORDANCE WITH
CLAUSE 26.4 (ACCESSION)
Authorisations
1. A copy of the memorandum and articles of association, certificate of
incorporation and certificate of incorporation on change of name (if any)
of Holdco.
2. A copy of a resolution of the board of directors of Holdco:
(a) approving the terms of, and the transactions contemplated by the
Guarantor Accession Agreement and resolving that it execute the
Guarantor Accession Agreement;
(b) authorising a specified person or persons to execute the Guarantor
Accession Agreement on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed and/or
despatched by it under or in connection with the Guarantor Accession
Agreement.
3. A certificate of a director of Holdco certifying that the execution of the
Guarantor Accession Agreement will not result in any breach or any
restriction binding on Holdco.
4. A certificate of an authorised signatory of Holdco certifying:
(a) that each copy document specified in Part 2 of this Schedule 2 is
correct, complete and in full force and effect as at a date no
earlier than the date of the Guarantor Accession Agreement; and
(b) the identity and specimen signatures of the directors, authorised
signatories and secretary of Holdco.
Legal opinion
5. A legal opinion of Allen & Overy, legal advisers to the Agent, addressed
to the Finance Parties.
6. A legal opinion of Maclay Murray & Spens, legal advisers to the Agent in
Scotland, addressed to the Finance Parties.
Miscellaneous
7. Guarantor Accession Agreement duly executed by Holdco.
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8. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary in connection with the entry
into and performance of the transactions contemplated by, the Guarantee or
for the validity and enforceability of the Guarantee.
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SCHEDULE 3
CALCULATION OF THE MANDATORY COST
(a) The Mandatory Cost for each Loan for each period in respect of which
interest is payable is the rate determined by the Agent to be equal to the
rate notified by the Agent and calculated in accordance with the following
formulae:
in relation to a Loan denominated in Sterling:
BY + S(Y-Z) + F x 0.01 % per annum = Mandatory Cost
----------------------
100-(B + S)
in relation to any other Loan:
F x 0.01 % per annum = Mandatory Cost
--------
300
where on the day of application of the formula:
B is the percentage of the Agent's eligible liabilities which the Bank
of England requires the Agent to hold on a non-interest-bearing
deposit account in accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Agent to
leading banks in the London interbank market at or about 11.00 a.m.
on that day for the Term or Interest Period;
S is the percentage of the Agent's eligible liabilities which the Bank
of England requires the Agent to place as a special deposit;
Z is the interest rate per annum allowed by the Bank of England on
special deposits; and
F is the charge payable by the Agent to the Financial Services
Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees
Regulations (but where for this purpose, the figure in paragraph
2.02b and 2.03b will be deemed to be zero) expressed in pounds per
(pound)1 million of the fee base of the Agent.
(b) For the purposes of this Schedule 3:
(i) "eligible liabilities" and "special deposits" have the meanings
given to them at the time of application of the formula by the Bank
of England;
(ii) "fee base" has the meaning given to it in the Fees Regulations;
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(iii) "Fees Regulations" means:
(A) prior to 31st March, 1999, the Banking Supervision (Fees)
Regulations 1998; and
(B) on and after 31st March, 1999, any regulations governing the
payment of fees for banking supervision.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%,
BY is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant period
comprised in the relevant Term or Interest Period.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to the nearest four decimal places.
(e) If the Agent determines (after consultation with the Banks) that a change
in circumstances has rendered, or will render, the formula inappropriate,
the Agent shall notify the Company of the manner in which the Mandatory
Cost will subsequently be calculated. The manner of calculation so
notified by the Agent shall, in the absence of manifest error, be binding
on all the parties to this Agreement.
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SCHEDULE 4
PART 1
FORM OF REQUEST
To: THE ROYAL BANK OF SCOTLAND PLC as Agent
From: SCOTTISH POWER PLC
Date: [ ]
Scottish Power plc-(pound)600,000,000 Revolving Credit Agreement
dated [ ], 1999
1. We wish to borrow a Loan as follows:
(a) Drawdown Date: [ ]
(b) Original Sterling Amount: (pound)[ ]
(c) Currency: [ ]
(d) Term/First Interest Period: [ ]
(e) Payment instructions: [ ]
2. We confirm that each condition specified in Clause 4.2(a) (Further
conditions precedent) (except as specified in paragraph (b) of that
Clause) is satisfied on the date of this Request.
3. We confirm that the Loan will be used [in accordance with Clause 3
(Purpose)/solely for the purposes of repayment of commercial paper which
is due for repayment on the Drawdown Date].
4. We confirm that the borrowing of the above referenced Loan will not cause
any borrowing limit binding on Scottish Power plc to be exceeded.
By:
SCOTTISH POWER PLC
Authorised Signatory
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PART 2
FORM OF SELECTION NOTICE
From: Scottish Power plc
To: The Royal Bank of Scotland plc
Scottish Power plc - (pound)600,000,000 Revolving Credit Agreement
dated [ ], 1999
1. We write in connection with the Loan in the sum of [ ]
outstanding/to be made under the Agreement.
2. We write to inform you that we have selected [ ] as the
duration of the next Interest Period relating thereto.
By:
SCOTTISH POWER PLC
--------------------
Authorised Signatory
--------------------
Authorised Signatory
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SCHEDULE 5
FORM OF NOVATION CERTIFICATE
To: THE ROYAL BANK OF SCOTLAND PLC as Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
Scottish Power plc - (pound)600,000,000 Revolving Credit Agreement
dated [ ], 1999
We refer to Clause 26.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New
Bank") agree to the Existing Bank and the New Bank novating all the
Existing Bank's rights and obligations referred to in the Schedule in
accordance with Clause 26.3 (Procedure for novations).
2. The specified date for the purposes of Clause 26.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 32.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] THE ROYAL BANK OF SCOTLAND PLC
By: By: By:
Date: Date: Date:
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SCHEDULE 6
FORM OF LEGAL OPINION OF ALLEN & OVERY
To: The Royal Bank of Scotland plc
Waterhouse Square
138-142 Holborn
London EC1N 2TH
(as Agent for the Finance Parties)
[ ], 1999
Dear Sirs,
Scottish Power plc (the "Company") -
(pound)600,000,000 Revolving Credit Agreement
dated [ ], 1999 (the "Credit Agreement")
We have acted as legal advisers in England to The Royal Bank of Scotland plc
(the "Agent") in connection with a Credit Agreement dated [ ], 1999
(the "Credit Agreement") made between the Company as borrower, The Royal Bank of
Scotland plc as Arranger, the Banks (as defined therein) and the Agent.
Terms defined in the Credit Agreement have the same meanings when used in this
opinion.
We have received instructions from and participated in discussions with the
Agent about the provisions contained in the Credit Agreement.
We have examined the following documents:
(a) an executed copy of the Credit Agreement; and
(b) the legal opinion of Maclay Murray & Spens legal advisers to the Agent in
Scotland dated [ ], 1999 and addressed to the Finance
Parties.
Except as stated above we have not examined any contracts, instruments or other
documents entered into by or affecting the Company or any corporate records of
the Company and have not made any other enquiries concerning the Company.
In giving this opinion, we have assumed:
(i) the genuineness of all signatures;
(ii) the authenticity and completeness of all documents submitted to us as
originals;
(iii) the conformity to original documents of all documents submitted to us as
copies and the authenticity and completeness of such original documents;
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(iv) the power and authority to execute and the due execution of the Credit
Agreement by the Company, each Bank, the Arranger and the Agent, and that
the obligations expressed to be assumed by each Bank, the Arranger and the
Agent under the Credit Agreement are legally valid;
(v) that, so far as the laws of Scotland are concerned, the Credit Agreement
constitutes a valid and legally binding obligation of the Company in
accordance with its terms; and
(vi) that the certificates and other documents dated earlier than the date
hereof and on which we have expressed reliance remain accurate and that
there have been no variations to any such certificates or documents.
We have not investigated the laws of any country other than England and this
opinion is given only with respect to English law. We assume that no foreign law
which may apply with respect to the Credit Agreement or the transactions and
matters contemplated thereby would be such as to affect any of the conclusions
stated herein. We express no opinion as to matters of fact.
Based upon and subject to the foregoing and subject to any matters not disclosed
to us we are of the opinion that, so far as the present laws of England are
concerned and subject to the qualifications set out below:
(A) Legal validity The Credit Agreement constitutes valid and legally binding
obligations of the Company.
(B) Stamp duties No stamp or registration duty or similar taxes or charges
are payable in the United Kingdom in respect of the execution or delivery
of the Credit Agreement.
(C) Registrations It is not necessary to register the Credit Agreement in any
public office or elsewhere in England.
Notwithstanding the foregoing this opinion is subject to the following
qualifications:
(i) The validity, performance and enforcement of the Credit Agreement may be
limited by bankruptcy, insolvency, reorganisation or similar laws
affecting creditors' rights generally.
(ii) Remedies such as specific performance or the issue of an injunction are
available only at the discretion of the court. Specific performance is not
usually granted and an injunction is not usually issued where damages
would be an adequate alternative.
(iii) The Credit Agreement provides for interest to be paid on overdue amounts.
Such interest may amount to a penalty under English law and may therefore
not be recoverable.
(iv) We express no opinion as to the enforceability of Clause 29 (Pro rata
sharing) of the Credit Agreement.
(v) An English court may stay proceedings if concurrent proceedings are being
brought elsewhere.
(vi) There could be circumstances in which an English court would not treat as
conclusive those certificates and determinations which the Credit
Agreement states are to be so treated.
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(vii) The obligations contained in Clause 22 (Stamp duties) of the Agreement may
be void in respect of stamp duty payable in the United Kingdom.
(viii) Clause 30 (Severability) of the Credit Agreement may not be effective in
certain circumstances depending on the nature of the prohibition or
unenforceability in question.
(ix) The Credit Agreement may be amended orally by the parties thereto
notwithstanding provisions therein to the contrary.
(x) English courts may not give effect to any provision for reimbursement of
legal costs incurred by an unsuccessful litigant.
(xi) The effectiveness of terms exculpating a party from a liability or duty
otherwise owed may be limited by law.
(xii) There is no authority as to whether or not an English court would give
effect to the currency indemnity contained in Clause 23.1 (Currency
indemnity) of the Credit Agreement. However, the English courts will now
render judgments in foreign currencies.
(xiii) On the assumption that a Novation Certificate is duly completed,
executed, authorised and delivered to the Agent in accordance with the
Credit Agreement and any conditions to which the Novation Certificate is
expressed to be subject are satisfied, then the provisions of Clause 26.3
(Procedure for novations) will operate in accordance with its terms.
However, without prejudice to the preceding sentence, no opinion is
expressed with respect to any Novation Certificate issued after the date
of this opinion because we do not know the identity of the parties
concerned and this opinion is given only as at today's date. In any
event, it should be noted that in certain circumstances transactions
employing Novation Certificates and assignments or transfers of interests
in the Credit Agreement may require compliance with the Financial
Services Act 1986.
(xiv) A person may not be able to enforce a provision of the Credit Agreement
expressed to be in his favour unless he is a party.
This opinion is given for the sole benefit of the Agent, the Arranger and the
Banks which are the original parties to the Credit Agreement and may not be
disclosed to, or relied upon by, any other person or be quoted or made public in
any way without our prior written consent.
Yours faithfully,
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SCHEDULE 7
FORM OF LEGAL OPINION OF MACLAY MURRAY & SPENS
Ref: RJL/SMK
[ ], 1999
The Royal Bank of Scotland plc
Waterhouse Square
138-142 Holborn
LONDON
EC1N 2TH
(as Agent for the Finance Parties)
Dear Sirs,
You have asked for our opinion in connection with an agreement of even date with
this opinion between Scottish Power plc as borrower (the "Company"), The Royal
Bank of Scotland plc as Arranger, the Banks (as defined therein) and The Royal
Bank of Scotland plc as agent (the "Agent") (the "Facility Agreement").
For the purposes of this opinion, we have examined copies of and base our
opinion on the following documents, copies of which we have signed and attach
for the purposes of identification (other than the Company Search):
(a) an executed copy of the Facility Agreement;
(b) a certified copy of the Memorandum and Articles of Association of the
Company;
(c) a microfiche of the files of the Company obtained from the Registrar of
Companies in Edinburgh on [ , 1999] (the "Company Search");
(d) a certified copy of the minutes of a meeting of the board of directors of
the Company held on [ 1999] (the "Directors' Minutes");
(e) a certificate of a director of the Company confirming that the utilisation
by the Company of the said Facility (as defined in the Facility Agreement)
(the "Director Certificate") in full would not cause any internal
borrowing limit binding on the Company to be exceeded; and
(f) a certificate of an authorised signatory of the Company (the "Authorised
Signatory Certificate") certifying that each of the items in paragraphs
(b) and (d) is correct, complete and in full force. The Director
Certificate and Authorised Signatory Certificate are herein together
referred to as "the Certificates").
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We have not made any other enquiries concerning the Company and in particular we
have not concerned ourselves with investigating or verifying any matters of fact
or opinion (whether set out in any of the documents referred to above or
elsewhere) other than as expressly stated herein. We have not reviewed and
express no opinion on any government regulations, subordinate legislation or
statutes relating to the operation of the electricity, water or sewerage
industries in the United Kingdom.
We have assumed for the purposes of this opinion:
(i) the capacity, power and authority of each of the Joint Arrangers, the
Co-Arranger, the Banks and the Agent to enter into and perform their
respective obligations under the Facility Agreement and the due execution
and delivery of the Facility Agreement by each of the Arrangers, the Banks
and the Agent;
(ii) that the Facility Agreement has been signed by [ ] and
[ ] on behalf of the Company and that the Facility Agreement
has been duly delivered;
(iii) the conformity to original documents of all documents supplied to us as
photocopies, specimen or facsimile copies;
(iv) that each of the statements contained in the Certificates (on which we
have relied without further inquiry) is true and correct as at the date
hereof;
(v) that the meeting of the board of directors of the Company held on
[ ], 1999 was duly convened and held;
(vi) that the information disclosed by the Company Search was accurate in all
respects and that such Search did not fail to disclose any material
information which had been delivered for registration but which did not
appear on the microfiche supplied by the Companies Registry in Edinburgh;
(vii) the Company has not passed a voluntary winding-up resolution, no petition
has been presented or order made by the Court for the winding up,
dissolution or administration of the Company and no receiver, trustee,
administrator or similar official has been appointed in relation to the
Company or any of its assets or revenues; and
(viii) that the Facility Agreement constitutes a legal, valid and binding
obligation of the parties thereto under English law to which it is
expressed to be subject and that the performance of the obligations
thereunder is not illegal or unenforceable by virtue of the law of any
jurisdiction (other than Scotland) in which they are to be performed.
We have not made any investigation of and do not express any opinion as to the
laws of any jurisdiction outside Scotland and this opinion relates only to the
laws of Scotland as they exist at the date hereof.
Based upon and subject to the foregoing and subject to the reservations
hereinafter referred to and to any matters not disclosed to us, we are of the
opinion that:
1. The Company is a limited liability company duly incorporated under the
laws of Scotland and has full corporate power and authority to execute,
deliver and perform its obligations under the Facility Agreement.
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2. The execution and delivery by the Company of the Facility Agreement and
the performance of its obligations thereunder have been duly authorised by
all requisite corporate action on its part.
3. The obligations of the Company under the Facility Agreement are valid and
binding obligations of the Company under the law of Scotland and would be
so treated in the Courts of Scotland.
4. The entry into and performance of the Facility Agreement by the Company
and the transaction and matters to be implemented thereunder do not
violate (i) Scottish Law or (ii) the Memorandum and Articles of
Association of the Company.
5. It is not necessary to file, register or record the Facility Agreement
with any court or authority in Scotland.
6. No stamp, registration or other similar taxes or charges are payable in
Scotland with respect to the execution or delivery of the Facility
Agreement.
7. The choice of English law to govern the Facility Agreement is valid and
effective under the private international law of Scotland. Subject to the
usual exceptions affecting such matters as procedure, the availability of
remedies and any provision which is repugnant to the law of Scotland, the
law of England will accordingly be applied by the Courts of Scotland if
any dispute arising from or contractual claim connected with the Facility
Agreement comes under their jurisdiction. A judgment rendered against the
Company by a competent court in England and registered in Scotland
pursuant to the provisions of the Civil Jurisdiction and Judgments Act
1982 will be enforceable by the Scottish Courts.
8. The submission by the Company to the jurisdiction of the courts of England
is valid and binding on the Company.
The foregoing opinion is subject to the following qualifications:
(a) We do not express any view on the particular remedies available on
enforcement, such as specific implement or interdict, which are
discretionary remedies.
(b) The enforcement of the Facility Agreement may be limited by applicable
laws relating to prescription, limitation, bankruptcy, liquidation,
receivership, administration, insolvency or other laws relating to
creditors' rights generally or by the application of rules of equity or
public policy.
(c) A Scottish court may refuse to give effect to any provisions of the
Facility Agreement providing for the payment of legal costs and other
costs, charges and expenses in respect of the cost of unsuccessful
litigation brought before such court or where that court has itself made
an order for costs.
(d) Any provision contained in the Facility Agreement to the effect that a
calculation and/or certification will be conclusive and binding may not be
effective if such calculation or certification is fraudulent or erroneous
on its face and will not necessarily prevent judicial enquiry into the
merit of any claim under the relative document.
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<PAGE>
77
- --------------------------------------------------------------------------------
(e) Any provision in the Facility Agreement relating to default interest would
be unenforceable if it were held to constitute a penalty and not a genuine
and reasonable pre-estimate of the damage likely to be suffered as a
result of the default in payment of the amount in question.
(f) We express no opinion whether any provision in the Facility Agreement
conferring on any party thereto a right of set off or similar right would
be effective against a liquidator or creditor.
(g) We have not been asked to advise you in connection with the preparation of
the Facility Agreement and we therefore express no opinion on the
implications of the Facility Agreement or on whether the Facility
Agreement gives effect to the commercial intentions of the parties.
(h) Any undertakings or indemnities in relation to United Kingdom stamp duties
given by the Company may be void under the provisions of Section 117 of
the Stamp Act 1891.
(i) A Scottish court may stay proceedings if concurrent proceedings are being
brought elsewhere.
(j) The effectiveness of terms exculpating a party from a liability or duty
otherwise owed is limited by law.
This opinion shall be governed by and construed in accordance with the law of
Scotland.
This opinion is strictly limited to the matters specifically stated herein and
is not to be read as extending by implication to any other matter.
This opinion is provided solely for the benefit of the person to which it is
addressed and may not be communicated to or relied upon by any other person,
firm or corporation whatsoever.
Yours faithfully,
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<PAGE>
78
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SCHEDULE 8
GUARANTOR ACCESSION AGREEMENT
To: THE ROYAL BANK OF SCOTLAND plc as Agent
From: [HOLDCO]
Scottish Power plc (the "Company") -
(pound)600,000,000 Revolving Credit Agreement
dated [ ], 1999 (the "Credit Agreement")
We refer to Clause 26.4 (Accession) of the Credit Agreement.
We, [HOLDCO] of 1 Atlantic Quay, Glasgow G2 8SP (Registered no. SC193794) agree
to become, with effect from the date of this Deed, an Obligor under the Credit
Agreement and to be bound by the terms of the Finance Documents as an Obligor in
accordance with Clause 26.4 (Accession).
Our address for notices for the purposes of Clause 32.2 (Addresses for notices)
is:
[
]
This Agreement is intended to take effect as a deed under English law.
THE COMMON SEAL of )
[HOLDCO] )
was affixed in )
the presence of: )
Director
Director/Secretary
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<PAGE>
79
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SIGNATORIES TO THE FACILITY AGREEMENT
Company
SCOTTISH POWER PLC
By: A.J.M. COATS
Arranger
THE ROYAL BANK OF SCOTLAND PLC
By: J.H.M. HARE
Agent
THE ROYAL BANK OF SCOTLAND PLC
By: J.H.M. HARE
Banks
THE ROYAL BANK OF SCOTLAND PLC
By: J.H.M. HARE
BAYERISCHE LANDESBANK GIROZENTRALE, LONDON BRANCH
By: TIMOTHY R. HALL
NATIONAL WESTMINSTER BANK PLC
By: JONATHAN J. WHITICAR
CITIBANK N.A.
By: JONATHON BISHOP
BARCLAYS BANK PLC
By: JOHN A.C. BATTERS
NATIONAL AUSTRALIA BANK LIMITED (A.C.N. 004044937)
By: DAVID RAWSON
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<PAGE>
80
- --------------------------------------------------------------------------------
BANCA DI ROMA SPA
By: J.G. CONNOLLY PETER SCHARF
BANQUE NATIONALE DE PARIS LONDON BRANCH
By: D. WARD
CIBC WOOD GUNDY IRELAND LTD
By: J.H.M. HARE (Power of Attorney)
COMMERZBANK AKTIENGESELLSCHAFT, LONDON BRANCH
By: R.S. SULLIVAN H.L. NUTTALL
DEUTSCHE BANK AG LONDON
By: B.D. STEVENSON
ING BANK N.V.
By: A.M. PRECIOUS
MIDLAND BANK PLC
By: PAUL E. TWEEDALE
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: MARK HALL
PARIBAS
By: ANDREW STEWART HASTINGS
THE BANK OF NOVA SCOTIA
By: W. CURRIE
THE SANWA BANK, LIMITED
By: PETER BLACKBURN LUCAS
THE TORONTO-DOMINION BANK
By: MARK CHERRY
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<PAGE>
81
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WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: G.P.A. TAYLOR JOHN A. FINN
ABN AMRO BANK N.V.
By: J.P. CLIFFE
CREDIT LYONNAIS
By: M.A. STEWART
KBC BANK N.V.
By: LISA TAYLOR
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
By: A.F. WOSKA
COMMONWEALTH BANK OF AUSTRALIA, LONDON BRANCH
By: NICHOLAS WALKER
LEONIA CORPORATE BANK PLC
By: PAUL STONE
BANCA MONTE DEI PASCHI DI SIENA SPA
By: DUNCAN ROUSE R. BOCCANERA
NORDDEUTSCHE LANDESBANK GIROZENTRALE, LONDON BRANCH
By: NEIL ROBERTSON
BANKGESELLSCHAFT BERLIN AG, LONDON BRANCH
By: LESLIE J. COLLETT
BAYERISCHE HYPO- UND VEREINSBANK AG
By: T. DEININGER K. BRIGHT
CHASE MANHATTAN BANK
By: NICHOLAS CONRON
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<PAGE>
82
- --------------------------------------------------------------------------------
DEN DANSKE BANK AKTIESELSKAB
By: J.H.M. HARE (Power of Attorney)
LANDESBANK BADEN-WURTTEMBERG
By: J.H.M. HARE (Power of Attorney)
THE BANK OF TOKYO-MITSUBISHI, LIMITED
By: DAVID DALLISON
THE DAI-ICHI KANGYO BANK, LIMITED
By: COLIN VITTERY
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
By: J.H.M. HARE (Power of Attorney)
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 2(d)
CONFORMED COPY
SUPPLEMENTAL AGREEMENT
DATED 12th March, 1999
relating to a
(pound)2,600,000,000
REVOLVING CREDIT AGREEMENT
dated 24th June, 1996
for
SCOTTISH POWER PLC
with
THE ROYAL BANK OF SCOTLAND PLC
as Agent
ALLEN & OVERY
London
<PAGE>
INDEX
Clause Page
1. Interpretation ....................................................... 1
2. Conditions precedent ................................................. 2
3. Amendments to the Credit Agreement ................................... 2
4. Approval ............................................................. 9
5. Representations and warranties ....................................... 9
6. Expenses ............................................................. 9
7. Fees ................................................................. 9
8. Miscellaneous ........................................................ 10
9. Governing law ........................................................ 10
Schedule
1. Part 1 - Conditions precedent to the Approval Date ................... 11
Part 2 - Conditions precedent to be provided in respect of Holdco
on the Guarantee Date ................................................ 13
2. Calculation of the Mandatory Cost .................................... 14
3. Form of Guarantee .................................................... 16
Signatories ................................................................. 31
<PAGE>
THIS SUPPLEMENTAL AGREEMENT is dated 12th March, 1999 and made between:-
(1) SCOTTISH POWER PLC (to be renamed "Scottish Power UK plc" on the Scheme
Date) (Registered No: SC11712OP) (the "Company"); and
(2) THE ROYAL BANK OF SCOTLAND PLC as agent acting on behalf of the Finance
Parties (as defined in the Credit Agreement referred to below) (the
"Agent").
BACKGROUND:-
(A) This Supplemental Agreement is supplemental to a credit agreement dated
24th June, 1996 as amended by a letter dated 29th January, 1998, between,
amongst others, the Company and the Agent (the "Credit Agreement") whereby
the Banks (as defined therein) agreed to provide a loan facility of up to
(pound)2,600,000,000 to the Company.
(B) The Majority Banks have approved the terms of this Supplemental Agreement
and provided their consent to the Agent to enter into this Supplemental
Agreement on their behalf.
(C) The parties to this Supplemental Agreement have agreed to amend the Credit
Agreement on the terms set out below in accordance with clause 23
(Amendments and waivers) of the Credit Agreement.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Definitions
In this Supplemental Agreement, unless the contrary intention appears, a
term or expression defined in the Credit Agreement has the same meaning in
this Supplemental Agreement and in addition:
"Approval Date"
means the date upon which the Agent has issued the notification referred
to in Clause 2 (Conditions precedent).
"Guarantee"
means a guarantee executed or to be executed by Holdco in favour of the
Agent on behalf of the Finance Parties substantially in the form of
Schedule 3.
"Guarantee Date"
means the date (falling on or after the Scheme Date) upon which Holdco
gives any guarantee, Security Interest, indemnity or enters into any other
similar arrangement in respect of any of the obligations of any of its
Subsidiaries in the Ring Fenced Group.
<PAGE>
2
"Holdco"
means New Scottish Power plc (to be renamed "Scottish Power plc" on the
Scheme Date) (Registered No. SC193794) which shall, following the Scheme
Date, be the Holding Company of the Company.
"Holdco Group"
means at any time Holdco and its Subsidiaries at that time.
"Obligor"
means the Company and, on or after the Guarantee Date, the Company or
Holdco.
"Ring Fenced Group"
means Holdco and any Affiliate of Holdco that is not also a member of the
Group.
"Scheme"
means the proposed scheme of arrangement pursuant to which (amongst other
things) the Company will become a Subsidiary of Holdco.
"Scheme Date"
means the date on which the Scheme becomes effective.
1.2 Construction
(a) In this Supplemental Agreement, unless the contrary intention appears, the
provisions of clause 1.2 (Construction) of the Credit Agreement will apply
with all necessary modifications as if they were set out in full.
(b) References in the Credit Agreement to "this Agreement", "hereof",
"hereunder" and expressions of similar import shall be deemed to be
references to the Credit Agreement (as amended by this Supplemental
Agreement) and to this Supplemental Agreement.
2. CONDITIONS PRECEDENT
The approval of the Scheme set out in Clause 4 (Approval) is subject to
receipt by the Agent of all the documents and other matters set out in
Part 1 of Schedule 1 in form and substance satisfactory to it and the
Agent shall notify the Company and the Banks when it has received those
documents and other matters.
3. AMENDMENTS TO THE CREDIT AGREEMENT
3.1 Amendments
With effect on and from the date of this Supplemental Agreement the Credit
Agreement shall be amended by:
(a) in clause 1.1 (Definitions):
<PAGE>
3
(i) inserting the following definitions in alphabetical order:
(A) ""Consolidated EBITDA"
means in respect of any financial year of the Group, the
consolidated profits of the Group before:
(i) Net Interest Payable;
(ii) tax;
(iii) depreciation;
(iv) amortisation (including, for the avoidance of
doubt, of goodwill); and
(v) extraordinary and exceptional items,
but adjusted by deducting any amount attributable to
minority interests.";
(B) ""Guarantee"
means a guarantee executed or to be executed by Holdco
substantially in the form of Schedule 3 to the
Supplemental Agreement.";
(C) ""Guarantee Date"
means the date (falling on or after the Scheme Date)
upon which Holdco guarantees any of the obligations of
any of its Subsidiaries in the Ring Fenced Group";
(D) ""Holdco"
means New Scottish Power plc (to be renamed "Scottish
Power plc" on the Scheme Date) (Registered No.
SC193794) which shall, following the Scheme Date, be the
Holding Company of the Company";
(E) ""Holdco Group"
means at any time Holdco and its Subsidiaries at that
time";
(F) ""Obligor"
means the Company and, on or after the Guarantee Date,
the Company or Holdco.";
<PAGE>
4
(G) ""Relevant Group"
means:
(a) in the case of the Company, the Group; or
(b) in the case of Holdco, the Holdco Group;"
(H) ""Ring Fenced Group"
means Holdco and any Affiliate of Holdco that is not
also a member of the Group.";
(I) ""Scheme"
means the scheme of arrangement pursuant to which
(amongst other things) Holdco is to acquire all of the
share capital of the Company.";
(J) ""Scheme Date"
means the date on which the Scheme becomes effective.";
(K) ""Supplemental Agreement"
means an agreement dated 12th March, 1999 between the
Agent and the Company amending certain provisions of
this Agreement.";
(ii) deleting:
(A) the definition of "MLA Cost" and replacing it with:
""Mandatory Cost"
means the cost imputed to the Banks of compliance with
the regulations of the Bank of England and the Financial
Services Authority or other reserve or mandatory liquid
assets costs or special deposit costs during the Term of
a Loan expressed as a rate per annum and determined in
accordance with Schedule 3.
(B) the definition of "Margin" and replacing it with:
"Margin"
means on and from the date of the Supplemental
Agreement, 0.45 per cent. per annum.";
(iii) inserting ", the Guarantee" in the definition of "Finance
Document" after the words "a Novation Certificate" and before
the words "or any other document";
<PAGE>
5
(b) replacing each reference to "MLA Cost" in the Credit Agreement by a
reference to "Mandatory Cost";
(c) in clause 1.2(c)(i) (Construction), inserting "Consolidated EBITDA"
after "Borrowings" in the first line;
(d) inserting the following clause after clause 2.3 (Nature of a Finance
Party's rights and obligations):
"2.4 Change of currency
If a change in the currency of the United Kingdom occurs, this
Agreement will be amended to the extent the Agent (acting
reasonably and in consultation with the Company) specifies to
be necessary to reflect the change in currency and to put the
Banks in the same position, so far as possible, that they
would have been in if no change in currency had occurred.";
(e) deleting clause 5.2(e) (Completion of Requests) and replacing ";
and" in clause 5.2(d) with a full stop;
(f) deleting clause 8.2(a), (b) and (c) (Calculation of Margin), moving
the existing clause 8.2(d) to be inserted as a clause 15.20 under
the heading of "Certificates" and renumbering clauses 8.3 to 8.5
accordingly;
(g) deleting clause 14.9 (Accounts) and inserting the following in its
place:
"14.9 Accounts
The audited consolidated accounts of the Relevant Group most
recently delivered to the Agent (which in respect of the
Company only, at the date of this Agreement, are the Original
Group Accounts):
(a) have been prepared in accordance with accounting
principles and practices generally accepted in the
United Kingdom consistently applied; and
(b) fairly represent the consolidated financial condition of
the Relevant Group as at the date to which they were
drawn up.
(h) deleting clause 15.2 (Financial information) and inserting the
following in its place:
"15.2 Financial information
The Company shall supply, and procure that Holdco will supply,
to the Agent in sufficient copies for all the Banks:
(a) as soon as the same are available (and in any event
within 180 days from the end of each of its financial
years) the audited financial statements and the audited
consolidated accounts of the Relevant Group for that
financial year;
<PAGE>
6
(b) as soon as the same are available (and in any event
within 90 days of the end of the first half-year of each
of its financial years) the unaudited consolidated
accounts of the Relevant Group for that half-year;
(c) (in respect of the Company only), together with the
accounts specified in:
(i) paragraph (a) above, a certificate signed by one
of its senior officers on its behalf setting out
in reasonable detail computations establishing
compliance with Clause 15.16 (Financial covenants)
as at the date to which those accounts were drawn
up;
(ii) paragraph (b) above, a certificate signed by one
of its senior officers on its behalf setting out
in reasonable detail computations establishing
compliance with Clause 15.16 (a) (Financial
covenants) as at the date to which those accounts
were drawn up; and
(d) as soon as the same are available (and in any event
within 90 days from the end of the period for which
they are produced) the quarterly unaudited consolidated
accounts of the Relevant Group.
(i) deleting clause 15.16(a) (Financial covenants) and inserting the
following in its place:
"The Company shall procure that, as at the last day of each period
of twelve months ending on the last day of each financial year and
each financial half-year of the Company, the ratio of Total
Consolidated Net Borrowings to Consolidated EBITDA does not exceed
4.0:1.";
(j) inserting the following clauses after clause 15.17 (Restriction on
Borrowings of Subsidiaries):
"15.18 Distributions
(a) Subject to paragraph (b) and Clause 15.19(a) (Lending and
guarantees) below, the Company shall not make any loans,
provide any form of credit, or pay or make any dividends or
distributions in respect of any class of equity or preference
shares in cash or in kind (a "Distribution") to any member of
the Ring Fenced Group.
(b) Notwithstanding paragraph (a) above and subject to Clause
15.19(b) to (e) (inclusive) (Lending and guarantees) below,
the Company may make the following Distributions to Holdco:
(i) prior to completion of the acquisition by Holdco of the
shares in PacifiCorp (pursuant to the merger announced
on 7th December, 1998), Distributions in an amount not
exceeding the aggregate of:
<PAGE>
7
(A) (pound)500,000,000 made on terms that the proceeds
of any such Distribution may only be used by
Holdco for the sole purposes of financing a share
buy-back of its shares in an equivalent amount;
and
(B) payment of any initial establishment expenses
incurred by it in connection with its acquisition
of the shares in PacifiCorp; and
(ii) in any six-month period Distributions in an aggregate
amount not exceeding an amount equal to the consolidated
post-taxation profits of the Company for that six month
period and, after the Scheme Date, Distributions in an
aggregate amount not exceeding an amount equal to the
lower of:
(A) 100 per cent. of dividends on ordinary share
capital made in respect of that six month period
by Holdco to its shareholders; and
(B) the consolidated post-taxation profits of the
Company for that six-month period.
15.19 Lending and guarantees
The Company shall not, and shall procure that no member of the
Group shall:
(a) subject to clause 15.18(b) (Distributions), make any
loans or provide any form of credit to members of the
Ring Fenced Group;
(b) give any guarantee or indemnity to or for the benefit of
members of the Ring Fenced Group or for the benefit of
any person in respect of any obligation or enter into
any document under which any member of the Group assumes
the liability of members of the Ring Fenced Group;
(c) either in a single transaction or in a series of
transactions, whether related or not and whether
voluntarily or involuntarily, sell, transfer, grant or
lease or otherwise dispose of all or any part of its
assets to members of the Ring Fenced Group;
(d) create or permit to subsist any Security Interest on any
of its assets in respect of any indebtedness owed by
members of the Ring Fenced Group;
(e) enter into any agreement with members of the Ring Fenced
Group unless it is on arm's length terms in the ordinary
course of business.";
(k) in clause 16.1 (Events of Default), deleting "16.16 (Change of
control of Target and Appointee)" and inserting "16.18
(Enforceability)" in its place;
<PAGE>
8
(l) deleting all references to "the Company" in clauses 16.2
(Non-payment) to 16.14(a) (Revocation and Modification of Licences
or Appointment etc.) and 16.15 (Cessation of business) (inclusive)
and replacing them with references to "an Obligor";
(m) deleting clause 16.16 (Change of control of Target and Appointee)
and inserting the following in its place:
"16.16 Change of control of Target, Appointee or the Company
(a) The Target is not or ceases to be a Subsidiary of the Company;
or
(b) the Appointee is not or at any time ceases to be a wholly
owned Subsidiary of the Target; or
(c) at any time after the Scheme Date, the Company ceases to be a
Subsidiary of Holdco";
(n) inserting the following new clauses and renumbering the existing
clause 16.17 to 16.19:
"16.17 Guarantee
On the Guarantee Date, Holdco does not execute the Guarantee or the
documents set out in part 2 of schedule 1 of the Supplemental
Agreement are either not provided or are not in form or substance
satisfactory to the Agent (acting reasonably) on the Guarantee
Date";
"16.18 Enforceability
On or after the Guarantee Date the Guarantee is not, or is alleged
by Holdco not to be, binding on or enforceable against Holdco";
(o) deleting all references to "16.16 (Change of control of Target and
Appointee)" and replacing them with:
"16.16 (Change of control of Target, Appointee or the Company)";
(p) replacing all references to "Clause 16.17 (Acceleration)" with
references to "Clause 16.19 (Acceleration)";
(q) in clause 18.2(a) (Commitment fee):
(i) deleting the words "the lower of (a) 0.125 per cent. per annum
and (b) one half of the applicable Margin from time to time,"
and inserting "0.20 per cent. per annum" in its place; and
(ii) deleting "this Agreement" (in the last line) and inserting
"the Supplemental Agreement" in its place;
(r) in the last line of clause 21.2(c) (Other indemnities) deleting
"Clause 8.4" and replacing it with "Clause 8.3"; and
<PAGE>
9
(s) replacing schedule 3 to the Credit Agreement with Schedule 2 to this
Supplemental Agreement.
3.2 Commitments
On the date of this Supplemental Agreement:
(a) the Total Commitments shall be reduced to (pound)2,000,000,000;
(b) the Commitment of each Bank shall be reduced proportionately; and
(c) as a result of the amendments in sub paragraphs (a) and (b) above,
the automatic reduction of the Total Commitments contemplated by
clause 7.2 (Interim reduction) of the Credit Agreement shall be
deemed to have occurred.
4. APPROVAL
On and from the Approval Date, the Agent on behalf of the Majority Banks
confirms that for the purposes of clause 16.8 (Compositions etc.) of the
Credit Agreement the Majority Banks have approved the Scheme.
5. REPRESENTATIONS AND WARRANTIES
The Company makes the representations and warranties set out in clauses
14.2 (Status) to 14.10 (Litigation) of the Credit Agreement to the Finance
Parties on the date of this Supplemental Agreement, the Approval Date and
on the Guarantee Date.
6. EXPENSES
The Company shall forthwith on demand pay to the Agent the amount of all
reasonable and proper out-of-pocket costs and expenses (including legal
fees) incurred by it in connection with the negotiation, preparation,
printing and execution of this Supplemental Agreement.
7. FEES
7.1 Amendment fee
The Company shall pay to the Agent an amendment fee of (pound)1,500,000
(which is equal to 0.075 per cent. of the Total Commitments as reduced by
this Supplemental Agreement) on the date of this Supplemental Agreement
which the Agent shall distribute to the Banks in the manner agreed between
the Agent and the Banks.
7.2 Additional amendment fee
The Company shall pay to the Agent for the account of each Bank which has
provided approval in writing to the Agent of the amendments set out in the
letter from the Company to the Agent dated 5th February, 1999 by 3.00 p.m.
on 25th February, 1999, a further fee in an amount equal to 0.025 per
cent. of that Bank's Commitment (as reduced by this Supplemental
Agreement). Such fee shall be payable on the date of this Supplemental
Agreement.
<PAGE>
10
7.3 Arrangement fee
The Company shall pay to the Agent, on the date of this Supplemental
Agreement, an additional fee for arranging the amendments contemplated by
this Supplemental Agreement in the amount set out in a letter between the
Company and the Agent dated on or about the date of this Supplemental
Agreement.
7.4 VAT
Any fee referred to in this Clause 7 is exclusive of any value added tax
or any other tax which might be chargeable in connection with that fee. If
any value added tax or other tax is so chargeable, it shall be paid by the
Company at the same time as it pays the relevant fee.
8. MISCELLANEOUS
(a) The provisions of clauses 9 (Payments), 10 (Taxes), 20 (Stamp duties) and
28 (Severability) to 32 (Jurisdiction) (both inclusive) of the Credit
Agreement shall apply to this Supplemental Agreement as if set out in this
Supplemental Agreement, but as if references in those clauses to the
Credit Agreement were references to this Supplemental Agreement.
(b) This Supplemental Agreement is a Finance Document.
(c) Except insofar as amended or supplemented by this Supplemental Agreement,
the Credit Agreement will remain in full force and effect.
9. GOVERNING LAW
This Supplemental Agreement is governed by English law.
This Supplemental Agreement has been entered into on the date stated at the
beginning of this Supplemental Agreement.
<PAGE>
11
SCHEDULE 1
PART 1
CONDITIONS PRECEDENT TO THE APPROVAL DATE
Authorisations
1. Certificates signed by an authorised signatory of the Company certifying:
(a) that there has been no change to its memorandum and articles of
association, certificate of incorporation and certificate of
incorporation on change of name (if any) since the date these
documents were delivered in accordance with clause 4.1 (Documentary
conditions precedent) of the Credit Agreement, or if there has been
any change, giving details of the same;
(b) the specimen signatures of its authorised signatories; and
(c) that the documents delivered under Part 1 of this Schedule 1 are
correct, complete and in full force and effect.
2. A copy of a resolution of the board of directors of the Company
authorising the entry into, execution and performance of this Supplemental
Agreement and authorising specified persons to execute the Supplemental
Agreement and related documents on its behalf.
3. A copy of the memorandum and articles of association and a certificate of
incorporation of Holdco.
Legal Opinion
4. A legal opinion of Allen & Overy, English legal advisers to the Agent,
addressed to the Finance Parties.
5. A legal opinion of Maclay Murray & Spens, legal advisers to the Agent in
Scotland, addressed to the Finance Parties.
Scheme
6. A copy of the circular sent to shareholders of the Company setting out
details of the Scheme.
7. A copy of the interlocutor of the Court sanctioning the Scheme under
section 425 of the Companies Act 1985 (the "Act") and confirming that in
accordance with section 137 of the Act, the reduction of capital proposed
under the Scheme has been delivered to the Registrar of Companies for
registration and that the order and relevant minute have been registered
by him.
Miscellaneous
8. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary in connection with the entry
into and performance of, and the
<PAGE>
12
transactions contemplated by, this Supplemental Agreement or for the validity
and enforceability of any Finance Document.
<PAGE>
13
PART 2
DOCUMENTS TO BE PROVIDED IN RESPECT OF HOLDCO
ON THE GUARANTEE DATE
Authorisations
1. A copy of a resolution of the board of directors of Holdco:
(a) approving the terms of, and the transactions contemplated by, the
Guarantee and resolving that it executes the Guarantee;
(b) authorising a specified person or persons to execute the Guarantee
on its behalf; and
(c) authorising a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed and/or
despatched by it under or in connection with the Guarantee.
2. A certificate of an authorised signatory of Holdco certifying:
(a) that there has been no change to its memorandum and articles of
association or certificate of incorporation since the date that
these documents were delivered in accordance with Clause 2
(Conditions precedent) of the Supplemental Agreement, or if there
has been any change giving details of the same;
(b) that each copy document specified in Part 2 of this Schedule 1 is
correct, complete and in full force and effect as at a date no
earlier than the date of the Guarantee; and
(c) the identity and specimen signatures of the directors and secretary
of Holdco.
3. A certificate of a director of Holdco certifying that the execution of the
Guarantee will not result in any breach of any restriction binding on
Holdco.
Legal Opinions
4. A legal opinion of Allen & Overy, legal advisers to the Agent, addressed
to the Finance Parties.
5. A legal opinion of Maclay Murray & Spens, legal advisers to the Agent in
Scotland, addressed to the Finance Parties.
Miscellaneous
6. The Guarantee duly executed by Holdco.
7. A pro forma balance sheet of Holdco.
8. A copy of any other authorisation or other document, opinion or assurance
which the Agent considers to be necessary in connection with the entry
into and performance of the transactions contemplated by, the Guarantee or
for the validity and enforceability of the Guarantee.
<PAGE>
14
SCHEDULE 2
CALCULATION OF THE MANDATORY COST
(a) The Mandatory Cost for each Loan for each period in respect of which
interest is payable is the rate determined by the Agent to be equal to the
rate notified by the Agent and calculated in accordance with the following
formulae:
BY + S(Y-Z) + F x 0.01 % per annum = Mandatory Cost
----------------------
100-(B + S)
where on the day of application of the formula:
B is the percentage of the Agent's eligible liabilities which the Bank
of England requires the Agent to hold on a non-interest-bearing
deposit account in accordance with its cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the Agent to
leading banks in the London interbank market at or about 11.00 a.m.
on that day for the relevant period;
S is the percentage of the Agent's eligible liabilities which the Bank
of England requires the Agent to place as a special deposit;
Z is the interest rate per annum allowed by the Bank of England on
special deposits; and
F is the charge payable by the Agent to the Financial Services
Authority under paragraph 2.02 or 2.03 (as appropriate) of the Fees
Regulations (but where for this purpose, the figure in paragraph
2.02b and 2.03b will be deemed to be zero) expressed in pounds per
(pound)1 million of the fee base of the Agent.
(b) For the purposes of this Schedule 2:
(i) "eligible liabilities" and "special deposits" have the meanings
given to them at the time of application of the formula by the Bank
of England;
(ii) "fee base" has the meaning given to it in the Fees Regulations;
(iii) "Fees Regulations" means:
(A) prior to 31st March, 1999, the Banking Supervision (Fees)
Regulations 1998; and
(B) on and after 31st March, 1999, any regulations governing the
payment of fees for banking supervision; and
(iv) "relevant period" in relation to each Term, means:
(A) if it is three months or less, that Term; or
<PAGE>
15
(B) if it is more than three months, three months.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B=0.5% and Y=15%, BY is
calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant period
comprised in the relevant Term.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to the nearest four decimal places.
(e) If the Agent determines (after consultation with the Banks) that a change
in circumstances has rendered, or will render, the formula inappropriate,
the Agent shall notify the Company of the manner in which the Mandatory
Cost will subsequently be calculated. The manner of calculation so
notified by the Agent shall, in the absence of manifest error, be binding
on all the parties to this Agreement.
<PAGE>
16
SCHEDULE 3
FORM OF GUARANTEE
DATED [ ]
RELATING TO A
(pound)2,600,000,000
REVOLVING CREDIT FACILITY
as amended by a
SUPPLEMENTAL AGREEMENT
dated 12th March, 1999
for
SCOTTISH POWER PLC
GUARANTEED BY
[HOLDCO]
IN FAVOUR OF
THE ROYAL BANK OF SCOTLAND PLC
as Agent
------------------------------------
GUARANTEE
------------------------------------
ALLEN & OVERY
London
<PAGE>
17
INDEX
Clause Page No.
1. Interpretation ....................................................... 18
2. Guarantee ............................................................ 18
3. Default interest ..................................................... 21
4. Payments ............................................................. 21
5. Taxes ................................................................ 22
6. Representations and warranties ....................................... 23
7. Undertakings ......................................................... 24
8. Currency indemnity ................................................... 26
9. Evidence and calculations and expenses ............................... 26
10. Waivers and remedies cumulative ...................................... 26
11. Changes to the parties ............................................... 27
12. Disclosure of information ............................................ 27
13. Set-off .............................................................. 27
14. Severability ......................................................... 28
15. Counterparts ......................................................... 28
16. Notices .............................................................. 28
17. Jurisdiction ......................................................... 29
18. Governing law ........................................................ 29
Signatories ................................................................. 30
<PAGE>
18
THIS GUARANTEE is dated [ ] between:
(1) [HOLDCO] (Registered No. SC193794) ("Holdco"); and
(2) THE ROYAL BANK OF SCOTLAND PLC as agent acting on behalf of the Finance
Parties (the "Agent").
BACKGROUND
On and subject to the terms of a credit agreement dated 24th June, 1996, as
amended by a letter dated 29th January, 1998, between, amongst others, Scottish
Power plc (the "Company") and the Agent (the "Credit Agreement") (as amended by
a supplemental agreement dated 12th March, 1999 between the Company and the
Agent (the "Supplemental Agreement")) the Banks (as defined therein) agreed to
make the Facility available to the Company.
IT IS AGREED as follows:
1. INTERPRETATION
(a) Capitalised terms defined in the Credit Agreement have, unless expressly
defined in this Guarantee, the same meaning in this Guarantee.
(b) The provisions of clause 1.2 of the Credit Agreement apply to this
Guarantee as though they were set out in full in this Guarantee except
that references to the Credit Agreement are to be construed as references
to this Guarantee.
2. GUARANTEE
2.1 Guarantee
In consideration of the Finance Parties, at any time making or continuing
advances under the Credit Agreement or for other sufficient consideration
(receipt of which Holdco acknowledges), Holdco irrevocably and
unconditionally:
(a) as principal obligor guarantees to each Finance Party prompt
performance by the Company of all its obligations under the Finance
Documents;
(b) undertakes with each Finance Party that, whenever the Company does
not pay any amount when due under or in connection with any Finance
Document, Holdco shall forthwith on demand by the Agent pay that
amount as if it instead of the Company were expressed to be the
principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by such Finance Party if any obligation of the
Company guaranteed by Holdco is or becomes unenforceable, invalid or
illegal.
2.2 Continuing guarantee
This Guarantee is a continuing guarantee, will extend to the ultimate
balance of all sums payable by the Company under the Finance Documents and
shall not be discharged by any intermediate payment or discharge in whole
or in part.
<PAGE>
19
2.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of the Company
or any security for those obligations or otherwise) is made in whole or
in part or any arrangement is made on the faith of any payment, security
or other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of Holdco under
this Guarantee shall continue as if the discharge or arrangement had not
occurred.
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
2.4 Waiver of defences
The obligations of Holdco under this Guarantee will not be affected by any
act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Guarantee
or prejudice or diminish those obligations in whole or in part, including
(whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, the Company or
other person;
(b) the taking, variation, compromise, exchange, renewal or release of,
or refusal or neglect to perfect, take up or enforce, any rights
against, or security over assets of, the Company or other person or
any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise
the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality of
or dissolution or change in the members or status of the Company or
any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Guarantee shall include each variation
or replacement;
(e) any unenforceability, illegality or invalidity of any obligation of
any person under any Finance Document or any other document or
security, to the intent that the obligations of Holdco under this
Guarantee shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity;
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so that
each such obligation shall for the purposes of the obligations of
Holdco under this Guarantee be construed as if there were no such
circumstance; or
(g) the release of the Company or any other person under the terms of
any composition or arrangement with any creditor of any member of
the Group.
<PAGE>
20
2.5 Immediate recourse
Holdco waives any right it may have of first requiring any Finance Party
(or any trustee or agent on its behalf) to proceed against or enforce any
other rights or security or claim payment from any person before claiming
from it under this Guarantee.
2.6 Appropriations
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and Holdco shall not be entitled
to the benefit of the same; and
(b) hold in a suspense account bearing interest at a commercial rate any
moneys received from Holdco or on account of the liability of Holdco
under this Guarantee.
