Statement re Serious Fraud Office

Severn Trent Plc announces today that the Serious Fraud Office (SFO) is to
charge Severn Trent Water Ltd with three offences relating to leakage data
supplied to Ofwat between 2000 and 2002.

The SFO has decided that it will bring three charges against Severn Trent Water
Ltd under section 207 Water Industry Act 1991, namely, providing false
information to Ofwat. The three charges will relate to the leakage data in the
June Returns for 2000, 2001 and 2002.

The SFO has also informed Severn Trent that no individual will be charged with
any offences.

Tony Wray, Chief Executive of Severn Trent Plc, said:

"The new Board has co-operated fully with the SFO during the investigation. We
will now study carefully the details of the charges which relate to the
responsibilities of a previous regime. Until that process is completed and we
have taken legal advice, we cannot comment further on our response to the
charges.

"What I can say is that this new Board and management team has taken, and will
continue to take, all actions we think appropriate to ensure the maintenance of
both high ethical and professional standards and resilient and effective
controls throughout our organisation.

"There has been a comprehensive review of Severn Trent Water since I became
Managing Director in March 2005 and, now, as Chief Executive of Severn Trent, I
and my new management team are determined to continue to drive improvements in
all our activities for the benefit of all our customers and other
stakeholders."

The SFO informed Severn Trent on 31 October 