2.7 Non-competition
Until all amounts which may be or become payable by the Obligors under or
in connection with the Finance Documents have been irrevocably paid in
full, Holdco shall not, after a claim has been made or by virtue of any
payment or performance by it under this Guarantee:
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of
Holdco's liability under this Guarantee;
(b) claim, rank, prove or vote as a creditor of the Company or its
estate in competition with any Finance Party (or any trustee or
agent on its behalf) unless otherwise required by law; or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of the Company, or exercise any right of
set-off as against the Company.
Holdco shall hold in trust for and forthwith pay or transfer to the Agent
for the Finance Parties any payment or distribution or benefit of
security received by it contrary to this Clause 2.7 (Non-competition) or
if required by law as contemplated by paragraph (b) above or as directed
by the Agent.
2.8 Additional security
This Guarantee is in addition to and is not in any way prejudiced by any
other security now or subsequently held by any Finance Party.
<PAGE>
21
3. DEFAULT INTEREST
(a) If Holdco fails to pay any amount payable by it under this Guarantee, it
shall forthwith on demand by the Agent pay interest on the overdue amount
from the due date up to the date of actual payment, as well as before
judgment, at a rate (the "default rate") determined by the Agent to be one
per cent. per annum above the higher of:
(i) the rate payable on the overdue amount under clause 8.1 (Interest
rate) of the Credit Agreement immediately before the due date (if of
principal); and
(ii) the rate which would have been payable if the overdue amount had,
during the period of non-payment, constituted a Loan in Sterling for
such successive Terms of such duration as the Agent may determine
(each a "Designated Term").
(b) The default rate will be determined by the Agent on each Business Day or
the first day of the relevant Designated Term, as appropriate.
(c) If the Agent determines that deposits in Sterling are not at the relevant
time being made available by the Reference Banks to leading banks in the
London interbank market, the default rate will be determined by reference
to the cost of funds to the Agent from whatever sources it reasonably
selects, after consultation with the Reference Banks.
(d) Default interest will be compounded monthly (where paragraph (a)(i)
applies) and at the end of each Designated Term (in each other case).
(e) The Agent shall promptly notify Holdco of the determination of a rate of
interest under this Guarantee.
4. PAYMENTS
4.1 Place
All payments by Holdco under this Guarantee shall be made to the Agent at
its account at such office or bank as it may notify to Holdco for this
purpose.
4.2 Funds
Payments under this Guarantee to the Agent shall be made in Sterling for
value on the due date.
4.3 Currency
All amounts payable under this Guarantee are payable in Sterling.
4.4 Set-off and counterclaim
All payments made by Holdco under this Guarantee shall be made without
set-off or counterclaim.
<PAGE>
22
4.5 Non-Business Days
(a) If a payment under this Guarantee is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not).
(b) During any extension of the due date for payment of any principal under
this Guarantee interest is payable on that principal at the rate payable
on the original due date.
4.6 Partial payments
If the Agent receives a payment insufficient to discharge all the amounts
then due and payable by Holdco under this Guarantee, the Agent shall apply
that payment towards the obligations of Holdco under this Guarantee in
such order as the Agent, in its absolute discretion, considers
appropriate, and that application shall override any application made by
Holdco.
5. TAXES
5.1 Gross-up
All payments by Holdco under this Guarantee shall be made free and clear
of and without deduction for or on account of any taxes levied or imposed
by or on behalf of the United Kingdom or any taxing authority thereof,
except to the extent that Holdco is required by law to make payment
subject to any taxes. If any tax or amounts in respect of tax must be
deducted, or any other deductions must be made, from any amounts payable
or paid by Holdco, or paid or payable by the Agent to a Bank under the
Finance Documents, Holdco shall pay such additional amounts as may be
necessary to ensure that the relevant Bank receives a net amount equal to
the full amount which it would have received had payment not been made
subject to tax.
5.2 Tax receipts
All taxes required by law to be deducted or withheld by Holdco from any
amounts paid or payable under this Guarantee shall be paid by Holdco when
due and Holdco shall, within 30 days of the payment being made, deliver to
the Agent for the relevant Bank an original or certified copy of an
official receipt or such other evidence, if any, as is then customary,
evidencing that such deduction or withholding has been made and has been
accounted for to the appropriate authorities.
5.3 Qualifying Bank
If, otherwise than as a result of the introduction of, change in, or any
change in the interpretation, administration or application of, any law or
regulation or any practice or concession of the United Kingdom Inland
Revenue occurring after the date of this Guarantee, a Bank is not or
ceases to be a Qualifying Bank, Holdco will not be liable to pay to that
Bank under Clause 5.1 (Gross-up) any amount in respect of taxes levied or
imposed by the United Kingdom or any taxing authority of or in the United
Kingdom in excess of the amount it would have been obliged to pay if that
Bank had been, or had not ceased to be a Qualifying Bank.
<PAGE>
23
5.4 Tax Credits
If:
(a) Holdco makes a payment under Clause 5.1 (Gross-up) (a "Tax Payment")
in respect of a payment to any Bank under this Guarantee; and
(b) that Bank determines that it has obtained a refund of tax or
obtained and used a credit against, or relief or remission or
repayment of tax on its overall net income (a "Tax Credit") which in
that Bank's opinion is reasonably determined to be attributable to
that Tax Payment,
then, if in its absolute discretion it can do so without any adverse
consequences for that Bank, that Bank shall reimburse Holdco such amount
as it reasonably determines to be such proportion of that Tax Credit as
will leave it (after that reimbursement) in no better or worse position
than it would have been in if no Tax Payment had been required. A Bank
shall have an absolute discretion as to whether to claim any Tax Credit
(and, if it does claim, the extent, order and manner in which it does so)
and whether any amount is due from it under this Clause 5.4 (Tax Credits)
(and, if so, what amount and when). A Bank shall not be obliged to
disclose any information regarding its tax affairs and computations.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and warranties
Holdco makes the representations and warranties set out in this Clause 6
(Representations and warranties) to each Finance Party.
6.2 Status
(a) It is a limited liability company, duly incorporated and validly existing
under the laws of the jurisdiction of its incorporation; and
(b) it has the power to own its assets and carry on its business, as it is
being conducted.
6.3 Powers and authority
It has the power to enter into, perform and deliver, and has taken all
necessary action to authorise the entry into, performance and delivery of,
this Guarantee and the transactions contemplated by this Guarantee.
6.4 Legal validity
This Guarantee constitutes, or when executed in accordance with its terms
will constitute, its legal, valid and binding obligation enforceable in
accordance with its terms.
6.5 Non-conflict
The entry into and performance by it of, and the transactions contemplated
by, this Guarantee does not and will not:
(a) conflict with any law or regulation or judicial or official order;
or
<PAGE>
24
(b) conflict with its constitutional documents; or
(c) conflict with any document which is binding upon it or any of its
assets.
6.6 Authorisations
So far as Holdco is aware (after due enquiry), all authorisations required
or desirable in connection with the entry into, performance, validity and
enforceability of, and the transactions contemplated by, this Guarantee
have been obtained or effected (as appropriate) and are in full force and
effect.
6.7 Litigation
No litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened, which might, if adversely
determined, be likely to have a material adverse effect on its ability to
perform its obligations under this Guarantee.
6.8 Ownership
It holds 100 per cent. of the issued share capital of the Company.
6.9 Times for making representations and warranties
The representations and warranties set out in this Clause 6
(Representations and warranties):
(a) are made on the date of this Guarantee; and
(b) are deemed to be repeated by Holdco on the date of each Request and
each Drawdown Date with reference to the facts and circumstances
then existing.
7. UNDERTAKINGS
7.1 Duration
The undertakings in this Clause 7 (Undertakings) shall remain in force
from the date of this Guarantee for so long as any amount is or may be
outstanding under the Credit Agreement or any Commitment is in force, or,
if earlier, until the maximum amount payable by Holdco under this
Guarantee has been paid.
7.2 Financial information
(a) Holdco shall supply to the Agent in sufficient copies for all the Banks:
(i) as soon as the same are available (and in any event within 180 days
of the end of each of its financial years), its audited financial
statements and the audited consolidated accounts of the Holdco Group
for that financial year;
(ii) as soon as the same are available (and in any event within 90 days
of the end of the first half year of each of its financial years)
the unaudited consolidated accounts of the Holdco Group for that
half year; and
<PAGE>
25
(iii) as soon as the same are available (and in any event within 90 days
from the end of the period for which they are produced) the
quarterly unaudited consolidated accounts of the Holdco Group.
(b) Holdco shall ensure that the financial statements delivered by it under
this Clause 7 (Undertakings) are prepared on a consistent basis and in
accordance with accounting principles generally accepted in the relevant
jurisdiction and consistently applied.
7.3 Information - Miscellaneous
Holdco shall supply to the Agent:
(a) all documents despatched by it to its shareholders (or any class of
them) or its creditors generally at the same time as they are
despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which might, if adversely determined,
have a material adverse effect on its ability to perform its
obligations under this Guarantee; and
(c) promptly, such further information in its possession or control
regarding its financial condition and operations as the Agent may
reasonably request.
7.4 Notification of Default
Holdco shall notify the Agent of any Default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of it.
7.5 Authorisations
Holdco shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) if requested, supply certified copies to the Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
this Guarantee.
7.6 Pari passu ranking
Holdco shall procure that its obligations under this Guarantee do and will
rank at least pari passu with all its other present and future unsecured
obligations, except for taxes, national insurance contributions, employee
remuneration and benefits and any other obligations which are mandatorily
preferred by law applying to companies generally.
7.7 Mergers and acquisitions
Holdco shall not, without the prior written consent of the Agent enter
into any amalgamation, demerger, merger or reconstruction.
<PAGE>
26
7.8 Negative Pledge
Holdco will not create or permit to subsist any Security Interest on any
of its assets.
8. CURRENCY INDEMNITY
(a) If a Finance Party receives an amount in respect of Holdco's liability
under the Finance Documents or if that liability is converted into a
claim, proof, judgment or order in a currency other than the currency (the
"contractual currency") in which the amount is expressed to be payable
under the relevant Finance Document:
(i) Holdco shall indemnify that Finance Party as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(ii) if the amount received by that Finance Party, when converted into
the contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual currency,
Holdco shall forthwith on demand pay to that Finance Party an amount
in the contractual currency equal to the deficit; and
(iii) Holdco shall pay to the Finance Party concerned on demand any
exchange costs and taxes payable in connection with any such
conversion.
(b) Holdco waives any right it may have in any jurisdiction to pay any amount
under the Finance Documents in a currency other than that in which it is
expressed to be payable.
9. EVIDENCE AND CALCULATIONS AND EXPENSES
9.1 Accounts
Accounts maintained by the Agent in connection with this Guarantee are
prima facie evidence of the matters to which they relate.
9.2 Certificates and determinations
Any certification or determination by the Agent of a rate or amount under
this Guarantee is, in the absence of manifest error, conclusive evidence
of the matters to which it relates.
9.3 Calculations
Interest accrues from day to day and is calculated on the basis of the
actual number of days elapsed and a year of 365 days.
9.4 Enforcement Costs
Subject to Clause 2.1(b) (Guarantee), Holdco shall forthwith on demand pay
(or procure payment) to the Agent the amount of all costs and expenses
(including legal fees) incurred by it in connection with the enforcement
of or the preservation of any rights under this Guarantee.
10. WAIVERS AND REMEDIES CUMULATIVE
The rights of each Finance Party under this Guarantee:
<PAGE>
27
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
11. CHANGES TO THE PARTIES
11.1 Transfers by Holdco
Holdco may not assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Guarantee.
11.2 Transfers by the Banks
A Bank may assign or transfer all or any part of its rights and/or
obligations under this Guarantee to another bank or financial institution
to which it has transferred any part of its rights and obligations under
the Credit Agreement.
12. DISCLOSURE OF INFORMATION
A Bank may disclose to its professional advisers, any of its Affiliates
or, subject (other than if a Default is outstanding) to the Company's
prior written consent (which shall not be unreasonably withheld or
delayed), any person with whom it is proposing to enter, or has entered
into, any kind of transfer, participation or other agreement in relation
to this Guarantee:
(a) a copy of this Guarantee; and
(b) any information which that Bank has acquired under or in connection
with this Guarantee or any Finance Document,
provided that any such person to whom the disclosure is made has agreed in
writing to keep that information confidential.
13. SET-OFF
A Finance Party may set off any matured obligation owed by Holdco under
this Guarantee (to the extent beneficially owned by that Finance Party)
against any obligation (whether or not matured) owed by that Finance Party
to Holdco, regardless of the place of payment, booking branch or currency
of either obligation. If the obligations are in different currencies, the
Finance Party may convert either obligation at a market rate of exchange
in its usual course of business for the purpose of the set-off. If either
obligation is unliquidated or unascertained, the Finance Party may set off
in an amount estimated by it in good faith to be the amount of that
obligation.
<PAGE>
28
14. SEVERABILITY
If a provision of this Guarantee is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the validity or enforceability in that jurisdiction of any other
provision of this Guarantee; or
(b) the validity or enforceability in other jurisdictions of that or any
other provision of this Guarantee.
15. COUNTERPARTS
This Guarantee may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Guarantee.
16. NOTICES
16.1 Giving of notices
All notices or other communications under or in connection with this
Guarantee shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:
(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
16.2 Addresses for notices
(a) Holdco's address and facsimile number for notices as at the date of this
Guarantee is:
1 Atlantic Quay
Glasgow G2 8SP
Facsimile no: 0141 566 4742
or such other as Holdco may notify to the Agent by not less than 5
Business Days' notice.
(b) The Agent's address and facsimile number for notices as at the date of
this Guarantee is:
The Royal Bank of Scotland plc
Loans Administration
Corporate Banking Office
5-10 Great Tower Street
London EC3P 3HX
Facsimile no: 0171 220 7370
<PAGE>
29
or such other as the Agent may notify to Holdco by not less than 5
Business Days' notice.
17. JURISDICTION
(a) Holdco irrevocably agrees, for the benefit of the Agent and the Banks,
that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Guarantee and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
(b) Holdco irrevocably waives any objection which it might now or hereafter
have to the courts referred to in paragraph (a) above being nominated as
the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Guarantee and agrees not to claim that any such court is not a convenient
or appropriate forum.
(c) The submission to the jurisdiction of the courts referred to in paragraph
(a) above shall not (and shall not be construed so as to) limit the right
of the Agent or the Banks to take proceedings in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
18. GOVERNING LAW
This Guarantee is governed by English law.
This Guarantee has been entered into as a deed on the date stated at the
beginning of this Guarantee.
<PAGE>
30
SIGNATORIES TO THE GUARANTEE
Holdco
The common seal of )
[ ] )
was affixed to this deed in )
the presence of:
- ------------------------------------
director
- ------------------------------------
director / secretary
Agent
THE ROYAL BANK OF SCOTLAND PLC
By:
<PAGE>
31
SIGNATORIES TO THE SUPPLEMENTAL AGREEMENT
Company
SCOTTISH POWER PLC
By: A.J.M. COATS
Agent
THE ROYAL BANK OF SCOTLAND PLC
By: J.H.M. HARE
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EXHIBIT 2(e)
CONFORMED COPY
Dated 4 November 1997
SCOTTISH POWER plc
as Issuer
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
as Trustee
TRUST DEED
relating to
SCOTTISH POWER plc
U.S.$2,000,000,000 Debt Issuance Programme
Arranged by J.P. MORGAN SECURITIES LTD.
(other than for issues of Deutsche Mark Notes)
J.P. MORGAN GMBH
(for issues of Deutsche Mark Notes)
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
Tel: 0171-456 2000
Ref: JALB/EXM
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Contents
------------------------------------------------------------------------
Clause Heading Page
1 Interpretation ...................................................... 1
2 Issue of Notes and Covenant to pay .................................. 6
3 Form of the Notes ................................................... 7
4 Stamp Duties and Taxes .............................................. 8
5 Application of moneys received by the Trustee ....................... 8
6 Covenants ........................................................... 9
7 Remuneration and Indemnification of the Trustee ..................... 13
8 Provisions supplemental to the Trustee Act 1925 ..................... 14
9 Trustee liable for negligence ....................................... 16
10 Waiver and proof of default ......................................... 16
11 Trustee not precluded from entering into contracts .................. 16
12 Modification and Substitution ....................................... 16
13 Appointment, Retirement and Removal of the Trustee .................. 17
14 Notes held in Clearing Systems and Couponholders .................... 18
15 Currency Indemnity .................................................. 18
16 Communications ...................................................... 19
17 Governing Law and Jurisdiction ...................................... 19
SCHEDULE 1
Part A
Form of Temporary Global Note ....................................... 20
SCHEDULE 1
Part B
Form of Permanent Global Note ....................................... 25
SCHEDULE 1
Part C
Form of Global Certificate .......................................... 33
SCHEDULE 2
Part A
Form of Bearer Note ................................................. 37
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Contents
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Clause Heading Page
SCHEDULE 2
Part B
Form of Certificate ................................................. 40
SCHEDULE 2
Part C
Terms and Conditions of the Notes ................................... 43
SCHEDULE 2
Part D
Form of Coupon ...................................................... 66
SCHEDULE 2
Part E
Form of Talon ....................................................... 68
SCHEDULE 2
Part F
Form of Receipt ..................................................... 70
SCHEDULE 3
Provisions for Meetings of Noteholders .............................. 71
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This Trust Deed is made on 4 November 1997 between:
(1) SCOTTISH POWER plc (the "Issuer") and
(2) THE LAW DEBENTURE TRUST CORPORATION p.l.c. (the "Trustee", which
expression, where the context so admits, includes any other trustee
for the time being of this Trust Deed).
(A) The Issuer proposes to issue from time to time euro medium term
notes in an aggregate principal amount outstanding at any one time
not exceeding the Programme Limit in accordance with the Programme
Agreement (the "Programme") and to be constituted under this Trust
Deed.
(B) The Trustee has agreed to act as trustee of this Trust Deed on the
following terms and conditions.
This deed witnesses and it is declared as follows:
1 Interpretation
1.1 Definitions: In these presents unless there is anything in the subject or
context inconsistent therewith all words and expressions defined in the
Conditions shall have the same meaning in the rest of this Trust Deed and
the following expressions shall have the following meanings:
"Agency Agreement" means the agency agreement relating to the Programme
dated 4 November 1997 between the Issuer, The Law Debenture Trust
Corporation p.l.c. as Trustee, Morgan Guaranty Trust Company of New York
as initial Issuing and Paying Agent and the other agents mentioned in it;
"Agents" means the Issuing and Paying Agent, the other Paying Agents, the
Calculation Agent, the Registrar, the other Transfer Agents or any of
them;
"Auditors" means the auditors for the time being of the Issuer or, if they
are unable or unwilling to carry out any action requested of them under
this Trust Deed, such other firm of accountants as may be nominated or
approved in writing by the Trustee for the purpose;
"Bearer Note" means a Note that is in bearer form, and includes any
replacement Bearer Note issued pursuant to the Conditions and any
temporary Global Note or permanent Global Note;
"Calculation Agent" means any person named as such in the Conditions or
any Successor Calculation Agent;
"Cedel Bank" means Cedel Bank, societe anonyme;
"Certificate" means a registered certificate representing one or more
Registered Notes of the same Series and, save as provided in the
Conditions, comprising the entire holding by a Noteholder of his
Registered Notes of that Series and, save in the case of Global
Certificates, being substantially in the form set out in Schedule 2;
"Conditions" means in respect of the Notes of each Series the terms and
conditions applicable thereto which shall be substantially in the form set
out in Schedule 2 as modified, with respect to any Notes represented by a
Global Certificate or a Global Note, by the provisions of such Global
Certificate or Global Note, shall incorporate any additional provisions
forming part of such terms and conditions set out in the Pricing
Supplement(s) relating to the Notes of that Series and shall be endorsed
on the Definitive Notes subject to amendment and completion as referred to
in the
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first paragraph of Schedule 2 Part C and any reference to a particularly
numbered Condition shall be construed accordingly;
"Contractual Currency" means, in relation to any payment obligation of any
Note, the currency in which that payment obligation is expressed and, in
relation to Clause 7, pounds sterling or such other currency as may be
agreed between the Issuer and the Trustee from time to time;
"Coupons" means the bearer coupons relating to interest bearing Bearer
Notes or, as the context may require, a specific number of them and
includes any replacement Coupons issued pursuant to the Conditions;
"Definitive Note" means a Bearer Note in definitive form having, where
appropriate, Coupons, Receipt(s) and/or a Talon attached on issue and,
unless the context requires otherwise, means a Certificate (other than a
Global Certificate) and includes any replacement Note or Certificate
issued pursuant to the Conditions;
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System;
"Event of Default" means an event described in Condition 10 that, if so
required by that Condition, has been certified by the Trustee to be, in
its opinion, materially prejudicial to the interests of the Noteholders;
"Exchangeable Bearer Note" means a Bearer Note that is exchangeable in
accordance with its terms for a Registered Note;
"Excluded Subsidiary" has the meaning specified in Condition 6;
"Extraordinary Resolution" has the meaning set out in Schedule 3;
"Global Certificate" means a Certificate substantially in the form set out
in Schedule 1 Part C representing Registered Notes of one or more Tranches
of the same Series that are registered in the name of a nominee for
Euroclear, Cedel Bank and/or any other clearing system;
"Global Note" means a temporary Global Note and/or, as the context may
require, a permanent Global Note;
"holder" in relation to a Note, Receipt, Coupon or Talon, and
"Couponholder" and "Noteholder" have the meanings given to them in the
Conditions;
"Issuing and Paying Agent" means the person named as such in the
Conditions or any Successor Issuing and Paying Agent in each case at its
specified office;
"Notes" means the euro medium term notes to be issued by the Issuer
pursuant to the Programme Agreement, constituted by this Trust Deed and
for the time being outstanding or, as the context may require, a specific
number of them;
"outstanding" means, in relation to the Notes, all the Notes issued except
(a) those that have been redeemed in accordance with the Conditions, (b)
those in respect of which the date for redemption has occurred and the
redemption moneys (including all interest accrued on such Notes to the
date for such redemption and any interest payable after such date) have
been duly paid to the Trustee or to the Issuing and Paying Agent as
provided in Clause 2 and remain available for payment against presentation
and surrender of Notes, Certificates, Receipts and/or Coupons, as the case
may be, (c) those that have become void or in respect of which claims have
become prescribed, (d) those that have been purchased and cancelled as
provided in the Conditions, (e) those mutilated or defaced Bearer Notes
that have been surrendered in exchange
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for replacement Bearer Notes, (f) (for the purpose only of determining how
many Notes are outstanding and without prejudice to their status for any
other purpose) those Bearer Notes alleged to have been lost, stolen or
destroyed and in respect of which replacement Notes have been issued, (g)
those Exchangeable Bearer Notes that have been exchanged for Registered
Notes, and (h) any temporary Global Note to the extent that it shall have
been exchanged for a permanent Global Note and any Global Note to the
extent that it shall have been exchanged for one or more Definitive Notes,
in either case pursuant to its provisions provided that for the purposes
of (1) ascertaining the right to attend and vote at any meeting of the
Noteholders, (2) the determination of how many Notes are outstanding for
the purposes of Conditions 10 and 11 and Schedule 3, (3) the exercise of
any discretion, power or authority that the Trustee is required, expressly
or impliedly, to exercise in or by reference to the interests of the
Noteholders and (4) the certification (where relevant) by the Trustee as
to whether a Potential Event of Default is in its opinion materially
prejudicial to the interests of the Noteholders, those Notes that are
beneficially held by or on behalf of the Issuer or any of its subsidiaries
and not yet cancelled shall (unless no longer so held) be deemed not to
remain outstanding;
"Paying Agents" means the persons (including the Issuing and Paying Agent)
referred to as such in the Conditions or any Successor Paying Agents in
each case at their respective specified offices;
"permanent Global Note" means a Global Note representing Bearer Notes of
one or more Tranches of the same Series, either on issue or upon exchange
of a temporary Global Note, or part of it, and which shall be
substantially in the form set out in Schedule 1 Part B;
"Potential Event of Default" means an event or circumstance that could
with the giving of notice, lapse of time, issue of a certificate and/or
fulfilment of any other requirement provided for in Condition 10 become an
Event of Default;
"Pricing Supplement" means, in relation to a Tranche, a pricing
supplement, supplemental to the offering circular relating to the
Programme, issued specifying the relevant issue details of such Tranche,
substantially in the form contained in Annex B to the Procedures
Memorandum;
"Principal Subsidiary" means at any time:
(A) any Relevant Subsidiary and
(B) any Subsidiary of the Issuer (not being an Excluded Subsidiary or
any other Subsidiary of the Issuer 90 per cent. in principal amount
of whose indebtedness for borrowed money is Project Finance
Indebtedness):
(i) whose (a) profits on ordinary activities before tax or
(b) net assets represent 20 per cent. or more of the
consolidated profits on ordinary activities before tax
of the Group, or, as the case may be, consolidated net
assets of the Group, in each case as calculated by
reference to the then latest audited financial
statements of such Subsidiary and the then latest
audited consolidated financial statements of the Group;
provided that in the case of a Subsidiary acquired after
the end of the financial period to which the then latest
relevant audited consolidated financial statements of
the Group relate, the reference to the then latest
audited consolidated financial statements of the Group
for the purposes of the calculation above shall, until
consolidated financial statements for the financial
period in which the acquisition is made have been
prepared and audited as aforesaid, be deemed to be a
reference to such first-mentioned financial statements
as if such Subsidiary had been shown in such financial
statements by reference to its then latest
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relevant audited financial statements, adjusted as
deemed appropriate by the Auditors after consultation
with the Issuer or
(ii) to which is transferred all or substantially all of the
business, undertaking and assets of a Subsidiary of the
Issuer which immediately prior to such transfer is a
Principal Subsidiary, whereupon the transferor
Subsidiary shall immediately cease to be a Principal
Subsidiary and the transferee Subsidiary shall cease to
be a Principal Subsidiary under this sub-paragraph (ii)
upon publication of its next audited financial
statements but so that such transferor Subsidiary or
such transferee Subsidiary may be a Principal Subsidiary
of the Issuer on or at any time after the date on which
such audited financial statements have been published by
virtue of the provisions of sub-paragraph (i) above or
before, on or at any time after such date by virtue of
the provisions of this sub-paragraph (ii).
A report by the Auditors that, in their opinion, a Subsidiary of the
Issuer is or is not or was or was not at any particular time or throughout
any specified period a Principal Subsidiary of the Issuer shall, in the
absence of manifest error, be conclusive and binding on all parties
"Procedures Memorandum" means the memorandum (as may be amended from time
to time) detailing the administrative procedures and guidelines relating
to the settlement of issues of Notes (other than Syndicated Issues);
"Programme Agreement" means the Programme Agreement relating to the
Programme dated the date hereof between the Issuer, J.P. Morgan Securities
Ltd., J.P. Morgan GmbH and the other dealers and arrangers named in it;
"Programme Limit" means the maximum aggregate principal amount of Notes
that may be issued and outstanding at any time under the Programme, as
such limit may be increased pursuant to the Programme Agreement;
"Receipts" means the receipts for the payment of instalments of principal
in respect of Bearer Notes of which the principal is repayable in
instalments or, as the context may require, a specific number of them and
includes any replacement Receipts issued pursuant to the Conditions;
"Redemption Amount" has the meaning given to it in the Conditions;
"Register" means the register maintained by the Registrar;
"Registered Note" means a Note in registered form;
"Registrar" means the person named as such in the Conditions or any
Successor Registrar in each case at its specified office;
"Relevant Subsidiary" has the meaning specified in Condition 6;
"Restructuring Event" has the meaning specified in Condition 6;
"Series" means a series of Notes comprising one or more Tranches issued by
the same Issuer, whether or not issued on the same date, that (except in
respect of the first payment of interest and their issue price) have
identical terms on issue and are expressed to have the same series number;
"specified office" means, in relation to a Paying Agent, the Registrar or
a Transfer Agent the office identified with its name at the end of the
Conditions or any other office approved by the Trustee and notified to
Noteholders pursuant to Clause 6.13;
"Stock Exchange" means The London Stock Exchange Limited;
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"Subsidiary" has the meaning specified in Condition 6;
"Successor" means, in relation to an Agent such other or further person as
may from time to time be appointed by the Issuer as such Agent with the
written approval of, and on terms approved in writing by, the Trustee and
notice of whose appointment is given to Noteholders pursuant to Clause
6.13;
"Talons" mean talons for further Coupons or, as the context may require, a
specific number of them and includes any replacement Talons issued
pursuant to the Conditions;
"temporary Global Note" means a Global Note representing Bearer Notes of
one or more Tranches of the same Series on issue and which shall be
substantially in the form set out in Schedule 1 Part A;
"Tranche" means, in relation to a Series, those Notes of that Series that
are issued on the same date at the same issue price and in respect of
which the first payment of interest is identical;
"Transfer Agents" means the persons (including the Registrar) referred to
as such in the Conditions or any Successor Transfer Agents in each case at
their specified offices; and
"trust corporation" means a trust corporation (as defined in the Law of
Property Act 1925) or a corporation entitled to act as a trustee pursuant
to applicable foreign legislation relating to trustees.
1.2 Construction of Certain References: References to:
1.2.1 costs, charges, remuneration or expenses include any value added,
turnover or similar tax charged in respect thereof;
1.2.2 an action, remedy or method of judicial proceedings for the
enforcement of creditors' rights include references to the action,
remedy or method of judicial proceedings in jurisdictions other than
England as shall most nearly approximate thereto;
1.2.3 words and expressions defined in the Agency Agreement or used in the
applicable Pricing Supplement shall have the same meaning where used
herein unless the context otherwise requires or unless otherwise
stated and provided that, in the event of inconsistency between the
Agency Agreement and this Trust Deed this Trust Deed shall prevail
and, in the event of inconsistency between the Agency Agreement or
this Trust Deed and the applicable Pricing Supplement, the
applicable Pricing Supplement shall prevail; and
1.2.4 for the purposes of the definition of and references to
"outstanding" in Clause 2 and Schedule 3 and for the purpose of
Clause 8.9 and Conditions 9, 10 and 14 receipts issued pursuant to
Condition 6(f) shall be treated as if they were Notes and for the
purposes of Schedule 3 the principal amount of the Notes represented
by each receipt with determine voting entitlement thereunder.
1.3 Headings: Headings shall be ignored in construing this Trust Deed.
1.4 Contracts: References in this Trust Deed to this Trust Deed or any other
document are to this Trust Deed or those documents as amended,
supplemented or replaced from time to time in relation to the Programme
and include any document that amends, supplements or replaces them.
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1.5 Schedules: The Schedules are part of this Trust Deed and have effect
accordingly and terms defined there and not in the main body of this Trust
Deed shall have the meaning given to them there.
1.6 Alternative Clearing System: References in this Trust Deed to Euroclear
and/or Cedel Bank shall, wherever the context so permits, be deemed to
include reference to any additional or alternative clearing system
approved by the Issuer, the Trustee and the Issuing and Paying Agent.
2 Issue of Notes and Covenant to pay
2.1 Issue of Notes: The Issuer may from time to time issue Notes in Tranches
of one or more Series on a continuous basis with no minimum issue size in
accordance with the Programme Agreement. By not later than 3.00 pm (London
time) on the second business day in London (which for this purpose shall
be a day on which commercial banks are open for business in London)
preceding each proposed issue date, the Issuer shall give written notice
or procure that it is given to the Trustee of the proposed issue of such
Tranche, specifying the details to be included in the relevant Pricing
Supplement. Upon the issue by the Issuer of any Notes expressed to be
constituted by this Trust Deed, such Notes shall forthwith be constituted
by this Trust Deed without any further formality and irrespective of
whether or not the issue of such debt securities contravenes any covenant
or other restriction in this Trust Deed or the Programme Limit.
2.2 Separate Series: The provisions of sub-Clauses 2.3, 2.4, 2.5 and 2.6 and
of Clauses 3 to 15 and Schedule 3 (all inclusive) shall apply mutatis
mutandis separately and independently to the Notes of each Series and in
such Clauses and Schedule the expressions "Noteholders", "Certificates",
"Receipts", "Coupons", "Couponholders" and "Talons", together with all
other terms that relate to Notes or their Conditions, shall be construed
as referring to those of the particular Series in question and not of all
Series unless expressly so provided, so that each Series shall be
constituted by a separate trust pursuant to sub-Clause 2.3 and that,
unless expressly provided, events affecting one Series shall not affect
any other.
2.3 Covenant to Pay: The Issuer shall on any date when any Notes become due to
be redeemed, in whole or in part, unconditionally pay to or to the order
of the Trustee in the Contractual Currency in the principal financial
centre for the Contractual Currency in same day funds the Redemption
Amount of the Notes becoming due for redemption on that date together with
any applicable premium and shall (subject to the Conditions) until such
payment (both before and after judgment) unconditionally so pay to or to
the order of the Trustee interest on the principal amount of the Notes
outstanding as set out in the Conditions (subject to sub-Clause 2.6)
provided that (1) payment of any sum due in respect of the Notes made to
the Issuing and Paying Agent as provided in the Agency Agreement shall, to
that extent, satisfy such obligation except to the extent that there is
failure in its subsequent payment to the relevant Noteholders or
Couponholders under the Conditions and (2) a payment made after the due
date or as a result of the Note becoming repayable following an Event of
Default shall be deemed to have been made when the full amount due has
been received by the Issuing and Paying Agent or the Trustee and notice to
that effect has been given to the Noteholders (if required under Clause
6.11), except to the extent that there is failure in its subsequent
payment to the relevant Noteholders or Couponholders under the Conditions.
This covenant shall only have effect each time Notes are issued and
outstanding, when the Trustee shall hold the benefit of this covenant on
trust for the Noteholders and Couponholders of the relevant Series.
2.4 Discharge: Subject to sub-Clause 2.5, any payment to be made in respect of
the Notes, Receipts or the Coupons by the Issuer or the Trustee may be
made as provided in the Conditions and any payment so made shall (subject
to sub-Clause 2.5) to that extent be a good discharge to the Issuer or the
Trustee, as the case may be.
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2.5 Payment after a Default: At any time after an Event of Default or a
Potential Event of Default has occurred the Trustee may:
2.5.1 by notice in writing to the Issuer, the Paying Agents and the
Transfer Agents, require the Paying Agents and the Transfer Agents,
until notified by the Trustee to the contrary, so far as permitted
by applicable law:
(i) to act as Paying Agents and Transfer Agents of the Trustee
under this Trust Deed and the Notes on the terms of the Agency
Agreement (with consequential amendments as necessary and
except that the Trustee's liability for the indemnification,
remuneration and expenses of the Paying Agents and the
Transfer Agents shall be limited to the amounts for the time
being held by the Trustee in respect of the Notes on the terms
of this Trust Deed) and thereafter to hold all Notes,
Certificates, Receipts, Coupons and Talons and all moneys,
documents and records held by them in respect of Notes,
Certificates, Receipts, Coupons and Talons to the order of the
Trustee; or
(ii) to deliver all Notes, Certificates, Receipts, Coupons and
Talons and all moneys, documents and records held by them in
respect of the Notes, Certificates, Receipts, Coupons and
Talons to the Trustee or as the Trustee directs in such notice
save for documents required to be retained by the Agents by
law or regulation; and
2.5.2 by notice in writing to the Issuer require it to make all subsequent
payments in respect of the Notes, Receipts, Coupons and Talons to or
to the order of the Trustee and not to the Issuing and Paying Agent.
2.6 Rate of Interest After a Default: If the Notes bear interest at a floating
or other variable rate and they become immediately payable under the
Conditions, the rate of interest payable in respect of them shall continue
to be calculated by the Calculation Agent in accordance with the
Conditions (with consequential amendments as necessary) except that the
rates of interest need not be published unless the Trustee otherwise
requires. The first period in respect of which interest shall be so
calculable shall commence on the expiry of the Interest Period during
which the Notes become so repayable.
3 Form of the Notes
3.1 The Global Notes: The Notes shall initially be represented by a temporary
Global Note, a permanent Global Note or one or more Certificates in the
principal amount of the Tranche being issued. Interests in temporary
Global Notes shall be exchangeable for Definitive Notes, Registered Notes
or interests in permanent Global Notes as set out in each temporary Global
Note. Interests in permanent Global Notes shall be exchangeable for
Definitive Notes and/or Registered Notes as set out in each permanent
Global Note.
3.2 The Definitive Notes: The Definitive Notes, Receipts, Coupons and Talons
shall be security printed and the Certificates shall be printed, in each
case in accordance with applicable legal and stock exchange requirements
substantially in the forms set out in Schedule 2. The Notes and
Certificates (other than Global Certificates) shall be endorsed with the
Conditions.
3.3 Signature: The Notes, Certificates, Receipts, Coupons and Talons shall be
signed manually or in facsimile by a Director of the Issuer, the Notes
shall be authenticated by or on behalf of the Issuing and Paying Agent and
the Certificates shall be authenticated by or on behalf of the Registrar.
The Issuer may use the facsimile signature of a person who at the date of
this Trust Deed is such a Director even if at the time of issue of any
Notes, Certificates, Receipts, Coupons
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or Talons he no longer holds that office. Notes, Certificates, Receipts,
Coupons and Talons so executed and authenticated shall be or, in the case
of Certificates, represent binding and valid obligations of the Issuer.
4 Stamp Duties and Taxes
4.1 Stamp Duties: The Issuer shall pay any stamp, issue, documentary or other
taxes and duties, including interest and penalties, payable in Belgium,
Luxembourg, the United Kingdom and the country of each Contractual
Currency in respect of the creation, issue and offering of the Notes,
Certificates, Receipts, Coupons and Talons and the execution or delivery
of this Trust Deed. The Issuer shall also indemnify the Trustee, the
Noteholders and the Couponholders from and against all stamp, issue,
documentary or other taxes paid by any of them in any jurisdiction in
connection with any action taken by or on behalf of the Trustee or, as the
case may be, the Noteholders or the Couponholders to enforce the Issuer's
obligations under this Trust Deed or the Notes, Certificates, Receipts,
Coupons or Talons.
4.2 Change of Taxing Jurisdiction: If the Issuer becomes subject generally to
the taxing jurisdiction of a territory or a taxing authority of or in that
territory with power to tax other than or in addition to the United
Kingdom or any such authority of or in such territory then the Issuer
shall (unless the Trustee otherwise agrees) give the Trustee an
undertaking satisfactory to the Trustee in terms corresponding to the
terms of Condition 8 with the substitution for, or (as the case may
require) the addition to, the references in that Condition to the United
Kingdom of references to that other or additional territory or authority
to whose taxing jurisdiction the Issuer has become so subject. In such
event this Trust Deed and the Notes, Certificates, Receipts, Coupons and
Talons shall be read accordingly.
5 Application of moneys received by the Trustee
5.1 Declaration of Trust: All moneys received by the Trustee in respect of the
Notes or amounts payable under this Trust Deed shall, despite any
appropriation of all or part of them by the Issuer, be held by the Trustee
on trust to apply them (subject to Clause 5.2):
first, in payment of all costs, charges, expenses and liabilities
incurred by the Trustee (including remuneration payable to it) in
carrying out its functions under this Trust Deed;
secondly, in payment of any amounts owing in respect of the Notes,
Receipts or Coupons pari passu and rateably; and
thirdly, in payment of any balance to the Issuer for itself.
If the Trustee holds any moneys in respect of Notes, Receipts or Coupons
that have become void or in respect of which claims have become
prescribed, the Trustee shall hold them on these trusts.
5.2 Accumulation: If the amount of the moneys at any time available for
payment in respect of the Notes under sub-Clause 5.1 is less than 10 per
cent of the principal amount of the Notes then outstanding, the Trustee
may, at its discretion, invest such moneys. The Trustee may retain such
investments and accumulate the resulting income until the investments and
the accumulations, together with any other funds for the time being under
its control and available for such payment, amount to at least 10 per cent
of the principal amount of the Notes then outstanding and then such
investments, accumulations and funds (after deduction of, or provision
for, any applicable taxes) shall be applied as specified in sub-Clause
5.1.
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5.3 Investment: Moneys held by the Trustee may be invested in its name or
under its control in any investments or other assets anywhere whether or
not they produce income or deposited in its name or under its control at
such bank or other financial institution in such currency as the Trustee
may, in its absolute discretion, think fit. If that bank or institution is
the Trustee or a subsidiary, holding or associated company of the Trustee,
it need only account for an amount of interest equal to the largest amount
of interest payable by it on such a deposit to an independent customer.
The Trustee may at any time vary or transpose any such investments or
assets or convert any moneys so deposited into any other currency, and
shall not be responsible for any resulting loss, whether by depreciation
in value, change in exchange rates or otherwise.
6 Covenants
So long as any of the Notes remains outstanding, the Issuer covenants that
it shall:
6.1 at all times carry on and conduct its affairs in a proper manner;
6.2 so far as permitted by applicable law, give to the Trustee such
information as it shall require and in such form as it shall require
(including without limitation the procurement by the Issuer of all such
certificates called for by the Trustee pursuant to Clause 8.4) for the
purpose of the discharge or exercise of the duties, trusts, powers,
authorities and discretions vested in it under these presents or by
operation of law;
6.3 cause to be prepared and certified by the Auditors in respect of each
financial accounting period accounts in such form as will comply with all
relevant legal and accounting requirements and all requirements for the
time being of the Stock Exchange;
6.4 at all times keep and procure its Principal Subsidiaries to keep proper
books of account and, at any time after the occurrence of an Event of
Default or a Potential Event of Default or if the Trustee certifies in
writing to the Issuer that it has reasonable grounds to believe that an
Event of Default or a Potential Event of Default has or may have occurred
and so far as permitted by applicable law allow and procure its Principal
Subsidiaries to allow the Trustee and any person appointed by the Trustee
to whom the Issuer or the relevant Principal Subsidiary (as the case may
be) shall have no reasonable objection, upon reasonable notice, free
access to such books of account at all reasonable times during normal
business hours for the purpose of the discharge or exercise of the duties,
trusts, powers, authorities and discretions vested in it under these
presents or by operation of law;
6.5 send to the Trustee (in addition to any copies to which it may be entitled
as a holder of any securities of the Issuer) four copies in English of
every balance sheet, profit and loss account, report, circular and notice
of general meeting and every other document issued or sent to its
shareholders together with any of the foregoing, and every document issued
or sent to its creditors (or any class thereof) generally concerning the
financial condition of the Issuer and its Subsidiaries, in each case in
their capacities as such, as soon as practicable after the issue or
publication thereof;
6.6 give notice in writing to the Trustee of the occurrence of any Event of
Default or any Potential Event of Default immediately upon becoming aware
of the same;
6.7 send to the Trustee (a) within 14 days after demand by the Trustee
therefor and (b) (without the necessity for any such demand) promptly
after the publication of its audited accounts in respect of each financial
period commencing with the financial period ending 31 March 1998 and in
any event not later than 180 days after the end of each such financial
period a certificate of the Issuer signed by two Directors of the Issuer
to the effect that, to the best of the knowledge, information and belief
of the Issuer, as at a date not more than seven days before delivering
such certificate
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(the "relevant date") there did not exist and had not existed since the
relevant date of the previous certificate (or in the case of the first
such certificate the date hereof) any Event of Default or any Potential
Event of Default (or if such exists or existed specifying the same) and
that during the period from and including the relevant date of the last
such certificate (or in the case of the first such certificate the date
hereof) to and including the relevant date of such certificate the Issuer
has complied with all its obligations contained in these presents or (if
such is not the case) specifying the respects in which it has not
complied;
6.8 so far as permitted by applicable law, at all times execute and do all
such further documents, acts and things as may be necessary at any time or
times in the reasonable opinion of the Trustee to give effect to these
presents;
6.9 at all times maintain a Principal Paying Agent, a Registrar and a Transfer
Agent in accordance with the Conditions and, in the case of a Principal
Paying Agent and a Registrar, so long as any of the Notes or Coupons
remains liable to prescription;
6.10 use all reasonable endeavours to procure the Principal Paying Agent to
notify the Trustee forthwith in the event that it does not, on or before
the due date for any payment in respect of the Notes or any of them or any
of the Coupons, receive unconditionally pursuant to the Agency Agreement
payment of the full amount in the requisite currency of the moneys payable
on such due date on all such Notes or Coupons as the case may be;
6.11 in the event of the unconditional payment to the Principal Paying Agent of
any sum due in respect of the Notes or any of them or any of the Coupons
being made after the due date for payment thereof forthwith give or
procure to be given notice to the relevant Noteholders in accordance with
Condition 16 that such payment has been made;
6.12 use all reasonable endeavours to maintain the listing of the Notes on the
Stock Exchange or, if it is unable to do so having used all reasonable
endeavours or if the maintenance of such listing is in the reasonable
opinion of the Issuer unduly onerous, use all reasonable endeavours to
obtain and maintain a quotation or listing of the Notes on such other
stock exchange or exchanges or securities market or markets as the Issuer
may (with the prior approval of the Trustee, such approval not to be
unreasonably withheld or delayed) decide and shall also upon obtaining a
quotation or listing of the Notes on such other stock exchange or
exchanges or securities market or markets enter into a deed supplemental
to this Trust Deed to effect such consequential amendments to these
presents as the Trustee may require to comply with the requirements of any
such stock exchange or securities market;
6.13 give notice to the Noteholders in accordance with Condition 16 of any
appointment, resignation or removal of any Agent after having obtained the
approval of the Trustee thereto or any change of any Agent's specified
office and (except as provided by the Agency Agreement) at least 30 days
prior to such event taking effect; provided always that so long as any of
the Notes remains outstanding in the case of the termination of the
appointment of the Registrar or a Transfer Agent or so long as any of the
Notes or Coupons remains liable to prescription in the case of the
termination of the appointment of the Principal Paying Agent no such
termination shall take effect until a new Registrar, Transfer Agent or
Principal Paying Agent has been appointed on terms approved by the
Trustee;
6.14 obtain the prior written approval of the Trustee to, and promptly give to
the Trustee four copies of, the form of every notice given to the
Noteholders in accordance with Condition 16 (such approval, unless so
expressed, not to constitute approval for the purposes of Section 57 of
the Financial Services Act 1986 of the United Kingdom of any such notice
which is an investment advertisement (as therein defined));
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6.15 if the Issuer shall become subject generally to the taxing jurisdiction of
any territory or any political sub-division thereof or any authority
therein or thereof having power to tax other than or in addition to the
United Kingdom or any such political sub-division thereof or any such
authority therein or thereof, immediately upon becoming aware thereof
notify the Trustee of such event and (unless the Trustee otherwise agrees)
enter forthwith into a Trust Deed supplemental to this Trust Deed, giving
to the Trustee an undertaking or covenant in form and manner satisfactory
to the Trustee in terms corresponding to the terms of Condition 8 with the
substitution for (or, as the case may be, the addition to) the references
therein to the United Kingdom or any political subdivision thereof or any
authority therein or thereof having power to tax of references to that
other or additional territory or any political sub-division thereof or any
authority therein or thereof having power to tax to whose taxing
jurisdiction the Issuer shall have become subject as aforesaid such Trust
Deed also (where applicable) to modify Condition 6(c) so that such
Condition shall make reference to the other or additional territory, any
political sub-division thereof and any authority therein or thereof having
power to tax;
6.16 comply with and perform all its obligations under the Agency Agreement and
use all reasonable endeavours to procure that the Agents comply with and
perform all their respective obligations thereunder and not make any
amendment or modification to the Agency Agreement without the prior
written approval of the Trustee;
6.17 in order to enable the Trustee to ascertain the principal amount of Notes
of each series for the time being outstanding for any of the purposes
referred to in the proviso to the definition of "outstanding" in Clause 1,
deliver to the Trustee as soon as reasonably practicable after being so
requested in writing by the Trustee a certificate in writing signed by two
Directors of the Issuer setting out the total number and aggregate
principal amount of Notes of each series which:
(i) up to and including the date of such certificate have been
purchased by the Issuer or any other Subsidiary of the Issuer
and cancelled and
(ii) are at the date of such certificate held for the benefit of,
or on behalf of, the Issuer or any other Subsidiary of the
Issuer
6.18 procure its Subsidiaries to comply with all (if any) applicable provisions
concerning the purchase of Notes of Condition 6(g);
6.19 use all reasonable endeavours to procure that each of the Paying Agents
makes available for inspection by Noteholders and Couponholders at its
specified office copies of these presents, the Agency Agreement and, as
soon as practicable after the date of publication thereof, the then latest
audited balance sheet and profit and loss account (consolidated if
applicable) of the Issuer;
6.20 if, in accordance with the provisions of the Conditions, interest in
respect of Bearer Securities denominated in U.S. dollars becomes payable
at the specified office of any Paying Agent in the United States of
America promptly give notice thereof to the Noteholders in accordance with
Condition 16;
6.21 give written notice to the Trustee (i) of any designation of any of its
Subsidiaries as an Excluded Subsidiary and (ii) forthwith upon any such
Excluded Subsidiary ceasing to be an Excluded Subsidiary for the purpose
of Condition 6;
6.22 give to the Trustee at the same time as sending to it the certificates
referred to in Clause 16.7 above and in any event not later than 180 days
after the last day of each financial period of the Issuer, a certificate
by the Auditors listing those Subsidiaries of the Issuer which as at such
last day were Principal Subsidiaries for the purposes of Condition 10;
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6.23 give to the Trustee, as soon as reasonably practicable after the
acquisition or disposal of any company which thereby becomes or ceases to
be a Principal Subsidiary of the Issuer or after any transfer is made to
any Subsidiary of the Issuer which thereby becomes a Principal Subsidiary,
a certificate by the Auditors to such effect;
6.24 upon due surrender in accordance with the Conditions, pay the face value
of all Coupons (including Coupons issued in exchange for Talons)
appertaining to all Notes purchased by the Issuer or any Subsidiary of the
Issuer;
6.25 forthwith give notice in writing to the Trustee of:
6.25.1 the occurrence of any Restructuring Event or of any event (a
"Potential Restructuring Event") which, depending on any
certification as provided in the definition of "Restructuring
Event", may be a Restructuring Event;
6.25.2 (if at the time any Restructuring Event occurs there are Rated
Securities) the occurrence of any Rating Downgrade in respect of
that Restructuring Event within the Restructuring Period; and
6.25.3 (if at the time any Restructuring Event occurs there are no Rated
Securities) the obtaining of a rating in accordance with the
definition of "Negative Rating Event" or the occurrence of a
Negative Rating Event;
6.26 send to the Trustee within fourteen days of any request by the Trustee
(such request only to be made after consultation with the Issuer or after
the Issuer has failed or refused to be consulted) a certificate signed by
any two directors of the Issuer giving their opinion on any matter
relating to or on any aspect of a Potential Restructuring Event (as
defined in Clause 6.24.1 above) requested by the Trustee and in forming an
opinion on whether the Potential Restructuring Event is a Restructuring
Event the Trustee shall be entitled, but not bound, to rely solely on such
certificate and if it does so rely, such certificate, and the
determination of the Trustee (in reliance on such certificate) as to
whether or not a Restructuring Event has occurred, shall be binding on the
Issuer, the Noteholders and the Couponholders and the Trustee shall incur
no liability to any person for so relying on such certificate; and
6.27 procure the delivery of legal opinions addressed to the Trustee dated the
date of such delivery, in form and content acceptable to the Trustee:
6.27.1 from Linklaters & Paines or such other firm of legal advisers as
may be agreed between the Issuer and the Trustee as to the laws of
England, on each anniversary of this Trust Deed and on the date of
any amendment to this Trust Deed;
6.27.2 from legal advisers, reasonably acceptable to the Trustee as to
such law as may reasonably be requested by the Trustee, on the
issue date for the Notes in the event of a proposed issue of Notes
of such a nature and having such features as might lead the
Trustee to conclude that it would be prudent, having regard to
such nature and features, to obtain such legal opinion(s) or in
the event that the Trustee considers it prudent in view of a
change (or proposed change) in (or in the interpretation or
application of) any applicable law, regulation or circumstance
affecting the Issuer, the Trustee, the Notes, the Certificates,
the Receipts, the Coupons, the Talons, this Trust Deed or the
Agency Agreement; and
6.27.3 on each occasion on which a legal opinion is given to any Dealer
in relation to any Notes pursuant to the Programme Agreement from
the legal adviser giving such opinion.
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7 Remuneration and Indemnification of the Trustee
7.1 Normal Remuneration: So long as any Note is outstanding the Issuer shall
pay the Trustee as remuneration for its services as Trustee such sum on
such dates in each case as the Issuer and the Trustee may from time to
time agree. Such remuneration shall accrue from day to day from the date
of this Trust Deed. However, if any payment to a Noteholder or
Couponholder of moneys due in respect of any Note, Receipts or Coupon is
improperly withheld or refused, such remuneration shall again accrue as
from the date of such withholding or refusal until payment to such
Noteholder or Couponholder is duly made.
7.2 Extra Remuneration: If an Event of Default shall have occurred or if the
Trustee finds it expedient or necessary or is requested by the Issuer to
undertake duties that they both agree to be of an exceptional nature or
otherwise outside the scope of the Trustee's normal duties under this
Trust Deed, the Issuer shall pay such additional remuneration as they may
agree or, failing agreement as to any of the matters in this sub-Clause
(or as to such sums referred to in sub-Clause 7.1), as determined by a
merchant bank (acting as an expert) selected by the Trustee and approved
by the Issuer or, failing such approval, nominated by the President for
the time being of The Law Society of England and Wales. The expenses
involved in such nomination and such merchant bank's fee shall be shared
equally between the Trustee and the Issuer. The determination of such
merchant bank shall be conclusive and binding on the Issuer, the Trustee,
the Noteholders and the Couponholders.
7.3 Expenses: The Issuer shall also on demand by the Trustee pay or discharge
all costs, charges, liabilities and expenses incurred by the Trustee in
the preparation and execution of this Trust Deed and the performance of
its functions under this Trust Deed including, but not limited to, legal
and travelling expenses and any stamp, documentary or other taxes or
duties paid by the Trustee in connection with any legal proceedings
properly brought or contemplated by the Trustee against the Issuer to
enforce any provision of this Trust Deed, the Notes, the Receipts, the
Coupons or the Talons. Such costs, charges, liabilities and expenses
shall:
7.3.1 in the case of payments made by the Trustee before such demand,
carry interest from the date of the demand at the rate of 2 per cent
per annum over the base rate of National Westminster Bank PLC on the
date on which the Trustee made such payments; and
7.3.2 in other cases, carry interest at such rate from 30 days after the
date of the demand or (where the demand specifies that payment is to
be made on an earlier date) from such earlier date.
7.4 Indemnity: The Issuer shall indemnify the Trustee in respect of all
liabilities and expenses incurred by it or by anyone appointed by it or to
whom any of its functions may be delegated by it in the carrying out of
its functions and against any loss, liability, proper cost, claim, action,
demand or expense (including, but not limited to, all proper costs,
charges and expenses paid or incurred in disputing or defending any of the
foregoing) that any of them may incur or that may be made against any of
them arising out of or in relation to or in connection with, its
appointment or the exercise of its functions.
7.5 Continuing Effect: Sub-clauses 7.3 and 7.4 shall continue in full force
and effect as regards the Trustee even if it no longer is Trustee.
7.6 Cost Allocation: The Trustee shall be entitled in its absolute discretion
to determine in respect of which Series of Notes any costs, charges,
liabilities and expenses incurred under this Trust Deed have been incurred
or to allocate any such costs, charges, liabilities and expenses between
the Notes of any two or more Series.
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8 Provisions supplemental to the Trustee Act 1925
8.1 Advice: The Trustee may act on the opinion or advice of, or information
obtained from, any expert and shall not be responsible to anyone for any
loss occasioned by so acting provided it shall have exercised proper care
in the selection of such person. Any such opinion, advice or information
may be sent or obtained by letter, telex or fax and the Trustee shall not
be liable to anyone for acting in good faith on any opinion, advice or
information purporting to be conveyed by such means even if it contains
some error or is not authentic.
8.2 Resolutions of Noteholders: The Trustee shall not be responsible for
having acted in good faith on a resolution purporting to have been passed
at a meeting of Noteholders in respect of which minutes have been made and
signed even if it is later found that there was a defect in the
constitution of the meeting or the passing of the resolution or that the
resolution was not valid or binding on the Noteholders or Couponholders.
8.3 Certificate Signed by Directors: If the Trustee, in the exercise of its
functions, requires to be satisfied or to have information as to any fact
or the expediency of any act, it may call for and accept as sufficient
evidence of that fact or the expediency of that act a certificate signed
by any two Directors of the Issuer as to that fact or to the effect that,
in their opinion, that act is expedient and the Trustee need not call for
further evidence and shall not be responsible for any loss occasioned by
acting on such a certificate.
8.4 Deposit of Documents: The Trustee may deposit this Trust Deed and any
other documents with any bank or entity whose business includes the safe
custody of documents or with any lawyer or firm of lawyers believed by it
to be of good repute and may pay all sums due in respect thereof and
provided that it shall have exercised proper care in the selection of such
person, the Trustee shall not be liable to anyone for any loss occasioned
by so acting.
8.5 Discretion: The Trustee shall have absolute and uncontrolled discretion as
to the exercise of its functions and shall not be responsible for any
loss, liability, cost, claim, action, demand, expense or inconvenience
that may result from their exercise or non-exercise.
8.6 Agents: Whenever it considers it expedient in the interests of the
Noteholders, the Trustee may, in the conduct of its trust business,
instead of acting personally, employ and pay an agent selected by it,
whether or not a lawyer or other professional person, to transact or
conduct, or concur in transacting or conducting, any business and to do or
concur in doing all acts required to be done by the Trustee (including the
receipt and payment of money). Provided that it shall have exercised
proper care in the selection of such person, the Trustee shall not be
responsible to anyone for any misconduct or omission by any such agent so
employed by it or be bound to supervise the proceedings or acts of any
such agent.
8.7 Delegation: Whenever it considers it expedient in the interests of the
Noteholders, the Trustee may delegate to any person on any terms
(including power to sub-delegate) all or any of its functions. If the
Trustee exercises proper care in selecting such delegate, it shall not
have any obligation to supervise such delegate or be responsible for any
loss, liability, cost, claim, action, demand or expense incurred by reason
of any misconduct or default by any such delegate or sub-delegate.
8.8 Forged Notes: The Trustee shall not be liable to the Issuer or any
Noteholder or Couponholder by reason of having accepted as valid or not
having rejected any Note, Certificate, Receipt, Coupon or Talon purporting
to be such and later found to be forged or not authentic.
8.9 Confidentiality: Unless ordered to do so by a court of competent
jurisdiction, the Trustee shall not be required to disclose to any
Noteholder or Couponholder any confidential financial or other
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information made available to the Trustee by the Issuer and no Noteholder
or Couponholder shall be entitled to take any action to obtain such
information from the Trustee.
8.10 Determinations Conclusive: As between itself and the Noteholders and
Couponholders, the Trustee may determine all questions and doubts arising
in relation to any of the provisions of this Trust Deed. Such
determinations, whether made upon such a question actually raised or
implied in the acts or proceedings of the Trustee, shall be conclusive and
shall bind the Trustee, the Noteholders and the Couponholders.
8.11 Currency Conversion: Where it is necessary or desirable to convert any sum
from one currency to another, it shall (unless otherwise provided hereby
or required by law) be converted at such rate or rates, in accordance with
such method and as at such date as may reasonably be specified by the
Trustee having consulted the Issuer (if the Trustee reasonably believes
such consultation to be in the interests of the Noteholders) but having
regard to current rates of exchange, if available. Any rate, method and
date so specified shall be binding on the Issuer, the Noteholders and the
Couponholders.
8.12 Events of Default: The Trustee may determine whether or not an Event of
Default or Potential Event of Default is in its opinion capable of remedy
and/or materially prejudicial to the interests of the Noteholders. Any
such determination shall be conclusive and binding on the Issuer, the
Noteholders and the Couponholders.
8.13 Payment for and Delivery of Notes: The Trustee shall not be responsible
for the receipt or application by the Issuer of the proceeds of the issue
of the Notes, any exchange of Notes or the delivery of Notes to the
persons entitled to them.
8.14 Legal Opinions: The Trustee shall not be responsible to any person for
failing to request, require or receive any legal opinion relating to any
Notes or for checking or commenting upon the content of any such legal
opinion.
8.15 Notes Held by the Issuer etc.: In the absence of knowledge or express
notice to the contrary, the Trustee may assume without enquiry (other than
requesting a certificate under Clause 6.17) that no Notes are for the time
being held by or on behalf of the Issuer or any of its Subsidiaries.
8.16 Programme Limit: The Trustee shall not be concerned, and need not enquire,
as to whether or not any Notes are issued in breach of the Programme
Limit.
8.17 Consent or Approval: Any consent or approval given by the Trustee for the
purposes of this Trust Deed may be given on such terms and subject to such
conditions (if any) as the Trustee thinks fit.
8.18 Recitals: With the exception of Recital (B), the Trustee assumes no
responsibility for the correctness of the recitals to this Trust Deed,
which shall be taken as statements of the Issuer, and shall not by the
execution of this Trust Deed or any Supplemental Trust Deed be deemed to
make any representation as to, the adequacy, sufficiency, validity or
enforceability of this Trust Deed or any Supplemental Trust Deed.
8.19 Apportionment: The Trustee may apportion amounts due to it under Clause
5.1 of this Trust Deed between Notes of different Series as it thinks fit.
8.20 Trustee to assume Performance: The Trustee shall not be bound to give
notice to any person of the execution of any documents comprised in these
presents or to take any steps to ascertain whether any Event of Default,
Potential Event of Default, Restructuring Event, Potential Restructuring
Event (as defined in Clause 6.24) or Negative Rating Event has happened
and, until it shall have actual knowledge or express notice to the
contrary, the Trustee shall be entitled to
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assume that no Event of Default, Potential Event of Default, Restructuring
Event, Potential Restructuring Event (as defined in Clause 6.24) or
Negative Rating Event has happened and that the Issuer is observing and
performing all its obligations under this Trust Deed, the Notes, the
Receipts, the Coupons and the Talons.
9 Trustee liable for negligence
If the Trustee fails to show the degree of care and diligence required of
it as trustee having regard to the provisions of the Trust Deed conferring
on it powers, duties and discretions, nothing in this Trust Deed shall
relieve or indemnify it from or against any liability that would otherwise
attach to it in respect of any negligence, default, breach of duty or
breach of trust of which it may be guilty.
10 Waiver and proof of default
10.1 Waiver: The Trustee may, without the consent of the Noteholders or
Couponholders and without prejudice to its rights in respect of any
subsequent breach, from time to time and at any time, if in its opinion
the interests of the Noteholders will not be materially prejudiced
thereby, waive or authorise, on such terms as seem expedient to it, any
breach or proposed breach by the Issuer of this Trust Deed or the
Conditions or determine that an Event of Default or Potential Event of
Default shall not be treated as such provided that the Trustee shall not
do so in contravention of an express direction given by an Extraordinary
Resolution or a request made pursuant to Condition 10. No such direction
or request shall affect a previous waiver, authorisation or determination.
Any such waiver, authorisation or determination shall be binding on the
Noteholders and the Couponholders and, if the Trustee so requires, shall
be notified to the Noteholders as soon as practicable.
10.2 Proof of Default: Proof that the Issuer has failed to pay a sum due to the
holder of any one Note, Receipt or Coupon shall (unless the contrary be
proved) be sufficient evidence that it has made the same default as
regards all other Notes, Receipts or Coupons that are then payable.
11 Trustee not precluded from entering into contracts
The Trustee and any other person, whether or not acting for itself, may
acquire, hold or dispose of any Note, Receipt, Coupon, Talon or other
security (or any interest therein) of the Issuer or any other person, may
enter into or be interested in any contract or transaction with any such
person and may act on, or as depositary or agent for, any committee or
body of holders of any securities of any such person in each case with the
same rights as it would have had if the Trustee were not acting as Trustee
and need not account for any profit.
12 Modification and Substitution
12.1 Modification: The Trustee may agree without the consent of the Noteholders
or Couponholders to any modification to this Trust Deed which is of a
formal, minor or technical nature or to correct a manifest error. The
Trustee may also so agree to any modification to this Trust Deed that is
in its opinion not materially prejudicial to the interests of the
Noteholders, but such power does not extend to any such modification as is
mentioned in paragraphs 2.2 and 2.8 of Schedule 3.
12.2 Substitution:
12.2.1 The Trustee may, without the consent of the Noteholders or
Couponholders, agree to the substitution of any company (the
"Substituted Obligor") in place of the Issuer (or of any previous
substitute under this sub-Clause) as the principal debtor under
this Trust Deed, the Notes, the Receipts, the Coupons and the
Talons provided that:
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(i) a deed is executed or undertaking given by the Substituted
Obligor to the Trustee, in form and manner satisfactory to the
Trustee, agreeing to be bound by this Trust Deed, the Notes,
the Receipts, the Coupons and the Talons (with consequential
amendments as the Trustee may deem appropriate) as if the
Substituted Obligor had been named in this Trust Deed, the
Notes, the Certificates, the Receipts, the Coupons and the
Talons as the principal debtor in place of the Issuer;
(ii) if the Substituted Obligor is subject generally to the taxing
jurisdiction of a territory or any authority of or in that
territory with power to tax (the "Substituted Territory")
other than the territory to the taxing jurisdiction of which
(or to any such authority of or in which) the Issuer is
subject generally (the "Issuer's Territory"), the Substituted
Obligor shall (unless the Trustee otherwise agrees) give to
the Trustee an undertaking satisfactory to the Trustee in
terms corresponding to Condition 8 with the substitution for
the references in that Condition to the Issuer's Territory of
references to the Substituted Territory whereupon the Trust
Deed, the Notes, the Certificates, the Receipts, the Coupons
and the Talons shall be read accordingly;
(iii) if any two Directors of the Substituted Obligor certify that
it will be solvent immediately after such substitution, the
Trustee need not have regard to the Substituted Obligor's
financial condition, profits or prospects or compare them with
those of the Issuer; and
(iv) the Issuer and the Substituted Obligor comply with such other
requirements as the Trustee may direct in the interests of the
Noteholders.
12.2.2 Release of Substituted Issuer: An agreement by the Trustee
pursuant to sub-Clause 12.2 shall, if so expressed, release the
Issuer (or a previous substitute) from any or all of its
obligations under this Trust Deed, the Notes, the Receipts, the
Coupons and the Talons. Notice of the substitution shall be given
to the Noteholders within 14 days of the execution of such
documents and compliance with such requirements.
12.2.3 Completion of Substitution: On completion of the formalities set
out in sub-Clause 12.2, the Substituted Obligor shall be deemed to
be named in this Trust Deed, the Notes, the Certificates, the
Receipts, the Coupons and the Talons as the principal debtor in
place of the Issuer (or of any previous substitute) and this Trust
Deed, the Notes, the Certificates, the Receipts, the Coupons and
the Talons shall be deemed to be amended as necessary to give
effect to the substitution.
13 Appointment, Retirement and Removal of the Trustee
13.1 Appointment: The Issuer has the power of appointing new trustees but
no-one may be so appointed unless previously approved by an Extraordinary
Resolution. A trust corporation shall at all times be a Trustee and may be
the sole Trustee. Any appointment of a new Trustee shall be notified by
the Issuer to the Noteholders as soon as practicable.
13.2 Retirement and Removal: Any Trustee may retire at any time on giving at
least 3 months' written notice to the Issuer without giving any reason or
being responsible for any costs occasioned by such retirement and the
Noteholders may by Extraordinary Resolution remove any Trustee provided
that the retirement or removal of a sole trust corporation shall not be
effective until a trust corporation is appointed as successor Trustee. If
a sole trust corporation gives notice of retirement or an Extraordinary
Resolution is passed for its removal, it shall use all reasonable
endeavours to procure that another trust corporation be appointed as
Trustee.
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13.3 Co-Trustees: The Trustee may, despite sub-Clause 13.1, by written notice
to the Issuer appoint anyone to act as an additional Trustee jointly with
the Trustee:
13.3.1 if the Trustee considers the appointment to be in the interests of
the Noteholders and/or the Couponholders;
13.3.2 to conform with a legal requirement, restriction or condition in a
jurisdiction in which a particular act is to be performed; or
13.3.3 to obtain a judgment or to enforce a judgment or any provision of
this Trust Deed in any jurisdiction.
Subject to the provisions of this Trust Deed the Trustee may confer on any
person so appointed such functions as it thinks fit. The Trustee may by
written notice to the Issuer and that person so remove that person. At the
Trustee's request, the Issuer shall forthwith do all things as may be
required to perfect such appointment or removal and it irrevocably
appoints the Trustee as its attorney in its name and on its behalf to do
so.
13.4 Competence of a Majority of Trustees: If there are more than two Trustees
the majority of them shall be competent to perform the Trustee's functions
provided the majority includes a trust corporation.
14 Notes held in Clearing Systems and Couponholders
14.1 Notes Held in Clearing Systems: So long as any Global Note is, or any
Notes represented by a Global Certificate are, held on behalf of a
clearing system, in considering the interests of Noteholders, the Trustee
may have regard to any information provided to it by such clearing system
or its operator as to the identity (either individually or by category) of
its accountholders or participants with entitlements to any such Global
Note or the Registered Notes and may consider such interests on the basis
that such accountholders or participants were the holder(s) thereof.
14.2 Couponholders: No notices need be given to Couponholders. They shall be
deemed to have notice of the contents of any notice given to Noteholders.
Even if it has express notice to the contrary, in exercising any of its
functions by reference to the interests of the Noteholders, the Trustee
shall assume that the holder of each Note is the holder of all Receipts,
Coupons and Talons relating to it.
15 Currency Indemnity
15.1 Currency of Account and Payment: The Contractual Currency is the sole
currency of account and payment for all sums payable by the Issuer under
or in connection with this Trust Deed, the Notes, the Receipts and the
Coupons, including damages.
15.2 Extent of Discharge: An amount received or recovered in a currency other
than the Contractual Currency (whether as a result of, or of the
enforcement of, a judgment or order of a court of any jurisdiction, in the
winding-up or dissolution of the Issuer or otherwise), by the Trustee or
any Noteholder or Couponholder in respect of any sum expressed to be due
to it from the Issuer shall only discharge the Issuer to the extent of the
Contractual Currency amount that the recipient is able to purchase with
the amount so received or recovered in that other currency on the date of
that receipt or recovery (or, if it is not practicable to make that
purchase on that date, on the first date on which it is practicable to do
so).
15.3 Indemnity: If that Contractual Currency amount is less than the
Contractual Currency amount expressed to be due to the recipient under
this Trust Deed, the Notes, the Receipts or the
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Coupons, the Issuer shall indemnify it against any loss sustained by it as
a result. In any event, the Issuer shall indemnify the recipient against
the cost of making any such purchase.
15.4 Indemnity Separate: The indemnities in this Clause 15 and in sub-Clause
7.4 constitute separate and independent obligations from the other
obligations in this Trust Deed, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence
granted by the Trustee and/or any Noteholder or Couponholder and shall
continue in full force and effect despite any judgment, order, claim or
proof for a liquidated amount in respect of any sum due under this Trust
Deed, the Notes, the Receipts and/or the Coupons or any other judgment or
order.
16 Communications
16.1 Method: Each communication under this Trust Deed shall be made by telex,
fax or otherwise in writing. Each communication or document to be
delivered to any party under this Trust Deed shall be sent to that party
at the telex, fax number or address, and marked for the attention of the
person (if any), from time to time designated by that party to the other
party for the purpose of this Trust Deed. The initial telephone number,
telex number, fax number, address and person so designated by the parties
under this Trust Deed are set out in the Procedures Memorandum.
16.2 Deemed Receipt: Any communication from any party to the other under this
Trust Deed shall be effective, (if by telex) when a confirmed answerback
is received at the end of the transmission, (if by fax) when good receipt
is confirmed by the recipient following enquiry by the sender and (if in
writing) when delivered, except that a communication received outside
normal business hours shall be deemed to be received on the next business
day in the city in which the recipient is located.
17 Governing Law and Jurisdiction
17.1 Governing Law: This Trust Deed shall be governed by and construed in
accordance with English law.
17.2 Jurisdiction: The courts of England are to have jurisdiction to settle any
disputes that may arise out of or in connection with this Trust Deed, the
Notes, the Receipts, the Coupons or the Talons and accordingly any legal
action or proceedings arising out of or in connection with this Trust
Deed, the Notes, the Receipts, the Coupons or the Talons ("Proceedings")
may be brought in such courts. The Issuer irrevocably submits to the
jurisdiction of such courts and waives any objections to Proceedings in
such courts on the ground of venue or on the ground that the Proceedings
have been brought in an inconvenient forum. This submission is for the
benefit of each of the Trustee, the Noteholders and the Couponholders and
shall not limit the right of any of them to take Proceedings in any other
court of competent jurisdiction nor shall the taking of Proceedings in any
one or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction (whether concurrently or not).
17.3 Service of Process: The Issuer shall procure that its London office, whose
address is at 54 Queen Anne Street, London W1M 9LA will act as its agent
for service of process in any Proceedings in England. Such service shall
be deemed completed on delivery to such process agent (whether or not it
is forwarded to and received by the Issuer). If for any reason such
process agent ceases to be able to act as such or no longer has an address
in England the Issuer irrevocably agrees to appoint a substitute process
agent acceptable to the Trustee and shall immediately notify the Trustee
of such appointment. Nothing shall affect the right to serve process in
any other manner permitted by law.
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SCHEDULE I
Part A
Form of Temporary Global Note
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
TEMPORARY GLOBAL NOTE
Temporary Global Note No. [*]
This temporary Global Note is issued in respect of the Notes (the "Notes") of
the Tranche and Series specified in the Second Schedule hereto of Scottish Power
plc (the "Issuer").
Interpretation and Definitions
References in this temporary Global Note to the "Conditions" are to the Terms
and Conditions applicable to the Notes (which are in the form set out in
Schedule 2 Part C to the Trust Deed (as amended or supplemented as at the Issue
Date, the "Trust Deed") dated 4 November 1997 between the Issuer and The Law
Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented
and/or modified and/or superseded by the provisions of this temporary Global
Note (including the supplemental definitions and any modifications or additions
set out in the Second Schedule hereto), which in the event of any conflict shall
prevail). Other capitalised terms used in this temporary Global Note shall have
the meanings given to them in the Conditions or the Trust Deed.
Aggregate Principal Amount
The aggregate principal amount from time to time of this temporary Global Note
shall be an amount equal to the aggregate principal amount of the Notes as shall
be shown by the latest entry in the fourth column of the First Schedule hereto,
which shall be completed by or on behalf of the Issuing and Paying Agent upon
(i) the issue of Notes represented hereby, (ii) the exchange of the whole or a
part of this temporary Global Note for a corresponding interest in a permanent
Global Note or, as the case may be, for Definitive Notes or Registered Notes,
(iii) the redemption or purchase and cancellation of Notes represented hereby
and/or (iv) in the case of Partly-paid Notes, the forfeiture of Notes
represented hereby in accordance with the Conditions relating to such
Partly-paid Notes, all as described below.
Promise to Pay
Subject as provided herein, the Issuer, for value received, promises to pay to
the bearer of this temporary Global Note, upon presentation and (when no further
payment is due in respect of this temporary Global Note) surrender of this
temporary Global Note, on the Maturity Date (or on such earlier date as the
Redemption Amount may become repayable in accordance with the
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<PAGE>
Conditions) the Redemption Amount in respect of the aggregate principal amount
of Notes represented by this temporary Global Note and (unless this temporary
Global Note does not bear interest) to pay interest in respect of such aggregate
principal amount of Notes from the Interest Commencement Date in arrear at the
rates, in the amounts and on the dates for payment provided for in the
Conditions together with such other sums and additional amounts (if any) as may
be payable under the Conditions, in accordance with the Conditions.
Exchange
If this temporary Global Note is an Exchangeable Bearer Note, this temporary
Global Note may be exchanged in whole or from time to time in part for one or
more Registered Notes in accordance with the Conditions on or after the Issue
Date but before the Exchange Date referred to below by its presentation to the
Issuing and Paying Agent. On or after the Exchange Date, the outstanding
principal amount of this temporary Global Note may be exchanged for Definitive
Notes and Registered Notes in accordance with the next paragraph.
Subject as provided in the Conditions applicable to Partly-paid Notes, on or
after the first day following the expiry of 40 days after the Issue Date (the
"Exchange Date"), this temporary Global Note may be exchanged (free of charge to
the holder) in whole or from time to time in part by its presentation and, on
exchange in full, surrender to or to the order of the Issuing and Paying Agent
for interests in a permanent Global Note or, if so specified in the Second
Schedule hereto, for Definitive Notes and (if this temporary Global Note is an
Exchangeable Bearer Note), in each case, for Registered Notes in an aggregate
principal amount equal to the principal amount of this temporary Global Note
submitted for exchange provided that, in the case of any part of this temporary
Global Note submitted for exchange for a permanent Global Note or Definitive
Notes, there shall have been Certification with respect to such principal amount
submitted for such exchange dated no earlier than the Exchange Date.
"Certification" means the presentation to the Issuing and Paying Agent of a
certificate or certificates with respect to one or more interests in this
temporary Global Note, signed by Euroclear or Cedel Bank, substantially to the
effect set out in Schedule 4 to the Agency Agreement to the effect that it has
received a certificate or certificates substantially to the effect set out in
Schedule 3 to the Agency Agreement with respect thereto and that no contrary
advice as to the contents thereof has been received by Euroclear or Cedel Bank,
as the case may be.
Upon the whole or a part of this temporary Global Note being exchanged for a
permanent Global Note, such permanent Global Note shall be exchangeable in
accordance with its terms for Definitive Notes or Registered Notes.
The Definitive Notes or the Certificates representing the Registered Notes for
which this temporary Global Note or a permanent Global Note may be exchangeable
shall be duly executed and authenticated, shall, in the case of Definitive
Notes, have attached to them all Coupons (and, where appropriate, Talons) in
respect of interest, and all Receipts in respect of Instalment Amounts, that
have not already been paid on this temporary Global Note or the permanent Global
Note, as the case may be, shall be security printed or, in the case of
Certificates, printed in accordance with applicable legal and stock exchange
requirements and shall be substantially in the form set out in the Schedules to
the Trust Deed as supplemented and/or modified and/or superseded by the terms of
the Second Schedule hereto. Certificates issued upon exchange for Registered
Notes shall not be Global Certificates unless the holder so requests and
certifies to the Issuing and Paying Agent that it is, or is acting as a nominee
for, Cedel Bank, Euroclear and/ or any other clearing system.
On any exchange of a part of this temporary Global Note for an equivalent
interest in a permanent Global Note, for Definitive Notes or for Registered
Notes, as the case may be, the portion of the principal amount hereof so
exchanged shall be endorsed by or on behalf of the Issuing and
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<PAGE>
Paying Agent in Part I of the First Schedule hereto, whereupon the principal
amount hereof shall be reduced for all purposes by the amount so exchanged and
endorsed.
Benefit of Conditions
Except as otherwise specified herein, this temporary Global Note is subject to
the Conditions and the Trust Deed and, until the whole of this temporary Global
Note is exchanged for equivalent interests in a permanent Global Note, for
Definitive Notes or for Registered Notes, as the case may be, the holder of this
temporary Global Note shall in all respects be entitled to the same benefits as
if it were the holder of the permanent Global Note (or the relevant part of it)
or the Definitive Notes, as the case may be, for which it may be exchanged as if
such permanent Global Note or Definitive Notes had been issued on the Issue
Date.
Payments
No person shall be entitled to receive any payment in respect of the Notes
represented by this temporary Global Note that falls due on or after the
Exchange Date unless, upon due presentation of this temporary Global Note for
exchange, delivery of (or, in the case of a subsequent exchange, due endorsement
of) a permanent Global Note or delivery of Definitive Notes or Certificates, as
the case may be, is improperly withheld or refused by or on behalf of the
Issuer.
Payments due before the Exchange Date shall only be made in relation to such
principal amount of this temporary Global Note with respect to which there shall
have been Certification dated no earlier than such due date for payment.
Any payments that are made in respect of this temporary Global Note shall be
made to its holder against presentation and (if no further payment falls to be
made on it) surrender of it at the specified office of the Issuing and Paying
Agent or of any other Paying Agent provided for in the Conditions. If any
payment in full of principal is made in respect of any Note represented by this
temporary Global Note, the portion of this temporary Global Note representing
such Note shall be cancelled and the amount so cancelled shall be endorsed by or
on behalf of the Issuing and Paying Agent in the First Schedule hereto (such
endorsement being prima facie evidence that the payment in question has been
made) whereupon the principal amount hereof shall be reduced for all purposes by
the amount so cancelled and endorsed. If any other payments are made in respect
of the Notes represented by this temporary Global Note, a record of each such
payment shall be endorsed by or on behalf of the Issuing and Paying Agent on an
additional schedule hereto (such endorsement being prima facie evidence that the
payment in question has been made).
Cancellation
Cancellation of any Note represented by this temporary Global Note that is
required by the Conditions to be cancelled (other than upon its redemption)
shall be effected by reduction in the principal amount of this temporary Global
Note representing such Note on its presentation to or to the order of the
Issuing and Paying Agent for endorsement in the First Schedule hereto, whereupon
the principal amount hereof shall be reduced for all purposes by the amount so
cancelled and endorsed.
Notices
Notices required to be given in respect of the Notes represented by this
temporary Global Note may be given by their being delivered (so long as this
temporary Global Note is held on behalf of Euroclear and Cedel Bank or any other
clearing system) to Euroclear, Cedel Bank or such other clearing system, as the
case may be, or otherwise to the holder of this temporary Global Note, rather
than by publication as required by the Conditions.
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<PAGE>
[Compliance with Listing Rules
The Issuer has complied, as at the Issue Date of this temporary Global Note,
with its obligations under the listing rules made by The London Stock Exchange
Limited (the "London Stock Exchange") pursuant to Section 142(6) of the
Financial Services Act 1986 in respect of its debt securities that have been
admitted to the Official List of the London Stock Exchange and, since the last
publication in compliance with such rules of information about the Issuer, the
Issuer, having made all reasonable enquiries, has not become aware of any change
in circumstances that could reasonably be regarded as significantly and
adversely affecting its ability to meet its obligations in respect of the Notes
represented by this temporary Global Note as they fall due.](*) [(*) Delete if
Note is not denominated in Sterling.]
No provision of this temporary Global Note shall alter or impair the obligation
of the Issuer to pay the principal and premium of and interest on the Notes when
due in accordance with the Conditions.
This temporary Global Note shall not be valid or become obligatory for any
purpose until authenticated by or on behalf of the Issuing and Paying Agent.
This temporary Global Note shall be governed by and construed in accordance with
English law.
In witness whereof the Issuer has caused this temporary Global Note to be duly
signed on its behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This temporary Global Note is authenticated by or on behalf of the Issuing and
Paying Agent.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
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<PAGE>
THE FIRST SCHEDULE
Principal amount of Notes represented by this temporary Global Note
The following (i) issue of Notes initially represented by this temporary Global
Note, (ii) exchanges of the whole or a part of this temporary Global Note for
interests in a permanent Global Note, for Definitive Notes or for Registered
Notes and/or (iii) cancellations or forfeitures of interests in this temporary
Global Note have been made, resulting in the principal amount of this temporary
Global Note specified in the latest entry in the fourth column below:
Date Amount of Reason for Principal Notation
decrease in decrease in amount of this made by or on
principal principal amount of temporary behalf of the
amount of this this temporary Global Note on Issuing and
temporary Global Note issue or Paying Agent
Global Note (exchange, following such
cancellation or decrease
forfeiture)
Issue not applicable not applicable
Date
[Insert the provisions of the relevant Pricing Supplement that relate to the
Conditions or the Global Notes as the Second Schedule]
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<PAGE>
SCHEDULE I
Part B
Form of Permanent Global Note
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
Permanent Global Note No. [*]
This permanent Global Note is issued in respect of the Notes (the "Notes") of
the Tranche(s) and Series specified in the Third Schedule hereto of Scottish
Power plc (the "Issuer").
Interpretation and Definitions
References in this permanent Global Note to the "Conditions" are to the Terms
and Conditions applicable to the Notes (which are in the form set out in
Schedule 2 Part C to the Trust Deed (as amended or supplemented as at the Issue
Date, the "Trust Deed") dated 4 November 1997 between the Issuer and The Law
Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented
and/or modified and/or superseded by the provisions of this permanent Global
Note (including the supplemental definitions and any modifications or additions
set out in the Third Schedule hereto), which in the event of any conflict shall
prevail). Other capitalised terms used in this permanent Global Note shall have
the meanings given to them in the Conditions or the Trust Deed.
Aggregate Principal Amount
The aggregate principal amount from time to time of this permanent Global Note
shall be an amount equal to the aggregate principal amount of the Notes as shall
be shown by the latest entry in the fourth column of the First Schedule hereto,
which shall be completed by or on behalf of the Issuing and Paying Agent upon
(i) the exchange of the whole or a part of the temporary Global Note initially
representing the Notes for a corresponding interest herein (in the case of Notes
represented by a temporary Global Note upon issue), (ii) the issue of the Notes
represented hereby (in the case of Notes represented by this permanent Global
Note upon issue), (iii) the exchange of the whole or, where the limited
circumstances so permit, a part of this permanent Global Note for Definitive
Notes or Registered Notes, (iv) the redemption or purchase and cancellation of
Notes represented hereby and/or (v) in the case of Partly-paid Notes, the
forfeiture of Notes represented hereby in accordance with the Conditions
relating to such Partly-paid Notes, all as described below.
Promise to Pay
Subject as provided herein, the Issuer, for value received, hereby promises to
pay to the bearer of this permanent Global Note, upon presentation and (when no
further payment is due in respect of this permanent Global Note) surrender of
this permanent Global Note, on the Maturity Date (or on
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<PAGE>
such earlier date as the Redemption Amount may become repayable in accordance
with the Conditions) the Redemption Amount in respect of the aggregate principal
amount of Notes represented by this permanent Global Note and (unless this
permanent Global Note does not bear interest) to pay interest in respect of such
aggregate principal amount of Notes from the Interest Commencement Date in
arrear at the rates, in the amounts and on the dates for payment provided for in
the Conditions together with such other sums and additional amounts (if any) as
may be payable under the Conditions, in accordance with the Conditions.
Exchange
This permanent Global Note is exchangeable (free of charge to the holder) on or
after the Exchange Date in whole but not, except as provided in the next
paragraph, in part for the Definitive Notes or (if this permanent Global Note is
an Exchangeable Bearer Note) Registered Notes represented by the Certificates
described below:
(i) by the Issuer giving notice to the Issuing and Paying Agent and the
Noteholders of its intention to effect such exchange
(ii) if the Third Schedule hereto provides that this permanent Global
Note is exchangeable for Definitive Notes at the request of the
holder, by such holder giving notice to the Issuing and Paying Agent
of its election for such exchange
(iii) if this permanent Global Note is an Exchangeable Bearer Note, by the
holder hereof giving notice to the Issuing and Paying Agent of its
election to exchange the whole or a part of this permanent Global
Note for Registered Notes or
(iv) otherwise, if this permanent Global Note is held on behalf of
Euroclear or Cedel Bank or any other clearing system (an
"Alternative Clearing System") and any such clearing system is
closed for business for a continuous period of 14 days (other than
by reason of holidays, statutory or otherwise) or announces an
intention permanently to cease business or does in fact do so.
This permanent Global Note is exchangeable in part (provided, however, that if
this permanent Global Note is held by or on behalf of Euroclear and/or Cedel
Bank, the rules of Euroclear and/or Cedel Bank, as the case may be, so permit)
(i) if this permanent Global Note is an Exchangeable Bearer Note and the part
hereof submitted for exchange is to be exchanged for Registered Notes or (ii) if
so provided, and in accordance with, the Conditions relating to Partly-paid
Notes.
"Exchange Date" means a day falling not less than 60 days, or in the case of an
exchange for Registered Notes 5 days, after that on which the notice requiring
exchange is given and on which banks are open for business in the city in which
the specified office of the Issuing and Paying Agent is located and, except in
the case of exchange pursuant to (iv) above, in the cities in which Euroclear
and Cedel Bank or, if relevant, the Alternative Clearing System, are located.
Subject as provided in the Conditions applicable to Party-paid Notes, any such
exchange may be effected on or after an Exchange Date by the holder of this
permanent Global Note surrendering this permanent Global Note or, in the case of
a partial exchange, presenting it for endorsement to or to the order of the
Issuing and Paying Agent. In exchange for this permanent Global Note, or part
thereof to be exchanged, the Issuer shall deliver, or procure the delivery of,
duly executed and authenticated Definitive Notes and/or (if this permanent
Global Note is an Exchangeable Bearer Note) Certificates in an aggregate
principal amount equal to the principal amount of this permanent Global Note
submitted for exchange (if appropriate, having attached to them all Coupons
(and, where appropriate, Talons) in respect of interest, and all Receipts in
respect of Instalment Amounts, that have not already been paid on this permanent
Global Note), security printed or, in the case of Certificates, printed in
accordance with any applicable legal and stock
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<PAGE>
exchange requirements and substantially in the form set out in Schedule 2 to the
Trust Deed as supplemented and/or modified and/or superseded by the terms of the
Third Schedule hereto. Certificates issued upon exchange for Registered Notes
shall not be Global Certificates unless the holder so requests and certifies to
the Issuing and Paying Agent that it is, or is acting as a nominee for, Cedel
Bank, Euroclear and/or an Alternative Clearing System.
On any exchange of a part of this permanent Global Note the portion of the
principal amount hereof so exchanged shall be endorsed by or on behalf of the
Issuing and Paying Agent in the First Schedule hereto, whereupon the principal
amount hereof shall be reduced for all purposes by the amount so exchanged and
endorsed.
Benefit of Conditions
Except as otherwise specified herein, this permanent Global Note is subject to
the Conditions and the Trust Deed and, until the whole of this permanent Global
Note is exchanged for Definitive Notes or Registered Notes, the holder of this
permanent Global Note shall in all respects be entitled to the same benefits as
if it were the holder of the Definitive Notes for which it may be exchanged and
as if such Definitive Notes had been issued on the Issue Date.
Payments
No person shall be entitled to receive any payment in respect of the Notes
represented by this permanent Global Note that falls due after an Exchange Date
for such Notes, unless upon due presentation of this permanent Global Note for
exchange, delivery of Definitive Notes or Certificates is improperly withheld or
refused by or on behalf of the Issuer or the Issuer does not perform or comply
with any one or more of what are expressed to be its obligations under any
Definitive Notes.
Payments in respect of this permanent Global Note shall be made to its holder
against presentation and (if no further payment falls to be made on it)
surrender of it at the specified office of the Issuing and Paying Agent or of
any other Paying Agent provided for in the Conditions. A record of each such
payment shall be endorsed on the First or Second Schedule hereto, as
appropriate, by the Issuing and Paying Agent or by the relevant Paying Agent,
for and on behalf of the Issuing and Paying Agent, which endorsement shall
(until the contrary is proved) be prima facie evidence that the payment in
question has been made.
Prescription
Claims in respect of principal and interest (as each is defined in the
Conditions) in respect of this permanent Global Note shall become void unless it
is presented for payment within a period of 10 years (in the case of principal)
and 5 years (in the case of interest) from the appropriate Relevant Date.
Meetings
The holder of this permanent Global Note shall (unless this permanent Global
Note represents only one Note) be treated as 2 persons for the purposes of any
quorum requirements of a meeting of Noteholders and, at any such meeting, as
having one vote in respect of each principal amount of Notes equal to the
minimum Denomination of the Notes for which this permanent Global Note may be
exchanged.
Cancellation
Cancellation of any Note represented by this permanent Global Note that is
required by the Conditions to be cancelled (other than upon its redemption)
shall be effected by reduction in the principal amount of this permanent Global
Note representing such Note on its presentation to or to the order of the
Issuing and Paying Agent for endorsement in the First Schedule hereto,
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<PAGE>
whereupon the principal amount hereof shall be reduced for all purposes by the
amount so cancelled and endorsed.
Purchase
Notes may only be purchased by the Issuer or any of its subsidiaries if they are
purchased together with the right to receive all future payments of interest and
Instalment Amounts (if any) thereon.
Issuer's Options
Any option of the Issuer provided for in the Conditions shall be exercised by
the Issuer giving notice to the Noteholders within the time limits set out in
and containing the information required by the Conditions, except that the
notice shall not be required to contain the serial numbers of Notes drawn in the
case of a partial exercise of an option and accordingly no drawing of Notes
shall be required.
Noteholders' Options
Any option of the Noteholders provided for in the Conditions may be exercised by
the holder of this permanent Global Note giving notice to the Issuing and Paying
Agent within the time limits relating to the deposit of Notes with a Paying
Agent set out in the Conditions substantially in the form of the notice
available from any Paying Agent, except that the notice shall not be required to
contain the certificate numbers of the Notes in respect of which the option has
been exercised, and stating the principal amount of Notes in respect of which
the option is exercised and at the same time presenting this permanent Global
Note to the Issuing and Paying Agent, or to a Paying Agent acting on behalf of
the Issuing and Paying Agent, for notation accordingly in the Fourth Schedule
hereto.
Notices
Notices required to be given in respect of the Notes represented by this
permanent Global Note may be given by their being delivered (so long as this
permanent Global Note is held on behalf of Euroclear, Cedel Bank or any other
clearing system) to Euroclear, Cedel Bank or such other clearing system, as the
case may be, or otherwise to the holder of this permanent Global Note, rather
than by publication as required by the Conditions.
Negotiability
This permanent Global Note is a bearer document and negotiable and accordingly:
(i) is freely transferable by delivery and such transfer shall operate
to confer upon the transferee all rights and benefits appertaining
hereto and to bind the transferee with all obligations appertaining
hereto pursuant to the Conditions
(ii) the holder of this permanent Global Note is and shall be absolutely
entitled as against all previous holders to receive all amounts by
way of Redemption Amount interest or otherwise payable in respect of
this permanent Global Note and the Issuer has waived against such
holder and any previous holder of this permanent Global Note all
rights of set-off or counterclaim that would or might otherwise be
available to it in respect of the obligations evidenced by this
Global Note and
(iii) payment upon due presentation of this permanent Global Note as
provided herein shall operate as a good discharge against such
holder and all previous holders of this permanent Global Note.
[Compliance with Listing Rules
The Issuer has complied, as at the Issue Date of this permanent Global Note,
with its obligations under the listing rules made by The London Stock Exchange
Limited (the "London Stock
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28
<PAGE>
Exchange") pursuant to Section 142(6) of the Financial Services Act 1986 in
respect of its debt securities that have been admitted to the Official List of
the London Stock Exchange and, since the last publication in compliance with
such rules of information about the Issuer, the Issuer, having made all
reasonable enquiries, has not become aware of any change in circumstances that
could reasonably be regarded as significantly and adversely affecting its
ability to meet its obligations in respect of the Notes represented by this
permanent Global Note as they fall due.](*) [(*) Delete if Note is not
denominated in Sterling.]
No provision of this permanent Global Note shall alter or impair the obligation
of the Issuer to pay the principal and premium of and interest on the Notes when
due in accordance with the Conditions.
This permanent Global Note shall not be valid or become obligatory for any
purpose until authenticated by or on behalf of the Issuing and Paying Agent.
This permanent Global Note shall be governed by and construed in accordance with
English law.
In witness whereof the Issuer has caused this permanent Global Note to be duly
signed on its behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This permanent Global Note is authenticated by
or on behalf of the Issuing and
Paying Agent.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
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29
<PAGE>
THE FIRST SCHEDULE
Principal amount of Notes represented by this permanent Global Note
The following (i) issues of Notes initially represented by this permanent Global
Note, (ii) exchanges of interests in a temporary Global Note for interests in
this permanent Global Note, (iii) exchanges of the whole or a part of this
permanent Global Note for Definitive Notes or for Registered Notes, (iv)
cancellations or forfeitures of interests in this permanent Global Note and/ or
(v) payments of Redemption Amount in respect of this permanent Global Note have
been made, resulting in the principal amount of this permanent Global Note
specified in the latest entry in the fourth column:
Date Amount of Reason for increase/ Principal Notation
increase/ decrease in amount of this made by or
decrease in principal amount of permanent on behalf
principal this permanent Global Note of the
amount of this Global Note (initial following such Issuing and
permanent issue, exchange, increase/ Paying
Global Note cancellation, decrease Agent
forfeiture or
payment, stating
amount of payment
made)
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30
<PAGE>
THE SECOND SCHEDULE
Payments of Interest
The following payments of interest or Interest Amount in respect of this
Permanent Global Note have been made:
Due date of Date of payment Amount of interest Notation made by or on
payment behalf of the Issuing
and Paying Agent
[Insert the provisions of the relevant Pricing Supplement that relate to the
Conditions or the Global Notes as the Third Schedule.]
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31
<PAGE>
THE FOURTH SCHEDULE
Exercise of Noteholders' Option
The following exercises of the option of the Noteholders provided for in the
Conditions have been made in respect of the stated principal amount of this
permanent Global Note:
Date of Principal amount of Date of which Notation made by
exercise this permanent exercise of such or on behalf of the
Global Note in option is effective Issuing and Paying
respect of which Agent
exercise is made
- --------------------------------------------------------------------------------
32
<PAGE>
SCHEDULE I
Part C
Form of Global Certificate
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is SCOTTISH POWER plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
GLOBAL CERTIFICATE
Global Certificate No. [*]
Registered Holder:
Address of Registered Holder:
Principal amount of Notes represented by this Global Certificate:
This Global Certificate is issued in respect of the principal amount specified
above of the Notes (the "Notes") of the Tranche and Series specified in the
Schedule hereto of Scottish Power plc (the "Issuer"). This Global Certificate
certifies that the Registered Holder (as defined above) is registered as the
holder of such principal amount of the Notes at the date hereof.
Interpretation and Definitions
References in this Global Certificate to the "Conditions" are to the Terms and
Conditions applicable to the Notes (which are in the form set out in Schedule 2
Part C to the Trust Deed (as amended or supplemented as at the Issue Date, the
"Trust Deed") dated 4 November 1997 between the Issuer and The Law Debenture
Trust Corporation p.l.c. as trustee, as such form is supplemented and/or
modified and/or superseded by the provisions of this Global Certificate
(including the supplemental definitions and any modifications or additions set
out in the Schedule hereto), which in the event of any conflict shall prevail).
Other capitalised terms used in this Global Certificate shall have the meanings
given to them in the Conditions or the Trust Deed.
Promise to Pay
The Issuer, for value received, promises to pay to the holder of the Notes
represented by this Global Certificate upon presentation and (when no further
payment is due in respect of the Notes represented by this Global Certificate)
surrender of this Global Certificate on the Maturity Date (or on such earlier
date as the Redemption Amount may become repayable in accordance with the
Conditions) the Redemption Amount in respect of the Notes represented by this
Global Certificate and (unless the Notes represented by this Certificate do not
bear interest) to pay interest in respect of such Notes from the Interest
Commencement Date in arrear at the rates, in
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33
<PAGE>
the amounts and on the dates for payment provided for in the Conditions together
with such other sums and additional amounts (if any) as may be payable under the
Conditions, in accordance with the Conditions.
For the purposes of this Global Certificate, (a) the holder of the Notes
represented by this Global Certificate is bound by the provisions of the Agency
Agreement, (b) the Issuer certifies that the Registered Holder is, at the date
hereof, entered in the Register as the holder of the Notes represented by this
Global Certificate, (c) this Global Certificate is evidence of entitlement only,
(d) title to the Notes represented by this Global Certificate passes only on due
registration on the Register, and (e) only the holder of the Notes represented
by this Global Certificate is entitled to payments in respect of the Notes
represented by this Global Certificate.
Transfer of Notes represented by permanent Global Certificates
If the Schedule hereto states that the Notes are to be represented by a
permanent Global Certificate on issue, transfers of the holding of Notes
represented by this Global Certificate pursuant to Condition 2(b) may only be
made in part:
(i) if the Notes represented by this Global Certificate are held on
behalf of Euroclear or Cedel Bank or any other clearing system (an
"Alternative Clearing System") and any such clearing system is
closed for business for a continuous period of 14 days (other than
by reason of holidays, statutory or otherwise) or announces an
intention permanently to cease business or does in fact do so or
(ii) with the consent of the Issuer
provided that, in the case of the first transfer of part of a holding pursuant
to (i) above, the holder of the Notes represented by this Global Certificate has
given the Registrar not less than 30 days' notice at its specified office of
such holder's intention to effect such transfer. Where the holding of Notes
represented by this Global Certificate is only transferable in its entirety, the
Certificate issued to the transferee upon transfer of such holding shall be a
Global Certificate. Where transfers are permitted in part, Certificates issued
to transferees shall not be Global Certificates unless the transferee so
requests and certifies to the Registrar that it is, or is acting as a nominee
for, Cedel Bank, Euroclear and/or an Alternative Clearing System.
Meetings
The holder of the Notes represented by this Global Certificate shall (unless
this Global Certificate represents only one Note) be treated as two persons for
the purposes of any quorum requirements of a meeting of Noteholders.
[Compliance with Listing Rules
The Issuer has complied, as at the Issue Date of the Notes, with its obligations
under the listing rules made by The London Stock Exchange Limited (the "London
Stock Exchange") pursuant to Section 142(6) of the Financial Services Act 1986
in respect of its debt securities that have been admitted to the Official List
of the London Stock Exchange and, since the last publication in compliance with
such rules of information about the Issuer, the Issuer, having made all
reasonable enquiries, has not become aware of any change in circumstances that
could reasonably be regarded as significantly and adversely affecting its
ability to meet its obligations in respect of the Notes as they fall due.](*)
[(*) Delete if Note is not denominated in Sterling.]
This Global Certificate shall not become valid for any purpose until
authenticated by or on behalf of the Registrar.
In witness whereof the Issuer has caused this Global Certificate to be signed on
its behalf.
Dated as of the Issue Date.
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34
<PAGE>
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This Global Certificate is authenticated by or on behalf of the Registrar.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Registrar
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
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35
<PAGE>
Form of Transfer
For value received the undersigned transfers to
-----------------------------------
-----------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[*] principal amount of the Notes represented by this Global Certificate, and
all rights under them.
Dated
---------------------------
Signed Certifying Signature
---------------------------
Notes:
(i) The signature of the person effecting a transfer shall conform to a
list of duly authorised specimen signatures supplied by the holder
of the Notes represented by this Global Certificate or (if such
signature corresponds with the name as it appears on the face of
this Global Certificate) be certified by a notary public or a
recognised bank or be supported by such other evidence as a Transfer
Agent or the Registrar may reasonably require.
(ii) A representative of the Noteholder should state the capacity in
which he signs e.g. executor.
[Insert the provisions of the relevant Pricing Supplement that relate to the
Conditions or the Global Certificate as the Schedule.]
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36
<PAGE>
SCHEDULE 2
Part A
Form of Bearer Note
On the front:
[Denomination] [ISIN] [Series] [Certif. No.]
[Currency and denomination]
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
Series No. [*]
[Title of issue]
This Note forms one of the Series of Notes referred to above (the "Notes") of
Scottish Power plc (the "Issuer") designated as specified in the title hereof.
The Notes are subject to the Terms and Conditions (the "Conditions") endorsed
hereon and are issued subject to, and with the benefit of, the Trust Deed
referred to in the Conditions. Expressions defined in the Conditions have the
same meanings in this Note.
The Issuer for value received promises to pay to the bearer of this Note, on
presentation and (when no further payment is due in respect of this Note)
surrender of this Note on the Maturity Date (or on such earlier date as the
Redemption Amount may become repayable in accordance with the Conditions) the
Redemption Amount and (unless this Note does not bear interest) to pay interest
from the Interest Commencement Date in arrear at the rates, in the amounts and
on the dates for payment provided for in the Conditions together with such other
sums and additional amounts (if any) as may be payable under the Conditions, in
accordance with the Conditions.
[The Issuer has complied, as at the Issue Date of this Note, with its
obligations under the listing rules made by The London Stock Exchange Limited
(the "London Stock Exchange") pursuant to Section 142(6) of the Financial
Services Act 1986 in respect of its debt securities that have been admitted to
the Official List of the London Stock Exchange and, since the last publication
in compliance with such rules of information about the Issuer, the Issuer,
having made all
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37
<PAGE>
reasonable enquiries, has not become aware of any change in circumstances that
could reasonably be regarded as significantly and adversely affecting its
ability to meet its obligations in respect of this Note as they fall due.](*)
[(*) Delete if Note is not denominated in Sterling.]
This Note shall not become valid or obligatory for any purpose until
authenticated by or on behalf of the Issuing and Paying Agent.
In witness whereof the Issuer has caused this Note to be signed on its behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This Note is authenticated
by or on behalf of the Issuing and Paying Agent.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
- --------------------------------------------------------------------------------
38
<PAGE>
On the back:
Terms and Conditions of the Notes
[The Terms and Conditions that are set out in Schedule 2 Part C to the Trust
Deed as amended by and incorporating any additional provisions forming part of
such Terms and Conditions and set out in the relevant Pricing Supplement shall
be set out here.]
ISSUING AND PAYING AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
60 Victoria Embankment
London
EC4Y 0JR
PAYING AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE
Avenue des Arts 35
B-1040 Brussels
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39
<PAGE>
SCHEDULE 2
Part B
Form of Certificate
On the front:
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
Series No. [*]
[Title of issue]
This Certificate certifies that [*] of [*] (the "Registered Holder") is, as at
the date hereof, registered as the holder of [principal amount] of Notes of the
Series of Notes referred to above (the "Notes") of Scottish Power plc (the
"Issuer"), designated as specified in the title hereof. The Notes are subject to
the Terms and Conditions (the "Conditions") endorsed hereon and are issued
subject to, and with the benefit of, the Trust Deed referred to in the
Conditions. Expressions defined in the Conditions have the same meanings in this
Certificate.
The Issuer, for value received, promises to pay to the holder of the Note(s)
represented by this Certificate upon presentation and (when no further payment
is due in respect of the Note(s) represented by this Certificate) surrender of
this Certificate on the Maturity Date (or on such earlier date as the Redemption
Amount may become repayable in accordance with the Conditions) the Redemption
Amount in respect of the Notes represented by this Certificate and (unless the
Note(s) represented by this Certificate do not bear interest) to pay interest in
respect of such Notes from the Interest Commencement Date in arrear at the
rates, in the amounts and on the dates for payment provided for in the
Conditions together with such other sums and additional amounts (if any) as may
be payable under the Conditions, in accordance with the Conditions.
For the purposes of this Certificate, (a) the holder of the Note(s) represented
by this Certificate is bound by the provisions of the Agency Agreement, (b) the
Issuer certifies that the Registered Holder is, at the date hereof, entered in
the Register as the holder of the Note(s) represented by this Certificate, (c)
this Certificate is evidence of entitlement only, (d) title to the Note(s)
represented by this Certificate passes only on due registration on the Register,
and (e) only the holder of the Note(s) represented by this Certificate is
entitled to payments in respect of the Note(s) represented by this Certificate.
[The Issuer has complied, as at the Issue Date of the Notes represented by this
Certificate, with its obligations under the listing rules made by The London
Stock Exchange Limited (the "London Stock Exchange") pursuant to Section 142(6)
of the Financial Services Act 1986 in respect of its
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40
<PAGE>
debt securities that have been admitted to the Official List of the London Stock
Exchange and, since the last publication in compliance with such rules of
information about the Issuer, the Issuer, having made all reasonable enquiries,
has not become aware of any change in circumstances that could reasonably be
regarded as significantly and adversely affecting its ability to meet its
obligations in respect of the Notes represented by this Certificate as they fall
due.](*) [(*) Delete if Notes are not denominated in Sterling.]
This Certificate shall not become valid for any purpose until authenticated by
or on behalf of the Registrar.
In witness whereof the Issuer has caused this Certificate to be signed on its
behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This Certificate is authenticated
by or on behalf of the Registrar.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Registrar
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
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41
<PAGE>
On the back:
Terms and Conditions of the Notes
[The Terms and Conditions that are set out in Schedule 2 Part C to the Trust
Deed as amended by and incorporating any additional provisions forming part of
such Terms and Conditions and set out in the relevant Pricing Supplement shall
be set out here.]
Form of Transfer
For value received the undersigned transfers to
-----------------------------------
-----------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[*] principal amount of the Notes represented by this Certificate, and all
rights under them.
Dated
---------------------------
Signed Certifying Signature
---------------------------
Notes:
(i) The signature of the person effecting a transfer shall conform to a
list of duly authorised specimen signatures supplied by the holder
of the Notes represented by this Certificate or (if such signature
corresponds with the name as it appears on the face of this
Certificate) be certified by a notary public or a recognised bank or
be supported by such other evidence as a Transfer Agent or the
Registrar may reasonably require.
(ii) A representative of the Noteholder should state the capacity in
which he signs.
ISSUING AND PAYING AGENT, TRANSFER AGENT AND REGISTRAR
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
60 Victoria Embankment
London
EC4Y 0JR
PAYING AGENT AND TRANSFER AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE
Avenue des Arts 35
B-1040 Brussels
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<PAGE>
SCHEDULE 2
Part C
Terms and Conditions of the Notes
The Notes are constituted by a Trust Deed (as amended or supplemented as at the
date of issue of the Notes (the "Issue Date"), the "Trust Deed") dated 4th
November 1997 between the Issuer and The Law Debenture Trust Corporation p.l.c.
(the "Trustee", which expression shall include all persons for the time being
the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as
defined below). These terms and conditions include summaries of, and are subject
to, the detailed provisions of the Trust Deed, which includes the form of the
Bearer Notes, Certificates, Receipts, Coupons and Talons referred to below. An
Agency Agreement (as amended or supplemented as at the Issue Date, the "Agency
Agreement") dated 4th November 1997 has been entered into in relation to the
Notes between the Issuer, the Trustee, Morgan Guaranty Trust Company of New
York, London office as initial issuing and paying agent and the other agents
named in it. The issuing and paying agent, the paying agents, the registrar, the
transfer agents and the calculation agent(s) for the time being (if any) are
referred to below respectively as the "Issuing and Paying Agent", the "Paying
Agents" (which expression shall include the Issuing and Paying Agent), the
"Registrar", the "Transfer Agents" (which expression shall include the
Registrar) and the "Calculation Agent(s)". Copies of the relevant Pricing
Supplement, Trust Deed and the Agency Agreement are available for inspection
during usual business hours at the registered office of the Trustee (presently
at Princes House, 95 Gresham Street, London EC2V 7LY) and at the specified
offices of the Paying Agents and the Transfer Agents.
The Noteholders, the holders of the interest coupons (the "Coupons")
appertaining to interest bearing Notes in bearer form and, where applicable in
the case of such Notes, talons for further Coupons (the "Talons") (the
"Couponholders") and the holders of the receipts for the payment of instalments
of principal (the "Receipts") relating to Notes in bearer form of which the
principal is payable in instalments are entitled to the benefit of, are bound
by, and are deemed to have notice of, all the provisions of the Trust Deed and
the relevant Pricing Supplement and are deemed to have notice of those
provisions applicable to them of the Agency Agreement.
1. Form, Denomination and Title
The Notes are issued in bearer form ("Bearer Notes", which expression includes
Notes that are specified to be Exchangeable Bearer Notes), in registered form
("Registered Notes") or in bearer form exchangeable for Registered Notes
("Exchangeable Bearer Notes") in each case in the Denomination(s) shown thereon.
All Registered Notes shall have the same Denomination. Where Exchangeable Bearer
Notes are issued, the Registered Notes for which they are exchangeable shall
have the same Denomination as the lowest denomination of Exchangeable Bearer
Notes.
Bearer Notes are serially numbered and are issued with Coupons (and, where
appropriate, a Talon) attached, save in the case of Notes that do not bear
interest in which case references to interest (other than in relation to
interest due after the Maturity Date), Coupons and Talons in these Conditions
are not applicable. Any Bearer Note the principal amount of which is redeemable
in instalments is issued with one or more Receipts attached.
Registered Notes are represented by registered certificates ("Certificates")
and, save as provided in Condition 2(c), each Certificate shall represent the
entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by
delivery. Title to the Registered Notes shall pass by registration in the
register that the Issuer shall procure to be kept by the
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43
<PAGE>
Registrar in accordance with the provisions of the Agency Agreement (the
"Register"). Except as ordered by a court of competent jurisdiction or as
required by law, the holder (as defined below) of any Note, Receipt, Coupon or
Talon shall be deemed to be and may be treated as its absolute owner for all
purposes whether or not it is overdue and regardless of any notice of ownership,
trust or an interest in it, any writing on it (or on the Certificate
representing it) or its theft or loss (or that of the related Certificate) and
no person shall be liable for so treating the holder.
In these Conditions, "Noteholder" means the bearer of any Bearer Note and the
Receipts relating to it or the person in whose name a Registered Note is
registered (as the case may be), "holder" (in relation to a Note, Receipt,
Coupon or Talon) means the bearer of any Bearer Note, Receipt, Coupon or Talon
or the person in whose name a Registered Note is registered (as the case may be)
and capitalised terms have the meanings given to them hereon, the absence of any
such meaning indicating that such term is not applicable to the Notes.
2. Exchanges of Exchangeable Bearer Notes and Transfers of Registered Notes
(a) Exchange of Exchangeable Bearer Notes
Subject as provided in Condition 2(f), Exchangeable Bearer Notes may be
exchanged for the same aggregate principal amount of Registered Notes at the
request in writing of the relevant Noteholder and upon surrender of each
Exchangeable Bearer Note to be exchanged, together with all unmatured Receipts,
Coupons and Talons relating to it, at the specified office of any Transfer
Agent; provided, however, that where an Exchangeable Bearer Note is surrendered
for exchange after the Record Date (as defined in Condition 7(b)) for any
payment of interest, the Coupon in respect of that payment of interest need not
be surrendered with it. Registered Notes may not be exchanged for Bearer Notes.
Bearer Notes of one Denomination may not be exchanged for Bearer Notes of
another Denomination. Bearer Notes that are not Exchangeable Bearer Notes may
not be exchanged for Registered Notes.
(b) Transfer of Registered Notes
One or more Registered Notes may be transferred upon the surrender (at the
specified office of the Registrar or any Transfer Agent) of the Certificate
representing such Registered Notes to be transferred, together with the form of
transfer endorsed on such Certificate duly completed and executed and any other
evidence as the Registrar or Transfer Agent may reasonably require. In the case
of a transfer of part only of a holding of Registered Notes represented by one
Certificate, a new Certificate shall be issued to the transferee in respect of
the part transferred and a further new Certificate in respect of the balance of
the holding not transferred shall be issued to the transferor.
(c) Exercise of Options or Partial Redemption in Respect of Registered Notes
In the case of an exercise of an Issuer's or Noteholders' option in respect of,
or a partial redemption of, a holding of Registered Notes represented by a
single Certificate, a new Certificate shall be issued to the holder to reflect
the exercise of such option or in respect of the balance of the holding not
redeemed. In the case of a partial exercise of an option resulting in Registered
Notes of the same holding having different terms, separate Certificates shall be
issued in respect of those Notes of that holding that have the same terms. New
Certificates shall only be issued against surrender of the existing Certificates
to the Registrar or any Transfer Agent. In the case of a transfer of Registered
Notes to a person who is already a holder of Registered Notes, a new Certificate
representing the enlarged holding shall only be issued against surrender of the
Certificate representing the existing holding.
(d) Delivery of New Certificates
Each new Certificate to be issued pursuant to Conditions 2(a), (b) or (c) shall
be available for delivery within five business days of receipt of the request
for exchange, form of transfer or Exercise Notice or surrender of the
Certificate for exchange. Delivery of the new Certificate(s) shall be made at
the specified office of the Transfer Agent or of the Registrar (as the case may
be) to whom delivery or surrender of such request for exchange, form of
transfer, Exercise Notice or Certificate shall have been made or, at the option
of the holder making such delivery or surrender as aforesaid and as specified in
the relevant request for exchange, form of transfer, Exercise Notice or
otherwise in writing, be mailed by uninsured post at the risk of the holder
entitled to the new Certificate to such address as may be so specified, unless
such holder requests otherwise and pays in advance to the relevant Agent the
costs of such other method of delivery and/or such insurance as it may specify.
In this Condition 2(d), "business day" means a day, other than a Saturday or
Sunday, on which banks are open for business in the place of the specified
office of the relevant Transfer Agent or the Registrar.
(e) Exchange Free of Charge
Exchange and transfer of Notes and Certificates on registration, transfer,
exercise of an option or partial redemption shall be effected without charge by
or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon
payment of any tax or other governmental charges that may be imposed in relation
to it (or the giving of such indemnity as the Registrar or the relevant Transfer
Agent may reasonably require).
44
<PAGE>
(f) Closed Periods
No Noteholder may require the transfer of a Registered Note to be registered or
an Exchangeable Bearer Note to be exchanged for one or more Registered Note(s)
(i) during the period of 15 days ending on the due date for redemption of, or
payment of any Instalment Amount in respect of, that Note, (ii) during the
period of 15 days prior to any date on which Notes may be called for redemption
by the Issuer at its option pursuant to Condition 6(d), (iii) after any such
Note has been called for redemption or (iv) during the period of seven days
ending on (and including) any Record Date. An Exchangeable Bearer Note called
for redemption may, however, be exchanged for one or more Registered Note(s) in
respect of which the Certificate is simultaneously surrendered not later than
the relevant Record Date.
3. Status
The Notes and the Receipts and Coupons constitute (subject to Condition 4)
unsecured obligations of the Issuer and shall at all times rank pari passu and
without any preference among themselves. The payment obligations of the Issuer
under the Notes and the Receipts and Coupons shall, save for such exceptions as
may be provided by applicable legislation and subject to Condition 4, at all
times rank at least equally with all other unsecured and unsubordinated
indebtedness and monetary obligations of the Issuer, present and future.
4. Negative Pledge
So long as any of the Notes remains outstanding (as defined in the Trust Deed)
the Issuer will ensure that no Relevant Indebtedness of the Issuer or any
Relevant Subsidiary (as defined in Condition 6) or of any other person and no
guarantee by the Issuer or any Relevant Subsidiary of any Relevant Indebtedness
(as defined in Condition 6) of any person will be secured by a mortgage, charge,
lien, pledge or other security interest (each a "Security Interest") upon, or
with respect to, any of the present or future business, undertaking, assets or
revenues (including any uncalled capital) of the Issuer or any Relevant
Subsidiary unless the Issuer shall, before or at the same time as the creation
of the Security Interest, take any and all action necessary to ensure that:
(i) all amounts payable by it under the Notes, the Receipts, the Coupons and the
Trust Deed are secured equally and rateably with the Relevant Indebtedness or
guarantee, as the case may be, by the Security Interest to the satisfaction of
the Trustee; or
(ii) such other Security Interest or guarantee or other arrangement (whether or
not including the giving of a Security Interest) is provided in respect of all
amounts payable by the Issuer under the Notes, the Receipts, the Coupons and the
Trust Deed either (i) as the Trustee shall in its absolute discretion deem not
materially less beneficial to the interests of the Noteholders or (ii) as shall
be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the
Noteholders,
save that the Issuer or any Relevant Subsidiary may create or have outstanding a
Security Interest in respect of any Relevant Indebtedness and/or any guarantees
given by the Issuer or any Relevant Subsidiary in respect of any Relevant
Indebtedness of any person (without the obligation to provide a Security
Interest or guarantee or other arrangement in respect of the Notes, the
Receipts, the Coupons and the Trust Deed as aforesaid) where (1) such Relevant
Indebtedness has an initial maturity of not less than twenty years and is of a
maximum aggregate amount outstanding at any time not exceeding the greater of
(pound)250,000,000 or 20% of the Capital and Reserves (as defined in Condition
6) or (2) such Security Interest is provided in respect of a company becoming a
Subsidiary of the Issuer after the date of the relevant Pricing Supplement and
where such Security Interest existed at the time that company becomes a
Subsidiary of the Issuer (provided that such Security Interest was not created
in contemplation of that company becoming a Subsidiary of the Issuer and the
principal amount secured at the time of that company becoming a Subsidiary of
the Issuer is not subsequently increased).
5. Interest and Other Calculations
(a) Interest Rate and Accrual
Each Note bears interest on its outstanding principal amount from the Interest
Commencement Date at the rate per annum (expressed as a percentage) equal to the
Interest Rate, such interest being payable in arrear on each Interest Payment
Date.
Interest shall cease to accrue on each Note on the due date for redemption
unless, upon due presentation, payment of principal is improperly withheld or
refused, in which event interest shall continue to accrue (as well after as
before judgment) at the Interest Rate in the manner provided in this Condition 5
to the Relevant Date (as defined in Condition 8).
(b) Business Day Convention
If any date referred to in these Conditions that is specified to be subject to
adjustment in accordance with a Business Day Convention would otherwise fall on
a day that is not a Business Day, then, if the Business Day Convention specified
is (i) the Floating Rate Business Day Convention, such date shall be postponed
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to the next day that is a Business Day unless it would thereby fall into the
next calendar month, in which event (A) such date shall be brought forward to
the immediately preceding Business Day and (B) each subsequent such date shall
be the last Business Day of the month in which such date would have fallen had
it not been subject to adjustment, (ii) the Following Business Day Convention,
such date shall be postponed to the next day that is a Business Day, (iii) the
Modified Following Business Day Convention, such date shall be postponed to the
next day that is a Business Day unless it would thereby fall into the next
calendar month, in which event such date shall be brought forward to the
immediately preceding Business Day or (iv) the Preceding Business Day
Convention, such date shall be brought forward to the immediately preceding
Business Day
(c) Interest Rate on Floating Rate Notes
If the Interest Rate is specified in the Pricing Supplement as being Floating
Rate, the Interest Rate for each Interest Accrual Period shall be determined by
the Calculation Agent at or about the Relevant Time on the Interest
Determination Date in respect of each Interest Accrual Period in accordance with
the following
(i) if the Primary Source for the Floating Rate is a Page, subject as provided
below, the Interest Rate shall be:
(x) the Relevant Rate (where such Relevant Rate on such Page is a composite
quotation or is customarily supplied by one entity); or
(y) the arithmetic mean of the Relevant Rates of the persons whose Relevant
Rates appear on that Page,
in each case appearing on such Page at the Relevant Time on the Interest
Determination Date
(ii) if the Page specified in the Pricing Supplement as a Primary Source
permanently ceases to quote the Relevant Rate(s) but such quotation(s) is/are
available from another page, section or other part of such information service
selected by the Calculation Agent (the "Replacement Page"), the Replacement Page
shall be substituted as the Primary Source for Interest Rate Quotations and if
no Replacement Page exists but such quotation(s) is/are available from a page,
section or other part of a different information service selected by the
Calculation Agent and approved by the Issuer (the "Secondary Replacement Page"),
the Secondary Replacement Page shall be substituted as the Primary Source for
Interest Rate Quotations
(iii) if the Primary Source for the Floating Rate is Reference Banks (as defined
below) or if sub-paragraph (i)(x) applies and no Relevant Rate appears on the
Page at the Relevant Time on the Interest Determination Date or if sub-paragraph
(i)(y) above applies and fewer than two Relevant Rates appear on the Page at the
Relevant Time on the Interest Determination Date, subject as provided below, the
Interest Rate shall be the arithmetic mean of the Relevant Rates that each of
the Reference Banks is quoting to leading banks in the Relevant Financial Centre
at the Relevant Time on the Interest Determination Date, as determined by the
Calculation Agent
(iv) if paragraph (iii) above applies, and the Calculation Agent determines that
fewer than two Reference Banks are so quoting Relevant Rates, and either the
Relevant Currency is not ECU or the Relevant Currency is ECU and the third stage
of the European monetary union has started (in which event, references to the
Relevant Currency shall mean the Euro), subject as provided below, the Interest
Rate shall be the arithmetic mean of the rates per annum (expressed as a
percentage) that the Calculation Agent determines to be the rates (being the
nearest equivalent to the Benchmark) in respect of a Representative Amount of
the Relevant Currency that at least two out of five leading banks selected by
the Calculation Agent in the principal financial centre of the country of the
Relevant Currency or, if the Relevant Currency is ECU, in Brussels, Frankfurt,
London, Luxembourg or Paris as selected by the Calculation Agent (the "Principal
Financial Centre") are quoting at or about the Relevant Time on the date on
which such banks would customarily quote such rates for a period commencing on
the Effective Date for a period equivalent to the Specified Duration (x) to
leading banks carrying on business in Europe, or (if the Calculation Agent
determines that fewer than two of such banks are so quoting to leading banks in
Europe) (y) to leading banks carrying on business in the Principal Financial
Centre; except that, if fewer than two of such banks are so quoting to leading
banks in the Principal Financial Centre, the Interest Rate shall be the Interest
Rate determined on the previous Interest Determination Date (after readjustment
for any difference between any Margin, Rate Multiplier or Maximum or Minimum
Interest Rate applicable to the preceding Interest Accrual Period and to the
relevant Interest Accrual Period)
(v) if paragraph (iii) above applies and the Relevant Currency is ECU and the
third stage of European monetary union has not started and the Calculation Agent
determines that fewer than two Reference Banks are so quoting Relevant Rates,
the Calculation Agent shall, in respect of each of the then component currencies
of the ECU (provided that, if the ECU is not then used as the unit of account of
the European Communities (the "EC"), the component currencies of the ECU shall
be those provided for in
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Condition 7(i)(iv)), determine an Interest Rate (each a "Component Rate") for
such component in accordance with paragraphs (iii) and (iv) above as if such
component was the Relevant Currency (and without any adjustment in accordance
with Condition 5(e) below) and, provided that Component Rates for component
currencies representing in aggregate 95% (determined as provided below) of one
ECU are determined on the Interest Determination Date and subject as provided
below, the Interest Rate shall be the arithmetic mean of the Component Rates,
weighted in the manner provided below, as determined by the Calculation Agent
and
(vi) if paragraph (v) above applies and the Calculation Agent is unable to
determine the Interest Rate for an Interest Accrual Period in accordance with
that paragraph, the Interest Rate for such Interest Accrual Period shall be the
Interest Rate in effect for the last preceding Interest Accrual Period to which
paragraphs (i) or (iii) above shall have applied (after readjustment for any
difference between any Margin, Rate Multiplier or Maximum or Minimum Interest
Rate applicable to the preceding Interest Accrual Period and to the relevant
Interest Accrual Period).
(d) Interest Rate on Zero Coupon Notes
Where a Note the Interest Rate of which is specified in the Pricing Supplement
to be Zero Coupon is repayable prior to the Maturity Date and is not paid when
due, the amount due and payable prior to the Maturity Date shall be the
Redemption Amount of such Note. As from the Maturity Date, the Interest Rate for
any overdue principal of such a Note shall be a rate per annum (expressed as a
percentage) equal to the Amortisation Yield (as defined in Condition 6(b)).
(e) Margin, Maximum/Minimum Interest Rates, Instalment Amounts and Redemption
Amounts, Rate Multipliers, Rounding and ECU Weighting
(i) If any Margin or Rate Multiplier is specified in the Pricing Supplement
(either (x) generally, or (y) in relation to one or more Interest Accrual
Periods), an adjustment shall be made to all Interest Rates, in the case of (x),
or the Interest Rates for the specified Interest Accrual Periods, in the case of
(y), calculated in accordance with Condition 5(c) above by adding (if a positive
number) or subtracting the absolute value (if a negative number) of such Margin
or multiplying by such Rate Multiplier, subject always to the next paragraph.
(ii) If any Maximum or Minimum Interest Rate, Instalment Amount or Redemption
Amount is specified in the Pricing Supplement, then any Interest Rate,
Instalment Amount or Redemption Amount shall be subject to such maximum or
minimum, as the case may be.
(iii) For the purposes of any calculations required pursuant to these Conditions
(unless otherwise specified in the Pricing Supplement), (x) all percentages
resulting from such calculations shall be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point (with halves being rounded up), (y)
all figures shall be rounded to seven significant figures (with halves being
rounded up) and (z) all currency amounts that fall due and payable shall be
rounded to the nearest unit of such currency (with halves being rounded up),
save in the case of yen, which shall be rounded down to the nearest yen. For
these purposes "unit" means, with respect to any currency other than ECU, the
lowest amount of such currency that is available as legal tender in the country
of such currency and, with respect to ECU, means 0.01 ECU.
(iv) For the purposes of this Condition 5, the weighting to be given to a
component currency of, or the percentage that it bears to, one ECU shall be
determined by the Calculation Agent by reference to the proportion that the
amount of such component currency included in one ECU bears to one ECU and
calculated on the basis of the U.S. dollar equivalent of each of the component
currencies as at or about the Relevant Time on the Interest Determination Date
in question. Such U.S. dollar equivalent shall be determined by the Calculation
Agent in the manner provided under Condition 7(i), except that for the purposes
of this Condition 5, (i) any reference therein to a Day of Valuation shall be
deemed to refer to the Interest Determination Date in question, (ii) all
decisions or choices to be made by the Trustee thereunder shall be made by the
Calculation Agent, and (iii) if the ECU is being used as the unit of account of
the EC on such Interest Determination Date, the components of the ECU shall be
the currency amounts that are components of the ECU on such date.
(f) Calculations
The amount of interest payable in respect of any Note for any period shall be
calculated by multiplying the product of the Interest Rate and the outstanding
principal amount of such Note by the Day Count Fraction, unless an Interest
Amount (or a formula for its calculation) is specified in respect of such
period, in which case the amount of interest payable in respect of such Note for
such period shall equal such Interest Amount (or be calculated in accordance
with such formula). Where any Interest Period comprises two or more Interest
Accrual Periods, the amount of interest payable in respect of such Interest
Period shall be the sum of the amounts of interest payable in respect of each of
those Interest Accrual Periods.
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(g) Determination and Publication of Interest Rates, Interest Amounts,
Redemption Amounts and Instalment Amounts
As soon as practicable after the Relevant Time on each Interest Determination
Date or such other time on such date as the Calculation Agent may be required to
calculate any Redemption Amount or Instalment Amount, obtain any quote or make
any determination or calculation, it shall determine the Interest Rate and
calculate the amount of interest payable (the "Interest Amounts") in respect of
each Denomination of the Notes for the relevant Interest Accrual Period,
calculate the Redemption Amount or Instalment Amount, obtain such quote or make
such determination or calculation, as the case may be, and cause the Interest
Rate and the Interest Amounts for each Interest Period and the relevant Interest
Payment Date and, if required to be calculated, the Redemption Amount or any
Instalment Amount to be notified to the Trustee, the Issuer, each of the Paying
Agents, the Noteholders, any other Calculation Agent appointed in respect of the
Notes that is to make a further calculation upon receipt of such information
and, if the Notes are listed on a stock exchange and the rules of such exchange
so require, such exchange as soon as possible after their determination but in
no event later than (i) the commencement of the relevant Interest Period, if
determined prior to such time, in the case of notification to such exchange of
an Interest Rate and Interest Amount, or (ii) in all other cases, the fourth
Business Day after such determination. Where any Interest Payment Date or
Interest Period Date is subject to adjustment pursuant to Condition 5(b), the
Interest Amounts and the Interest Payment Date so published may subsequently be
amended (or appropriate alternative arrangements made with the consent of the
Trustee by way of adjustment) without notice in the event of an extension or
shortening of the Interest Period. If the Notes become due and payable under
Condition 10, the accrued interest and the Interest Rate payable in respect of
the Notes shall nevertheless continue to be calculated as previously in
accordance with this Condition but no publication of the Interest Rate or the
Interest Amount so calculated need be made unless the Trustee otherwise
requires. The determination of each Interest Rate, Interest Amount, Redemption
Amount and Instalment Amount, the obtaining of each quote and the making of each
determination or calculation by the Calculation Agent(s) shall (in the absence
of manifest error) be final and binding upon all parties.
(h) Determination or Calculation by Trustee
If the Calculation Agent does not at any time for any reason determine or
calculate the Interest Rate for an Interest Period or any Interest Amount,
Instalment Amount or Redemption Amount, the Trustee shall do so (or shall
appoint an agent on its behalf to do so) and such determination or calculation
shall be deemed to have been made by the Calculation Agent. In doing so, the
Trustee shall apply the foregoing provisions of this Condition, with any
necessary consequential amendments, to the extent that, in its opinion, it can
do so, and, in all other respects it shall do so in such manner as it shall deem
fair and reasonable in all the circumstances.
(i) Definitions
In these Conditions, unless the context otherwise requires, the following
defined terms shall have the meanings set out below
"Business Day" means
(i) in the case of a specified currency other than ECU, a day (other than a
Saturday or Sunday) on which commercial banks and foreign exchange markets
settle payments in the principal financial centre for that currency and/or
(ii) in the case of ECU, any day other than a Saturday, a Sunday or a day
designated as a non-settlement day for ECU on the Reuters Screen ISDE page on
the Reuter Monitor Money Rates Service ("Reuters") or a day so designated by the
ECU Banking Association if ECU non-settlement days do not appear on that page
or, if no days are so designated, a day on which ECU interbank payments cannot
be settled and/or
(iii) in the case of a specified currency with one or more financial centres, a
day (other than a Saturday or Sunday) on which commercial banks and foreign
exchange markets settle payments in the specified currency in the specified
financial centre or, if no financial centre is specified, generally in each of
such financial centres.
"Day Count Fraction" means, in respect of the calculation of an amount of
interest on any Note for any period of time (whether or not constituting an
Interest Period, the "Calculation Period")
(i) if "Actual/365" or "Actual/Actual" is specified in the Pricing Supplement,
the actual number of days in the Calculation Period divided by 365 (or, if any
portion of that Calculation Period falls in a leap year, the sum of (A) the
actual number of days in that portion of the Calculation Period falling in a
leap year divided by 366 and (B) the actual number of days in that portion of
the Calculation Period falling in a non-leap year divided by 365)
(ii) if "Actual/365 (Fixed)" is specified in the Pricing Supplement, the actual
number of days in the Calculation Period divided by 365
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(iii) if "Actual/360" is specified in the Pricing Supplement, the actual number
of days in the Calculation Period divided by 360
(iv) if "30/360", "360/360" or "Bond Basis" is specified in the Pricing
Supplement, the number of days in the Calculation Period divided by 360 (the
number of days to be calculated on the basis of a year of 360 days with 12
30-day months (unless (a) the last day of the Calculation Period is the 31st day
of a month but the first day of the Calculation Period is a day other than the
30th or 31st day of a month, in which case the month that includes that last day
shall not be considered to be shortened to a 30-day month, or (b) the last day
of the Calculation Period is the last day of the month of February, in which
case the month of February shall not be considered to be lengthened to a 30-day
month)) and
(v) if "30E/360" or "Eurobond Basis" is specified in the Pricing Supplement, the
number of days in the Calculation Period divided by 360 (the number of days to
be calculated on the basis of a year of 360 days with 12 30-day months, without
regard to the date of the first day or last day of the Calculation Period
unless, in the case of a Calculation Period ending on the Maturity Date, the
Maturity Date is the last day of the month of February, in which case the month
of February shall not be considered to be lengthened to a 30-day month).
"Effective Date" means, with respect to any Floating Rate to be determined on an
Interest Determination Date, the date specified as such in the Pricing
Supplement or, if none is so specified, the first day of the Interest Accrual
Period to which such Interest Determination Date relates.
"Interest Accrual Period" means the period beginning on (and including) the
Interest Commencement Date and ending on (but excluding) the first Interest
Period Date and each successive period beginning on (and including) an Interest
Period Date and ending on (but excluding) the next succeeding Interest Period
Date.
"Interest Commencement Date" means the Issue Date or such other date as may be
specified in the Pricing Supplement.
"Interest Determination Date" means, with respect to an Interest Rate and
Interest Accrual Period, the date specified as such in the Pricing Supplement
or, if none is so specified, the first day of such Interest Accrual Period if
the Relevant Currency is Sterling or the day falling two Business Days in London
for the Relevant Currency prior to the first day of such Interest Accrual Period
if the Relevant Currency is not Sterling.
"Interest Period" means the period beginning on (and including) the Interest
Commencement Date and ending on (but excluding) the first Interest Payment Date
and each successive period beginning on (and including) an Interest Payment Date
and ending on (but excluding) the next succeeding Interest Payment Date.
"Interest Period Date" means each Interest Payment Date unless otherwise
specified in the Pricing Supplement.
"Interest Rate" means the rate of interest payable from time to time in respect
of this Note and that is either specified or calculated in accordance with the
provisions in the Pricing Supplement.
"Page" means such page, section, caption, column or other part of a particular
information service (including, but not limited to, Reuters and the Dow Jones
Telerate Service ("Telerate")) as may be specified for the purpose of providing
a Relevant Rate, or such other page, section, caption, column or other part as
may replace it on that information service or on such other information service,
in each case as may be nominated by the person or organisation providing or
sponsoring the information appearing there for the purpose of displaying rates
or prices comparable to that Relevant Rate.
"Reference Banks" means the institutions specified as such in the Pricing
Supplement or, if none, four (or, if the Relevant Financial Centre is Helsinki,
five) major banks selected by the Calculation Agent in the interbank market (or,
if appropriate, money, swap or over-the-counter index options market) that is
most closely connected with the Benchmark.
"Relevant Currency" means the currency specified in the Pricing Supplement or,
if none is specified, the currency in which the Notes are denominated.
"Relevant Financial Centre" means, with respect to any Floating Rate to be
determined on an Interest Determination Date, the financial centre as may be
specified as such in the Pricing Supplement or, if none is so specified, the
financial centre with which the relevant Benchmark is most closely connected or,
if none is so connected, London.
"Relevant Rate" means the Benchmark for a Representative Amount of the Relevant
Currency for a period (if applicable or appropriate to the Benchmark) equal to
the Specified Duration commencing on the Effective Date.
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"Relevant Time" means, with respect to any Interest Determination Date, the
local time in the Relevant Financial Centre specified in the Pricing Supplement
or, if none is specified, the local time in the Relevant Financial Centre at
which it is customary to determine bid and offered rates in respect of deposits
in the Relevant Currency in the interbank market in the Relevant Financial
Centre.
"Representative Amount" means, with respect to any Floating Rate to be
determined on an Interest Determination Date, the amount specified as such in
the Pricing Supplement or, if none is specified, an amount that is
representative for a single transaction in the relevant market at the time.
"Specified Duration" means, with respect to any Floating Rate to be determined
on an Interest Determination Date, the duration specified in the Pricing
Supplement or, if none is specified, a period of time equal to the relative
Interest Accrual Period, ignoring any adjustment pursuant to Condition 5(b).
(j) Calculation Agent and Reference Banks
The Issuer shall procure that there shall at all times be four Reference Banks
(or such other number as may be required) with offices in the Relevant Financial
Centre and one or more Calculation Agents if provision is made for them in the
Pricing Supplement and for so long as any Note is outstanding (as defined in the
Trust Deed). If any Reference Bank (acting through its relevant office) is
unable or unwilling to continue to act as a Reference Bank, then the Issuer
shall (with the prior approval of the Trustee) appoint another Reference Bank
with an office in the Relevant Financial Centre to act as such in its place.
Where more than one Calculation Agent is appointed in respect of the Notes,
references in these Conditions to the Calculation Agent shall be construed as
each Calculation Agent performing its respective duties under the Conditions. If
the Calculation Agent is unable or unwilling to act as such or if the
Calculation Agent fails duly to establish the Interest Rate for an Interest
Period or to calculate any Interest Amount, Instalment Amount or the Redemption
Amount or to comply with any other requirement, the Issuer shall (with the prior
approval of the Trustee) appoint a leading bank or investment banking firm
engaged in the interbank market (or, if appropriate, money, swap or
over-the-counter index options market) that is most closely connected with the
calculation or determination to be made by the Calculation Agent (acting through
its principal London office or any other office actively involved in such
market) to act as such in its place. The Calculation Agent may not resign its
duties without a successor having been appointed as aforesaid.
(k) Certificates to be Final
All certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions of this Condition 5, whether by the Calculation Agent or the
Trustee, shall (in the absence of wilful default, bad faith or manifest error)
be binding on the Issuer, the Calculation Agent, the Trustee, the other Paying
Agents and all Noteholders, Receiptholders and Couponholders and (in the absence
as aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or
the Couponholders shall attach to the Calculation Agent or the Trustee in
connection with the exercise or non-exercise by them of their powers, duties and
discretions pursuant to such provisions.
6. Redemption, Purchase and Options
(a) Redemption by Instalments and Final Redemption
(i) Unless previously redeemed, purchased and cancelled as provided in this
Condition 6 or the relevant Instalment Date (being one of the dates so specified
hereon) is extended pursuant to the Issuer's or any Noteholder's option in
accordance with Condition 6(d) or 6(e), each Note that provides for Instalment
Dates and Instalment Amounts shall be partially redeemed on each Instalment Date
at the related Instalment Amount specified in the Pricing Supplement. The
outstanding principal amount of each such Note shall be reduced by the
Instalment Amount (or, if such Instalment Amount is calculated by reference to a
proportion of the principal amount of such Note, such proportion) for all
purposes with effect from the related Instalment Date, unless payment of the
Instalment Amount is improperly withheld or refused on presentation of the
related Receipt, in which case, such amount shall remain outstanding until the
Relevant Date relating to such Instalment Amount.
(ii) Unless previously redeemed, purchased and cancelled as provided below or
its maturity is extended pursuant to the Issuer's or any Noteholder's option in
accordance with Condition 6(d) or 6(e), each Note shall be finally redeemed on
the Maturity Date specified in the Pricing Supplement at its Redemption Amount
(which, unless otherwise provided in the Pricing Supplement, is its principal
amount) or, in the case of a Note falling within paragraph (i) above, its final
Instalment Amount.
(b) Early Redemption of Zero Coupon Notes
(i) The Redemption Amount payable in respect of any Note that does not bear
interest prior to the Maturity Date, the Redemption Amount of which is not
linked to an index and/or a formula, upon redemption of such Note pursuant to
Condition 6(c) or 6(f) or upon it becoming due and payable as provided in
Condition 10 shall be the Amortised Face Amount (calculated as provided below)
of such Note.
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(ii) Subject to the provisions of sub-paragraph (iii) below, the Amortised Face
Amount of any such Note shall be the scheduled Redemption Amount of such Note on
the Maturity Date discounted at a rate per annum (expressed as a percentage)
equal to the Amortisation Yield (which, if none is shown in the Pricing
Supplement, shall be such rate as would produce an Amortised Face Amount equal
to the issue price of the Notes if they were discounted back to their issue
price on the Issue Date) compounded annually. Where such calculation is to be
made for a period of less than one year, it shall be made on the basis of the
Day Count Fraction shown hereon.
(iii) If the Redemption Amount payable in respect of any such Note upon its
redemption pursuant to Condition 6(c) or 6(f) or upon it becoming due and
payable as provided in Condition 10 is not paid when due, the Redemption Amount
due and payable in respect of such Note shall be the Amortised Face Amount of
such Note as defined in sub-paragraph (ii) above, except that such sub-paragraph
shall have effect as though the reference therein to the date on which the Note
becomes due and payable were replaced by a reference to the Relevant Date. The
calculation of the Amortised Face Amount in accordance with this sub-paragraph
shall continue to be made (as well after as before judgment) until the Relevant
Date, unless the Relevant Date falls on or after the Maturity Date, in which
case the amount due and payable shall be the scheduled Redemption Amount of such
Note on the Maturity Date together with any interest that may accrue in
accordance with Condition 5(d).
(c) Redemption for Taxation Reasons
If, as a result of any amendment to or change in the laws or regulations of the
United Kingdom or of any political subdivision thereof or any authority therein
or thereof having power to tax or any change in the official or generally
accepted interpretation or application of such laws or regulations which becomes
effective on or after the date of the Trust Deed, the Issuer has or will become
obliged to pay any additional amounts as described in Condition 8 (and such
amendment or change has been evidenced by the delivery by the Issuer to the
Trustee (who shall accept such certificate and opinion as sufficient evidence
thereof) of (i) a certificate signed by two directors of the Issuer on behalf of
the Issuer stating that such amendment or change has occurred (irrespective of
whether such amendment or change is then effective), describing the facts
leading thereto and stating that such requirement cannot be avoided by the
Issuer, taking reasonable measures available to it and (ii) an opinion of
independent legal advisers of recognised standing to the effect that such
amendment or change has occurred (irrespective of whether such amendment or
change is then effective)), the Issuer may (having given not less than 30 nor
more than 90 days' notice to the Trustee and to the holders in accordance with
Condition 16) redeem all, but not some only, of the Notes (other than Notes in
respect of which the Issuer shall have given a notice of redemption pursuant to
Condition 6(d) or in respect of which a Noteholder shall have given a Put Event
Notice in accordance with Condition 6(f), in each case prior to any notice being
given under this Condition 6(c)) at their Redemption Amount, together with
accrued interest to the date fixed for such redemption, provided that no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Issuer would be required to pay such additional amounts were a
payment in respect of the Notes then due.
(d) Redemption at the Option of the Issuer and Exercise of Issuer's Options
If so provided in the Pricing Supplement, the Issuer may, on giving irrevocable
notice to the Noteholders falling within the Issuer's Option Period, redeem, or
exercise the Issuer's option in relation to, all or, if so provided, some of the
Notes (other than Notes in respect of which the Issuer shall have given a notice
of redemption pursuant to Condition 6(c) or in respect of which a Noteholder
shall have given a Put Event Notice in accordance with Condition 6(f), in each
case prior to any notice being given under this Condition 6(d)) in the principal
amount or integral multiples thereof and on the date or dates so provided. Any
such redemption of Notes shall be at their Redemption Amount together with
interest accrued to the date fixed for redemption.
All Notes in respect of which any such notice is given shall be redeemed, or the
Issuer's option shall be exercised, on the date specified in such notice in
accordance with this Condition.
In the case of a partial redemption or a partial exercise of the Issuer's
option, the notice to Noteholders shall also contain the certificate numbers of
the Notes to be redeemed or in respect of which such option has been exercised,
which shall have been drawn in such place as the Trustee may approve and in such
manner as it deems appropriate, subject to compliance with any applicable laws
and stock exchange requirements. So long as the Notes are listed on the London
Stock Exchange or any other stock exchange and the rules of the relevant stock
exchange so require, the Issuer shall, once in each year in which there has been
a partial redemption of the Notes, cause to be published in a leading newspaper
of general circulation in London or as specified by such other stock exchange, a
notice specifying the aggregate principal amount of Notes outstanding and a list
of the Notes drawn for redemption but not surrendered.
(e) Redemption at the Option of Noteholders and Exercise of Noteholders' Options
If so provided in the Pricing Supplement, the Issuer shall, at the option of the
holder of any such Note, redeem such Note on the date or dates so provided at
its Redemption Amount together with interest accrued to the date fixed for
redemption.
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To exercise such option or any other Noteholders' option that may be set out
hereon the holder must deposit (in the case of Bearer Notes) such Note (together
with all unmatured Receipts and Coupons and unexchanged Talons) with any Paying
Agent or (in the case of Registered Notes) the Certificate representing such
Note(s) with the Registrar or any Transfer Agent at its specified office,
together with a duly completed option exercise notice ("Exercise Notice" which
expression shall include any Put Notice (as defined below)) in the form
obtainable from any Paying Agent, the Registrar or any Transfer Agent (as
applicable) within the Noteholders' Option Period (which expression shall, in
the case of the exercise of the option referred to in Condition 6(f) below, mean
the Put Period (as defined below)). No Note or Certificate so deposited and
option exercised may be withdrawn without the prior consent of the Issuer,
except that such Note or Certificate will be returned to the relevant Noteholder
by the Paying Agent, the Registrar or Transfer Agent with which it has been
deposited if, prior to the due date for its redemption or the exercise of the
option, the Note becomes immediately due and payable or if upon due presentation
payment of the redemption moneys is not made or exercise of the option is
denied.
(f) Redemption at the Option of the Noteholders on a Put Event
If so provided in the Pricing Supplement, if, at any time while any of the Notes
remains outstanding, a Restructuring Event occurs and prior to the commencement
of or during the Restructuring Period an Independent Financial Adviser shall
have certified in writing to the Trustee that such Restructuring Event will not
be or is not, in its opinion, materially prejudicial to the interests of the
Noteholders, the following provisions of this Condition 6(f) shall cease to have
any further effect in relation to such Restructuring Event.
If, at any time while any of the Notes remains outstanding, a Restructuring
Event occurs and (subject to this Condition 6(f)) within the Restructuring
Period, either:
(i) if at the time such Restructuring Event occurs there are Rated Securities, a
Rating Downgrade in respect of such Restructuring Event also occurs; or
(ii) if at such time there are no Rated Securities, a Negative Rating Event also
occurs; and
an Independent Financial Adviser shall have certified in writing to the Trustee
that such Restructuring Event is, in its opinion, materially prejudicial to the
interests of the Noteholders (a "Negative Certification"), then, unless at any
time the Issuer shall have given a notice under Condition 6(c) or 6(d), the
holder of each Note will, upon the giving of a Put Event Notice (as defined
below), have the option (the "Put Option") to require the Issuer to redeem or,
at the option of the Issuer, purchase (or procure the purchase of) that Note on
the Put Date (as defined below), at its principal amount together with (or,
where purchased, together with an amount equal to) interest (if any) accrued to
(but excluding) the Put Date.
An event shall be deemed not to be a Restructuring Event if, notwithstanding the
occurrence of a Rating Downgrade or a Negative Rating Event, the rating assigned
to the Rated Securities by any Rating Agency is subsequently increased to, or,
as the case may be, there is assigned to the Notes or other unsecured and
unsubordinated debt of the Issuer or a Relevant Subsidiary (or of any Subsidiary
of the Issuer which is guaranteed on an unsecured and unsubordinated basis by
the Issuer or a Relevant Subsidiary) having an initial maturity of five years or
more by any Rating Agency, an investment grade rating (BBB-/Baa3 or their
respective equivalents for the time being) or better prior to any Negative
Certification being issued.
Any certification by an Independent Financial Adviser as aforesaid as to whether
or not, in its opinion any Restructuring Event is materially prejudicial to the
interests of the Noteholders shall, in the absence of manifest error, be
conclusive and binding on the Trustee, the Issuer and the Noteholders.
Promptly upon, and in any event within 14 days after, the Issuer becoming aware
that a Put Event has occurred, the Issuer shall, and at any time upon the
Trustee becoming similarly so aware the Trustee may, and if so requested by the
holders of at least one-quarter in principal amount of the Notes then
outstanding shall, give notice (a "Put Event Notice") to the Noteholders in
accordance with Condition 16 specifying the nature of the Put Event and the
procedure for exercising the Put Option.
To exercise the Put Option, the holder of a Note must deposit (in the case of a
Bearer Note) such Note with any Paying Agent or (in the case of Registered
Notes) the Certificate representing such Note(s) with the Registrar or any
Transfer Agent at its specified office, on a day which is a Business Day in the
City of London and in the place of such specified office falling within the
period (the "Put Period") of 45 days after that on which a Put Event Notice is
given, accompanied by a duly completed and signed notice of exercise in the form
(for the time being current) obtainable from any specified office of any Paying
Agent, the Registrar or any Transfer Agent (as applicable) (a "Put Notice") and
in which the holder may specify a bank account to which payment is to be made
under this Condition 6. Where any Bearer Note is delivered without all Coupons
relating to it which mature after the day (the "Put Date") being the fifteenth
day after the date of expiry of the Put Period, the exercise of the Put Option
in respect of such Note shall be subject
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to the provision of such indemnity as the Issuer may reasonably require. The
Paying Agent to which such Note and Put Notice or, as the case may be, the
Registrar or Transfer Agent to which the Certificate and Put Notice are
delivered shall issue to the Noteholder concerned a non-transferable receipt in
respect of the Note so delivered. Payment in respect of any Note so delivered
shall be made, if the holder duly specifies in the Put Notice an account with a
bank to which payment is to be made, on the Put Date by transfer to that bank
account and, in every other case, on or after the Put Date in each case against
presentation and surrender or (as the case may be) endorsement of such receipt
at any specified office of any Paying Agent. A Put Notice, once given, shall be
irrevocable. For the purposes of Conditions 9, 10, 11, 12, 14, 16 and 17 and for
certain other purposes specified in the Trust Deed, receipts issued pursuant to
this Condition 6(f) shall be treated as if they were Notes. The Issuer shall
redeem or, at the option of the Issuer, purchase (or procure the purchase of)
the relevant Note on the applicable Put Date unless previously redeemed or
purchased.
A Rating Downgrade or a Negative Rating Event or a non-investment grade rating
shall be deemed not to have occurred as a result or in respect of a
Restructuring Event if the Rating Agency making the relevant reduction in rating
or, where applicable, declining to assign a rating of at least investment grade
as provided in this Condition 6(f) does not announce or publicly confirm or
inform the Trustee in writing at its request that the reduction or, where
applicable, declining to assign a rating of at least investment grade was the
result, in whole or in part, of any event or circumstance comprised in or
arising as a result of the applicable Restructuring Event.
The Trust Deed provides that the Trustee is under no obligation to ascertain
whether a Restructuring Event, a Negative Rating Event or any event which could
lead to the occurrence of, or could constitute a, Restructuring Event has
occurred and until it shall have actual knowledge or express notice pursuant to
the Trust Deed to the contrary the Trustee may assume that no Restructuring
Event, Negative Rating Event or such other event has occurred. The Trust Deed
also provides that in determining whether or not a Restructuring Event has
occurred, the Trustee may rely solely on an opinion given in a certificate
signed by two directors of the Issuer.
In these Conditions
"Appointment" means the Instrument of Appointment dated August 1989 under
Section 11 of the Water Act 1989 (now Section 6 of the Water Industry Act) as in
effect on the date of the relevant Pricing Supplement, appointing SWSL as a
water undertaker and sewerage undertaker;
"Business Day" means, in relation to any place, a day on which commercial banks
and foreign exchange markets generally settle payments in that place;
"Capital and Reserves" means the aggregate of
(i) the amount paid up or credited as paid up on the share capital of the
Issuer; and
(ii) the total of the capital, revaluation and revenue reserves of the Group,
including any share premium account, capital redemption reserve and credit
balance on the profit and loss account, but excluding sums set aside for
taxation and amounts attributable to minority interests and deducting any debit
balance on the profit and loss account,
all as shown in the then latest audited consolidated balance sheet and profit
and loss account of the Group prepared in accordance with generally accepted
accounting principles in the United Kingdom, but adjusted as may be necessary in
respect of any variation in the paid up share capital or share premium account
of the Issuer since the date of that balance sheet and further adjusted as may
be necessary to reflect any change since the date of that balance sheet in the
Subsidiary Undertakings comprising the Group and/or as the Auditors (as defined
in the Trust Deed) may consider appropriate. A report by the Auditors as to the
amount of Capital and Reserves at any given time shall, in the absence of
manifest error, be conclusive and binding on all parties;
"Composite Licence" means the document dated 28th March 1990 containing the
Generation Transmission and PES Licences granted to the Issuer by the Secretary
of State for Scotland under the Electricity Act;
"Electricity Act" means the Electricity Act 1989 as amended or re-enacted from
time to time and all subordinate legislation made pursuant thereto;
"Electricity Licence" means any licence granted or issued by any relevant
authority or person in the United Kingdom or by or pursuant to any primary or
secondary legislation which entitles the person holding such licence to generate
and/or transmit and/or distribute and/or supply electricity (other than a second
tier supply licence) in the United Kingdom or any part thereof;
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"Excluded Subsidiary" means any Subsidiary of the Issuer
(i) which is a single purpose company whose principal assets and business are
constituted by the ownership, acquisition, development and/or operation of an
asset;
(ii) none of whose indebtedness for borrowed money in respect of the financing
of such ownership, acquisition, development and/or operation of an asset is
subject to any recourse whatsoever to any member of the Group (other than such
Subsidiary or another Excluded Subsidiary) in respect of the repayment thereof,
except as expressly referred to in sub-paragraph (ii) of the definition of
Project Finance Indebtedness; and
(iii) which has been designated as such by the Issuer by written notice to the
Trustee,
provided that the Issuer may give written notice to the Trustee at any time that
any Excluded Subsidiary is no longer an Excluded Subsidiary; whereupon it shall
cease to be an Excluded Subsidiary;
"Generation Licence" means the electricity generation licence granted by the
Secretary of State for Scotland to the Issuer under the Electricity Act as
comprised in the Composite Licence as in effect on the date of the relevant
Pricing Supplement;
"Group" means the Issuer and its Subsidiary Undertakings and "member of the
Group" shall be construed accordingly;
"indebtedness for borrowed money" means any present or future indebtedness
(whether being principal, premium, interest or other amounts) for or in respect
of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or
acceptance credit, or (iii) any notes, bonds, debentures, debenture stock, loan
stock or other securities offered, issued or distributed whether by way of
public offer, private placing, acquisition consideration or otherwise and
whether issued for cash or in whole or in part or for a consideration other than
cash;
"Independent Financial Adviser" means a financial adviser appointed by the
Issuer and approved by the Trustee (such approval not to be unreasonably
withheld or delayed) or, if the Issuer shall not have appointed such an adviser
within 21 days after becoming aware of the occurrence of a Restructuring Event
and the Trustee is indemnified to its satisfaction against the costs of such
adviser, appointed by the Trustee following consultation with the Issuer;
"Issuer Licences" means the Generation Licence, the Transmission Licence and the
PBS Licence and, in any such case, and from time to time any other licence or
licences relating to the generation, transmission, distribution and/or supply of
electricity granted to the Issuer and/or any Relevant Subsidiary as contemplated
pursuant to paragraph (A) of "Restructuring Event" below and "Issuer Licence"
shall be construed accordingly;
"Manweb" means Manweb plc;
"Manweb PES Licence" means the public electricity supply licence granted by the
Secretary of State for Energy to Manweb under the Electricity Act (but for the
avoidance of doubt excluding for this purpose any second tier licence) as in
effect on the date of the relevant Pricing Supplement, and, from time to time,
any other licence or licences relating to the distribution and/or supply of
electricity granted to the Issuer and/or any Relevant Subsidiary as contemplated
pursuant to paragraph (A) of "Restructuring Event" below;
A "Negative Rating Event" shall be deemed to have occurred if (A) the Issuer
does not, either prior to or not later than 14 days after the date of a Negative
Certification in respect of the relevant Restructuring Event, seek, and
thereupon use all reasonable endeavours to obtain, a rating of the Notes or any
other unsecured and unsubordinated debt of the Issuer or a Relevant Subsidiary
(or of any Subsidiary of the Issuer which is guaranteed on an unsecured and
unsubordinated basis by the Issuer or a Relevant Subsidiary) having an initial
maturity of five years or more from a Rating Agency or (B) if it does so seek
and use such endeavours, it is unable, as a result of such Restructuring Event,
to obtain such a rating of at least investment grade (BBB-/Baa3, or their
respective equivalents for the time being);
"PES Licence" means the public electricity supply licence granted by the
Secretary of State for Scotland to the Issuer under the Electricity Act (but for
the avoidance of doubt excluding for this purpose any second tier licence) as
comprised in the Composite Licence as in effect on the date of the relevant
Pricing Supplement;
"Pooling and Settlement Agreement" means the agreement dated 30th March 1990 (as
amended and restated as at 22nd April 1994) made by the Issuer and Manweb with
The National Grid Company plc and others setting out the rules and procedures
for the operation of an electricity trading pool and of a settlement system and,
while the same has effect, the Initial Settlement Agreement also dated 30th
March 1990 and made between the same parties, in each case as in force on the
date of the relevant Pricing Supplement;
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"Principal Subsidiary" at any time shall mean:
(A) any Relevant Subsidiary; or
(B) any Subsidiary of the Issuer (not being an Excluded Subsidiary or any other
Subsidiary of the Issuer 90% in principal amount of whose indebtedness for
borrowed money is Project Finance Indebtedness):
(i) whose (a) profits on ordinary activities before tax or (b) net assets
represent 20% or more of the consolidated profits on ordinary activities before
tax of the Group or consolidated net assets of the Group respectively, in each
case as calculated by reference to the then latest audited financial statements
of such Subsidiary and the then latest audited consolidated financial statements
of the Group; or
(ii) to which is transferred all or substantially all of the business,
undertaking and assets of a Subsidiary of the Issuer which immediately prior to
such transfer is a Principal Subsidiary, whereupon the transferor Subsidiary
shall immediately cease to be a Principal Subsidiary and the transferee
Subsidiary shall cease to be a Principal Subsidiary under the provisions of this
sub-paragraph (ii) (but without prejudice to the provisions of sub-paragraph (i)
above), upon publication of its next audited financial statements,
all as more fully defined in the Trust Deed.
A Report by the Auditors that, in their opinion, a Subsidiary of the Issuer is
or is not or was or was not at any particular time or throughout any specified
period a Principal Subsidiary shall, in the absence of manifest error, be
conclusive and binding on the Issuer, the Trustee and the Noteholders;
"Project Finance Indebtedness" means any present or future indebtedness incurred
to finance the ownership, acquisition, development and/or operation of an asset,
whether or not an asset of a member of the Group:
(i) which is incurred by an Excluded Subsidiary; or
(ii) in respect of which the person or persons to whom any such indebtedness is
or may be owed by the relevant borrower (whether or not a member of the Group)
has or have no recourse whatsoever to any member of the Group (other than an
Excluded Subsidiary) for the repayment thereof other than:
(A) recourse for amounts limited to the cash flow or net cash flow (other than
historic cash flow or historic net cash flow) from such asset; and/or
(B) recourse for the purpose only of enabling amounts to be claimed in respect
of such indebtedness in an enforcement of any encumbrance given by such borrower
over such asset or the income, cash flow or other proceeds, deriving therefrom
(or given by any shareholder or the like in the borrower over its shares or the
like in the capital of the borrower) to secure such indebtedness, provided that
(aa) the extent of such recourse is limited solely to the amount of any
recoveries made on any such enforcement, and (bb) such person or persons is/are
not entitled, by virtue of any right or claim arising out of or in connection
with such indebtedness, to commence proceedings for the winding up or
dissolution of any member of the Group (other than an Excluded Subsidiary) or to
appoint or procure the appointment of any receiver, trustee or similar person or
officer in respect of any member of the Group (other than an Excluded
Subsidiary) or any of its assets (save for the assets the subject of such
encumbrance); and/or
(C) recourse under any form of assurance, undertaking or support, which recourse
is limited to a claim for damages (other than liquidated damages and damages
required to be calculated in a specified way) for breach of an obligation (not
being a payment obligation or an obligation to procure payment by another or an
indemnity in respect thereof or any obligation to comply or to procure
compliance by another with any financial ratios or other tests of financial
condition) by any member of the Group (other than an Excluded Subsidiary);
A "Put Event" occurs on the date of the last to occur of (aa) a Restructuring
Event, (bb) either a Rating Downgrade or, as the case may be, a Negative Rating
Event and (cc) the relevant Negative Certification;
"Rated Securities" means the Notes, if at any time and for so long as they have
a rating from a Rating Agency, and otherwise any other unsecured and
unsubordinated debt of the Issuer or a Relevant Subsidiary (or of any Subsidiary
of the Issuer which is guaranteed on an unsecured and unsubordinated basis by
the Issuer or a Relevant Subsidiary) having an initial maturity of five years or
more which is rated by a Rating Agency;
"Rating Agency" means Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies, Inc. or any of its Subsidiaries and their successors or
Moody's Investors Service, Inc. or any of its Subsidiaries and their successors
or any rating agency substituted for either of them (or any permitted substitute
of them) by the Issuer from time to time with the prior written approval of the
Trustee (such approval not to be unreasonably withheld or delayed);
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A "Rating Downgrade" shall be deemed to have occurred in respect of a
Restructuring Event if the then current rating assigned to the Rated Securities
by any Rating Agency (whether provided by a Rating Agency at the invitation of
the Issuer or by its own volition) is withdrawn or reduced from an investment
grade rating (BBB-/Baa3, or their respective equivalents for the time being, or
better) to a non-investment grade rating (BB+/Ba1, or their respective
equivalents for the time being, or worse) or, if the Rating Agency shall then
have already rated the Rated Securities below investment grade (as described
above), the rating is lowered one full rating category (from BB+/Ba1 to BB/Ba2
or such similar lowering);
"Relevant Indebtedness" means any present or future indebtedness (whether being
principal, premium, interest or other amounts) in the form of or represented by
notes, bonds, debentures, debenture stock, loan stock or other securities,
whether issued for cash or in whole or in part for a consideration other than
cash, and which, with the agreement of the person issuing the same, are quoted,
listed or ordinarily dealt in on any stock exchange or recognised
over-the-counter or other securities market, but shall in any event not include
Project Finance Indebtedness;
"Relevant Group Member" means a member of the Group that holds a Relevant
Licence;
"Relevant Licence" means any Issuer Licence and the Manweb PES Licence;
"Relevant Subsidiary" means a wholly-owned Subsidiary of the Issuer or of
another Relevant Subsidiary which has granted a guarantee in respect of the
Notes as contemplated in paragraph (A) of "Restructuring Event" below;
"Restructuring Event" means the occurrence of any one or more of the following
events:
(A) (aa) the Secretary of State gives the Issuer or Manweb or any Relevant
Subsidiary written notice of revocation of any Relevant Licence (excluding, in
relation to the PES Licence or the Manweb PES Licence any second tier supply
licence and provided that the giving of notice pursuant to paragraph 3 of Part 1
of the Manweb PES Licence or paragraph 3 of Part 1 of the PES Licence in each
case as in effect on the date of the relevant Pricing Supplement, or any other
similar provision in any other Manweb PES Licence or PES Licence, shall not be
deemed to constitute the revocation of the relevant Licence), or
(bb) the Issuer or Manweb or any Relevant Subsidiary agrees in writing with the
Secretary of State to any revocation or surrender of any Relevant Licence; or
(cc) any legislation (whether primary or subordinate) is enacted terminating or
revoking any Relevant Licence,
except in any such case in circumstances where (x) a licence or licences on
substantially not less favourable terms is or are granted to the Issuer or one
or more Relevant Subsidiaries or wholly-owned Subsidiaries (not being an
Excluded Subsidiary) of the Issuer or one or more Relevant Subsidiaries and (y)
in the case of the grant of a licence or licences to wholly-owned Subsidiaries
of the Issuer or one or more Relevant Subsidiaries, such Subsidiary or
Subsidiaries at the time of such grant executes in favour of the Trustee an
unconditional and irrevocable guarantee in respect of the Notes (jointly and
severally where appropriate) in such form as the Trustee may approve (such
approval not to be unreasonably withheld or delayed); or
(B) any modification (other than a modification which is of a formal, minor or
technical nature) is made to the terms and conditions of any Relevant Licence on
or after the date of the relevant Pricing Supplement, unless two directors of
the Issuer have certified in good faith to the Trustee that the modified terms
and conditions are not materially less favourable to the business of the Group
and to the business of the member of the Group holding the Relevant Licence; or
(C) (aa) the Pooling and Settlement Agreement is terminated under Clause 67.4
thereof and not replaced by one or more agreements, commercial arrangements or
open market mechanisms or frameworks, in each case on terms which two directors
of the Issuer certify in good faith to the Trustee to be not materially less
favourable to the business of the Group or to the business of the Relevant Group
Member or Members party to the Pooling and Settlement Agreement; or
(bb) any Relevant Group Member is given notice pursuant to Clause 67.3.2 of the
Pooling and Settlement Agreement requiring it to cease to be a party thereto; or
(cc) any notice declaring an event of default (as defined in the Pooling and
Settlement Agreement) is given to any Relevant Group Member under Clause 66.1.1
or 66.2 thereof and such default remains unremedied or unwaived; or
(dd) any modification (other than a modification which is of a formal, minor or
technical nature) is made to the Pooling and Settlement Agreement on or after
the date of the relevant Pricing Supplement, unless two directors of the Issuer
have certified in good faith to the Trustee that any such modification has not
had
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and will not have a materially adverse effect on the financial rights and
obligations of any Relevant Group Member under the Pooling and Settlement
Agreement or a materially adverse effect on the business of the Group or the
business of any Relevant Group Member party to the Pooling and Settlement
Agreement, provided that any such modification shall, to the extent it grants or
confers powers or discretions on the Director General of Electricity Supply (or
any successor) under or in respect of the Pooling and Settlement Agreement, be
deemed not to have a materially adverse effect as aforesaid, but for the
avoidance of doubt any modification to the Pooling and Settlement Agreement made
by the Director General of Electricity Supply (or any successor) by virtue of or
pursuant to any such powers or discretions and which otherwise would have a
materially adverse effect as provided above shall not by virtue of this
sub-paragraph be deemed not to have such an effect; or
(ee) any Relevant Group Member ceases to be a party to the Pooling and
Settlement Agreement for any other reason (other than pursuant to (bb) and (cc)
above) except where a licence or licences is or are granted to one or more
Subsidiaries as contemplated by sub-paragraph (A) above and at or about the same
time all rights and obligations of the Relevant Group Member pursuant to the
Pooling of Settlement Agreement which are attributable to such licence(s) are
assigned and transferred to such Subsidiary and/or Subsidiaries in such manner
as the Trustee may approve (such approval not to be unreasonably withheld or
delayed) or such Subsidiary or Subsidiaries enters or enter into one or more
agreements, commercial arrangements or open market mechanisms or frameworks in
relation to such licence(s) which two directors of the Issuer certify to be not
materially less favourable to the business of the Group; or
(D) any legislation (whether primary or subordinate) is enacted which removes,
qualifies or amends (other than an amendment which is of a formal, minor or
technical nature) the duties of the Secretary of State and/or the Director
General of Electricity Supply under Section 3 of the Electricity Act as in force
on the date of the relevant Pricing Supplement, unless two directors of the
Issuer have certified in good faith to the Trustee that such removal,
qualification or amendment is unlikely to have a materially adverse effect on
the financial condition of the Group or any Relevant Group Member; or
(E) (aa) the Appointment is terminated; or
(bb) any material rights, benefits or obligations of SWSL as a water undertaker
or sewerage undertaker arising under the Appointment or the Water Industry Act
as in force on the date of the relevant Pricing Supplement or any material terms
of the Appointment are modified (whether or not with the consent of SWSL and
whether pursuant to the Water Industry Act or otherwise) unless two directors of
the Issuer have certified in good faith to the Trustee that such modified
rights, benefits, obligations or terms are not materially less favourable to the
business of the Group and to the business of SWSL; or
(F) any legislation (whether primary or subordinate) is enacted removing,
reducing or qualifying the duties or powers of the Secretary of State for the
Environment (or any successor) and/or the Director General of Water Services (or
any successor) (including without limitation any such legislation removing,
reducing or qualifying such duties or powers under or pursuant to Sections 2, 9
or 24 of the Water Industry Act) in each case as compared to those in force on
the date of the relevant Pricing Supplement, unless two directors of the Issuer
have certified in good faith to the Trustee that such removal, reduction or
qualification is unlikely to have a material adverse effect on the financial
condition of the Group or SWSL;
"Restructuring Period" means:
(A) if at any time a Restructuring Event occurs there are Rated Securities, the
period of 90 days starting from and including the day on which that
Restructuring Event occurs; or
(B) if at the time a Restructuring Event occurs there are no Rated Securities,
the period starting from and including the day on which that Restructuring Event
occurs and ending on the day 90 days following the later of (aa) the date on
which the Issuer shall seek to obtain a rating as contemplated in the definition
of Negative Rating prior to the expiry of the 14 days referred to in that
definition and (bb) the date on which a Negative Certification shall have been
given to the Issuer in respect of that Restructuring Event;
"Secretary of State" means the Secretary of State for Trade and Industry (or any
successor) or, as the case may be, the Secretary of State for Scotland (or any
successor);
"Subsidiary" means a subsidiary within the meaning of Section 736 of the
Companies Act 1985;
"Subsidiary Undertaking" shall have the meaning given to it by Section 258 of
the Companies Act 1985 (but, in relation to the Issuer, shall exclude any
undertaking (as defined in the Companies Act 1985) whose accounts are not
included in the then latest published audited consolidated accounts of the
Issuer, or (in the case of an undertaking which has first become a subsidiary
undertaking of a member of the Group since the date as at which any such audited
accounts were prepared) would not have been so included or consolidated if it
had become so on or before that date);
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"SWSL" means Southern Water Services Limited;
"Transmission Licence" means the electricity transmission licence granted by the
Secretary of State for Scotland to the Issuer under the Electricity Act as
comprised in the Composite Licence as in effect on the date of the relevant
Pricing Supplement; and
"Water Industry Act" means the Water Industry Act 1991 as amended or re-enacted
from time to time and all subordinate legislation made pursuant thereto.
Any reference to an obligation being guaranteed shall include a reference to an
indemnity being given in respect of the obligation.
(g) Purchases
The Issuer and any of its Subsidiaries may to the extent permitted by applicable
law, at any time purchase Notes (provided that all unmatured Receipts and
Coupons and unexchanged Talons relating thereto are attached thereto or
surrendered therewith) in the open market or otherwise at any price.
(h) Cancellation
All Notes purchased by or on behalf of the Issuer or any of its Subsidiaries
shall be surrendered for cancellation, in the case of Bearer Notes, by
surrendering each such Note together with all unmatured Receipts and Coupons and
all unexchanged Talons to the Issuing and Paying Agent and, in the case of
Registered Notes, by surrendering the Certificate representing such Notes to the
Registrar and, in each case, if so surrendered, shall, together with all Notes
redeemed by the Issuer, be cancelled forthwith (together with all unmatured
Receipts and Coupons and unexchanged Talons attached thereto or surrendered
therewith). Any Notes so surrendered for cancellation may not be reissued or
resold.
7. Payments and Talons
(a) Bearer Notes
Payments of principal and interest in respect of Bearer Notes shall, subject as
mentioned below, be made against presentation and surrender of the relevant
Receipts (in the case of payments of Instalment Amounts other than on the due
date for redemption and provided that the Receipt is presented for payment
together with its relative Note), Notes (in the case of all other payments of
principal and, in the case of interest, as specified in Condition 7(f)(vi)) or
Coupons (in the case of interest, save as specified in Condition 7(f)(ii)), as
the case may be, at the specified office of any Paying Agent outside the United
States by a cheque payable in the currency in which such payment is due drawn
on, or, at the option of the holder, by transfer to an account denominated in
that currency with, a bank in the principal financial centre for that currency;
provided that (i) in the case of ECU, the transfer may be to, or the cheque
drawn on, an ECU account with a bank in London, Luxembourg, Paris, Frankfurt or
Brussels, (ii) in the case of Japanese yen, the transfer shall be to a
non-resident Japanese yen account with an authorised foreign exchange bank (in
the case of payment to a non-resident of Japan) and (iii) from the start of the
third stage of European monetary union, all payments in respect of the Notes
which are expressed to be payable in ECU will be payable in Euro at the rate
then established in accordance with the Treaty establishing the European
Communities, as amended by the Treaty on European Union. Condition 7(i) will not
result in payment in a component currency in such circumstances.
(b) Registered Notes
(i) Payments of principal (which for the purposes of this Condition 7(b) shall
include final Instalment Amounts but not other Instalment Amounts) in respect of
Registered Notes shall be made against presentation and surrender of the
relevant Certificates at the specified office of any of the Transfer Agents or
of the Registrar and in the manner provided in paragraph (ii) below.
(ii) Interest (which for the purpose of this Condition 7(b) shall include all
Instalment Amounts other than final Instalment Amounts) on Registered Notes
shall be paid to the person shown on the Register at the close of business on
the fifteenth day before the due date for payment thereof (the "Record Date").
Payments of interest on each Registered Note shall be made in the currency in
which such payments are due by cheque drawn on a bank in the principal financial
centre of the country of the currency concerned and mailed to the holder (or to
the first named of joint holders) of such Note at its address appearing in the
Register. Upon application by the holder to the specified office of the
Registrar or any Transfer Agent before the Record Date and subject as provided
in paragraph (a) above, such payment of interest may be made by transfer to an
account in the relevant currency maintained by the payee with a bank in the
principal financial centre of the country of that currency.
(c) Payments in the United States
Notwithstanding the foregoing, if any Bearer Notes are denominated in U.S.
dollars, payments in respect thereof may be made at the specified office of any
Paying Agent in New York City in the same manner as aforesaid if (i) the Issuer
shall have appointed Paying Agents with specified offices outside the United
States
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with the reasonable expectation that such Paying Agents would be able to make
payment of the amounts on the Notes in the manner provided above when due, (ii)
payment in full of such amounts at all such offices is illegal or effectively
precluded by exchange controls or other similar restrictions on payment or
receipt of such amounts and (iii) such payment is then permitted by United
States law, without involving, in the opinion of the Issuer, any adverse tax
consequence to the Issuer.
(4) Payments Subject to Fiscal Laws
All payments are subject in all cases to any applicable fiscal or other laws,
regulations and directives, but without prejudice to the provisions of Condition
8. No commission or expenses shall be charged to the Noteholders or
Couponholders in respect of such payments.
(e) Appointment of Agents
The Issuing and Paying Agent, the Paying Agents, the Registrar, the Transfer
Agents and the Calculation Agent initially appointed by the Issuer and their
respective specified offices are listed below. The Issuing and Paying Agent, the
Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent act
solely as agents of the Issuer and do not assume any obligation or relationship
of agency or trust for or with any Noteholder or Couponholder. The Issuer
reserves the right at any time with the approval of the Trustee to vary or
terminate the appointment of the Issuing and Paying Agent, any other Paying
Agent, the Registrar, any Transfer Agent or the Calculation Agent and to appoint
additional or other Paying Agents or Transfer Agents, provided that the Issuer
shall at all times maintain (i) an Issuing and Paying Agent, (ii) a Registrar in
relation to Registered Notes, (iii) a Transfer Agent in relation to Registered
Notes, (iv) one or more Calculation Agent(s) where the Conditions so require,
(v) Paying Agents having specified offices in at least two major European cities
(including London) so long as the Notes are listed on the London Stock Exchange
and (vi) such other agents as may be required by any other stock exchange on
which the Notes may be listed, in each case, as approved by the Trustee.
In addition, the Issuer shall forthwith appoint a Paying Agent in New York City
in respect of any Bearer Notes denominated in U.S. dollars in the circumstances
described in paragraph (c) above.
Notice of any such change or any change of any specified office shall promptly
be given to the Noteholders.
(f) Unmatured Coupons and Receipts and Unexchanged Talons
(i) Unless the Pricing Supplement provides that the relative Coupons are to
become void upon the due date for redemption of those Notes, Bearer Notes should
be surrendered for payment together with all unmatured Coupons (if any)
appertaining thereto, failing which an amount equal to the face value of each
missing unmatured Coupon (or, in the case of payment not being made in full,
that proportion of the amount of such missing unmatured Coupon that the sum of
principal so paid bears to the total principal due) shall be deducted from the
Redemption Amount due for payment. Any amount so deducted shall be paid in the
manner mentioned above against surrender of such missing Coupon within a period
of 10 years from the Relevant Date for the payment of such principal (whether or
not such Coupon has become void pursuant to Condition 9).
(ii) If the Pricing Supplement so provides, upon the due date for redemption of
any Bearer Note, unmatured Coupons relating to such Note (whether or not
attached) shall become void and no payment shall be made in respect of them.
(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon
relating to such Note (whether or not attached) shall become void and no Coupon
shall be delivered in respect of such Talon.
(iv) Upon the due date for redemption of any Bearer Note that is redeemable in
instalments, all Receipts relating to such Note having an Instalment Date
falling on or after such due date (whether or not attached) shall become void
and no payment shall be made in respect of them.
(v) Where any Bearer Note that provides that the relative unmatured Coupons are
to become void upon the due date for redemption of those Notes is presented for
redemption without all unmatured Coupons and any unexchanged Talon relating to
it, and where any Bearer Note is presented for redemption without all unmatured
Coupons and any unexchanged Talon relating to it, redemption shall be made only
against the provision of such indemnity as the Issuer may require.
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(vi) If the due date for redemption of any Note is not a due date for payment of
interest, interest accrued from the preceding due date for payment of interest
or the Interest Commencement Date, as the case may be, shall only be payable
against presentation (and surrender if appropriate) of the relevant Bearer Note
or Certificate representing it, as the case may be. Interest accrued on a Note
that only bears interest after its Maturity Date shall be payable on redemption
of such Note against presentation of the relevant Note or Certificate
representing it, as the case may be.
(g) Talons
On or after the Interest Payment Date for the final Coupon forming part of a
Coupon sheet issued in respect of any Bearer Note, the Talon forming part of
such Coupon sheet may be surrendered at the specified office of the Issuing and
Paying Agent in exchange for a further Coupon sheet (and if necessary another
Talon for a further Coupon sheet) (but excluding any Coupons that may have
become void pursuant to Condition 9).
(h) Non-Business Days
If any date for payment in respect of any Note, Receipt or Coupon is not a
business day, the holder shall not be entitled to payment until the next
following business day nor to any interest or other sum in respect of such
postponed payment. In this paragraph, "business day" means a day (other than a
Saturday or a Sunday) on which banks and foreign exchange markets are open for
business in the relevant place of presentation, in such jurisdictions as shall
be specified as "Business Day Jurisdictions" hereon and:
(i) (in the case of a payment in a currency other than ECU) where payment is to
be made by transfer to an account maintained with a bank in the relevant
currency, on which foreign exchange transactions may be carried on in the
relevant currency in the principal financial centre of the country of such
currency or
(ii) (in the case of a payment in ECU) on which banks are open for business and
carrying out transactions in ECU in the jurisdiction in which the ECU account
specified by the payee is located.
(i) ECU Notes
(i) Definition of the ECU
The ECU for the purpose of any Notes denominated or payable in ECU ("ECU") is
the same as the ECU that is from time to time used as the unit of account of the
EC. Changes to the ECU may be made by the EC, in which event the ECU shall
change accordingly.
(ii) Choice of Component Currencies for Future Payments
With respect to each due date for the payment of principal, interest or other
amounts in respect of Notes denominated in ECU on which the ECU is neither used
as the unit of account of the EC nor used as the currency of the European Union,
the Trustee shall, without liability on its part and without having regard to
the interests of individual Noteholders, choose a component currency of the ECU
(the "chosen currency") in which all payments due on that due date with respect
to such Notes shall be made. Notice of the chosen currency selected by the
Trustee shall, where practicable, be given to Noteholders. The amount of each
payment in the chosen currency shall be computed on the basis of the equivalent
of the ECU in that currency, determined as set out in this Condition 7(i) as of
the fourth Business Day in Luxembourg prior to the date on which such payment is
due.
(iii) Choice of Component Currency for Payments Already Due
On the first Business Day in Luxembourg on which the ECU is neither used as the
unit of account of the EC nor used as the currency of the European Union, the
Trustee shall, without liability on its part and without having regard to the
interests of individual Noteholders, choose a component currency of the ECU (the
"chosen currency") in which all payments of principal, interest or other amounts
in respect of Notes denominated in ECU having a due date prior thereto but not
yet presented for payment are to be made. The amount of each payment in the
chosen currency shall be computed on the basis of the equivalent of the ECU in
that currency, determined as set out in this Condition 7(i), as of such first
Business Day.
(iv) Determination of Equivalent in Component Currency
The equivalent of the ECU in the relevant chosen currency as of any date (the
"Day of Valuation") shall be determined on the following basis by a leading bank
(the "Computation Agent") having its head office in Europe appointed by the
Issuer and approved by the Trustee and notice of whose appointment is given to
Noteholders. The component currencies of the ECU for this purpose (the
"Components") shall be the currency amounts that were components of the ECU when
the ECU was most recently used as the unit of account of the EC. The equivalent
of the ECU in the chosen currency shall be calculated by, first,
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aggregating the U.S. dollar equivalents of the Components, and then, using the
rate used for determining the U.S. dollar equivalent of the Component in the
chosen currency as set out below, calculating the equivalent in the chosen
currency of such aggregate amount in U.S. dollars.
(v) U.S. dollar Equivalent of Component Currencies
The U.S. dollar equivalent of each of the Components shall be determined by the
Computation Agent on the basis of the middle spot delivery quotations prevailing
at 2.30 p.m. (Luxembourg time) on the Day of Valuation, as obtained by the
Computation Agent from one or more leading banks, as selected by the Trustee or
the Computation Agent, in the country of issue of the Component in question.
(vi) No Direct Quotation for Component Currency
If no direct quotations are available for a Component as of a Day of Valuation
from any of the banks selected by the Trustee or the Computation Agent for this
purpose because foreign exchange markets are closed in the country of issue of
that currency or for any other reason, the most recent direct quotations for
that currency obtained by the Computation Agent shall be used in computing the
equivalents of the ECU on such Day of Valuation, provided, however, that such
most recent quotations may be used only if they were prevailing in the country
of issue not more than two Business Days for such currency before such Day of
Valuation. Beyond such period of two Business Days for such currency, the
Computation Agent shall determine the U.S. dollar equivalent of such Component
on the basis of cross rates derived from the middle spot delivery quotations for
such component currency and for the U.S. dollar prevailing at 2.30 p.m.
(Luxembourg time) on such Day of Valuation, as obtained by the Computation Agent
from one or more leading banks, as selected by the Computation Agent, in a
country other than the country of issue of such Component. Within such period of
two Business Days for such currency, the Computation Agent shall determine the
U.S. dollar equivalent of such Component on the basis of such cross rates if the
Computation Agent judges that the equivalent so calculated is more
representative than the U.S. dollar equivalent calculated on the basis of such
most recent direct quotations. Unless otherwise specified by the Computation
Agent, if there is more than one market for dealing in any Component by reason
of foreign exchange regulations or for any other reason, the market to be
referred to in respect of such currency shall be that upon which a non-resident
issuer of securities denominated in such currency would purchase such currency
in order to make payments in respect of such securities.
(vii) Determinations made by the Computation Agent or the Trustee
All determinations made by the Computation Agent or the Trustee shall be at
their sole discretion and shall, in the absence of manifest error, be conclusive
for all purposes and binding on the Issuer and all Noteholders and
Couponholders.
8. Taxation
All payments of principal and interest in respect of the Notes, the Receipts and
the Coupons (other than payments of interest in respect of Registered Notes
which will be made subject to the deduction of any United Kingdom income tax
required to be withheld or deducted at source) shall be made free and clear of,
and without withholding or deduction for, any taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected, withheld or
assessed by or within the United Kingdom or any authority therein or thereof
having power to tax, unless such withholding or deduction is required by law. In
that event, the Issuer shall pay such additional amounts as shall result in
receipt by the Noteholders and Couponholders of such amounts as would have been
received by them had no such withholding or deduction been required, except that
no such additional amounts shall be payable with respect to any Note, Receipt or
Coupon:
(a) to, or to a third party on behalf of, a holder who is liable to such taxes,
duties, assessments or governmental charges in respect of such Note, Receipt or
Coupon by reason of his having some connection with the United Kingdom other
than the mere holding of the Note, Receipt or Coupon; or
(b) presented (or in respect of which the Certificate representing it is
presented) for payment more than 30 days after the Relevant Date except to the
extent that the holder of it would have been entitled to such additional amounts
on presenting it for payment on the thirtieth day; or
(c) presented for payment in the United Kingdom.*
As used in these Conditions, "Relevant Date" in respect of any Note, Receipt or
Coupon means the date on which payment in respect of it first becomes due or (if
any amount of the money payable is improperly withheld or refused) the date on
which payment in full of the amount outstanding is made or (if earlier) the date
seven days after that on which notice is duly given to the Noteholders that,
upon further presentation of the Note (or relative Certificate), Receipt or
Coupon being made in accordance with the Conditions, such payment will be made,
provided that payment is in fact made upon such presentation. References in
these
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Conditions to (i) "principal" shall be deemed to include any premium payable in
respect of the Notes, all Instalment Amounts, Redemption Amounts, Amortised Face
Amounts and all other amounts in the nature of principal payable pursuant to
Condition 6 or any amendment or supplement to it, (ii) "interest" shall be
deemed to include all Interest Amounts and all other amounts payable pursuant to
Condition 5 or any amendment or supplement to it and (iii) "principal" and/or
"interest" shall be deemed to include any additional amounts that may be payable
under this Condition or any undertaking given in addition to or in substitution
for it under the Trust Deed.
9. Prescription
Claims against the Issuer for payment in respect of the Notes, Receipts and
Coupons (which, for this purpose, shall not include Talons) shall be prescribed
and become void unless made within 10 years (in the case of principal) or five
years (in the case of interest) from the appropriate Relevant Date in respect of
them.
10. Events of Default
The Trustee at its discretion may, and if so requested in writing by the holders
of at least one-quarter in principal amount of the Notes then outstanding or if
so directed by an Extraordinary Resolution of the Noteholders shall, subject to
being indemnified to its satisfaction, (but, in the case of the happening of any
of the events mentioned in sub-paragraphs (b), (c), (e), (f), (g) and (h) below,
only if the Trustee shall have certified in writing to the Issuer that such
event is, in its opinion, materially prejudicial to the interests of the
Noteholders), give notice to the Issuer that the Notes are, and they shall
accordingly thereby forthwith become, immediately due and repayable at their
principal amount together with accrued interest (as provided in the Trust Deed)
if any of the following events (each an "Event of Default") shall have occurred
(unless such Event of Default has been remedied to the satisfaction of the
Trustee):
(a) if default is made for a period of 14 days or more in the payment of any
principal or the purchase price due in respect of any Notes pursuant to
Condition 6 or 21 days or more in the payment of any interest due in respect of
the Notes or any of them; or
(b) if the Issuer fails to perform or observe any of its other obligations under
the Notes or the Trust Deed and (except where the Trustee shall have certified
to the Issuer in writing that it considers such failure to be incapable of
remedy in which case no such notice or continuation as is hereinafter mentioned
will be required) such failure continues for the period of 60 days (or such
longer period as the Trustee may in its absolute discretion permit) next
following the service by the Trustee of notice on the Issuer requiring the same
to be remedied; or
(c) if (i) any other indebtedness for borrowed money of the Issuer or any
Principal Subsidiary becomes due and repayable prior to its stated maturity by
reason of an event of default or (ii) any such indebtedness for borrowed money
is not paid when due or, as the case may be, within any applicable grace period
(as originally provided) or (iii) the Issuer or any Principal Subsidiary fails
to pay when due (or, as the case may be, within any originally applicable grace
period) any amount payable by it under any present or future guarantee for, or
indemnity in respect of, any indebtedness for borrowed money of any person or
(iv) any security given by the Issuer or any Principal Subsidiary for any
indebtedness for borrowed money of any person or for any guarantee or indemnity
of indebtedness for borrowed money of any person becomes enforceable by reason
of default in relation thereto and steps are taken to enforce such security,
save in any such case where there is a bona fide dispute as to whether the
relevant indebtedness for borrowed money or any such guarantee or indemnity as
aforesaid shall be due and payable, provided that the aggregate amount of the
relevant indebtedness for borrowed money in respect of which any one or more of
the events mentioned above in this sub-paragraph (c) has or have occurred equals
or exceeds whichever is the greater of (pound)20,000,000 or its equivalent in
other currencies (as determined by the Trustee) or 2% of Capital and Reserves,
and for the purposes of this sub-paragraph (c), "indebtedness for borrowed
money" shall exclude Project Finance Indebtedness; or
(d) if any order shall be made by any competent court or any resolution shall be
passed for the winding up or dissolution of the Issuer, save for the purpose of
amalgamation, merger, consolidation, reorganisation, reconstruction or other
similar arrangement on terms previously approved in writing by the Trustee (such
approval not to be unreasonably withheld or delayed having regard to the
interests of the Noteholders) or by an Extraordinary Resolution of the
Noteholders; or
(e) if (i) any order shall be made by any competent court or any resolution
shall be passed for the winding up or dissolution of a Principal Subsidiary,
save for the purposes of amalgamation, merger, consolidation,
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reorganisation, reconstruction or other similar arrangement (A) not involving or
arising out of the insolvency of such Principal Subsidiary and under which all
the surplus assets of such Principal Subsidiary are transferred to the Issuer or
any of its other Subsidiaries (other than an Excluded Subsidiary) or (B) the
terms of which have previously been approved in writing by the Trustee (such
approval not to be unreasonably withheld or delayed having regard to the
interests of Noteholders) or by an Extraordinary Resolution of the Noteholders
or (ii) a petition is presented under Section 24 of the Water Industry Act (and
is not dismissed within 60 days) or a special administration order is made under
Section 24 of the Water Industry Act in respect of SWSL; or
(f) if the Issuer or any Principal Subsidiary shall cease to carry on the whole
or substantially the whole of its business, save in each case for the purposes
of amalgamation, merger, consolidation, reorganisation, reconstruction, or other
similar arrangement (i) not involving or arising out of the insolvency of the
Issuer or such Principal Subsidiary and under which all or substantially all of
its assets are transferred to another member or members of the Group (other than
an Excluded Subsidiary) or to a transferee or transferees which is or are, or
immediately upon such transfer become(s), a Principal Subsidiary or Principal
Subsidiaries, or (ii) under which all or substantially all of its assets are
transferred to a third party or parties (whether associates or not) for full
consideration by the Issuer or a Principal Subsidiary on an arm's length basis
or (iii) the terms of which have previously been approved in writing by the
Trustee or by an Extraordinary Resolution of the Bondholders, provided that if
neither the Issuer nor any Relevant Subsidiary holds an Electricity Licence, the
Issuer shall be deemed to have ceased to carry on the whole or substantially the
whole of its business (and neither of exceptions (i) and (ii) shall apply); or
(g) if the Issuer or any Principal Subsidiary shall suspend or announce its
intention to suspend payment of its debts generally or shall be declared or
adjudicated by a competent court to be unable, or shall admit in writing its
inability, to pay its debts generally (within the meaning of Section 123(1) or
(2) of the Insolvency Act 1986) as they fall due, or shall be adjudicated or
found insolvent by a competent court or shall enter into any composition or
other similar arrangement with its creditors generally under Section 1 of the
Insolvency Act 1986; or
(h) if a receiver, administrative receiver, administrator or other similar
official shall be appointed in relation to the Issuer or any Principal
Subsidiary or in relation to the whole or a substantial part of the undertaking
or assets of any of them or a distress, execution or other process shall be
levied or enforced upon or sued out against, or any encumbrancer shall take
possession of, the whole or a substantial part of the assets of any of them and
in any of the foregoing cases it or he shall not be paid out or discharged
within 90 days (or such longer period as the Trustee may in its absolute
discretion permit).
For the purposes of sub-paragraph (g) above, Section 123(1)(a) of the Insolvency
Act 1986 shall have effect as if for "(pound)750" there was substituted
"(pound)250,000". Neither the Issuer nor any Principal Subsidiary shall be
deemed to be unable to pay its debts for the purposes of sub-paragraph (g) above
if any such demand as is mentioned in Section 123(1)(a) of the Insolvency Act
1986 is being contested in good faith by the Issuer or the relevant Principal
Subsidiary with recourse to all appropriate measures and procedures or if any
such demand is satisfied before the expiration of such period as may be stated
in any notice given by the Trustee under this Condition.
11. Meetings of Noteholders, Modification, Waiver and Substitution
(a) Meetings of Noteholders
The Trust Deed contains provisions for convening meetings of Noteholders to
consider matters affecting their interests, including the modification of any of
the terms and conditions of the Notes or any provisions of the Trust Deed. Any
such modification may be made if sanctioned by an Extraordinary Resolution. The
quorum for any meeting convened to consider an Extraordinary Resolution will be
one or more persons holding or representing a clear majority in principal amount
of the Notes for the time being outstanding, or at any adjourned meeting, one or
more persons being or representing Noteholders whatever the principal amount of
the Notes held or represented, unless the business of such meeting includes
consideration of proposals, inter alia (i) to postpone the maturity or
redemption of the Notes, any Instalment Date or any date for payment of any
interest or Interest Amount on the Notes, (ii) to reduce or cancel the principal
amount of, or any Instalment Amount of, or any premium payable on redemption of,
the Notes, (iii) to reduce the rate or rates of interest in respect of the Notes
or to vary the method or basis of calculating the rate or rates or amount of
interest or the basis for calculating any Interest Amount in respect of the
Notes, (iv) if a Minimum and/or a Maximum Interest Rate, Instalment Amount or
Redemption Amount is shown hereon, to reduce any such Minimum and/or Maximum,
(v) to vary any method of, or basis for, calculating the Redemption Amount,
including the method of calculating the Amortised Face Amount, (vi) to vary the
currency or currencies of payment or denomination of the Notes, (vii) to take
any steps that as specified hereon may only be taken following approval by an
Extraordinary Resolution to which the special quorum provisions apply, or (viii)
to modify the provisions concerning the quorum required at any meeting of
Noteholders or the majority required to pass the Extraordinary Resolution, in
which case the necessary
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quorum shall be one or more persons holding or representing not less than
two-thirds, or at any adjourned meeting not less than one-third, in principal
amount of the Notes for the time being outstanding. Any Extraordinary Resolution
duly passed shall be binding on Noteholders (whether or not they were present at
the meeting at which such resolution was passed) and on all Couponholders.
These Conditions may be amended, modified or varied in relation to any Series of
Notes by the terms of the relevant Pricing Supplement in relation to such
Series.
(b) Modification of the Trust Deed
The Trustee may agree, without the consent of the Noteholders or Couponholders,
to (i) any modification of any of the provisions of the Trust Deed, the Notes or
the Coupons that is of a formal, minor or technical nature or is made to correct
a manifest error, and (ii) any other modification (except as mentioned in the
Trust Deed), and any waiver or authorisation of any breach or proposed breach,
of any of the provisions of the Trust Deed that is in the opinion of the Trustee
not materially prejudicial to the interests of the Noteholders. Any such
modification, authorisation or waiver shall be binding on the Noteholders and
the Couponholders and, if the Trustee so requires, such modification shall be
notified to the Noteholders as soon as practicable.
(c) Substitution
The Trust Deed contains provisions permitting the Trustee to agree, subject to
such amendment of the Trust Deed and such other conditions as the Trustee may
require, but without the consent of the Noteholders or the Couponholders, to the
substitution of any other company in place of the Issuer, or of any previous
substituted company, as principal debtor under the Trust Deed and the Notes. In
the case of such a substitution the Trustee may agree, without the consent of
the Noteholders or the Couponholders, to a change of the law governing the
Notes, the Receipts, the Coupons, the Talons and/or the Trust Deed provided that
such change would not in the opinion of the Trustee be materially prejudicial to
the interests of the Noteholders.
(d) Entitlement of the Trustee
In connection with the exercise of its functions (including but not limited to
those referred to in this Condition) the Trustee shall have regard to the
interests of the Noteholders as a class and shall not have regard to the
consequences of such exercise for individual Noteholders or Couponholders and
the Trustee shall not be entitled to require, nor shall any Noteholder or
Couponholder be entitled to claim, from the Issuer any indemnification or
payment in respect of any tax consequence of any such exercise upon individual
Noteholders or Couponholders.
12. Replacement of Notes, Certificates, Receipts, Coupons and Talons
If a Note, Certificate, Receipt, Coupon or Talon is lost, stolen, mutilated,
defaced or destroyed, it may be replaced, subject to applicable laws,
regulations and stock exchange regulations, at the specified office of the
Issuing and Paying Agent (in the case of Bearer Notes, Receipts, Coupons or
Talons) and of the Registrar (in the case of Certificates) or such other Paying
Agent or Transfer Agent, as the case may be, as may from time to time be
designated by the Issuer for the purpose and notice of whose designation is
given to Noteholders, in each case on payment by the claimant of the fees and
costs incurred in connection therewith and on such terms as to evidence,
security and indemnity (which may provide, inter alia, that if the allegedly
lost, stolen or destroyed Note, Certificate, Receipt, Coupon or Talon is
subsequently presented for payment or, as the case may be, for exchange for
further Coupons, there shall be paid to the Issuer on demand the amount payable
by the Issuer in respect of such Notes, Certificates, Receipts, Coupons or
further Coupons) and otherwise as the Issuer may reasonably require. Mutilated
or defaced Notes, Certificates, Receipts, Coupons or Talons must be surrendered
before replacements will be issued.
13. Further Issues
The Issuer may from time to time without the consent of the Noteholders or
Couponholders create and issue further securities either having the same terms
and conditions as the Notes in all respects (or in all respects except for the
first payment of interest on them) and so that such further issue shall be
consolidated and form a single series with the outstanding securities of any
series (including the Notes) or upon such terms as the Issuer may determine at
the time of their issue. References in these Conditions to the Notes include
(unless the context requires otherwise) any other securities issued pursuant to
this Condition and forming a single series with the Notes. Any further
securities forming a single series with the outstanding securities of any series
(including the Notes) constituted by the Trust Deed or any deed supplemental to
it shall, and any other securities may (with the consent of the Trustee), be
constituted by the Trust Deed. The Trust Deed contains provisions for convening
a single meeting of the Noteholders and the holders of securities of other
series where the Trustee so decides.
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<PAGE>
14. Enforcement
At any time after the Notes become due and payable, the Trustee may, as its
discretion and without further notice, institute such proceedings against the
Issuer as it may think fit to enforce the terms of the Trust Deed, but it need
not take any such proceedings unless (a) it shall have been so directed by an
Extraordinary Resolution or so requested in writing by holders of at least
one-fifth in principal amount of the Notes outstanding, and (b) it shall have
been indemnified to its satisfaction. No Noteholder, Receiptholder or
Couponholder may proceed directly against the Issuer unless the Trustee, having
become bound so to proceed fails to do so within a reasonable time and such
failure is continuing.
15. Indemnification of the Trustee
The Trust Deed contains provisions for the indemnification of the Trustee and
for its relief from responsibility. The Trustee is entitled to enter into
business transactions with the Issuer and any entity related to the Issuer
without accounting for any profit.
16. Notices
Notices to the holders of Registered Notes shall be mailed to them at their
respective addresses in the Register and deemed to have been given on the fourth
weekday (being a day other than a Saturday or a Sunday) after the date of
mailing. Notices to the holders of Bearer Notes shall be valid if published in a
daily newspaper of general circulation in London (which is expected to be the
Financial Times). The Issuer shall also ensure that notices are duly published
in a manner which complies with the rules and regulations of any other stock
exchange on which the Notes are, for the time being, listed. Any such notice
shall be deemed to have been given on the date of such publication or, if
published more than once or on different dates, on the first date on which
publication is made, as provided above.
Couponholders shall be deemed for all purposes to have notice of the contents of
any notice given to the holders of Bearer Notes in accordance with this
Condition.
17. Governing Law and Jurisdiction
(a) Governing Law
The Trust Deed, the Notes, the Receipts, the Coupons and the Talons are governed
by, and shall be construed in accordance with, English law.
(b) Jurisdiction
The courts of England are to have jurisdiction to settle any disputes that may
ate out of or in connection with any Notes, Receipts, Coupons or Talons and
accordingly any legal action or proceedings arising out of or in connection with
any Notes, Receipts, Coupons or Talons ("Proceedings") may be brought in such
courts. The Issuer has in the Trust Deed irrevocably submitted to the
jurisdiction of such courts.
(c) Service of Process
The Issuer, in accordance with the Trust Deed, will appoint its London office,
whose address is at 54 Queen Anne Street, London W1M 9LA to act as its agent in
England to receive, for it and on its behalf, service of process in any
Proceedings in England.
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SCHEDULE 2
Part D
Form of Coupon
On the front:
SCOTTISH POWER plc
DEBT ISSUANCE PROGRAMME
Series No. [*]
[Title of issue]
Coupon for [[set out amount due, if known]/the amount] due on [the Interest
Payment Date falling in]* [*], [*].
[Coupon relating to Note in the principal amount of [*]]**
This Coupon is payable to bearer (subject to the Conditions endorsed on the Note
to which this Coupon relates, which shall be binding upon the holder of this
Coupon whether or not it is for the time being attached to such Note) at the
specified offices of the Issuing and Paying Agent and the Paying Agents set out
on the reverse hereof (or any other Issuing and Paying Agent or further or other
Paying Agents or specified offices duly appointed or nominated and notified to
the Noteholders).
[If the Note to which this Coupon relates shall have become due and payable
before the maturity date of this Coupon, this Coupon shall become void and no
payment shall be made in respect of it.]***
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
Scottish Power plc
By:
[Cp. No.] [Denomination] [ISIN] [Series] [Certif. No.]
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On the back:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
60 Victoria Embankment
London
EC4Y 0JR
[*]
PAYING AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE
Avenue des Arts 35
B-1040 Brussels
[*Only necessary where Interest Payment Dates are subject to adjustment in
accordance with a Business Day Convention otherwise the particular Interest
Payment Date should be specified.]
[**Only required for Coupons relating to Floating Rate or Variable Coupon Amount
Notes that are issued in more than one denomination.]
[***Delete if Coupons are not to become void upon early redemption of Note.]
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SCHEDULE 2
Part E
Form of Talon
On the front:
SCOTTISH POWER plc
DEBT ISSUANCE PROGRAMME
Series No. [*]
[Title of issue]
Talon for further Coupons falling due on [the Interest Payment Dates falling
in]* [*][*].
[Talon relating to Note in the principal amount of [*]]**
After all the Coupons relating to the Note to which this Talon relates have
matured, further Coupons (including if appropriate a Talon for further Coupons)
shall be issued at the specified office of the Issuing and Paying Agent set out
on the reverse hereof (or any other Issuing and Paying Agent or specified office
duly appointed or nominated and notified to the Noteholders) upon production and
surrender of this Talon.
If the Note to which this Talon relates shall have become due and payable before
the original due date for exchange of this Talon, this Talon shall become void
and no exchange shall be made in respect of it.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
SCOTTISH POWER plc
By:
[Talon No.] [ISIN] [Series] [Certif. No.]
On the back:
ISSUING AND PAYING AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
60 Victoria Embankment
London
EC4Y 0JR
PAYING AGENT
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, BRUSSELS OFFICE
Avenue des Arts 35
B-1040 Brussels
[* The maturity dates of the relevant Coupons should be set out if known,
otherwise reference should be made to the months and years in which the Interest
Payment Dates fall due.]
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<PAGE>
[** Only required where the Series comprises Notes of more than one
denomination.]
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<PAGE>
SCHEDULE 2
Part F
Form of Receipt
SCOTTISH POWER plc
DEBT ISSUANCE PROGRAMME
Series No. [*]
Receipt for the sum of [*] being the instalment of principal payable in
accordance with the Terms and Conditions endorsed on the Note to which this
Receipt relates (the "Conditions") on [*].
This Receipt is issued subject to and in accordance with the Conditions which
shall be binding upon the holder of this Receipt (whether or not it is for the
time being attached to such Note) and is payable at the specified office of any
of the Paying Agents set out on the reverse of the Note to which this Receipt
relates (and/or any other or further Paying Agents and/or specified offices as
may from time to time be duly appointed and notified to the Noteholders).
This Receipt must be presented for payment together with the Note to which it
relates. If the Note to which this Receipt appertains shall have become due and
payable on or before the maturity date of this Receipt, this Receipt shall
become void and no payment shall be made in respect of it. The Issuer shall have
no obligation in respect of this Receipt if it is presented without the Note to
which it relates.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
SCOTTISH POWER plc
By:
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SCHEDULE 3
Provisions for Meetings of Noteholders
Interpretation
1 In this Schedule:
1.1 references to a meeting are to a meeting of Noteholders of a single series
of Notes and include, unless the context otherwise requires, any
adjournment
1.2 references to "Notes" and "Noteholders" are only to the Notes of the
Series in respect of which a meeting has been, or is to be, called, and to
the holders of these Notes, respectively
1.3 "agent" means a holder of a voting certificate or a proxy for, or
representative of, a Noteholder
1.4 "block voting instruction" means an instruction issued in accordance with
paragraphs 8 to 14
1.5 "Extraordinary Resolution" means a resolution passed at a meeting duly
convened and held in accordance with this Trust Deed by a majority of at
least 75 per cent of the votes cast
1.6 "voting certificate" means a certificate issued in accordance with
paragraphs 5, 6, 7 and 14 and
1.7 references to persons representing a proportion of the Notes are to
Noteholders or agents holding or representing in the aggregate at least
that proportion in principal amount of the Notes for the time being
outstanding.
Powers of meetings
2 A meeting shall, subject to the Conditions and without prejudice to any
powers conferred on other persons by this Trust Deed, have power by
Extraordinary Resolution:
2.1 to sanction any proposal by the Issuer or the Trustee for any
modification, abrogation, variation or compromise of, or arrangement in
respect of, the rights of the Noteholders and/or the Couponholders against
the Issuer, whether or not those rights arise under this Trust Deed
2.2 to sanction the exchange or substitution for the Notes of, or the
conversion of the Notes into, shares, bonds or other obligations or
securities of the Issuer or any other entity
2.3 to assent to any modification of this Trust Deed, the Notes, the Receipts,
the Talons or the Coupons proposed by the Issuer or the Trustee
2.4 to authorise anyone to concur in and do anything necessary to carry out
and give effect to an Extraordinary Resolution
2.5 to give any authority, direction or sanction required to be given by
Extraordinary Resolution
2.6 to appoint any persons (whether Noteholders or not) as a committee or
committees to represent the Noteholders' interests and to confer on them
any powers or discretions which the Noteholders could themselves exercise
by Extraordinary Resolution
2.7 to approve a proposed new Trustee and to remove a Trustee
2.8 to approve the substitution of any entity for the Issuer (or any previous
substitute) as principal debtor or guarantor under this Trust Deed and
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2.9 to discharge or exonerate the Trustee from any liability in respect of any
act or omission for which it may become responsible under this Trust Deed,
the Notes, the Receipts, the Talons or the Coupons
provided that the special quorum provisions in paragraph 19 shall apply to
any Extraordinary Resolution (a "special quorum resolution") for the
purpose of sub-paragraph 2.2 or 2.8, any of the proposals listed in
Condition 11(a) or any amendment to this proviso.
Convening a meeting
3 The Issuer or the Trustee may at any time convene a meeting. If it
receives a written request by Noteholders holding at least 10 per cent in
principal amount of the Notes of any Series for the time being outstanding
and is indemnified to its satisfaction against all costs and expenses, the
Trustee shall convene a meeting of the Noteholders of that Series. Every
meeting shall be held at a time and place approved by the Trustee.
4 At least 21 days' notice (exclusive of the day on which the notice is
given and of the day of the meeting) shall be given to the Noteholders. A
copy of the notice shall be given by the party convening the meeting to
the other parties. The notice shall specify the day, time and place of
meeting and, unless the Trustee otherwise agrees, the nature of the
resolutions to be proposed and shall explain how Noteholders may appoint
proxies or representatives, obtain voting certificates and use block
voting instructions and the details of the time limits applicable.
Arrangements for voting
5 If a holder of a Bearer Note wishes to obtain a voting certificate in
respect of it for a meeting, he must deposit it for that purpose at least
48 hours before the time fixed for the meeting with a Paying Agent or to
the order of a Paying Agent with a bank or other depositary nominated by
the Paying Agent for the purpose. The Paying Agent shall then issue a
voting certificate in respect of it.
6 A voting certificate shall:
6.1 be a document in the English language
6.2 be dated
6.3 specify the meeting concerned and the serial numbers of the Notes
deposited and
6.4 entitle, and state that it entitles, its bearer to attend and vote at that
meeting in respect of those Notes.
7 Once a Paying Agent has issued a voting certificate for a meeting in
respect of a Note, it shall not release the Note until either:
7.1 the meeting has been concluded or
7.2 the voting certificate has been surrendered to the Paying Agent.
8 If a holder of a Bearer Note wishes the votes attributable to it to be
included in a block voting instruction for a meeting, then, at least 48
hours before the time fixed for the meeting, (i) he must deposit the Note
for that purpose with a Paying Agent or to the order of a Paying Agent
with a bank or other depositary nominated by the Paying Agent for the
purpose and (ii) he or a duly authorised person on his behalf must direct
the Paying Agent how those votes are to be cast. The Paying Agent shall
issue a block voting instruction in respect of the votes attributable to
all Notes so deposited.
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9 A block voting instruction shall:
9.1 be a document in the English language
9.2 be dated
9.3 specify the meeting concerned
9.4 list the total number and serial numbers of the Notes deposited,
distinguishing with regard to each resolution between those voting for and
those voting against it
9.5 certify that such list is in accordance with Notes deposited and
directions received as provided in paragraphs 8, 11 and 14 and
9.6 appoint a named person (a "proxy") to vote at that meeting in respect of
those Notes and in accordance with that list.
A proxy need not be a Noteholder.
10 Once a Paying Agent has issued a block voting instruction for a meeting in
respect of the votes attributable to any Notes:
10.1 it shall not release the Notes, except as provided in paragraph 11, until
the meeting has been concluded and
10.2 the directions to which it gives effect may not be revoked or altered
during the 48 hours before the time fixed for the meeting.
11 If the receipt for a Note deposited with a Paying Agent in accordance with
paragraph 8 is surrendered to the Paying Agent at least 48 hours before
the time fixed for the meeting, the Paying Agent shall release the Note
and exclude the votes attributable to it from the block voting
instruction.
12 Each block voting instruction shall be deposited at least 24 hours before
the time fixed for the meeting at such place as the Trustee shall
designate or approve, and in default it shall not be valid unless the
chairman of the meeting decides otherwise before the meeting proceeds to
business. If the Trustee requires, a notarially certified copy of each
block voting instruction shall be produced by the proxy at the meeting but
the Trustee need not investigate or be concerned with the validity of the
proxy's appointment.
13 A vote cast in accordance with a block voting instruction shall be valid
even if it or any of the Noteholders' instructions pursuant to which it
was executed has previously been revoked or amended, unless written
intimation of such revocation or amendment is received from the relevant
Paying Agent by the Issuer or the Trustee at its registered office or by
the chairman of the meeting in each case at least 24 hours before the time
fixed for the meeting.
14 No Note may be deposited with or to the order of a Paying Agent at the
same time for the purposes of both paragraph 5 and paragraph 8 for the
same meeting.
15.1 A holder of a Registered Note may, by an instrument in writing in the form
available from the specified office of a Transfer Agent in the English
language executed by or on behalf of the holder and delivered to the
Transfer Agent at least 24 hours before the time fixed for a meeting,
appoint any person (a "proxy") to act on his behalf in connection with
that meeting. A proxy need not be a Noteholder.
15.2 A corporation which holds a Registered Note may by delivering to a
Transfer Agent at least 24 hours before the time fixed for a meeting a
certified copy of a resolution of its directors or other
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governing body (with, if it is not in English, a certified translation
into English) authorise any person to act as its representative (a
"representative") in connection with that meeting.
Chairman
16 The chairman of a meeting shall be such person as the Trustee may nominate
in writing, but if no such nomination is made or if the person nominated
is not present within 15 minutes after the time fixed for the meeting the
Noteholders or agents present shall choose one of their number to be
chairman, failing which the Issuer may appoint a chairman. The chairman
need not be a Noteholder or agent. The chairman of an adjourned meeting
need not be the same person as the chairman of the original meeting.
Attendance
17 The following may attend and speak at a meeting:
17.1 Noteholders and agents
17.2 the chairman
17.3 the Issuer and the Trustee (through their respective representatives) and
their respective financial and legal advisers
17.4 the Dealers and their advisers.
No-one else may attend or speak.
Quorum and Adjournment
18 No business (except choosing a chairman) shall be transacted at a meeting
unless a quorum is present at the commencement of business. If a quorum is
not present within 15 minutes from the time initially fixed for the
meeting, it shall, if convened on the requisition of Noteholders or if the
Issuer and the Trustee agree, be dissolved. In any other case it shall be
adjourned until such date, not less than 14 nor more than 42 days later,
and time and place as the chairman may decide. If a quorum is not present
within 15 minutes from the time fixed for a meeting so adjourned, the
meeting shall be dissolved.
19 One or more Noteholders or agents present in person shall be a quorum:
19.1 in the cases marked "No minimum proportion" in the table below, whatever
the proportion of the Notes which they represent
19.2 in any other case, only if they represent the proportion of the Notes
shown by the table below.
- --------------------------------------------------------------------------------
COLUMN 1 COLUMN 2 COLUMN 3
================================================================================
Purpose of meeting Any meeting except Meeting previously
one referred to in adjourned through want
column 3 of a quorum
------------------- -------------------
Required proportion Required proportion
- --------------------------------------------------------------------------------
To pass a special 2/3 1/3
quorum resolution
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- --------------------------------------------------------------------------------
COLUMN 1 COLUMN 2 COLUMN 3
================================================================================
To pass any other A clear majority No minimum proportion
Extraordinary
Resolution
- --------------------------------------------------------------------------------
Any other purpose 10 per cent No minimum proportion
- --------------------------------------------------------------------------------
20 The chairman may with the consent of (and shall if directed by) a meeting
adjourn the meeting from time to time and from place to place. Only
business which could have been transacted at the original meeting may be
transacted at a meeting adjourned in accordance with this paragraph or
paragraph 18.
21 At least 10 days' notice of a meeting adjourned through want of a quorum
shall be given in the same manner as for an original meeting and that
notice shall state the quorum required at the adjourned meeting. No notice
need, however, otherwise be given of an adjourned meeting.
Voting
22 Each question submitted to a meeting shall be decided by a show of hands
unless a poll is (before, or on the declaration of the result of, the show
of hands) demanded by the chairman, the Issuer, the Trustee or one or more
persons representing 2 per cent of the Notes.
23 Unless a poll is demanded a declaration by the chairman that a resolution
has or has not been passed shall be conclusive evidence of the fact
without proof of the number or proportion of the votes cast in favour of
or against it.
24 If a poll is demanded, it shall be taken in such manner and (subject as
provided below) either at once or after such adjournment as the chairman
directs. The result of the poll shall be deemed to be the resolution of
the meeting at which it was demanded as at the date it was taken. A demand
for a poll shall not prevent the meeting continuing for the transaction of
business other than the question on which it has been demanded.
25 A poll demanded on the election of a chairman or on a question of
adjournment shall be taken at once.
26 On a show of hands every person who is present in person and who produces
a Bearer Note, a Certificate of which he is the registered holder or a
voting certificate or is a proxy or representative has one vote. On a poll
every such person has one vote in respect of each principal amount equal
to the minimum denomination of such Series of Notes so produced or
represented by the voting certificate so produced or for which he is a
proxy or representative. Without prejudice to the obligations of proxies,
a person entitled to more than one vote need not use them all or cast them
all in the same way.
27 In case of equality of votes the chairman shall both on a show of hands
and on a poll have a casting vote in addition to any other votes which he
may have.
Effect and Publication of an Extraordinary Resolution
28 An Extraordinary Resolution shall be binding on all the Noteholders,
whether or not present at the meeting, and on all the Couponholders and
each of them shall be bound to give effect to it accordingly. The passing
of such a resolution shall be conclusive evidence that the circumstances
justify its being passed. The Issuer shall give notice of the passing of
an
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Extraordinary Resolution to Noteholders within 14 days but failure to do
so shall not invalidate the resolution.
Minutes
29 Minutes shall be made of all resolutions and proceedings at every meeting
and, if purporting to be signed by the chairman of that meeting or of the
next succeeding meeting, shall be conclusive evidence of the matters in
them. Until the contrary is proved every meeting for which minutes have
been so made and signed shall be deemed to have been duly convened and
held and all resolutions passed or proceedings transacted at it to have
been duly passed and transacted.
Trustee's Power to Prescribe Regulations
30 Subject to all other provisions in this Trust Deed the Trustee may without
the consent of the Noteholders prescribe such further regulations
regarding the holding of meetings and attendance and voting at them as it
in its sole discretion determines including (without limitation) such
requirements as the Trustee thinks reasonable to satisfy itself that the
persons who purport to make any requisition in accordance with this Trust
Deed are entitled to do so and as to the form of voting certificates or
block voting instructions so as to satisfy itself that persons who purport
to attend or vote at a meeting are entitled to do so.
31 The holder of a Global Note or Global Certificate shall (unless such
Global Note or Global Certificate represents only one Note) be treated as
2 persons for the purposes of any quorum requirements of a meeting of
Noteholders.
32 The foregoing provisions of this Schedule shall have effect subject to the
following provisions:
32.1 Meetings of Noteholders of separate Series will normally be held
separately. However, the Trustee may from time to time determine that
meetings of Noteholders of separate Series shall be held together
32.2 A resolution that in the opinion of the Trustee affects one Series alone
shall be deemed to have been duly passed if passed at a separate meeting
of the Noteholders of the Series concerned
32.3 A resolution that in the opinion of the Trustee affects the Noteholders of
more than one Series but does not give rise to a conflict of interest
between the Noteholders of the different Series concerned shall be deemed
to have been duly passed if passed at a single meeting of the Noteholders
of the relevant Series provided that for the purposes of determining the
votes a Noteholder is entitled to cast pursuant to paragraph 26, each
Noteholder shall have one vote in respect of each U.S.$1,000 principal
amount of Notes held, converted, if such Notes are not denominated in U.S.
dollars, in accordance with sub-Clause 8.12
32.4 A resolution that in the opinion of the Trustee affects the Noteholders of
more than one Series and gives or may give rise to a conflict of interest
between the Noteholders of the different Series concerned shall be deemed
to have been duly passed only if it shall be duly passed at separate
meetings of the Noteholders of the relevant Series
32.5 To all such meetings as aforesaid all the preceding provisions of this
Schedule shall mutatis mutandis apply as though references therein to
Notes and to Noteholders were references to the Notes and Noteholders of
the Series concerned.
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In witness whereof this Trust Deed has been executed as a deed on the date
stated at the beginning.
SCOTTISH POWER plc
By: IAN RUSSELL DUNCAN WHYTE
Director Director
THE COMMON SEAL OF THE LAW DEBENTURE TRUST CORPORATION p.l.c. was affixed in the
presence of:
D.M. ANDERSON C. RAKESTROW
Director Assistant Trust Manager
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EXHIBIT 2(f)
CONFORMED COPY
Dated 6 November 1998
SCOTTISH POWER plc
as Issuer
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
as Trustee
SUPPLEMENTAL TRUST DEED
relating to
SCOTTISH POWER plc
U.S.$4,000,000,000 Debt Issuance Programme
Arranged by J.P. MORGAN SECURITIES LTD.
(other than for issues of Deutsche Mark Notes)
J.P. MORGAN GmbH
(for issues of Deutsche Mark Notes)
LINKLATERS
& ALLIANCE
LINKLATERS & PAINES
One Silk Street
London EC2Y 8HQ
Tel: 0171 456 2000
Ref JALB/EXM/WAH
<PAGE>
Contents
------------------------------------------------------------------------
Clause Heading Page
1 Definitions ......................................................... 1
2 Amendment ........................................................... 1
3 Forms of Notes, Certificate, Coupon and Talon ....................... 1
4 Conditions .......................................................... 2
5 Governing Law, Submission and Jurisdiction .......................... 2
SCHEDULE 1
Part A
Form of Temporary Global Note ....................................... 3
SCHEDULE 1
Part B
Form of Permanent Global Note ....................................... 8
SCHEDULE 1
Part C
Form of Global Certificate .......................................... 16
SCHEDULE 2
Part A
Form of Bearer Note ................................................. 20
SCHEDULE 2
Part B
Form of Certificate ................................................. 23
SCHEDULE 2
Part C
Terms and Conditions of the Notes ................................... 26
SCHEDULE 2
Part D
Form of Coupon ...................................................... 45
SCHEDULE 2
Part E
Form of Talon ....................................................... 47
SCHEDULE 2
Part F
Form of Receipt ..................................................... 49
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i
<PAGE>
This Supplemental Trust Deed is made on 6 November 1998 between:
(1) SCOTTISH POWER plc (the "Issuer") and
(2) THE LAW DEBENTURE TRUST CORPORATION p.l.c. (the "Trustee", which
expression, where the context so admits, includes any other trustee
for the time being of this Trust Deed).
Whereas:
(A) The parties to this Supplemental Trust Deed are parties to a Trust
Deed dated 4 November 1997 (the "Trust Deed") relating to the
U.S.$4,000,000,000 Debt Issuance Programme of the Issuers (the
"Programme").
(B) The Issuer wishes to record that as a result of the sale by Morgan
Guaranty Trust Company of New York of its Global Agency and Trust
business to Citibank, N.A. on 26 June 1998 and by a letter of
agreement dated 31 March 1998 between the Issuer, Morgan Guaranty
Trust Company of New York, and Citibank, N.A., the Issuer (i)
terminated the appointments of Morgan Guaranty Trust Company of New
York, London office and Morgan Guaranty Trust Company of New York,
Brussels office as Agents under the Agency Agreement and (ii)
appointed Citibank, N.A., London as Issuing and Paying Agent, Paying
Agent, Transfer Agent, Registrar and Calculation Agent and Citibank,
N.A., Brussels as Paying Agents and Transfer Agents pursuant to the
Agency Agreement for Notes which have been issued under the
Programme and for all future issues of Notes under the Programme.
Notice to Noteholders and the Trustee as required by Clause 18.8 of
the Agency Agreement was given in accordance with the Conditions on
3 July 1998.
(C) The parties to this Supplemental Trust Deed wish to amend the Trust
Deed as set out herein.
This deed witnesses and it is declared as follows:
1 Definitions
Subject as provided herein and except as the context otherwise requires,
terms defined in the Trust Deed shall have the same meaning in this
Supplemental Trust Deed.
2 Amendment
2.1 The Trustee, being of the opinion that to do so is not materially
prejudicial to the interests of the Noteholders, hereby agrees in exercise
of the power conferred on it by Clause 12.1 of the Trust Deed to modify
the Trust Deed by amending the Trust Deed in the form of this Supplemental
Trust Deed.
2.2 The Trust Deed, as amended by this Supplemental Trust Deed shall
henceforward in relation to Notes issued on or after 6 November 1998 have
effect as so amended. For the avoidance of doubt the Trust Deed shall
continue to have effect in relation to Notes issues prior to 6 November
1998. Subject thereto, references herein to the "Trust Deed" shall be to
the Trust Deed as amended by this Supplemental Trust Deed.
3 Forms of Notes, Certificate, Coupon and Talon
3.1 The forms of note set out in Schedule 1 Parts A and B and in Schedule 2
Part A shall be replaced by those set out in Schedule 1 Parts A and B and
in Schedule 2 Part A respectively hereto.
3.2 The forms of certificate set out in Schedule 1 Part C and Schedule 2 Part
B shall be replaced by those set out in Schedule 1 Part C and Schedule 2
Part B respectively hereto.
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3.3 The form of coupon set out in Schedule 2 Part D shall be replaced by that
set out in Schedule 2 Part D hereto.
3.4 The form of talon set out in Schedule 2 Part E shall be replaced by that
set out in Schedule 2 Part F hereto.
4 Conditions
The form of the terms and conditions set out in Schedule 2 Part C shall be
replaced by those set out in Schedule 2 Part C hereto.
5 Governing Law, Submission and Jurisdiction
5.1 Governing Law: This Supplemental Trust Deed shall be governed by and
construed in accordance with English law.
5.2 Submission to Jurisdiction: The courts of England are to have jurisdiction
to settle any disputes that may arise out of or in connection with this
Supplemental Trust Deed, the Notes, the Receipts, the Coupons or the
Talons and accordingly any legal action or proceedings arising out of or
in connection with this Supplemental Trust Deed, the Notes, the Receipts,
the Coupons or the Talons ("Proceedings") may be brought in such courts.
The Issuer irrevocably submits to the jurisdiction of such courts and
waives any objections to Proceedings in such courts on the ground of venue
or on the ground that the Proceedings have been brought in an inconvenient
forum. This submission is for the benefit of each of the Trustee, the
Noteholders and the Couponholders and shall not limit the right of any of
them to take Proceedings in any other court of competent jurisdiction nor
shall the taking of Proceedings in any one or more jurisdictions preclude
the taking of Proceedings in any other jurisdiction (whether concurrently
or not).
5.3 Service of Process: The Issuer shall procure that its London office, whose
address is at 54 Queen Anne Street, London W1M 9LA will act as its agent
for service of process in any Proceedings in England. The Issuer
undertakes that in the event of the agent of process appointed by it
ceasing to so act, it will appoint such other person acceptable to the
Trustee and shall immediately notify the Trustee of such appointment.
Nothing shall affect the right to serve process in any other manner
permitted by law.
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SCHEDULE 1
Part A
Form of Temporary Global Note
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
TEMPORARY GLOBAL NOTE
Temporary Global Note No. [.]
This temporary Global Note is issued in respect of the Notes (the "Notes") of
the Tranche and Series specified in the Second Schedule hereto of Scottish Power
plc (the "Issuer").
Interpretation and Definitions
References in this temporary Global Note to the "Conditions" are to the Terms
and Conditions applicable to the Notes (which are in the form set out in
Schedule 2 Part C to the Trust Deed (as amended or supplemented as at the Issue
Date, the "Trust Deed") dated 4 November 1997 between the Issuer and The Law
Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented
and/or modified and/or superseded by the provisions of this temporary Global
Note (including the supplemental definitions and any modifications or additions
set out in the Second Schedule hereto), which in the event of any conflict shall
prevail). Other capitalised terms used in this temporary Global Note shall have
the meanings given to them in the Conditions or the Trust Deed. If the Second
Schedule hereto specifies that the applicable TEFRA exemption is either "C
Rules" or "not applicable", this temporary Global Note is a "C Rules Note",
otherwise this temporary Global Note is a "D Rules Note".
Aggregate Principal Amount
The aggregate principal amount from time to time of this temporary Global Note
shall be an amount equal to the aggregate principal amount of the Notes as shall
be shown by the latest entry in the fourth column of the First Schedule hereto,
which shall be completed by or on behalf of the Issuing and Paying Agent upon
(i) the issue of Notes represented hereby, (ii) the exchange of the whole or a
part of this temporary Global Note for a corresponding interest in a permanent
Global Note or, as the case may be, for Definitive Notes or Registered Notes,
(iii) the redemption or purchase and cancellation of Notes represented hereby
and/or (iv) in the case of Partly-paid Notes, the forfeiture of Notes
represented hereby in accordance with the Conditions relating to such
Partly-paid Notes, all as described below.
Promise to Pay
Subject as provided herein, the Issuer, for value received, promises to pay to
the bearer of this temporary Global Note, upon presentation and (when no further
payment is due in respect of this
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<PAGE>
temporary Global Note) surrender of this temporary Global Note, on the Maturity
Date (or on such earlier date as the Redemption Amount may become repayable in
accordance with the Conditions) the Redemption Amount in respect of the
aggregate principal amount of Notes represented by this temporary Global Note
and (unless this temporary Global Note does not bear interest) to pay interest
in respect of such aggregate principal amount of Notes from the Interest
Commencement Date in arrear at the rates, in the amounts and on the dates for
payment provided for in the Conditions together with such other sums and
additional amounts (if any) as may be payable under the Conditions, in
accordance with the Conditions.
Exchange
If this temporary Global Note is an Exchangeable Bearer Note, this temporary
Global Note may be exchanged in whole or from time to time in part for one or
more Registered Notes in accordance with the Conditions on or after the Issue
Date but before the Exchange Date referred to below by its presentation to the
Issuing and Paying Agent. On or after the Exchange Date, the outstanding
principal amount of this temporary Global Note may be exchanged for Definitive
Notes and Registered Notes in accordance with the next paragraph.
Subject as provided in the Conditions applicable to Partly-paid Notes, on or
after the first day following the expiry of 40 days after the Issue Date (the
"Exchange Date"), this temporary Global Note may be exchanged (free of charge to
the holder) in whole or from time to time in part by its presentation and, on
exchange in full, surrender to or to the order of the Issuing and Paying Agent
for interests in a permanent Global Note or, if so specified in the Second
Schedule hereto, for Definitive Notes and (if this temporary Global Note is an
Exchangeable Bearer Note), in each case, for Registered Notes in an aggregate
principal amount equal to the principal amount of this temporary Global Note
submitted for exchange provided that, in the case of any part of this temporary
Global Note submitted for exchange for a permanent Global Note or Definitive
Notes, there shall have been Certification with respect to such principal amount
submitted for such exchange dated no earlier than the Exchange Date.
"Certification" means the presentation to the Issuing and Paying Agent of a
certificate or certificates with respect to one or more interests in this
temporary Global Note, signed by Euroclear or Cedel Bank, substantially to the
effect set out in Schedule 4 to the Agency Agreement to the effect that it has
received a certificate or certificates substantially to the effect set out in
Schedule 3 to the Agency Agreement with respect thereto and that no contrary
advice as to the contents thereof has been received by Euroclear or Cedel Bank,
as the case may be.
Upon the whole or a part of this temporary Global Note being exchanged for a
permanent Global Note, such permanent Global Note shall be exchangeable in
accordance with its terms for Definitive Notes or Registered Notes.
The Definitive Notes or the Certificates representing the Registered Notes for
which this temporary Global Note or a permanent Global Note may be exchangeable
shall be duly executed and authenticated, shall, in the case of Definitive
Notes, have attached to them all Coupons (and, where appropriate, Talons) in
respect of interest, and all Receipts in respect of Instalment Amounts, that
have not already been paid on this temporary Global Note or the permanent Global
Note, as the case may be, shall be security printed or, in the case of
Certificates, printed in accordance with applicable legal and stock exchange
requirements and shall be substantially in the form set out in the Schedules to
the Trust Deed as supplemented and/or modified and/or superseded by the terms of
the Second Schedule hereto. Certificates issued upon exchange for Registered
Notes shall not be Global Certificates unless the holder so requests and
certifies to the Issuing and Paying Agent that it is, or is acting as a nominee
for, Cedel Bank, Euroclear and/ or any other clearing system.
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<PAGE>
On any exchange of a part of this temporary Global Note for an equivalent
interest in a permanent Global Note, for Definitive Notes or for Registered
Notes, as the case may be, the portion of the principal amount hereof so
exchanged shall be endorsed by or on behalf of the Issuing and Paying Agent in
Part I of the First Schedule hereto, whereupon the principal amount hereof shall
be reduced for all purposes by the amount so exchanged and endorsed.
Benefit of Conditions
Except as otherwise specified herein, this temporary Global Note is subject to
the Conditions and the Trust Deed and, until the whole of this temporary Global
Note is exchanged for equivalent interests in a permanent Global Note, for
Definitive Notes or for Registered Notes, as the case may be, the holder of this
temporary Global Note shall in all respects be entitled to the same benefits as
if it were the holder of the permanent Global Note (or the relevant part of it)
or the Definitive Notes, as the case may be, for which it may be exchanged as if
such permanent Global Note or Definitive Notes had been issued on the Issue
Date.
Payments
No person shall be entitled to receive any payment in respect of the Notes
represented by this temporary Global Note that falls due on or after the
Exchange Date unless, upon due presentation of this temporary Global Note for
exchange, delivery of (or, in the case of a subsequent exchange. due endorsement
of) a permanent Global Note or delivery of Definitive Notes or Certificates, as
the case may be, is improperly withheld or refused by or on behalf of the
Issuer.
Payments due before the Exchange Date shall only be made in relation to such
principal amount of this temporary Global Note with respect to which there shall
have been Certification dated no earlier than such due date for payment.
Any payments that are made in respect of this temporary Global Note shall be
made to its holder against presentation and (if no further payment falls to be
made on it) surrender of it at the specified office of the Issuing and Paying
Agent or of any other Paying Agent provided for in the Conditions. If any
payment in full of principal is made in respect of any Note represented by this
temporary Global Note, the portion of this temporary Global Note representing
such Note shall be cancelled and the amount so cancelled shall be endorsed by or
on behalf of the Issuing and Paying Agent in the First Schedule hereto (such
endorsement being prima facie evidence that the payment in question has been
made) whereupon the principal amount hereof shall be reduced for all purposes by
the amount so cancelled and endorsed. If any other payments are made in respect
of the Notes represented by this temporary Global Note, a record of each such
payment shall be endorsed by or on behalf of the Issuing and Paying Agent on an
additional schedule hereto (such endorsement being prima facie evidence that the
payment in question has been made).
Cancellation
Cancellation of any Note represented by this temporary Global Note that is
required by the Conditions to be cancelled (other than upon its redemption)
shall be effected by reduction in the principal amount of this temporary Global
Note representing such Note on its presentation to or to the order of the
Issuing and Paying Agent for endorsement in the First Schedule hereto, whereupon
the principal amount hereof shall be reduced for all purposes by the amount so
cancelled and endorsed.
Notices
Notices required to be given in respect of the Notes represented by this
temporary Global Note may be given by their being delivered (so long as this
temporary Global Note is held on behalf of Euroclear and Cedel Bank or any other
clearing system) to Euroclear, Cedel Bank or such other
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5
<PAGE>
clearing system, as the case may be, or otherwise to the holder of this
temporary Global Note, rather than by publication as required by the Conditions.
No provision of this temporary Global Note shall alter or impair the obligation
of the Issuer to pay the principal and premium of and interest on the Notes when
due in accordance with the Conditions.
This temporary Global Note shall not be valid or become obligatory for any
purpose until authenticated by or on behalf of the Issuing and Paying Agent.
This temporary Global Note shall be governed by and construed in accordance with
English law.
In witness whereof the Issuer has caused this temporary Global Note to be duly
signed on its behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This temporary Global Note is authenticated by
or on behalf of the Issuing and Paying Agent.
CITIBANK, N.A.
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
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<PAGE>
THE FIRST SCHEDULE
Principal amount of Notes represented by this temporary Global Note
The following (i) issue of Notes initially represented by this temporary Global
Note, (ii) exchanges of the whole or a part of this temporary Global Note for
interests in a permanent Global Note, for Definitive Notes or for Registered
Notes and/or (iii) cancellations or forfeitures of interests in this temporary
Global Note have been made, resulting in the principal amount of this temporary
Global Note specified in the latest entry in the fourth column below:
Date Amount of Reason for Principal Notation
decrease in decrease in amount of this made by or on
principal principal amount of temporary behalf of the
amount of this this temporary Global Note on Issuing and
temporary Global Note issue or Paying Agent
Global Note (exchange, following such
cancellation or decrease
forfeiture)
Issue not applicable not applicable
Date
[Insert the provisions of the relevant Pricing Supplement that relate to the
Conditions or the Global Notes as the Second Schedule]
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<PAGE>
SCHEDULE 1
Part B
Form of Permanent Global Note
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if the Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
Permanent Global Note No. [.]
This permanent Global Note is issued in respect of the Notes (the "Notes") of
the Tranche(s) and Series specified in the Third Schedule hereto of Scottish
Power plc (the "Issuer").
Interpretation and Definitions
References in this permanent Global Note to the "Conditions" are to the Terms
and Conditions applicable to the Notes (which are in the form set out in
Schedule 2 Part C to the Trust Deed (as amended or supplemented as at the Issue
Date, the "Trust Deed") dated 4 November 1997 between the Issuer and The Law
Debenture Trust Corporation p.l.c. as trustee, as such form is supplemented
and/or modified and/or superseded by the provisions of this permanent Global
Note (including the supplemental definitions and any modifications or additions
set out in the Third Schedule hereto), which in the event of any conflict shall
prevail). Other capitalised terms for used in this permanent Global Note shall
have the meanings given to them in the Conditions or the Trust Deed.
Aggregate Principal Amount
The aggregate principal amount from time to time of this permanent Global Note
shall be an amount equal to the aggregate principal amount of the Notes as shall
be shown by the latest entry in the fourth column of the First Schedule hereto,
which shall be completed by or on behalf of the Issuing and Paying Agent upon
(i) the exchange of the whole or a part of the temporary Global Note initially
representing the Notes for a corresponding interest herein (in the case of Notes
represented by a temporary Global Note upon issue), (ii) the issue of the Notes
represented hereby (in the case of Notes represented by this permanent Global
Note upon issue), (iii) the exchange of the whole or, where the limited
circumstances so permit, a part of this permanent Global Note for Definitive
Notes or Registered Notes, (iv) the redemption or purchase and cancellation of
Notes represented hereby and/or (v) in the case of Partly-paid Notes, the
forfeiture of Notes represented hereby in accordance with the Conditions
relating to such Partly-paid Notes, all as described below.
Promise to Pay
Subject as provided herein, the Issuer, for value received, hereby promises to
pay to the bearer of this permanent Global Note, upon presentation and (when no
further payment is due in respect of this permanent Global Note) surrender of
this permanent Global Note, on the Maturity Date (or on
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<PAGE>
such earlier date as the Redemption Amount may become repayable in accordance
with the Conditions) the Redemption Amount in respect of the aggregate principal
amount of Notes represented by this permanent Global Note and (unless this
permanent Global Note does not bear interest) to pay interest in respect of such
aggregate principal amount of Notes from the Interest Commencement Date in
arrear at the rates, in the amounts and on the dates for payment provided for in
the Conditions together with such other sums and additional amounts (if any) as
may be payable under the Conditions, in accordance with the Conditions.
Exchange
This permanent Global Note is exchangeable (free of charge to the holder) on or
after the Exchange Date in whole but not, except as provided in the next
paragraph, in part for the Definitive Notes or (if this permanent Global Note is
an Exchangeable Bearer Note) Registered Notes represented by the Certificates
described below:
(i) by the Issuer giving notice to the Issuing and Paying Agent and the
Noteholders of its intention to effect such exchange
(ii) if the Third Schedule hereto provides that this permanent Global
Note is exchangeable for Definitive Notes at the request of the
holder, by such holder giving notice to the Issuing and Paying Agent
of its election for such exchange
(iii) if this permanent Global Note is an Exchangeable Bearer Note, by the
holder hereof giving notice to the Issuing and Paying Agent of its
election to exchange the whole or a part of this permanent Global
Note for Registered Notes or
(iv) otherwise, if this permanent Global Note is held on behalf of
Euroclear or Cedel Bank or any other clearing system (an
"Alternative Clearing System") and any such clearing system is
closed for business for a continuous period of 14 days (other than
by reason of holidays, statutory or otherwise) or announces an
intention permanently to cease business or does in fact do so.
This permanent Global Note is exchangeable in part (provided, however, that if
this permanent Global Note is held by or on behalf of Euroclear and/or Cedel
Bank, the rules of Euroclear and/or Cedel Bank, as the case may be, so permit)
(i) if this permanent Global Note is an Exchangeable Bearer Note and the part
hereof submitted for exchange is to be exchanged for Registered Notes or (ii) if
so provided, and in accordance with, the Conditions relating to Partly-paid
Notes.
"Exchange Date" means a day falling not less than 60 days, or in the case of an
exchange for Registered Notes 5 days, after that on which the notice requiring
exchange is given and on which banks are open for business in the city in which
the specified office of the Issuing and Paying Agent is located and, except in
the case of exchange pursuant to (iv) above, in the cities in which Euroclear
and Cedel Bank or, if relevant, the Alternative Clearing System, are located.
Subject as provided in the Conditions applicable to Party-paid Notes, any such
exchange may be effected on or after an Exchange Date by the holder of this
permanent Global Note surrendering this permanent Global Note or, in the case of
a partial exchange, presenting it for endorsement to or to the order of the
Issuing and Paying Agent. In exchange for this permanent Global Note, or part
thereof to be exchanged, the Issuer shall deliver, or procure the delivery of,
duly executed and authenticated Definitive Notes and/or (if this permanent
Global Note is an Exchangeable Bearer Note) Certificates in an aggregate
principal amount equal to the principal amount of this permanent Global Note
submitted for exchange (if appropriate, having attached to them all Coupons
(and, where appropriate, Talons) in respect of interest, and all Receipts in
respect of Instalment Amounts, that have not already been paid on this permanent
Global Note), security printed or, in the case of Certificates, printed in
accordance with any applicable legal and stock
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<PAGE>
exchange requirements and substantially in the form set out in Schedule 2 to the
Trust Deed as supplemented and/or modified and/or superseded by the terms of the
Third Schedule hereto. Certificates issued upon exchange for Registered Notes
shall not be Global Certificates unless the holder so requests and certifies to
the Issuing and Paying Agent that it is, or is acting as a nominee for, Cedel
Bank, Euroclear and/or an Alternative Clearing System.
On any exchange of a part of this permanent Global Note the portion of the
principal amount hereof so exchanged shall be endorsed by or on behalf of the
Issuing and Paying Agent in the First Schedule hereto, whereupon the principal
amount hereof shall be reduced for all purposes by the amount so exchanged and
endorsed.
Benefit of Conditions
Except as otherwise specified herein, this permanent Global Note is subject to
the Conditions and the Trust Deed and, until the whole of this permanent Global
Note is exchanged for Definitive Notes or Registered Notes, the holder of this
permanent Global Note shall in all respects be entitled to the same benefits as
if it were the holder of the Definitive Notes for which it may be exchanged and
as if such Definitive Notes had been issued on the Issue Date.
Payments
No person shall be entitled to receive any payment in respect of the Notes
represented by this permanent Global Note that falls due after an Exchange Date
for such Notes, unless upon due presentation of this permanent Global Note for
exchange, delivery of Definitive Notes or Certificates is improperly withheld or
refused by or on behalf of the Issuer or the Issuer does not perform or comply
with any one or more of what are expressed to be its obligations under any
Definitive Notes.
Payments in respect of this permanent Global Note shall be made to its holder
against presentation and (if no further payment falls to be made on it)
surrender of it at the specified office of the Issuing and Paying Agent or of
any other Paying Agent provided for in the Conditions. A record of each such
payment shall be endorsed on the First or Second Schedule hereto, as
appropriate, by the Issuing and Paying Agent or by the relevant Paying Agent,
for and on behalf of the Issuing and Paying Agent, which endorsement shall
(until the contrary is proved) be prima facie evidence that the payment in
question has been made.
Prescription
Claims in respect of principal and interest (as each is defined in the
Conditions) in respect of this permanent Global Note shall become void unless it
is presented for payment within a period of 10 years (in the case of principal)
and 5 years (in the case of interest) from the appropriate Relevant Date.
Meetings
The holder of this permanent Global Note shall be treated at any meeting of
Noteholders, as having one vote in respect of each principal amount of Notes
equal to the minimum Denomination of the Notes for which this permanent Global
Note may be exchanged.
Cancellation
Cancellation of any Note represented by this permanent Global Note that is
required by the Conditions to be cancelled (other than upon its redemption)
shall be effected by reduction in the principal amount of this permanent Global
Note representing such Note on its presentation to or to the order of the
Issuing and Paying Agent for endorsement in the First Schedule hereto, whereupon
the principal amount hereof shall be reduced for all purposes by the amount so
cancelled and endorsed.
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<PAGE>
Purchase
Notes may only be purchased by the Issuer or any of its subsidiaries if they are
purchased together with the right to receive all future payments of interest and
Instalment Amounts (if any) thereon.
Issuer's Options
Any option of the Issuer provided for in the Conditions shall be exercised by
the Issuer giving notice to the Noteholders within the time limits set out in
and containing the information required by the Conditions, except that the
notice shall not be required to contain the serial numbers of Notes drawn in the
case of a partial exercise of an option and accordingly no drawing of Notes
shall be required.
Noteholders' Options
Any option of the Noteholders provided for in the Conditions may be exercised by
the holder of this permanent Global Note giving notice to the Issuing and Paying
Agent within the time limits relating to the deposit of Notes with a Paying
Agent set out in the Conditions substantially in the form of the notice
available from any Paying Agent, except that the notice shall not be required to
contain the certificate numbers of the Notes in respect of which the option has
been exercised, and stating the principal amount of Notes in respect of which
the option is exercised and at the same time presenting this permanent Global
Note to the Issuing and Paying Agent, or to a Paying Agent acting on behalf of
the Issuing and Paying Agent, for notation accordingly in the Fourth Schedule
hereto.
Notices
Notices required to be given in respect of the Notes represented by this
permanent Global Note may be given by their being delivered (so long as this
permanent Global Note is held on behalf of Euroclear, Cedel Bank or any other
clearing system) to Euroclear, Cedel Bank or such other clearing system, as the
case may be, or otherwise to the holder of this permanent Global Note, rather
than by publication as required by the Conditions.
Negotiability
This permanent Global Note is a bearer document and negotiable and accordingly:
(i) is freely transferable by delivery and such transfer shall operate
to confer upon the transferee all rights and benefits appertaining
hereto and to bind the transferee with all obligations appertaining
hereto pursuant to the Conditions
(ii) the holder of this permanent Global Note is and shall be absolutely
entitled as against all previous holders to receive all amounts by
way of Redemption Amount interest or otherwise payable in respect of
this permanent Global Note and the Issuer has waived against such
holder and any previous holder of this permanent Global Note all
rights of set-off or counterclaim that would or might otherwise be
available to it in respect of the obligations evidenced by this
Global Note and
(iii) payment upon due presentation of this permanent Global Note as
provided herein shall operate as a good discharge against such
holder and all previous holders of this permanent Global Note.
No provision of this permanent Global Note shall alter or impair the obligation
of the Issuer to pay the principal and premium of and interest on the Notes when
due in accordance with the Conditions.
This permanent Global Note shall not be valid or become obligatory for any
purpose until authenticated by or on behalf of the Issuing and Paying Agent.
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<PAGE>
This permanent Global Note shall be governed by and construed in accordance with
English law.
In witness whereof the Issuer has caused this permanent Global Note to be duly
signed on its behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This permanent Global Note is authenticated by or on behalf of the Issuing and
Paying Agent.
CITIBANK, N.A.
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
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<PAGE>
THE FIRST SCHEDULE
Principal amount of Notes represented by this permanent Global Note
The following (i) issues of Notes initially represented by this permanent Global
Note, (ii) exchanges of interests in a temporary Global Note for interests in
this permanent Global Note, (iii) exchanges of the whole or a part of this
permanent Global Note for Definitive Notes or for Registered Notes, (iv)
cancellations or forfeitures of interests in this permanent Global Note and/ or
(v) payments of Redemption Amount in respect of this permanent Global Note have
been made, resulting in the principal amount of this permanent Global Note
specified in the latest entry in the fourth column:
Date Amount of Reason for increase/ Principal Notation
Increase/ decrease in amount of this made by or
decrease in principal amount of permanent on behalf
principal this permanent Global Note of the
amount of this Global Note (initial following such Issuing and
permanent issue, exchange, increase/ Paying
Global Note cancellation, decrease Agent
forfeiture or
payment, stating
amount of payment
made)
- --------------------------------------------------------------------------------
13
<PAGE>
THE SECOND SCHEDULE
Payments of Interest
The following payments of interest or Interest Amount in respect of this
Permanent Global Note have been made:
Due date of Date of payment Amount of interest Notation made by or on
payment behalf of the Issuing
and Paying Agent
[Insert the provisions of the relevant Pricing Supplement that relate to the
Conditions or the Global Notes as the Third Schedule.]
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14
<PAGE>
THE FOURTH SCHEDULE
Exercise of Noteholders' Option
The following exercises of the option of the Noteholders provided for in the
Conditions have been made in respect of the stated principal amount of this
permanent Global Note:
Date of Principal amount of Date of which Notation made by
exercise this permanent exercise of such or on behalf of the
Global Note in option is effective Issuing and Paying
respect of which Agent
exercise is made
- --------------------------------------------------------------------------------
15
<PAGE>
SCHEDULE 1
Part C
Form of Global Certificate
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is SCOTTISH POWER plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
GLOBAL CERTIFICATE
Global Certificate No. [.]
Registered Holder:
Address of Registered Holder:
Principal amount of Notes
represented by this Global
Certificate:
This Global Certificate is issued in respect of the principal amount specified
above of the Notes (the "Notes") of the Tranche and Series specified in the
Schedule hereto of Scottish Power plc (the "Issuer"). This Global Certificate
certifies that the Registered Holder (as defined above) is registered as the
holder of such principal amount of the Notes at the date hereof.
Interpretation and Definitions
References in this Global Certificate to the "Conditions" are to the Terms and
Conditions applicable to the Notes (which are in the form set out in Schedule 2
Part C to the Trust Deed (as amended or supplemented as at the Issue Date, the
"Trust Deed") dated 4 November 1997 between the Issuer and The Law Debenture
Trust Corporation p.l.c. as trustee, as such form is supplemented and/or
modified and/or superseded by the provisions of this Global Certificate
(including the supplemental definitions and any modifications or additions set
out in the Schedule hereto), which in the event of any conflict shall prevail).
Other capitalised terms used in this Global Certificate shall have the meanings
given to them in the Conditions or the Trust Deed.
Promise to Pay
The Issuer, for value received, promises to pay to the holder of the Notes
represented by this Global Certificate upon presentation and (when no further
payment is due in respect of the Notes represented by this Global Certificate)
surrender of this Global Certificate on the Maturity Date (or on such earlier
date as the Redemption Amount may become repayable in accordance with the
Conditions) the Redemption Amount in respect of the Notes represented by this
Global Certificate and (unless the Notes represented by this Certificate do not
bear interest) to pay interest in respect of such Notes from the Interest
Commencement Date in arrear at the rates, in
- --------------------------------------------------------------------------------
16
<PAGE>
the amounts and on the dates for payment provided for in the Conditions together
with such other sums and additional amounts (if any) as may be payable under the
Conditions, in accordance with the Conditions.
For the purposes of this Global Certificate, (a) the holder of the Notes
represented by this Global Certificate is bound by the provisions of the Agency
Agreement, (b) the Issuer certifies that the Registered Holder is, at the date
hereof, entered in the Register as the holder of the Notes represented by this
Global Certificate, (c) this Global Certificate is evidence of entitlement only,
(d) title to the Notes represented by this Global Certificate passes only on due
registration in the Register, and (e) only the holder of the Notes represented
by this Global Certificate is entitled to payments in respect of the Notes
represented by this Global Certificate.
Transfer of Notes represented by permanent Global Certificates
If the Schedule hereto states that the Notes are to be represented by a
permanent Global Certificate on issue, transfers of the holding of Notes
represented by this Global Certificate pursuant to Condition 2(b) may only be
made in part:
(i) if the Notes represented by this Global Certificate are held on
behalf of Euroclear or Cedel Bank or any other clearing system (an
"Alternative Clearing System") and any such clearing system is
closed for business for a continuous period of 14 days (other than
by reason of holidays, statutory or otherwise) or announces an
intention permanently to cease business or does in fact do so or
(ii) with the consent of the Issuer
provided that, in the case of the first transfer of part of a holding pursuant
to (i) above, the holder of the Notes represented by this Global Certificate has
given the Registrar not less than 30 days' notice at its specified office of
such holder's intention to effect such transfer. Where the holding of Notes
represented by this Global Certificate is only transferable in its entirety, the
Certificate issued to the transferee upon transfer of such holding shall be a
Global Certificate. Where transfers are permitted in part, Certificates issued
to transferees shall not be Global Certificates unless the transferee so
requests and certifies to the Registrar that it is, or is acting as a nominee
for, Cedel Bank, Euroclear and/or an Alternative Clearing System.
Meetings
The holder of the Notes represented by this Global Certificate shall (unless
this Global Certificate represents only one Note) be treated as two persons for
the purposes of any quorum requirements of a meeting of Noteholders.
This Global Certificate shall not become valid for any purpose until
authenticated by or on behalf of the Registrar.
In witness whereof the Issuer has caused this Global Certificate to be signed on
its behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
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17
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Global Certificate is authenticated by or on behalf of the Registrar.
CITIBANK, N.A.
as Registrar
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
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18
<PAGE>
Form of Transfer
For value received the undersigned transfers to
------------------------------
------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[.] principal amount of the Notes represented by this Global Certificate, and
all rights under them.
Dated
Signed
------------------------------- ------------------------------------
Certifying Signature
Notes:
(i) The signature of the person effecting a transfer shall conform to a
list of duly authorised specimen signatures supplied by the holder
of the Notes represented by this Global Certificate or (if such
signature corresponds with the name as it appears on the face of
this Global Certificate) be certified by a notary public or a
recognised bank or be supported by such other evidence as a Transfer
Agent or the Registrar may reasonably require.
(ii) A representative of the Noteholder should state the capacity in
which he signs e.g. executor.
[Insert the provisions of the relevant Pricing Supplement that relate to the
Conditions or the Global Certificate as the Schedule.]
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19
<PAGE>
SCHEDULE 2
Part A
Form of Bearer Note
On the front:
[Denomination] [ISIN] [Series] [Certif. No.]
[Currency and denomination]
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
Series No. [.]
[Title of issue]
This Note forms one of the Series of Notes referred to above (the "Notes") of
Scottish Power plc (the "Issuer") designated as specified in the title hereof.
The Notes are subject to the Terms and Conditions (the "Conditions") endorsed
hereon and are issued subject to, and with the benefit of, the Trust Deed
referred to in the Conditions. Expressions defined in the Conditions have the
same meanings in this Note.
The Issuer for value received promises to pay to the bearer of this Note, on
presentation and (when no further payment is due in respect of this Note)
surrender of this Note on the Maturity Date (or on such earlier date as the
Redemption Amount may become repayable in accordance with the Conditions) the
Redemption Amount and (unless this Note does not bear interest) to pay interest
from the Interest Commencement Date in arrear at the rates, in the amounts and
on the dates for payment provided for in the Conditions together with such other
sums and additional amounts (if any) as may be payable under the Conditions, in
accordance with the Conditions.
This Note shall not become valid or obligatory for any purpose until
authenticated by or on behalf of the Issuing and Paying Agent.
In witness whereof the Issuer has caused this Note to be signed on its behalf.
Dated as of the Issue Date.
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20
<PAGE>
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This Note is authenticated
by or on behalf of the Issuing and Paying Agent.
CITIBANK, N.A.
as Issuing and Paying Agent
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
- --------------------------------------------------------------------------------
21
<PAGE>
On the back:
Terms and Conditions of the Notes
[The Terms and Conditions that are set out in Schedule 2 Part C to the Trust
Deed as amended by and incorporating any additional provisions forming part of
such Terms and Conditions and set out in the relevant Pricing Supplement shall
be set out here.]
ISSUING AND PAYING AGENT
CITIBANK, N.A.
P.O. Box 18055
5 Carmelite Street
London
EC4Y 0PA
PAYING AGENT
CITIBANK, N.A., BRUSSELS OFFICE
Building 726
1931 Brucargo
Brussels
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22
<PAGE>
SCHEDULE 2
Part B
Form of Certificate
On the front:
This Note constitutes [[commercial paper/a [shorter/longer] term debt security]
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Issuer of this Note is Scottish Power plc, which is not an authorised
institution or a European authorised institution (as such terms are defined in
the Banking Act 1987 (Exempt Transactions) Regulations 1997). Repayment of the
principal and the payment of any interest or premium in connection with this
Note has not been guaranteed](*) [(*) Delete if Note is not denominated in
Sterling or if issue proceeds are not accepted in the UK.]
SCOTTISH POWER plc
(Incorporated in Scotland with limited liability under
registered number 117120)
DEBT ISSUANCE PROGRAMME
Series No. [.]
[Title of issue]
This Certificate certifies that [.] of [.] (the "Registered Holder") is, as at
the date hereof, registered as the holder of [principal amount] of Notes of the
Series of Notes referred to above (the "Notes") of Scottish Power plc (the
"Issuer"), designated as specified in the title hereof. The Notes are subject to
the Terms and Conditions (the "Conditions") endorsed hereon and are issued
subject to, and with the benefit of, the Trust Deed referred to in the
Conditions. Expressions defined in the Conditions have the same meanings in this
Certificate.
The Issuer, for value received, promises to pay to the holder of the Note(s)
represented by this Certificate upon presentation and (when no further payment
is due in respect of the Note(s) represented by this Certificate) surrender of
this Certificate on the Maturity Date (or on such earlier date as the Redemption
Amount may become repayable in accordance with the Conditions) the Redemption
Amount in respect of the Notes represented by this Certificate and (unless the
Note(s) represented by this Certificate do not bear interest) to pay interest in
respect of such Notes from the Interest Commencement Date in arrear at the
rates, in the amounts and on the dates for payment provided for in the
Conditions together with such other sums and additional amounts (if any) as may
be payable under the Conditions, in accordance with the Conditions.
For the purposes of this Certificate, (a) the holder of the Note(s) represented
by this Certificate is bound by the provisions of the Agency Agreement, (b) the
Issuer certifies that the Registered Holder is, at the date hereof, entered in
the Register as the holder of the Note(s) represented by this Certificate, (c)
this Certificate is evidence of entitlement only, (d) title to the Note(s)
represented by this Certificate passes only on due registration in the Register,
and (e) only the holder of the Note(s) represented by this Certificate is
entitled to payments in respect of the Note(s) represented by this Certificate.
This Certificate shall not become valid for any purpose until authenticated by
or on behalf of the Registrar.
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23
<PAGE>
In witness whereof the Issuer has caused this Certificate to be signed on its
behalf.
Dated as of the Issue Date.
SCOTTISH POWER plc
By:
CERTIFICATE OF AUTHENTICATION
This Certificate is authenticated
by or on behalf of the Registrar.
CITIBANK, N.A.
as Registrar
By:
Authorised Signatory
For the purposes of authentication only.
Without recourse, warranty or liability.
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24
<PAGE>
On the back:
Terms and Conditions of the Notes
[The Terms and Conditions that are set out in Schedule 2 Part C to the Trust
Deed as amended by and incorporating any additional provisions forming part of
such Terms and Conditions and set out in the relevant Pricing Supplement shall
be set out here.]
Form of Transfer
For value received the undersigned transfers to
------------------------------
------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[.] principal amount of the Notes represented by this Certificate, and all
rights under them.
Dated
Signed
------------------------------- ------------------------------
Certifying Signature
Notes:
(i) The signature of the person effecting a transfer shall conform to a
list of duly authorised specimen signatures supplied by the holder
of the Notes represented by this Certificate or (if such signature
corresponds with the name as it appears on the face of this
Certificate) be certified by a notary public or a recognised bank or
be supported by such other evidence as a Transfer Agent or the
Registrar may reasonably require.
(ii) A representative of the Noteholder should state the capacity in
which he signs.
ISSUING AND PAYING AGENT, TRANSFER AGENT AND REGISTRAR
CITIBANK, N.A.
P.O. Box 18055
5 Carmelite Street
London
EC4Y 0PA
PAYING AGENT AND TRANSFER AGENT
CITIBANK, N.A., BRUSSELS OFFICE
Building 726
1931 Brucargo
Brussels
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25
<PAGE>
SCHEDULE 2
Part C
Terms and Conditions of the Notes
The Notes are constituted by a Trust Deed (as amended or supplemented as at the
date of issue of the Notes (the "Issue Date"), the "Trust Deed") dated 4th
November 1997 between the Issuer and The Law Debenture Trust Corporation p.l.c.
(the "Trustee", which expression shall include all persons for the time being
the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as
defined below). These terms and conditions include summaries of, and are subject
to, the detailed provisions of the Trust Deed, which includes the form of the
Bearer Notes, Certificates, Receipts, Coupons and Talons referred to below. An
Agency Agreement (as amended or supplemented as at the Issue Date, the "Agency
Agreement") dated 4th November 1997 has been entered into in relation to the
Notes between the Issuer, the Trustee, Citibank, N.A., London as initial issuing
and paying agent and the other agents named in it. The issuing and paying agent,
the paying agents, the registrar, the transfer agents and the calculation
agent(s) for the time being (if any) are referred to below respectively as the
"Issuing and Paying Agent", the "Paying Agents" (which expression shall include
the Issuing and Paying Agent), the "Registrar", the "Transfer Agents" (which
expression shall include the Registrar) and the "Calculation Agent(s)". Copies
of the relevant Pricing Supplement, Trust Deed and the Agency Agreement are
available for inspection during usual business hours at the registered office of
the Trustee (presently at Princes House, 93 Gresham Street, London EC2V 7LY) and
at the specified offices of the Paying Agents and the Transfer Agents.
The Noteholders, the holders of the interest coupons (the "Coupons")
appertaining to interest bearing Notes in bearer form and, where applicable in
the case of such Notes, talons for further Coupons (the "Talons") (the
"Couponholders") and the holders of the receipts for the payment of instalments
of principal (the "Receipts") relating to Notes in bearer form of which the
principal is payable in instalments are entitled to the benefit of, are bound
by, and are deemed to have notice of, all the provisions of the Trust Deed and
the relevant Pricing Supplement and are deemed to have notice of those
provisions applicable to them of the Agency Agreement.
1. Form, Denomination and Title
The Notes are issued in bearer form ("Bearer Notes", which expression includes
Notes that are specified to be Exchangeable Bearer Notes), in registered form
("Registered Notes") or in bearer form exchangeable for Registered Notes
("Exchangeable Bearer Notes") in each case in the Denomination(s) shown thereon.
All Registered Notes shall have the same Denomination. Where Exchangeable Bearer
Notes are issued, the Registered Notes for which they are exchangeable shall
have the same Denomination as the lowest denomination of Exchangeable Bearer
Notes.
Bearer Notes are serially numbered and are issued with Coupons (and, where
appropriate, a Talon) attached, save in the case of Notes that do not bear
interest in which case references to interest (other than in relation to
interest due after the Maturity Date), Coupons and Talons in these Conditions
are not applicable. Any Bearer Note the principal amount of which is redeemable
in instalments is issued with one or more Receipts attached.
Registered Notes are represented by registered certificates ("Certificates")
and, save as provided in Condition 2(c), each Certificate shall represent the
entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by
delivery. Title to the Registered Notes shall pass by registration in the
register that the Issuer shall procure to be kept by the Registrar in accordance
with the provisions of the Agency Agreement (the "Register"). Except as ordered
by a court of competent jurisdiction or as required by law, the holder (as
defined below) of any Note, Receipt, Coupon or Talon shall be deemed to be and
may be treated as its absolute owner for all purposes whether or not it is
overdue and regardless of any notice of ownership, trust or an interest in it,
any writing on it (or on the Certificate representing it) or its theft or loss
(or that of the related Certificate) and no person shall be liable for so
treating the holder.
In these Conditions, "Noteholder" means the bearer of any Bearer Note and the
Receipts relating to it or the person in whose name a Registered Note is
registered (as the case may be), "holder" (in relation to a Note, Receipt,
Coupon or Talon) means the bearer of any Bearer Note, Receipt, Coupon or Talon
or the person in whose name a Registered Note is registered (as the case may be)
and capitalised terms have the meanings given to them hereon, the absence of any
such meaning indicating that such term is not applicable to the Notes.
2. Exchanges of Exchangeable Bearer Notes and Transfers of Registered Notes
(a) Exchange of Exchangeable Bearer Notes
Subject as provided in Condition 2(f), Exchangeable Bearer Notes may be
exchanged for the same aggregate principal amount of Registered Notes at the
request in writing of the relevant Noteholder and upon surrender of each
Exchangeable Bearer Note to be exchanged, together with all unmatured Receipts.
Coupons and Talons relating to it, at the specified office of any Transfer
Agent: provided, however, that where an Exchangeable Bearer Note is surrendered
for exchange after the Record Date (as defined in Condition 7(b)) for any
payment of interest, the Coupon in respect of that payment of interest need not
be surrendered with it. Registered Notes may not be exchanged for Bearer Notes.
Bearer Notes of one Denomination may not be exchanged for Bearer Notes of
another Denomination. Bearer Notes that are not Exchangeable Bearer Notes may
not be exchanged for Registered Notes.
<PAGE>
(b) Transfer of Registered Notes
One or more Registered Notes may be transferred upon the surrender (at the
specified office of the Registrar or any Transfer Agent) of the Certificate
representing such Registered Notes to be transferred, together with the form of
transfer endorsed on such Certificate duly completed and executed and any other
evidence as the Registrar or Transfer Agent may reasonably require. In the case
of a transfer of part only of a holding of Registered Notes represented by one
Certificate, a new Certificate shall be issued to the transferee in respect of
the part transferred and a further new Certificate in respect of the balance of
the holding not transferred shall be issued to the transferor.
(c) Exercise of Options or Partial Redemption in Respect of Registered Notes
In the case of an exercise of an Issuer's or Noteholders' option in respect of,
or a partial redemption of, a holding of Registered Notes represented by a
single Certificate, a new Certificate shall be issued to the holder to reflect
the exercise of such option or in respect of the balance of the holding not
redeemed. In the case of a partial exercise of an option resulting in Registered
Notes of the same holding having different terms, separate Certificates shall be
issued in respect of those Notes of that holding that have the same terms. New
Certificates shall only be issued against surrender of the existing Certificates
to the Registrar or any Transfer Agent. In the case of a transfer of Registered
Notes to a person who is already a holder of Registered Notes, a new Certificate
representing the enlarged holding shall only be issued against surrender of the
Certificate representing the existing holding.
(d) Delivery of New Certificates
Each new Certificate to be issued pursuant to Conditions 2(a), (b) or (c) shall
be available for delivery within five business days of receipt of the request
for exchange, form of transfer or Exercise Notice or surrender of the
Certificate for exchange. Delivery of the new Certificate(s) shall be made at
the specified office of the Transfer Agent or of the Registrar (as the case may
be) to whom delivery or surrender of such request for exchange, form of
transfer, Exercise Notice or Certificate shall have been made or, at the option
of the holder making such delivery or surrender as aforesaid and as specified in
the relevant request for exchange, form of transfer, Exercise Notice or
otherwise in writing, be mailed by uninsured post at the risk of the holder
entitled to the new Certificate to such address as may be so specified, unless
such holder requests otherwise and pays in advance to the relevant Agent the
costs of such other method of delivery and/or such insurance as it may specify.
In this Condition 2(d), "business day" means a day, other than a Saturday or
Sunday, on which banks are open for business in the place of the specified
office of the relevant Transfer Agent or the Registrar.
(e) Exchange Free of Charge
Exchange and transfer of Notes and Certificates on registration, transfer,
exercise of an option or partial redemption shall be effected without charge by
or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon
payment of any tax or other governmental charges that may be imposed in relation
to it (or the giving of such indemnity as the Registrar or the relevant Transfer
Agent may reasonably require).
(f) Closed Periods
No Noteholder may require the transfer of a Registered Note to be registered or
an Exchangeable Bearer Note to be exchanged for one or more Registered Note(s)
(i) during the period of 15 days ending on the due date for redemption of, or
payment of any Instalment Amount in respect of, that Note, (ii) during the
period of 15 days prior to any date on which Notes may be called for redemption
by the Issuer at its option pursuant to Condition 6(d), (iii) after any such
Note has been called for redemption or (iv) during the period of seven days
ending on (and including) any Record Date. An Exchangeable Bearer Note called
for redemption may, however, be exchanged for one or more Registered Note(s) in
respect of which the Certificate is simultaneously surrendered not later than
the relevant Record Date.
3. Status
The Notes and the Receipts and Coupons constitute (subject to Condition 4)
unsecured obligations of the Issuer and shall at all times rank pari passu and
without any preference among themselves. The payment obligations of the Issuer
under the Notes and the Receipts and Coupons shall, save for such exceptions as
may be provided by applicable legislation and subject to Condition 4, at all
times rank at least equally with all other unsecured and unsubordinated
indebtedness and monetary obligations of the Issuer, present and future.
4. Negative Pledge
So long as any of the Notes remains outstanding (as defined in the Trust Deed)
the Issuer will ensure that no Relevant Indebtedness of the Issuer or any
Relevant Subsidiary (as defined in Condition 6) or of any other person and no
guarantee by the Issuer or any Relevant Subsidiary of any Relevant Indebtedness
(as defined in Condition 6) of any person will be secured by a mortgage, charge,
lien, pledge or other security interest (each a "Security Interest") upon, or
with respect to, any of the present or future business, undertaking, assets or
revenues (including any uncalled capital) of the Issuer or any Relevant
Subsidiary unless the Issuer shall, before or at the same time as the creation
of the Security Interest, take any and all action necessary to ensure that:
(i) all amounts payable by it under the Notes, the Receipts, the Coupons and the
Trust Deed are secured equally and rateably with the Relevant Indebtedness or
guarantee, as the case may be, by the Security Interest to the satisfaction of
the Trustee; or
<PAGE>
(ii) such other Security Interest or guarantee or other arrangement (whether or
not including the giving of a Security Interest) is provided in respect of all
amounts payable by the Issuer under the Notes, the Receipts, the Coupons and the
Trust Deed either (i) as the Trustee shall in its absolute discretion deem not
materially less beneficial to the interests of the Noteholders or (ii) as shall
be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the
Noteholders,
save that the Issuer or any Relevant Subsidiary may create or have outstanding a
Security Interest in respect of any Relevant Indebtedness and/or any guarantees
given by the Issuer or any Relevant Subsidiary in respect of any Relevant
Indebtedness of any person (without the obligation to provide a Security
Interest or guarantee or other arrangement in respect of the Notes, the
Receipts, the Coupons and the Trust Deed as aforesaid) where (1) such Relevant
Indebtedness has an initial maturity of not less than twenty years and is of a
maximum aggregate amount outstanding at any time not exceeding the greater of
(pound)250,000,000 or 20% of the Capital and Reserves (as defined in Condition
6) or (2) such Security Interest is provided in respect of a company becoming a
Subsidiary of the Issuer after the date of the relevant Pricing Supplement and
where such Security Interest existed at the time that company becomes a
Subsidiary of the Issuer (provided that such Security Interest was not created
in contemplation of that company becoming a Subsidiary of the Issuer and the
principal amount secured at the time of that company becoming a Subsidiary of
the Issuer is not subsequently increased).
5. Interest and Other Calculations
(a) Interest Rate and Accrual
Each Note bears interest on its outstanding principal amount from the Interest
Commencement Date at the rate per annum (expressed as a percentage) equal to the
Interest Rate, such interest being payable in arrear on each Interest Payment
Date.
Interest shall cease to accrue on each Note on the due date for redemption
unless, upon due presentation, payment of principal is improperly withheld or
refused, in which event interest shall continue to accrue (as well after as
before judgment) at the Interest Rate in the manner provided in this Condition 5
to the Relevant Date (as defined in Condition 8).
(b) Business Day Convention
If any date referred to in these Conditions that is specified to be subject to
adjustment in accordance with a Business Day Convention would otherwise fall on
a day that is not a Business Day, then, if the Business Day Convention specified
is (i) the Floating Rate Business Day Convention, such date shall be postponed
to the next day that is a Business Day unless it would thereby fall into the
next calendar month, in which event (A) such date shall be brought forward to
the immediately preceding Business Day and (B) each subsequent such date shall
be the last Business Day of the month in which such date would have fallen had
it not been subject to adjustment, (ii) the Following Business Day Convention,
such date shall be postponed to the next day that is a Business Day; (iii) the
Modified Following Business Day Convention, such date shall be postponed to the
next day that is a Business Day unless it would thereby fall into the next
calendar month, in which event such date shall be brought forward to the
immediately preceding Business Day or (iv) the Preceding Business Day
Convention, such date shall be brought forward to the immediately preceding
Business Day.
(c) Interest Rate on Floating Rate Notes
Subject to paragraph (v) below, if the Interest Rate is specified in the Pricing
Supplement as being Floating Rate, the Interest Rate for each Interest Accrual
Period shall be determined by the Calculation Agent at or about the Relevant
Time on the Interest Determination Date in respect of each Interest Accrual
Period in accordance with the following
(i) if the Primary Source for the Floating Rate is a Page, subject as provided
below, the Interest Rate shall be:
(x) the Relevant Rate (where such Relevant Rate on such Page is a composite
quotation or is customarily supplied by one entity); or
(y) the arithmetic mean of the Relevant Rates of the persons whose Relevant
Rates appear on that Page,
in each case appearing on such Page at the Relevant Time on the Interest
Determination Date
(ii) if the Page specified in the Pricing Supplement as a Primary Source
permanently ceases to quote the Relevant Rate(s) but such quotation(s) is/are
available from another page, section or other part of such information service
selected by the Calculation Agent (the "Replacement Page"), the Replacement Page
shall be substituted as the Primary Source for Interest Rate Quotations and if
no Replacement Page exists but such quotation(s) is/are available from a page,
section or other part of a different information service selected by the
Calculation Agent and approved by the Issuer (the "Secondary Replacement Page"),
the Secondary Replacement Page shall be substituted as the Primary Source for
Interest Rate Quotations
(iii) if the Primary Source for the Floating Rate is Reference Banks (as defined
below) or if sub-paragraph (i)(x) applies and no Relevant Rate appears on the
Page at the Relevant Time on the Interest Determination Date or if sub-paragraph
(i)(y) above applies and fewer than two Relevant Rates appear on the Page at the
Relevant Time on the Interest Determination Date, subject as provided below, the
Interest Rate shall be the arithmetic mean of the Relevant Rates that each of
the Reference Banks is quoting to leading banks in the Relevant Financial Centre
at the Relevant Time on the Interest Determination Date, as determined by the
Calculation Agent
(iv) if paragraph (iii) above applies, and the Calculation Agent determines that
fewer than two Reference Banks are so quoting Relevant Rates, subject as
provided below, the Interest Rate shall be the arithmetic mean of the rates per
annum
<PAGE>
(expressed as a percentage) that the Calculation Agent determines to be the
rates (being the nearest equivalent to the Benchmark) in respect of a
Representative Amount of the Relevant Currency that at least two out of five
leading banks selected by the Calculation Agent in the principal financial
centre of the country of the Relevant Currency (the "Principal Financial
Centre") selected by the Calculation Agent are quoting at or about the Relevant
Time on the date on which such banks would customarily quote such rates for a
period commencing on the Effective Date for a period equivalent to the Specified
Duration (x) to leading banks carrying on business in Europe, or (if the
Calculation Agent determines that fewer than two of such banks are so quoting to
leading banks in Europe) (y) to leading banks carrying on business in the
Principal Financial Centre; except that, if fewer than two of such banks are so
quoting to leading banks in the Principal Financial Centre, the Interest Rate
shall be the Interest Rate determined on the previous Interest Determination
Date (after readjustment for any difference between any Margin, Rate Multiplier
or Maximum or Minimum Interest Rate applicable to the preceding Interest Accrual
Period and to the relevant Interest Accrual Period)
(v) where the Relevant Currency is Euro (provided that if the third stage of the
European economic and monetary union has not started, references to Euro as the
relevant currency shall mean ECU) and the Interest Rate is specified as being
Floating Rate, provisions relating to the calculation and determination of
interest will be specified in the relevant Pricing Supplement.
(d) Interest Rate on Zero Coupon Notes
Where a Note the Interest Rate of which is specified in the Pricing Supplement
to be Zero Coupon is repayable prior to the Maturity Date and is not paid when
due, the amount due and payable prior to the Maturity Date shall be the
Redemption Amount of such Note. As from the Maturity Date, the Interest Rate for
any overdue principal of such a Note shall be a rate per annum (expressed as a
percentage) equal to the Amortisation Yield (as defined in Condition 6(b)).
(e) Margin, Maximum/Minimum Interest Rates, Instalment Amounts and Redemption
Amounts, Rate Multipliers and Rounding
(i) If any Margin or Rate Multiplier is specified in the Pricing Supplement
(either (x) generally, or (y) in relation to one or more Interest Accrual
Periods), an adjustment shall be made to all Interest Rates, in the case of (x),
or the Interest Rates for the specified Interest Accrual Periods, in the case of
(y), calculated in accordance with Condition 5(c) above by adding (if a positive
number) or subtracting the absolute value (if a negative number) of such Margin
or multiplying by such Rate Multiplier, subject always to the next paragraph.
(ii) If any Maximum or Minimum Interest Rate, Instalment Amount or Redemption
Amount is specified in the Pricing Supplement, then any Interest Rate,
Instalment Amount or Redemption Amount shall be subject to such maximum or
minimum, as the case may be.
(iii) For the purposes of any calculations required pursuant to these Conditions
(unless otherwise specified in the Pricing Supplement), (x) all percentages
resulting from such calculations shall be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point (with halves being rounded up), (y)
all figures shall be rounded to seven significant figures (with halves being
rounded up) and (z) all currency amounts that fall due and payable shall be
rounded to the nearest unit of such currency (with halves being rounded up),
save in the case of yen, which shall be rounded down to the nearest yen. For
these purposes "unit" means, with respect to any currency other than ECU, the
lowest amount of such currency that is available as legal tender in the country
of such currency and, (a) with respect to ECU, means 0.01 ECU and (b) with
respect to Euro, means 0.01 Euro.
(f) Calculations
The amount of interest payable in respect of any Note for any period shall be
calculated by multiplying the product of the Interest Rate and the outstanding
principal amount of such Note by the Day Count Fraction, unless an Interest
Amount (or a formula for its calculation) is specified in respect of such
period, in which case the amount of interest payable in respect of such Note for
such period shall equal such Interest Amount (or be calculated in accordance
with such formula). Where any Interest Period comprises two or more Interest
Accrual Periods, the amount of interest payable in respect of such Interest
Period shall be the sum of the amounts of interest payable in respect of each of
those Interest Accrual Periods.
(g) Determination and Publication of Interest Rates, Interest Amounts,
Redemption Amounts and Instalment Amounts
As soon as practicable after the Relevant Time on each Interest Determination
Date or such other time on such date as the Calculation Agent may be required to
calculate any Redemption Amount or Instalment Amount, obtain any quote or make
any determination or calculation, it shall determine the Interest Rate and
calculate the amount of interest payable (the "Interest Amounts") in respect of
each Denomination of the Notes for the relevant Interest Accrual Period,
calculate the Redemption Amount or Instalment Amount, obtain such quote or make
such determination or calculation, as the case may be, and cause the Interest
Rate and the Interest Amounts for each Interest Period and the relevant Interest
Payment Date and, if required to be calculated, the Redemption Amount or any
Instalment Amount to be notified to the Trustee, the Issuer, each of the Paying
Agents, the Noteholders, any other Calculation Agent appointed in respect of the
Notes that is to make a further calculation upon receipt of such information
and, if the Notes are listed on a stock exchange and the rules of such exchange
so require, such exchange as soon as possible after their determination but in
no event later than (i) the commencement of the relevant Interest Period, if
determined prior to such time, in the case of notification to such exchange of
an Interest Rate and Interest
<PAGE>
Amount, or (ii) in all other cases, the fourth Business Day after such
determination. Where any Interest Payment Date or Interest Period Date is
subject to adjustment pursuant to Condition 5(b), the Interest Amounts and the
Interest Payment Date so published may subsequently be amended (or appropriate
alternative arrangements made with the consent of the Trustee by way of
adjustment) without notice in the event of an extension or shortening of the
Interest Period. If the Notes become due and payable under Condition 10, the
accrued interest and the Interest Rate payable in respect of the Notes shall
nevertheless continue to be calculated as previously in accordance with this
Condition but no publication of the Interest Rate or the Interest Amount so
calculated need be made unless the Trustee otherwise requires. The determination
of each Interest Rate, Interest Amount, Redemption Amount and Instalment Amount,
the obtaining of each quote and the making of each determination or calculation
by the Calculation Agent(s) shall (in the absence of manifest error) be final
and binding upon all parties.
(h) Determination or Calculation by Trustee
If the Calculation Agent does not at any time for any reason determine or
calculate the Interest Rate for an Interest Period or any Interest Amount,
Instalment Amount or Redemption Amount, the Trustee shall do so (or shall
appoint an agent on its behalf to do so) and such determination or calculation
shall be deemed to have been made by the Calculation Agent. In doing so, the
Trustee shall apply the foregoing provisions of this Condition, with any
necessary consequential amendments, to the extent that, in its opinion, it can
do so, and, in all other respects it shall do so in such manner as it shall deem
fair and reasonable in all the circumstances.
(i) Definitions
In these Conditions, unless the context otherwise requires, the following
defined terms shall have the meanings set out below
"Business Day" means:
(i) in the case of a specified currency other than Euro, a day (other than a
Saturday or Sunday) on which commercial banks and foreign exchange markets
settle payments in the principal financial centre for that currency; and/or
(ii) in the case of Euro, a day on which the TARGET system is operating; and/or
(iii) in the case of ECU, any day other than a Saturday, a Sunday or a day
designated as a non-settlement day for ECU on the Reuters Screen ISDE page on
the Reuter Monitor Money Rates Service ("Reuters") or a day so designated by the
ECU Banking Association if ECU non-settlement days do not appear on that page
or, if no days are so designated, a day on which ECU interbank payments cannot
be settled; and/or
(iv) in the case of a specified currency with one or more financial centres, a
day (other than a Saturday or Sunday) on which commercial banks and foreign
exchange markets settle payments in the specified currency in the specified
financial centre or, if no financial centre is specified, generally in each of
such financial centres.
"Day Count Fraction" means, in respect of the calculation of an amount of
interest on any Note for any period of time (whether or not constituting an
Interest Period, the "Calculation Period"):
(i) if "Actual/365" or "Actual/Actual" is specified in the Pricing Supplement,
the actual number of days in the Calculation Period divided by 365 (or, if any
portion of that Calculation Period falls in a leap year, the sum of (A) the
actual number of days in that portion of the Calculation Period falling in a
leap year divided by 366 and (B) the actual number of days in that portion of
the Calculation Period falling in a non-leap year divided by 365);
(ii) if "Actual/365 (Fixed)" is specified in the Pricing Supplement, the actual
number of days in the Calculation Period divided by 365;
(iii) if "Actual/360" is specified in the Pricing Supplement, the actual number
of days in the Calculation Period divided by 360;
(iv) if "30/360", "360/360" or "Bond Basis" is specified in the Pricing
Supplement, the number of days in the Calculation Period divided by 360 (the
number of days to be calculated on the basis of a year of 360 days with 12
30-day months (unless (a) the last day of the Calculation Period is the 31st day
of a month but the first day of the Calculation Period is a day other than the
30th or 31st day of a month, in which case the month that includes that last day
shall not be considered to be shortened to a 30-day month, or (b) the last day
of the Calculation Period is the last day of the month of February, in which
case the month of February shall not be considered to be lengthened to a 30-day
month)); and
(v) if "30E/360" or "Eurobond Basis" is specified in the Pricing Supplement, the
number of days in the Calculation Period divided by 360 (the number of days to
be calculated on the basis of a year of 360 days with 12 30-day months, without
regard to the date of the first day or last day of the Calculation Period
unless, in the case of a Calculation Period ending on the Maturity Date, the
Maturity Date is the last day of the month of February, in which case the month
of February shall not be considered to be lengthened to a 30-day month).
"Effective Date" means, with respect to any Floating Rate to be determined on an
Interest Determination Date, the date specified as such in the Pricing
Supplement or, if none is so specified, the first day of the Interest Accrual
Period to which such Interest Determination Date relates.
<PAGE>
"Interest Accrual Period" means the period beginning on (and including) the
Interest Commencement Date and ending on (but excluding) the first Interest
Period Date and each successive period beginning on (and including) an Interest
Period Date and ending on (but excluding) the next succeeding Interest Period
Date.
"Interest Commencement Date" means the Issue Date or such other date as may be
specified in the Pricing Supplement.
"Interest Determination Date" means, with respect to an Interest Rate and
Interest Accrual Period, the date specified as such in the Pricing Supplement
or, if none is so specified and the Relevant Currency is not Euro, the first day
of such Interest Accrual Period if the Relevant Currency is Sterling or the day
falling two Business Days in London for the Relevant Currency prior to the first
day of such Interest Accrual Period if the Relevant Currency is not Sterling.
"Interest Period" means the period beginning on (and including) the Interest
Commencement Date and ending on (but excluding) the first Interest Payment Date
and each successive period beginning on (and including) an Interest Payment Date
and ending on (but excluding) the next succeeding Interest Payment Date.
"Interest Period Date" means each Interest Payment Date unless otherwise
specified in the Pricing Supplement.
"Interest Rate" means the rate of interest payable from time to time in respect
of this Note and that is either specified or calculated in accordance with the
provisions in the Pricing Supplement.
"Page" means such page, section, caption, column or other part of a particular
information service (including, but not limited to, Reuters and the Dow Jones
Telerate Service ("Telerate")) as may be specified for the purpose of providing
a Relevant Rate, or such other page, section, caption, column or other part as
may replace it on that information service or on such other information service,
in each case as may be nominated by the person or organisation providing or
sponsoring the information appearing there for the purpose of displaying rates
or prices comparable to that Relevant Rate.
"Reference Banks" means the institutions specified as such in the Pricing
Supplement or, if none, four (or, if the Relevant Financial Centre is Helsinki,
five) major banks selected by the Calculation Agent in the interbank market (or,
if appropriate, money, swap or over-the-counter index options market) that is
most closely connected with the Benchmark.
"Relevant Currency" means the currency specified in the Pricing Supplement
or, if none is specified, the currency in which the Notes are denominated.
"Relevant Financial Centre" means, with respect to any Floating Rate to be
determined on an Interest Determination Date, the financial centre as may be
specified as such in the Pricing Supplement or, if none is so specified, the
financial centre with which the relevant Benchmark (which, in the case of Euro,
shall be as specified in the Pricing Supplement) is most closely connected or,
if none is so connected, London.
"Relevant Rate" means the Benchmark for a Representative Amount of the Relevant
Currency for a period (if applicable or appropriate to the Benchmark) equal to
the Specified Duration commencing on the Effective Date.
"Relevant Time" means, with respect to any Interest Determination Date, if the
Relevant Currency is not Euro, the local time in the Relevant Financial Centre
specified in the Pricing Supplement or, if none is specified, the local time in
the Relevant Financial Centre at which it is customary to determine bid and
offered rates in respect of deposits in the Relevant Currency in the interbank
market in the Relevant Financial Centre and, if the Relevant Currency is Euro,
the time specified in the relevant Pricing Supplement.
"Representative Amount" means, with respect to any Floating Rate to be
determined on an Interest Determination Date, the amount specified as such in
the Pricing Supplement or, if none is specified, an amount that is
representative for a single transaction in the relevant market at the time.
"Specified Duration" means, with respect to any Floating Rate to be determined
on an Interest Determination Date, the duration specified in the Pricing
Supplement or, if none is specified, a period of time equal to the relative
Interest Accrual Period, ignoring any adjustment pursuant to Condition 5(b).
(j) Calculation Agent and Reference Banks
The Issuer shall procure that there shall at all times be four Reference Banks
(or such other number as may be required) with offices in the Relevant Financial
Centre (or, if the Relevant Currency is Euro, in such place or places as are
specified in the relevant Pricing Supplement) and one or more Calculation Agents
if provision is made for them in the Pricing Supplement and for so long as any
Note is outstanding (as defined in the Trust Deed). If any Reference Bank
(acting through its relevant office) is unable or unwilling to continue to act
as a Reference Bank, then the Issuer shall (with the prior approval of the
Trustee) appoint another Reference Bank with an office in the Relevant Financial
Centre to act as such in its place. Where more than one Calculation Agent is
appointed in respect of the Notes, references in these Conditions to the
Calculation Agent shall be construed as each Calculation Agent performing its
respective duties under the Conditions. If the Calculation Agent is unable or
unwilling to act as such or if the Calculation Agent fails duly to establish the
Interest Rate for an Interest Period or Interest Accrual Period or to calculate
any Interest Amount, Instalment Amount or the Redemption Amount or to comply
with any other requirement, the Issuer shall (with the prior approval of the
Trustee) appoint a leading bank or investment
<PAGE>
banking firm engaged in the interbank market (or, if appropriate, money, swap or
over-the-counter index options market) that is most closely connected with the
calculation or determination to be made by the Calculation Agent (acting through
its principal London office or any other office actively involved in such
market) to act as such in its place. The Calculation Agent may not resign its
duties without a successor having been appointed as aforesaid.
(k) Certificates to be Final
All certificates, communications, opinions, determinations, calculations,
quotations and decisions given, expressed, made or obtained for the purposes of
the provisions of this Condition 5, whether by the Calculation Agent or the
Trustee, shall (in the absence of wilful default, bad faith or manifest error)
be binding on the Issuer, the Calculation Agent, the Trustee, the other Paying
Agents and all Noteholders, Receiptholders and Couponholders and (in the absence
as aforesaid) no liability to the Issuer, the Noteholders, the Receiptholders or
the Couponholders shall attach to the Calculation Agent or the Trustee in
connection with the exercise or non-exercise by them of their powers, duties and
discretions pursuant to such provisions.
6. Redemption, Purchase and Options
(a) Redemption by Instalments and Final Redemption
(i) Unless previously redeemed, purchased and cancelled as provided in this
Condition 6 or the relevant Instalment Date (being one of the dates so specified
hereon) is extended pursuant to the Issuer's or any Noteholder's option in
accordance with Condition 6(d) or 6(e), each Note that provides for Instalment
Dates and Instalment Amounts shall be partially redeemed on each Instalment Date
at the related Instalment Amount specified in the Pricing Supplement. The
outstanding principal amount of each such Note shall be reduced by the
Instalment Amount (or, if such Instalment Amount is calculated by reference to a
proportion of the principal amount of such Note, such proportion) for all
purposes with effect from the related Instalment Date, unless payment of the
Instalment Amount is improperly withheld or refused on presentation of the
related Receipt, in which case, such amount shall remain outstanding until the
Relevant Date relating to such Instalment Amount.
(ii) Unless previously redeemed, purchased and cancelled as provided below or
its maturity is extended pursuant to the Issuer's or any Noteholder's option in
accordance with Condition 6(d) or 6(e), each Note shall be finally redeemed on
the Maturity Date specified in the Pricing Supplement at its Redemption Amount
(which, unless otherwise provided in the Pricing Supplement, is its principal
amount) or, in the case of a Note falling within paragraph (i) above, its final
Instalment Amount.
(b) Early Redemption of Zero Coupon Notes
(i) The Redemption Amount payable in respect of any Note that does not bear
interest prior to the Maturity Date, the Redemption Amount of which is not
linked to an index and/or a formula, upon redemption of such Note pursuant to
Condition 6(c) or 6(f) or upon it becoming due and payable as provided in
Condition 10 shall be the Amortised Face Amount (calculated as provided below)
of such Note.
(ii) Subject to the provisions of sub-paragraph (iii) below, the Amortised Face
Amount of any such Note shall be the scheduled Redemption Amount of such Note on
the Maturity Date discounted at a rate per annum (expressed as a percentage)
equal to the Amortisation Yield (which, if none is shown in the Pricing
Supplement, shall be such rate as would produce an Amortised Face Amount equal
to the issue price of the Notes if they were discounted back to their issue
price on the Issue Date) compounded annually. Where such calculation is to be
made for a period of less than one year, it shall be made on the basis of the
Day Count Fraction shown hereon.
(iii) If the Redemption Amount payable in respect of any such Note upon its
redemption pursuant to Condition 6(c) or 6(f) or upon it becoming due and
payable as provided in Condition 10 is not paid when due, the Redemption Amount
due and payable in respect of such Note shall be the Amortised Face Amount of
such Note as defined in sub-paragraph (ii) above, except that such sub-paragraph
shall have effect as though the reference therein to the date on which the Note
becomes due and payable were replaced by a reference to the Relevant Date. The
calculation of the Amortised Face Amount in accordance with this sub-paragraph
shall continue to be made (as well after as before judgment) until the Relevant
Date, unless the Relevant Date falls on or after the Maturity Date, in which
case the amount due and payable shall be the scheduled Redemption Amount of such
Note on the Maturity Date together with any interest that may accrue in
accordance with Condition 5(d).
(c) Redemption for Taxation Reasons
If, as a result of any amendment to or change in the laws or regulations of the
United Kingdom or of any political subdivision thereof or any authority therein
or thereof having power to tax or any change in the official or generally
accepted interpretation or application of such laws or regulations which becomes
effective on or after the date of the Trust Deed, the Issuer has or will become
obliged to pay any additional amounts as described in Condition 8 (and such
amendment or change has been evidenced by the delivery by the Issuer to the
Trustee (who shall accept such certificate and opinion as sufficient evidence
thereof) of (i) a certificate signed by two directors of the Issuer on behalf of
the Issuer stating that such amendment or change has occurred (irrespective of
whether such amendment or change is then effective), describing the facts
leading thereto and stating that such requirement cannot be avoided by the
Issuer, taking reasonable measures available to it and (ii) an opinion of
independent legal advisers of recognised standing to the effect that such
amendment or change has occurred (irrespective of whether such amendment or
change is then effective)), the Issuer may (having given not less than 30 nor
more
<PAGE>
than 90 days' notice to the Trustee and to the holders in accordance with
Condition 16) redeem all, but not some only, of the Notes (other than Notes in
respect of which the Issuer shall have given a notice of redemption pursuant to
Condition 6(d) or in respect of which a Noteholder shall have given a Put Event
Notice in accordance with Condition 6(f), in each case prior to any notice being
given under this Condition 6(c)) at their Redemption Amount, together with
accrued interest to the date fixed for such redemption, provided that no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Issuer would be required to pay such additional amounts were a
payment in respect of the Notes then due.
(d) Redemption at the Option of the Issuer and Exercise of Issuer's Options
If so provided in the Pricing Supplement, the Issuer may, on giving irrevocable
notice to the Noteholders falling within the Issuer's Option Period, redeem, or
exercise the Issuer's option in relation to, all or, if so provided, some of the
Notes (other than Notes in respect of which the Issuer shall have given a notice
of redemption pursuant to Condition 6(c) or in respect of which a Noteholder
shall have given a Put Event Notice in accordance with Condition 6(f), in each
case prior to any notice being given under this Condition 6(d)) in the principal
amount or integral multiples thereof and on the date or dates so provided. Any
such redemption of Notes shall be at their Redemption Amount together with
interest accrued to the date fixed for redemption.
All Notes in respect of which any such notice is given shall be redeemed, or the
Issuer's option shall be exercised, on the date specified in such notice in
accordance with this Condition.
In the case of a partial redemption or a partial exercise of the Issuer's
option, the notice to Noteholders shall also contain the certificate numbers of
the Notes to be redeemed or in respect of which such option has been exercised,
which shall have been drawn in such place as the Trustee may approve and in such
manner as it deems appropriate, subject to compliance with any applicable laws
and stock exchange requirements. So long as the Notes are listed on the London
Stock Exchange or any other stock exchange and the rules of the relevant stock
exchange so require, the Issuer shall, once in each year in which there has been
a partial redemption of the Notes, cause to be published in a leading newspaper
of general circulation in London or as specified by such other stock exchange, a
notice specifying the aggregate principal amount of Notes outstanding and a list
of the Notes drawn for redemption but not surrendered.
(e) Redemption at the Option of Noteholders and Exercise of Noteholders'
Options
If so provided in the Pricing Supplement, the Issuer shall, at the option of the
holder of any such Note, redeem such Note on the date or dates so provided at
its Redemption Amount together with interest accrued to the date fixed for
redemption.
To exercise such option or any other Noteholders' option that may be set out
hereon the holder must deposit (in the case of Bearer Notes) such Note (together
with all unmatured Receipts and Coupons and unexchanged Talons) with any Paying
Agent or (in the case of Registered Notes) the Certificate representing such
Note(s) with the Registrar or any Transfer Agent at its specified office,
together with a duly completed option exercise notice ("Exercise Notice" which
expression shall include any Put Notice (as defined below)) in the form
obtainable from any Paying Agent, the Registrar or any Transfer Agent (as
applicable) within the Noteholders' Option Period (which expression shall, in
the case of the exercise of the option referred to in Condition 6(f) below, mean
the Put Period (as defined below)). No Note or Certificate so deposited and
option exercised may be withdrawn without the prior consent of the Issuer,
except that such Note or Certificate will be returned to the relevant Noteholder
by the Paying Agent, the Registrar or Transfer Agent with which it has been
deposited if, prior to the due date for its redemption or the exercise of the
option, the Note becomes immediately due and payable or if upon due presentation
payment of the redemption moneys is not made or exercise of the option is
denied.
(f) Redemption at the Option of the Noteholders on a Put Event
If so provided in the Pricing Supplement, if, at any time while any of the Notes
remains outstanding, a Restructuring Event occurs and prior to the commencement
of or during the Restructuring Period an Independent Financial Adviser shall
have certified in writing to the Trustee that such Restructuring Event will not
be or is not, in its opinion, materially prejudicial to the interests of the
Noteholders, the following provisions of this Condition 6(f) shall cease to have
any further effect in relation to such Restructuring Event.
If, at any time while any of the Notes remains outstanding, a Restructuring
Event occurs and (subject to this Condition 6(f)) within the Restructuring
Period, either:
(i) if at the time such Restructuring Event occurs there are Rated Securities, a
Rating Downgrade in respect of such Restructuring Event also occurs; or
(ii) if at such time there are no Rated Securities, a Negative Rating Event also
occurs; and
an Independent Financial Adviser shall have certified in writing to the Trustee
that such Restructuring Event is, in its opinion, materially prejudicial to the
interests of the Noteholders (a "Negative Certification"), then, unless at any
time the Issuer shall have given a notice under Condition 6(c) or 6(d), the
holder of each Note will, upon the giving of a Put Event Notice (as defined
below), have the option (the "Put Option") to require the Issuer to redeem or,
at the option of the Issuer, purchase (or procure the purchase of) that Note on
the Put Date (as defined below), at its principal amount together with (or,
where purchased, together with an amount equal to) interest (if any) accrued to
(but excluding) the Put Date.
<PAGE>
An event shall be deemed not to be a Restructuring Event if, notwithstanding the
occurrence of a Rating Downgrade or a Negative Rating Event, the rating assigned
to the Rated Securities by any Rating Agency is subsequently increased to, or,
as the case may be, there is assigned to the Notes or other unsecured and
unsubordinated debt of the Issuer or a Relevant Subsidiary (or of any Subsidiary
of the Issuer which is guaranteed on an unsecured and unsubordinated basis by
the Issuer or a Relevant Subsidiary) having an initial maturity of five years or
more by any Rating Agency, an investment grade rating (BBB-/Baa3 or their
respective equivalents for the time being) or better prior to any Negative
Certification being issued.
Any certification by an Independent Financial Adviser as aforesaid as to whether
or not, in its opinion any Restructuring Event is materially prejudicial to the
interests of the Noteholders shall, in the absence of manifest error, be
conclusive and binding on the Trustee, the Issuer and the Noteholders.
Promptly upon, and in any event within 14 days after, the Issuer becoming aware
that a Put Event has occurred, the Issuer shall, and at any time upon the
Trustee becoming similarly so aware the Trustee may, and if so requested by the
holders of at least one-quarter in principal amount of the Notes then
outstanding shall, give notice (a "Put Event Notice") to the Noteholders in
accordance with Condition 16 specifying the nature of the Put Event and the
procedure for exercising the Put Option.
To exercise the Put Option, the holder of a Note must deposit (in the case of a
Bearer Note) such Note with any Paying Agent or (in the case of Registered
Notes) the Certificate representing such Note(s) with the Registrar or any
Transfer Agent at its specified office, on a day which is a Business Day in the
City of London and in the place of such specified office falling within the
period (the "Put Period") of 45 days after that on which a Put Event Notice is
given, accompanied by a duly completed and signed notice of exercise in the form
(for the time being current) obtainable from any specified office of any Paying
Agent, the Registrar or any Transfer Agent (as applicable) (a "Put Notice") and
in which the holder may specify a bank account to which payment is to be made
under this Condition 6. Where any Bearer Note is delivered without all Coupons
relating to it which mature after the day (the "Put Date") being the fifteenth
day after the date of expiry of the Put Period, the exercise of the Put Option
in respect of such Note shall be subject to the provision of such indemnity as
the Issuer may reasonably require. The Paying Agent to which such Note and Put
Notice or, as the case may be, the Registrar or Transfer Agent to which the
Certificate and Put Notice are delivered shall issue to the Noteholder concerned
a non-transferable receipt in respect of the Note so delivered. Payment in
respect of any Note so delivered shall be made, if the holder duly specifies in
the Put Notice an account with a bank to which payment is to be made, on the Put
Date by transfer to that bank account and, in every other case, on or after the
Put Date in each case against presentation and surrender or (as the case may be)
endorsement of such receipt at any specified office of any Paying Agent. A Put
Notice, once given, shall be irrevocable. For the purposes of Conditions 9, 10,
11, 12, 14, 16 and 17 and for certain other purposes specified in the Trust
Deed, receipts issued pursuant to this Condition 6(f) shall be treated as if
they were Notes. The Issuer shall redeem or, at the option of the Issuer,
purchase (or procure the purchase of) the relevant Note on the applicable Put
Date unless previously redeemed or purchased.
A Rating Downgrade or a Negative Rating Event or a non-investment grade rating
shall be deemed not to have occurred as a result or in respect of a
Restructuring Event if the Rating Agency making the relevant reduction in rating
or, where applicable, declining to assign a rating of at least investment grade
as provided in this Condition 6(f) does not announce or publicly confirm or
inform the Trustee in writing at its request that the reduction or, where
applicable, declining to assign a rating of at least investment grade was the
result, in whole or in part, of any event or circumstance comprised in or
arising as a result of the applicable Restructuring Event.
The Trust Deed provides that the Trustee is under no obligation to ascertain
whether a Restructuring Event, a Negative Rating Event or any event which could
lead to the occurrence of, or could constitute a, Restructuring Event has
occurred and until it shall have actual knowledge or express notice pursuant to
the Trust Deed to the contrary the Trustee may assume that no Restructuring
Event, Negative Rating Event or such other event has occurred. The Trust Deed
also provides that in determining whether or not a Restructuring Event has
occurred, the Trustee may rely solely on an opinion given in a certificate
signed by two directors of the Issuer.
In these Conditions
"Appointment" means the Instrument of Appointment dated August 1989 under
Section 11 of the Water Act 1989 (now Section 6 of the Water Industry Act) as in
effect on the date of the relevant Pricing Supplement, appointing SWSL as a
water undertaker and sewerage undertaker;
"Business Day" means, in relation to any place, a day on which commercial banks
and foreign exchange markets generally settle payments in that place;
"Capital and Reserves" means the aggregate of:
(i) the amount paid up or credited as paid up on the share capital of the
Issuer; and
(ii) the total of the capital, revaluation and revenue reserves of the Group,
including any share premium account, capital redemption reserve and credit
balance on the profit and loss account, but excluding sums set aside for
taxation and amounts attributable to minority interests and deducting any debit
balance on the profit and loss account,
<PAGE>
all as shown in the then latest audited consolidated balance sheet and profit
and loss account of the Group prepared in accordance with generally accepted
accounting principles in the United Kingdom, but adjusted as may be necessary in
respect of any variation in the paid up share capital or share premium account
of the Issuer since the date of that balance sheet and further adjusted as may
be necessary to reflect any change since the date of that balance sheet in the
Subsidiary Undertakings comprising the Group and/or as the Auditors (as defined
in the Trust Deed) may consider appropriate. A report by the Auditors as to the
amount of Capital and Reserves at any given time shall, in the absence of
manifest error, be conclusive and binding on all parties;
"Composite Licence" means the document dated 28th March 1990 containing the
Generation, Transmission and PES Licences granted to the Issuer by the Secretary
of State for Scotland under the Electricity Act;
"Electricity Act" means the Electricity Act 1989 as amended or re-enacted from
time to time and all subordinate legislation made pursuant thereto;
"Electricity Licence" means any licence granted or issued by any relevant
authority or person in the United Kingdom or by or pursuant to any primary or
secondary legislation which entitles the person holding such licence to generate
and/or transmit and/or distribute and/or supply electricity (other than a second
tier supply licence) in the United Kingdom or any part thereof;
"Excluded Subsidiary" means any Subsidiary of the Issuer:
(i) which is a single purpose company whose principal assets and business are
constituted by the ownership, acquisition, development and/or operation of an
asset;
(ii) none of whose indebtedness for borrowed money in respect of the financing
of such ownership, acquisition, development and/or operation of an asset is
subject to any recourse whatsoever to any member of the Group (other than such
Subsidiary or another Excluded Subsidiary) in respect of the repayment thereof,
except as expressly referred to in sub-paragraph (ii) of the definition of
Project Finance Indebtedness; and
(iii) which has been designated as such by the Issuer by written notice to
the Trustee,
provided that the Issuer may give written notice to the Trustee at any time that
any Excluded Subsidiary is no longer an Excluded Subsidiary, whereupon it shall
cease to be an Excluded Subsidiary;
"Generation Licence" means the electricity generation licence granted by the
Secretary of State for Scotland to the Issuer under the Electricity Act as
comprised in the Composite Licence as in effect on the date of the relevant
Pricing Supplement;
"Group" means the Issuer and its Subsidiary Undertakings and "member of the
Group" shall be construed accordingly;
"indebtedness for borrowed money" means any present or future indebtedness
(whether being principal, premium, interest or other amounts) for or in respect
of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or
acceptance credit, or (iii) any notes, bonds, debentures, debenture stock, loan
stock or other securities offered, issued or distributed whether by way of
public offer, private placing, acquisition consideration or otherwise and
whether issued for cash or in whole or in part or for a consideration other than
cash;
"Independent Financial Adviser" means a financial adviser appointed by the
Issuer and approved by the Trustee (such approval not to be unreasonably
withheld or delayed) or, if the Issuer shall not have appointed such an adviser
within 21 days after becoming aware of the occurrence of a Restructuring Event
and the Trustee is indemnified to its satisfaction against the costs of such
adviser, appointed by the Trustee following consultation with the Issuer;
"Issuer Licences" means the Generation Licence, the Transmission Licence and the
PES Licence and, in any such case, and from time to time any other licence or
licences relating to the generation, transmission, distribution and/or supply of
electricity granted to the Issuer and/or any Relevant Subsidiary as contemplated
pursuant to paragraph (A) of "Restructuring Event" below and "Issuer Licence"
shall be construed accordingly;
"Manweb" means Manweb plc;
"Manweb PES Licence" means the public electricity supply licence granted by the
Secretary of State for Energy to Manweb under the Electricity Act (but for the
avoidance of doubt excluding for this purpose any second tier licence) as in
effect on the date of the relevant Pricing Supplement, and, from time to time,
any other licence or licences relating to the distribution and/or supply of
electricity granted to the Issuer and/or any Relevant Subsidiary as contemplated
pursuant to paragraph (A) of "Restructuring Event" below;
A "Negative Rating Event" shall be deemed to have occurred if (A) the Issuer
does not, either prior to or not later than 14 days after the date of a Negative
Certification in respect of the relevant Restructuring Event, seek, and
thereupon use all reasonable endeavours to obtain, a rating of the Notes or any
other unsecured and unsubordinated debt of the Issuer or a Relevant Subsidiary
(or of any Subsidiary of the Issuer which is guaranteed on an unsecured and
unsubordinated basis by the Issuer or a Relevant Subsidiary) having an initial
maturity of five years or more from a Rating Agency or (B) if it does so seek
and use such endeavours, it is unable, as a result of such Restructuring Event,
to obtain such a rating of at least investment grade (BBB-/Baa3, or their
respective equivalents for the time being);
<PAGE>
"PES Licence" means the public electricity supply licence granted by the
Secretary of State for Scotland to the Issuer under the Electricity Act (but for
the avoidance of doubt excluding for this purpose any second tier licence) as
comprised in the Composite Licence as in effect on the date of the relevant
Pricing Supplement;
"Pooling and Settlement Agreement" means the agreement dated 30th March 1990 (as
amended and restated as at 22nd April 1994) made by the Issuer and Manweb with
The National Grid Company plc and others setting out the rules and procedures
for the operation of an electricity trading pool and of a settlement system and,
while the same has effect, the Initial Settlement Agreement also dated 30th
March 1990 and made between the same parties, in each case as in force on the
date of the relevant Pricing Supplement;
"Principal Subsidiary" at any time shall mean:
(A) any Relevant Subsidiary; or
(B) any Subsidiary of the Issuer (not being an Excluded Subsidiary or any other
Subsidiary of the Issuer 90% in principal amount of whose indebtedness for
borrowed money is Project Finance Indebtedness):
(i) whose (a) profits on ordinary activities before tax or (b) net assets
represent 20% or more of the consolidated profits on ordinary activities before
tax of the Group or consolidated net assets of the Group respectively, in each
case as calculated by reference to the then latest audited financial statements
of such Subsidiary and the then latest audited consolidated financial statements
of the Group; or
(ii) to which is transferred all or substantially all of the business,
undertaking and assets of a Subsidiary of the Issuer which immediately prior to
such transfer is a Principal Subsidiary, whereupon the transferor Subsidiary
shall immediately cease to be a Principal Subsidiary and the transferee
Subsidiary shall cease to be a Principal Subsidiary under the provisions of this
sub-paragraph (ii) (but without prejudice to the provisions of sub-paragraph (i)
above), upon publication of its next audited financial statements,
all as more fully defined in the Trust Deed.
A Report by the Auditors that, in their opinion, a Subsidiary of the Issuer is
or is not or was or was not at any particular time or throughout any specified
period a Principal Subsidiary shall, in the absence of manifest error, be
conclusive and binding on the Issuer, the Trustee and the Noteholders;
"Project Finance Indebtedness" means any present or future indebtedness incurred
to finance the ownership, acquisition, development and/or operation of an asset,
whether or not an asset of a member of the Group:
(i) which is incurred by an Excluded Subsidiary; or
(ii) in respect of which the person or persons to whom any such indebtedness is
or may be owed by the relevant borrower (whether or not a member of the Group)
has or have no recourse whatsoever to any member of the Group (other than an
Excluded Subsidiary) for the repayment thereof other than:
(A) recourse for amounts limited to the cash flow or net cash flow (other than
historic cash flow or historic net cash flow) from such asset; and/or
(B) recourse for the purpose only of enabling amounts to be claimed in respect
of such indebtedness in an enforcement of any encumbrance given by such borrower
over such asset or the income, cash flow or other proceeds, deriving therefrom
(or given by any shareholder or the like in the borrower over its shares or the
like in the capital of the borrower) to secure such indebtedness, provided that
(aa) the extent of such recourse is limited solely to the amount of any
recoveries made on any such enforcement, and (bb) such person or persona is/are
not entitled, by virtue of any right or claim arising out of or in connection
with such indebtedness, to commence proceedings for the winding up or
dissolution of any member of the Group (other than an Excluded Subsidiary) or to
appoint or procure the appointment of any receiver, trustee or similar person or
officer in respect of any member of the Group (other than an Excluded
Subsidiary) or any of its assets (save for the assets the subject of such
encumbrance); and/or
(C) recourse under any form of assurance, undertaking or support, which recourse
is limited to a claim for damages (other than liquidated damages and damages
required to be calculated in a specified way) for breach of an obligation (not
being a payment obligation or an obligation to procure payment by another or an
indemnity in respect thereof or any obligation to comply or to procure
compliance by another with any financial ratios or other tests of financial
condition) by any member of the Group (other than an Excluded Subsidiary);
A "Put Event" occurs on the date of the last to occur of (aa) a Restructuring
Event, (bb) either a Rating Downgrade or, as the case may be, a Negative Rating
Event and (cc) the relevant Negative Certification;
"Rated Securities" means the Notes, if at any time and for so long as they have
a rating from a Rating Agency, and otherwise any other unsecured and
unsubordinated debt of the Issuer or a Relevant Subsidiary (or of any Subsidiary
of the Issuer which is guaranteed on an unsecured and unsubordinated basis by
the Issuer or a Relevant Subsidiary) having an initial maturity of five years or
more which is rated by a Rating Agency;
<PAGE>
"Rating Agency" means Standard & Poor's Rating Services, a division of the
McGraw-Hill Companies, Inc. or any of its Subsidiaries and their successors or
Moody's Investors Service, Inc. or any of its Subsidiaries and their successors
or any rating agency substituted for either of them (or any permitted substitute
of them) by the Issuer from time to time with the prior written approval of the
Trustee (such approval not to be unreasonably withheld or delayed);
A "Rating Downgrade" shall be deemed to have occurred in respect of a
Restructuring Event if the then current rating assigned to the Rated Securities
by any Rating Agency (whether provided by a Rating Agency at the invitation of
the Issuer or by its own volition) is withdrawn or reduced from an investment
grade rating (BBB-/Baa3, or their respective equivalents for the time being, or
better) to a non-investment grade rating (BB+/Ba1, or their respective
equivalents for the time being, or worse) or, if the Rating Agency shall then
have already rated the Rated Securities below investment grade (as described
above), the rating is lowered one full rating category (from BB+/Ba1 to BB/Ba2
or such similar lowering);
"Relevant Indebtedness" means any present or future indebtedness (whether being
principal, premium, interest or other amounts) in the form of or represented by
notes, bonds, debentures, debenture stock, loan stock or other securities,
whether issued for cash or in whole or in part for a consideration other than
cash, and which, with the agreement of the person issuing the same, are quoted,
listed or ordinarily dealt in on any stock exchange or recognised
over-the-counter or other securities market, but shall in any event not include
Project Finance Indebtedness;
"Relevant Group Member" means a member of the Group that holds a Relevant
Licence;
"Relevant Licence" means any Issuer Licence and the Manweb PES Licence;
"Relevant Subsidiary" means a wholly-owned Subsidiary of the Issuer or of
another Relevant Subsidiary which has granted a guarantee in respect of the
Notes as contemplated in paragraph (A) of "Restructuring Event" below;
"Restructuring Event" means the occurrence of any one or more of the
following events:
(A) (aa) the Secretary of State gives the Issuer or Manweb or any Relevant
Subsidiary written notice of revocation of any Relevant Licence (excluding, in
relation to the PES Licence or the Manweb PES licence any second tier supply
licence and provided that the giving of notice pursuant to paragraph 3 of Part 1
of the Manweb PES Licence or paragraph 3 of Part 1 of the PES Licence in each
case as in effect on the date of the relevant Pricing Supplement, or any other
similar provision in any other Manweb PES Licence or PES Licence, shall not be
deemed to constitute the revocation of the relevant Licence), or
(bb) the Issuer or Manweb or any Relevant Subsidiary agrees in writing with the
Secretary of State to any revocation or surrender of any Relevant Licence; or
(cc) any legislation (whether primary or subordinate) is enacted terminating or
revoking any Relevant Licence,
except in any such case in circumstances where (x) a licence or licences on
substantially not less favourable terms is or are granted to the Issuer or one
or more Relevant Subsidiaries or wholly-owned Subsidiaries (not being an
Excluded Subsidiary) of the Issuer or one or more Relevant Subsidiaries and (y)
in the case of the grant of a licence or licences to wholly-owned Subsidiaries
of the Issuer or one or more Relevant Subsidiaries, such Subsidiary or
Subsidiaries at the time of such grant executes in favour of the Trustee an
unconditional and irrevocable guarantee in respect of the Notes (jointly and
severally where appropriate) in such form as the Trustee may approve (such
approval not to be unreasonably withheld or delayed), or
(B) any modification (other than a modification which is of a formal, minor or
technical nature) is made to the terms and conditions of any Relevant Licence on
or after the date of the relevant Pricing Supplement, unless two directors of
the Issuer have certified in good faith to the Trustee that the modified terms
and conditions are not materially less favourable to the business of the Group
and to the business of the member of the Group holding the Relevant Licence; or
(C) (aa) the Pooling and Settlement Agreement is terminated under Clause 67.4
thereof and not replaced by one or more agreements, commercial arrangements or
open market mechanisms or frameworks, in each case on terms which two directors
of the Issuer certify in good faith to the Trustee to be not materially less
favourable to the business of the Group or to the business of the Relevant Group
Member or Members party to the Pooling and Settlement Agreement; or
(bb) any Relevant Group Member is given notice pursuant to Clause 67.3.2 of the
Pooling and Settlement Agreement requiring it to cease to be a party thereto; or
(cc) any notice declaring an event of default (as defined in the Pooling and
Settlement Agreement) is given to any Relevant Group Member under Clause 66.1.1
or 66.2 thereof and such default remains unremedied or unwaived; or
(dd) any modification (other than a modification which is of a formal, minor or
technical nature) is made to the Pooling and Settlement Agreement on or after
the date of the relevant Pricing Supplement, unless two directors of the Issuer
have certified in good faith to the Trustee that any such modification has not
had and will not have a materially adverse effect on the financial rights and
obligations of any Relevant Group Member under the Pooling and Settlement
Agreement or a materially adverse effect on the business of the Group or the
business of any Relevant Group Member party to the Pooling and Settlement
Agreement, provided that any such modification shall, to the extent it grants or
confers powers or discretions on the Director General of Electricity Supply (or
any successor) under or in respect of the Pooling and Settlement Agreement, be
<PAGE>
deemed not to have a materially adverse effect as aforesaid, but for the
avoidance of doubt any modification to the Pooling and Settlement Agreement made
by the Director General of Electricity Supply (or any successor) by virtue of or
pursuant to any such powers or discretions and which otherwise would have a
materially adverse effect as provided above shall not by virtue of this
sub-paragraph be deemed not to have such an effect; or
(ee) any Relevant Group Member ceases to be a party to the Pooling and
Settlement Agreement for any other reason (other than pursuant to (bb) and (cc)
above) except where a licence or licences is or are granted to one or more
Subsidiaries as contemplated by sub-paragraph (A) above and at or about the same
time all rights and obligations of the Relevant Group Member pursuant to the
Pooling of Settlement Agreement which are attributable to such licence(s) are
assigned and transferred to such Subsidiary and/or Subsidiaries in such manner
as the Trustee may approve (such approval not to be unreasonably withheld or
delayed) or such Subsidiary or Subsidiaries enters or enter into one or more
agreements, commercial arrangements or open market mechanisms or frameworks in
relation to such licence(s) which two directors of the Issuer certify to be not
materially less favourable to the business of the Group; or
(D) any legislation (whether primary or subordinate) is enacted which removes,
qualifies or amends (other than an amendment which is of a formal, minor or
technical nature) the duties of the Secretary of State and/or the Director
General of Electricity Supply under Section 3 of the Electricity Act as in force
on the date of the relevant Pricing Supplement, unless two directors of the
Issuer have certified in good faith to the Trustee that such removal,
qualification or amendment is unlikely to have a materially adverse effect on
the financial condition of the Group or any Relevant Group Member; or
(E) (aa) the Appointment is terminated; or
(bb) any material rights, benefits or obligations of SWSL as a water undertaker
or sewerage undertaker arising under the Appointment or the Water Industry Act
as in force on the date of the relevant Pricing Supplement or any material terms
of the Appointment are modified (whether or not with the consent of SWSL and
whether pursuant to the Water Industry Act or otherwise) unless two directors of
the Issuer have certified in good faith to the Trustee that such modified
rights, benefits, obligations or terms are not materially less favourable to the
business of the Group and to the business of SWSL; or
(F) any legislation (whether primary or subordinate) is enacted removing,
reducing or qualifying the duties or powers of the Secretary of State for the
Environment (or any successor) and/or the Director General of Water Services (or
any successor) (including without limitation any such legislation removing,
reducing or qualifying such duties or powers under or pursuant to Sections 2, 9
or 24 of the Water Industry Act) in each case as compared to those in force on
the date of the relevant Pricing Supplement, unless two directors of the Issuer
have certified in good faith to the Trustee that such removal, reduction or
qualification is unlikely to have a material adverse effect on the financial
condition of the Group or SWSL;
"Restructuring Period" means:
(A) if at any time a Restructuring Event occurs there are Rated Securities, the
period of 90 days starting from and including the day on which that
Restructuring Event occurs; or
(B) if at the time a Restructuring Event occurs there are no Rated Securities,
the period starting from and including the day on which that Restructuring Event
occurs and ending on the day 90 days following the later of (aa) the date on
which the Issuer shall seek to obtain a rating as contemplated in the definition
of Negative Rating prior to the expiry of the 14 days referred to in that
definition and (bb) the date on which a Negative Certification shall have been
given to the Issuer in respect of that Restructuring Event;
"Secretary of State" means the Secretary of State for Trade and Industry (or
any successor) or, as the case may be, the Secretary of State for Scotland
(or any successor);
"Subsidiary" means a subsidiary within the meaning of Section 736 of the
Companies Act 1985;
"Subsidiary Undertaking" shall have the meaning given to it by Section 258 of
the Companies Act 1985 (but, in relation to the Issuer, shall exclude any
undertaking (as defined in the Companies Act 1985) whose accounts are not
included in the then latest published audited consolidated accounts of the
Issuer, or (in the case of an undertaking which has first become a subsidiary
undertaking of a member of the Group since the date as at which any such audited
accounts were prepared) would not have been so included or consolidated if it
had become so on or before that date);
"SWSL" means Southern Water Services Limited;
"Transmission Licence" means the electricity transmission licence granted by the
Secretary of State for Scotland to the Issuer under the Electricity Act as
comprised in the Composite Licence as in effect on the date of the relevant
Pricing Supplement; and
"Water Industry Act" means the Water Industry Act 1991 as amended or re-enacted
from time to time and all subordinate legislation made pursuant thereto.
Any reference to an obligation being guaranteed shall include a reference to an
indemnity being given in respect of the obligation.
<PAGE>
(g) Purchases
The Issuer and any of its Subsidiaries may to the extent permitted by applicable
law, at any time purchase Notes (provided that all unmatured Receipts and
Coupons and unexchanged Talons relating thereto are attached thereto or
surrendered therewith) in the open market or otherwise at any price.
(h) Cancellation
All Notes purchased by or on behalf of the Issuer or any of its Subsidiaries
shall be surrendered for cancellation, in the case of Bearer Notes, by
surrendering each such Note together with all unmatured Receipts and Coupons and
all unexchanged Talons to the Issuing and Paying Agent and, in the case of
Registered Notes, by surrendering the Certificate representing such Notes to the
Registrar and, in each case, if so surrendered, shall, together with all Notes
redeemed by the Issuer, be cancelled forthwith (together with all unmatured
Receipts and Coupons and unexchanged Talons attached thereto or surrendered
therewith). Any Notes so surrendered for cancellation may not be reissued or
resold.
7. Payments and Talons
(a) Bearer Notes
Payments of principal and interest in respect of Bearer Notes shall, subject as
mentioned below, be made against presentation and surrender of the relevant
Receipts (in the case of payments of Instalment Amounts other than on the due
date for redemption and provided that the Receipt is presented for payment
together with its relative Note), Notes (in the case of all other payments of
principal and, in the case of interest, as specified in Condition 7(f)(vi)) or
Coupons (in the case of interest, save as specified in Condition 7(f)(ii)), as
the case may be, at the specified office of any Paying Agent outside the United
States by a cheque payable in the currency in which such payment is due drawn
on, or, at the option of the holder, by transfer to an account denominated in
that currency with, a bank in the principal financial centre for that currency;
provided that (i) in the case of Euro, the transfer may be to, or the cheque
drawn on, an Euro account with a bank in Europe and (ii) until the start of the
third stage of European economic and monetary union, all payments in respect of
Notes which are expressed to be payable in Euro will be payable in ECU at the
rate of one ECU for one Euro by transfer to or cheque drawn on, an account
specified by the payee in London, Luxembourg, Paris or Brussels.
(b) Registered Notes
(i) Payments of principal (which for the purposes of this Condition 7(b) shall
include final Instalment Amounts but not other Instalment Amounts) in respect of
Registered Notes shall be made against presentation and surrender of the
relevant Certificates at the specified office of any of the Transfer Agents or
of the Registrar and in the manner provided in paragraph (ii) below.
(ii) Interest (which for the purpose of this Condition 7(b) shall include all
Instalment Amounts other than final Instalment Amounts) on Registered Notes
shall be paid to the person shown on the Register at the close of business on
the fifteenth day before the due date for payment thereof (the "Record Date").
Payments of interest on each Registered Note shall be made in the currency in
which such payments are due by cheque drawn on a bank in the principal financial
centre of the country of the currency concerned and mailed to the holder (or to
the first named of joint holders) of such Note at its address appearing in the
Register. Upon application by the holder to the specified office of the
Registrar or any Transfer Agent before the Record Date and subject as provided
in paragraph (a) above, such payment of interest may be made by transfer to an
account in the relevant currency maintained by the payee with a bank in the
principal financial centre of the country of that currency.
(c) Payments in the United States
Notwithstanding the foregoing, if any Bearer Notes are denominated in U.S.
dollars, payments in respect thereof may be made at the specified office of any
Paying Agent in New York City in the same manner as aforesaid if (i) the Issuer
shall have appointed Paying Agents with specified offices outside the United
States with the reasonable expectation that such Paying Agents would be able to
make payment of the amounts on the Notes in the manner provided above when due,
(ii) payment in full of such amounts at all such offices is illegal or
effectively precluded by exchange controls or other similar restrictions on
payment or receipt of such amounts and (iii) such payment is then permitted by
United States law, without involving, in the opinion of the Issuer, any adverse
tax consequence to the Issuer.
(d) Payments Subject to Fiscal Laws
All payments are subject in all cases to any applicable fiscal or other laws,
regulations and directives, but without prejudice to the provisions of Condition
8. No commission or expenses shall be charged to the Noteholders or
Couponholders in respect of such payments.
(e) Appointment of Agents
The Issuing and Paying Agent, the Paying Agents, the Registrar, the Transfer
Agents and the Calculation Agent initially appointed by the Issuer and their
respective specified offices are listed below. The Issuing and Paying Agent, the
Paying Agents, the Registrar, the Transfer Agents and the Calculation Agent act
solely as agents of the Issuer and do not assume any obligation or relationship
of agency or trust for or with any Noteholder or Couponholder. The Issuer
reserves the right at any time with the approval of the Trustee to vary or
terminate the appointment of the Issuing and Paying Agent, any other Paying
<PAGE>
Agent, the Registrar, any Transfer Agent or the Calculation Agent and to appoint
additional or other Paying Agents or Transfer Agents, provided that the Issuer
shall at all times maintain (i) an Issuing and Paying Agent, (ii) a Registrar in
relation to Registered Notes, (iii) a Transfer Agent in relation to Registered
Notes, (iv) one or more Calculation Agent(s) where the Conditions so require,
(v) Paying Agents having specified offices in at least two major European cities
(including London so long as the Notes are listed on the London Stock Exchange
and (vi) such other agents as may be required by any other stock exchange on
which the Notes may be listed, in each case, as approved by the Trustee.
In addition, the Issuer shall forthwith appoint a Paying Agent in New York City
in respect of any Bearer Notes denominated in U.S. dollars in the circumstances
described in paragraph (c) above.
Notice of any such change or any change of any specified office shall promptly
be given to the Noteholders.
(f) Unmatured Coupons and Receipts and Unexchanged Talons
(i) Unless the Pricing Supplement provides that the relative Coupons are to
become void upon the due date for redemption of those Notes, Bearer Notes should
be surrendered for payment together with all unmatured Coupons (if any)
appertaining thereto, failing which an amount equal to the face value of each
missing unmatured Coupon (or, in the case of payment not being made in full,
that proportion of the amount of such missing unmatured Coupon that the sum of
principal so paid bears to the total principal due) shall be deducted from the
Redemption Amount due for payment. Any amount so deducted shall be paid in the
manner mentioned above against surrender of such missing Coupon within a period
of 10 years from the Relevant Date for the payment of such principal (whether or
not such Coupon has become void pursuant to Condition 9).
(ii) If the Pricing Supplement so provides, upon the due date for redemption of
any Bearer Note, unmatured Coupons relating to such Note (whether or not
attached) shall become void and no payment shall be made in respect of them.
(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon
relating to such Note (whether or not attached) shall become void and no Coupon
shall be delivered in respect of such Talon.
(iv) Upon the due date for redemption of any Bearer Note that is redeemable in
instalments, all Receipts relating to such Note having an Instalment Date
falling on or after such due date (whether or not attached) shall become void
and no payment shall be made in respect of them.
(v) Where any Bearer Note that provides that the relative unmatured Coupons are
to become void upon the due date for redemption of those Notes is presented for
redemption without all unmatured Coupons and any unexchanged Talon relating to
it, and where any Bearer Note is presented for redemption without all unmatured
Coupons and any unexchanged Talon relating to it, redemption shall be made only
against the provision of such indemnity as the Issuer may require.
(vi) If the due date for redemption of any Note is not a due date for payment of
interest, interest accrued from the preceding due date for payment of interest
or the Interest Commencement Date, as the case may be, shall only be payable
against presentation (and surrender if appropriate) of the relevant Bearer Note
or Certificate representing it, as the case may be. Interest accrued on a Note
that only bears interest after its Maturity Date shall be payable on redemption
of such Note against presentation of the relevant Note or Certificate
representing it, as the case may be.
(g) Talons
On or after the Interest Payment Date for the final Coupon forming part of a
Coupon sheet issued in respect of any Bearer Note, the Talon forming part of
such Coupon sheet may be surrendered at the specified office of the Issuing and
Paying Age, in exchange for a further Coupon sheet (and if necessary another
Talon for a further Coupon sheet) (but excluding any Coupons that may have
become void pursuant to Condition 9).
(h) Non-Business Days
If any date for payment in respect of any Note, Receipt or Coupon is not a
business day, the holder shall not be entitled to payment until the next
following business day nor to any interest or other sum in respect of such
postponed payment. In this paragraph, "business day" means a day (other than a
Saturday or a Sunday) on which banks and foreign exchange markets are open for
business in the relevant place of presentation, in such jurisdictions as shall
be specified as "Business Day Jurisdictions" hereon and:
(i) (in the case of a payment in a currency other than Euro) where payment is to
be made by transfer to an account maintained with a bank in the relevant
currency, on which foreign exchange transactions may be carried on in the
relevant currency in the principal financial centre of the country of such
currency or
(ii) (in the case of a payment in Euro, or, until the start of the third stage
of European economic and monetary union, the ECU) on which banks are open for
business and carrying out transactions in Euro (or ECU, as the case may be) in
the jurisdiction in which the Euro account (or ECU account, as the case may be)
specified by the payee is located.
(i) Euro and ECU Notes
(i) Definition of Euro and the ECU
References in these Conditions to the Euro are to the currency which is to be
introduced at the start of the third stage of the European economic and monetary
union pursuant to Article 1091(4) of the Treaty establishing the European
Communities as
<PAGE>
amended by the Treaty on European Union (the "Treaty"). References to the ECU
("ECU") are to ECU as referred to in Article 109(g) of the Treaty as defined in
Council Regulation (EC) No. 3320/94, that is from time to time used as the unit
of account of the EC. Changes to the ECU may be made by the EC, in which event
the ECU shall change accordingly.
(ii) Redenomination
Notes denominated in a currency that may, after the start of the third stage of
European economic and monetary union, be converted into Euros, may be subject to
redenomination, renominalisation and/or consolidation with other Notes then
denominated in Euros, as specified in the relevant Pricing Supplement.
8. Taxation
All payments of principal and interest in respect of the Notes, the Receipts and
the Coupons (other than payments of interest in respect of Registered Notes
which will be made subject to the deduction of any United Kingdom income tax
required to be withheld or deducted at source) shall be made free and clear of,
and without withholding or deduction for, any taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected, withheld or
assessed by or within the United Kingdom or any authority therein or thereof
having power to tax, unless such withholding or deduction is required by law. In
that event, the Issuer shall pay such additional amounts as shall result in
receipt by the Noteholders and Couponholders of such amounts as would have been
received by them had no such withholding or deduction been required, except that
no such additional amounts shall be payable with respect to any Note, Receipt or
Coupon:
(a) to, or to a third party on behalf of, a holder who is liable to such taxes,
duties, assessments or governmental charges in respect of such Note, Receipt or
Coupon by reason of his having some connection with the United Kingdom other
than the mere holding of the Note, Receipt or Coupon; or
(b) presented (or in respect of which the Certificate representing it is
presented) for payment more than 30 days after the Relevant Date except to the
extent that the holder of it would have been entitled to such additional amounts
on presenting it for payment on the thirtieth day; or
(c) presented for payment in the United Kingdom.*
As used in these Conditions, "Relevant Date" in respect of any Note, Receipt or
Coupon means the date on which payment in respect of it first becomes due or (if
any amount of the money payable is improperly withheld or refused) the date on
which payment in full of the amount outstanding is made or (if earlier) the date
seven days after that on which notice is duly given to the Noteholders that,
upon further presentation of the Note (or relative Certificate), Receipt or
Coupon being made in accordance with the Conditions, such payment will be made,
provided that payment is in fact made upon such presentation. References in
these Conditions to (i) "principal" shall be deemed to include any premium
payable in respect of the Notes, all Instalment Amounts, Redemption Amounts,
Amortised Face Amounts and all other amounts in the nature of principal payable
pursuant to Condition 6 or any amendment or supplement to it, (ii) "interest"
shall be deemed to include all Interest Amounts and all other amounts payable
pursuant to Condition 5 or any amendment or supplement to it and (iii)
"principal" and/or "interest" shall be deemed to include any additional amounts
that may be payable under this Condition or any undertaking given in addition to
or in substitution for it under the Trust Deed.
9. Prescription
Claims against the Issuer for payment in respect of the Notes, Receipts and
Coupons (which, for this purpose, shall not include Talons) shall be prescribed
and become void unless made within 10 years (in the case of principal) or five
years (in the case of interest) from the appropriate Relevant Date in respect of
them.
10. Events of Default
The Trustee at its discretion may, and if so requested in writing by the holders
of at least one-quarter in principal amount of the Notes then outstanding or if
so directed by an Extraordinary Resolution of the Noteholders shall, subject to
being indemnified to its satisfaction, (but, in the case of the happening of any
of the events mentioned in sub-paragraphs (b), (c), (e), (f), (g) and (h) below,
only if the Trustee shall have certified in writing to the Issuer that such
event is, in its opinion, materially prejudicial to the interests of the
Noteholders), give notice to the Issuer that the Notes are, and they shall
accordingly thereby forthwith become, immediately due and repayable at their
principal amount together with accrued interest (as provided in the Trust Deed)
if any of the following events (each an "Event of Default") shall have occurred
(unless such Event of Default has been remedied to the satisfaction of the
Trustee):
(a) if default is made for a period of 14 days or more in the payment of any
principal or the purchase price due in respect of any Notes pursuant to
Condition 6 or 21 days or more in the payment of any interest due in respect of
the Notes or any of them; or
<PAGE>
(b) if the Issuer fails to perform or observe any of its other obligations under
the Notes or the Trust Deed and (except where the Trustee shall have certified
to the Issuer in writing that it considers such failure to be incapable of
remedy in which case no such notice or continuation as is hereinafter mentioned
will be required) such failure continues for the period of 60 days (or such
longer period as the Trustee may in its absolute discretion permit) next
following the service by the Trustee of notice on the Issuer requiring the same
to be remedied; or
(c) if (i) any other indebtedness for borrowed money of the Issuer or any
Principal Subsidiary becomes due and repayable prior to its stated maturity by
reason of an event of default or (ii) any such indebtedness for borrowed money
is not paid when due or, as the case may be, within any applicable grace period
(as originally provided) or (iii) the Issuer or any Principal Subsidiary fails
to pay when due (or, as the case may be, within any originally applicable grace
period) any amount payable by it under any present or future guarantee for, or
indemnity in respect of, any indebtedness for borrowed money of any person or
(iv) any security given by the Issuer or any Principal Subsidiary for any
indebtedness for borrowed money of any person or for any guarantee or indemnity
of indebtedness for borrowed money of any person becomes enforceable by reason
of default in relation thereto and steps are taken to enforce such security,
save in any such case where there is a bona fide dispute as to whether the
relevant indebtedness for borrowed money or any such guarantee or indemnity as
aforesaid shall be due and payable, provided that the aggregate amount of the
relevant indebtedness for borrowed money in respect of which any one or more of
the events mentioned above in this sub-paragraph (c) has or have occurred equals
or exceeds whichever is the greater of (Pounds)20,000,000 or its equivalent in
other currencies (as determined by the Trustee) or 2% of Capital and Reserves,
and for the purposes of this sub-paragraph (c), "indebtedness for borrowed
money" shall exclude Project Finance Indebtedness; or
(d) if any order shall be made by any competent court or any resolution shall be
passed for the winding up or dissolution of the Issuer, save for the purpose of
amalgamation, merger, consolidation, reorganisation, reconstruction or other
similar arrangement on terms previously approved in writing by the Trustee (such
approval not to be unreasonably withheld or delayed having regard to the
interests of the Noteholders) or by an Extraordinary Resolution of the
Noteholders; or
(e) if (i) any order shall be made by any competent court or any resolution
shall be passed for the winding up or dissolution of a Principal Subsidiary,
save for the purposes of amalgamation, merger, consolidation, reorganisation,
reconstruction or other similar arrangement (A) not involving or arising out of
the insolvency of such Principal Subsidiary and under which all the surplus
assets of such Principal Subsidiary are transferred to the Issuer or any of its
other Subsidiaries (other than an Excluded Subsidiary) or (B) the terms of which
have previously been approved in writing by the Trustee (such approval not to be
unreasonably withheld or delayed having regard to the interests of Noteholders)
or by an Extraordinary Resolution of the Noteholders or (ii) a petition is
presented under Section 24 of the Water Industry Act (and is not dismissed
within 60 days) or a special administration order is made under Section 24 of
the Water Industry Act in respect of SWSL; or
(f) if the Issuer or any Principal Subsidiary shall cease to carry on the whole
or substantially the whole of its business, save in each case for the purposes
of amalgamation, merger, consolidation, reorganisation, reconstruction, or other
similar arrangement (i) not involving or arising out of the insolvency of the
Issuer or such Principal Subsidiary and under which all or substantially all of
its assets are transferred to another member or members of the Group (other than
an Excluded Subsidiary) or to a transferee or transferees which is or are, or
immediately upon such transfer become(s), a Principal Subsidiary or Principal
Subsidiaries, or (ii) under which all or substantially all of its assets are
transferred to a third party or parties (whether associates or not) for full
consideration by the Issuer or a Principal Subsidiary on an arm's length basis
or (iii) the terms of which have previously been approved in writing by the
Trustee or by an Extraordinary Resolution of the Bondholders, provided that if
neither the Issuer nor any Relevant Subsidiary holds an Electricity Licence, the
Issuer shall be deemed to have ceased to carry on the whole or substantially the
whole of its business (and neither of exceptions (i) and (ii) shall apply); or
(g) if the Issuer or any Principal Subsidiary shall suspend or announce its
intention to suspend payment of its debts generally or shall be declared or
adjudicated by a competent court to be unable, or shall admit in writing its
inability, to pay its debts generally (within the meaning of Section 123(1) or
(2) of the Insolvency Act 1986) as they fall due, or shall be adjudicated or
found insolvent by a competent court or shall enter into any composition or
other similar arrangement with its creditors generally under Section 1 of the
Insolvency Act 1986; or
(h) if a receiver, administrative receiver, administrator or other similar
official shall be appointed in relation to the Issuer or any Principal
Subsidiary or in relation to the whole or a substantial part of the undertaking
or assets of any of them or a distress, execution or other process shall be
levied or enforced upon or sued out against, or any encumbrancer shall take
possession of, the whole or a substantial part of the assets of any of them and
in any of the foregoing cases it or he shall not be paid out or discharged
within 90 days (or such longer period as the Trustee may in its absolute
discretion permit).
For the purposes of sub-paragraph (g) above, Section l23(1)(a) of the Insolvency
Act 1986 shall have effect as if for "(Pounds)750" there was substituted
"(Pounds)250,000". Neither the Issuer nor any Principal Subsidiary shall be
deemed to be unable to pay its debts for the purposes of sub-paragraph (g) above
if any such demand as is mentioned in Section 123(1)(a) of the Insolvency Act
1986 is being contested in good faith by the Issuer or the relevant Principal
Subsidiary with recourse to all appropriate measures and procedures or if any
such demand is satisfied before the expiration of such period as may be stated
in any notice given by the Trustee under this Condition.
<PAGE>
11. Meetings of Noteholders, Modification, Waiver and Substitution
(a) Meetings of Noteholders
The Trust Deed contains provisions for convening meetings of Noteholders to
consider matters affecting their interests, including the modification of any of
the terms and conditions of the Notes or any provisions of the Trust Deed. Any
such modification may be made if sanctioned by an Extraordinary Resolution. The
quorum for any meeting convened to consider an Extraordinary Resolution will be
one or more persons holding or representing a clear majority in principal amount
of the Notes for the time being outstanding, or at any adjourned meeting, one or
more persons being or representing Noteholders whatever the principal amount of
the Notes held or represented, unless the business of such meeting includes
consideration of proposals, inter alia (i) to postpone the maturity or
redemption of the Notes, any Instalment Date or any date for payment of any
interest or Interest Amount on the Notes, (ii) to reduce or cancel the principal
amount of, or any Instalment Amount of, or any premium payable on redemption of,
the Notes, (iii) to reduce the rate or rates of interest in respect of the Notes
or to vary the method or basis of calculating the rate or rates or amount of
interest or the basis for calculating any Interest Amount in respect of the
Notes, (iv) if a Minimum and/or a Maximum Interest Rate, Instalment Amount or
Redemption Amount is shown hereon to reduce any such Minimum and/or Maximum,
(v) to vary any method of, or basis for, calculating the Redemption Amount,
including the method of calculating the Amortised Face Amount, (vi) to vary the
currency or currencies of payment or denomination of the Notes, (vii) to take
any steps that as specified hereon may only be taken following approval by an
Extraordinary Resolution to which the special quorum provisions apply, or (viii)
to modify the provisions concerning the quorum required at any meeting of
Noteholders or the majority required to pass the Extraordinary Resolution, in
which case the necessary quorum shall be one or more persons holding or
representing not less than two-thirds, or at any adjourned meeting not less than
one-third, in principal amount of the Notes for the time being outstanding. Any
Extraordinary Resolution duly passed shall be binding on Noteholders (whether or
not they were present at the meeting at which such resolution was passed) and on
all Couponholders.
These Conditions may be amended, modified or varied in relation to any Series of
Notes by the terms of the relevant Pricing Supplement in relation to such
Series.
(b) Modification of the Trust Deed
The Trustee may agree, without the consent of the Noteholders or Couponholders,
to (i) any modification of any of the provisions of the Trust Deed, the Notes or
the Coupons that is of a formal, minor or technical nature or is made to correct
a manifest error, and (ii) any other modification (except as mentioned in the
Trust Deed), and any waiver or authorisation of any breach or proposed breach,
of any of the provisions of the Trust Deed that is in the opinion of the Trustee
not materially prejudicial to the interests of the Noteholders. Any such
modification, authorisation or waiver shall be binding on the Noteholders and
the Couponholders and, if the Trustee so requires, such modification shall be
notified to the Noteholders as soon as practicable.
(c) Substitution
The Trust Deed contains provisions permitting the Trustee to agree, subject to
such amendment of the Trust Deed and such other conditions as the Trustee may
require, but without the consent of the Noteholders or the Couponholders, to the
substitution of any other company in place of the Issuer, or of any previous
substituted company, as principal debtor under the Trust Deed and the Notes. In
the case of such a substitution the Trustee may agree, without the consent of
the Noteholders or the Couponholders, to a change of the law governing the
Notes, the Receipts, the Coupons, the Talons and/or the Trust Deed provided that
such change would not in the opinion of the Trustee be materially prejudicial to
the interests of the Noteholders.
(d) Entitlement of the Trustee
In connection with the exercise of its functions (including but not limited to
those referred to in this Condition) the Trustee shall have regard to the
interests of the Noteholders as a class and shall not have regard to the
consequences of such exercise for individual Noteholders or Couponholders and
the Trustee shall not be entitled to require, nor shall any Noteholder or
Couponholder be entitled to claim, from the Issuer any indemnification or
payment in respect of any tax consequence of any such exercise upon individual
Noteholders or Couponholders.
12. Replacement of Notes, Certificates, Receipts, Coupons and Talons
If a Note, Certificate, Receipt, Coupon or Talon is lost, stolen, mutilated,
defaced or destroyed, it may be replaced, subject to applicable laws,
regulations and stock exchange regulations, at the specified office of the
Issuing and Paying Agent (in the case of Bearer Notes, Receipts, Coupons or
Talons) and of the Registrar (in the case of Certificates) or such other Paying
Agent or Transfer Agent, as the case may be, as may from time to time be
designated by the Issuer for the purpose and notice of whose designation is
given to Noteholders, in each case on payment by the claimant of the fees and
costs incurred in connection therewith and on such terms as to evidence,
security and indemnity (which may provide, inter alia, that if the allegedly
lost, stolen or destroyed Note, Certificate, Receipt, Coupon or Talon is
subsequently presented for payment or, as the case may be, for exchange for
further Coupons, there shall be paid to the Issuer on demand the amount payable
by the Issuer in respect of such Notes, Certificates, Receipts, Coupons or
further Coupons) and otherwise as the Issuer may reasonably require. Mutilated
or defaced Notes, Certificates, Receipts, Coupons or Talons must be surrendered
before replacements will be issued.
<PAGE>
13. Further Issues
The Issuer may from time to time without the consent of the Noteholders or
Couponholders create and issue further securities either having the same terms
and conditions as the Notes in all respects (or in all respects except for the
first payment of interest on them) and so that such further issue shall be
consolidated and form a single series with the outstanding securities of any
series (including the Notes) or upon such terms as the Issuer may determine at
the time of their issue. References in these Conditions to the Notes include
(unless the context requires otherwise) any other securities issued pursuant to
this Condition and forming a single series with the Notes. Any further
securities forming a single series with the outstanding securities of any series
(including the Notes) constituted by the Trust Deed or any deed supplemental to
it shall, and any other securities may (with the consent of the Trustee), be
constituted by the Trust Deed. The Trust Deed contains provisions for convening
a single meeting of the Noteholders and the holders of securities of other
series where the Trustee so decides.
14. Enforcement
At any time after the Notes become due and payable, the Trustee may, as its
discretion and without further notice, institute such proceedings against the
Issuer as it may think fit to enforce the terms of the Trust Deed, but it need
not take any such proceedings unless (a) it shall have been so directed by an
Extraordinary Resolution or so requested in writing by holders of at least
one-fifth in principal amount of the Notes outstanding, and (b) it shall have
been indemnified to its satisfaction. No Noteholder, Receiptholder or
Couponholder may proceed directly against the Issuer unless the Trustee, having
become bound so to proceed fails to do so within a reasonable time and such
failure is continuing.
15. Indemnification of the Trustee
The Trust Deed contains provisions for the indemnification of the Trustee and
for its relief from responsibility. The Trustee is entitled to enter into
business transactions with the Issuer and any entity related to the Issuer
without accounting for any profit.
16. Notices
Notices to the holders of Registered Notes shall be mailed to them at their
respective addresses in the Register and deemed to have been given on the fourth
weekday (being a day other than a Saturday or a Sunday) after the date of
mailing. Notices to the holders of Bearer Notes shall be valid if published in a
daily newspaper of general circulation in London (which is expected to be the
Financial Times). The Issuer shall also ensure that notices are duly published
in a manner which complies with the rules and regulations of any other stock
exchange on which the Notes are, for the time being, listed. Any such notice
shall be deemed to have been given on the date of such publication or, if
published more than once or on different dates, on the first date on which
publication is made, as provided above.
Couponholders shall be deemed for all purposes to have notice of the contents of
any notice given to the holders of Bearer Notes in accordance with this
Condition.
17. Governing Law and Jurisdiction
(a) Governing Law
The Trust Deed, the Notes, the Receipts, the Coupons and the Talons are governed
by, and shall be construed in accordance with, English law.
(b) Jurisdiction
The courts of England are to have jurisdiction to settle any disputes that may
arise out of or in connection with any Notes, Receipts, Coupons or Talons and
accordingly any legal action or proceedings arising out of or in connection with
any Notes, Receipts, Coupons or Talons ("Proceedings") may be brought in such
courts. The Issuer has in the Trust Deed irrevocably submitted to the
jurisdiction of such courts.
(c) Service of Process
The Issuer, in accordance with the Trust Deed, will appoint its London office,
whose address is at 54 Queen Anne Street, London W1M 9LA to act as its agent in
England to receive, for it and on its behalf, service of process in any
Proceedings in England.
<PAGE>
SCHEDULE 2
Part D
Form of Coupon
On the front:
SCOTTISH POWER plc
DEBT ISSUANCE PROGRAMME
Series No. [.]
[Title of issue]
Coupon for [[set out amount due, if known]/the amount] due on [the Interest
Payment Date falling in]* [.], [.].
[Coupon relating to Note in the principal amount of [.]]**
This Coupon is payable to bearer (subject to the Conditions endorsed on the Note
to which this Coupon relates, which shall be binding upon the holder of this
Coupon whether or not it is for the time being attached to such Note) at the
specified offices of the Issuing and Paying Agent and the Paying Agents set out
on the reverse hereof (or any other Issuing and Paying Agent or further or other
Paying Agents or specified offices duly appointed or nominated and notified to
the Noteholders).
[If the Note to which this Coupon relates shall have become due and payable
before the maturity date of this Coupon, this Coupon shall become void and no
payment shall be made in respect of it.]***
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
Scottish Power plc
By:
[Cp. No.] [Denomination] [ISIN] [Series] [Certif. No.]
- --------------------------------------------------------------------------------
45
<PAGE>
On the back:
CITIBANK, N.A.
P.O. Box 18055
5 Carmelite Street
London
EC4Y 0PA
PAYING AGENT
CITIBANK, N.A., BRUSSELS OFFICE
Building 726
1931 Brucargo
Brussels
[*Only necessary where Interest Payment Dates are subject to adjustment in
accordance with a Business Day Convention otherwise the particular Interest
Payment Date should be specified.]
[**Only required for Coupons relating to Floating Rate or Variable Coupon Amount
Notes that are issued in more than one denomination.]
[***Delete if Coupons are not to become void upon early redemption of Note.]
- --------------------------------------------------------------------------------
46
<PAGE>
SCHEDULE 2
Part E
Form of Talon
On the front:
SCOTTISH POWER plc
DEBT ISSUANCE PROGRAMME
Series No. [.]
[Title of issue]
Talon for further Coupons falling due on [the Interest Payment Dates falling
in]*[.] [.].
[Talon relating to Note in the principal amount of [.]]**
After all the Coupons relating to the Note to which this Talon relates have
matured, further Coupons (including if appropriate a Talon for further Coupons)
shall be issued at the specified office of the Issuing and Paying Agent set out
on the reverse hereof (or any other Issuing and Paying Agent or specified office
duly appointed or nominated and notified to the Noteholders) upon production and
surrender of this Talon.
If the Note to which this Talon relates shall have become due and payable before
the original due date for exchange of this Talon, this Talon shall become void
and no exchange shall be made in respect of it.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
SCOTTISH POWER plc
By:
[Talon No.] [ISIN] [Series] [Certif. No.]
On the back:
ISSUING AND PAYING AGENT
CITIBANK, N.A.
P.O. Box 18055
5 Carmelite Street
London
EC4Y 0PA
PAYING AGENT
CITIBANK, N.A., BRUSSELS OFFICE
1931 Brucargo
Brussels
- --------------------------------------------------------------------------------
47
<PAGE>
[* The maturity dates of the relevant Coupons should be set out if known,
otherwise reference should be made to the months and years in which the Interest
Payment Dates fall due.]
[** Only required where the Series comprises Notes of more than one
denomination.]
- --------------------------------------------------------------------------------
48
<PAGE>
SCHEDULE 2
Part F
Form of Receipt
SCOTTISH POWER plc
DEBT ISSUANCE PROGRAMME
Series No. [.]
Receipt for the sum of [*] being the instalment of principal payable in
accordance with the Terms and Conditions endorsed on the Note to which this
Receipt relates (the "Conditions") on [.].
This Receipt is issued subject to and in accordance with the Conditions which
shall be binding upon the holder of this Receipt (whether or not it is for the
time being attached to such Note) and is payable at the specified office of any
of the Paying Agents set out on the reverse of the Note to which this Receipt
relates (and/or any other or further Paying Agents and/or specified offices as
may from time to time be duly appointed and notified to the Noteholders).
This Receipt must be presented for payment together with the Note to which it
relates. If the Note to which this Receipt appertains shall have become due and
payable on or before the maturity date of this Receipt, this Receipt shall
become void and no payment shall be made in respect of it. The Issuer shall have
no obligation in respect of this Receipt if it is presented without the Note to
which it relates.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
SCOTTISH POWER plc
By:
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<PAGE>
In witness whereof this Supplemental Trust Deed has been executed as a deed on
the date stated at the beginning.
SCOTTISH POWER plc
By:
ADRIAN COATS DUNCAN WHYTE
THE COMMON SEAL OF THE LAW DEBENTURE TRUST CORPORATION p.l.c.
was affixed in the presence of:
STEPHEN W.S. NORTON C.S.
CLIVE RAKESTROW
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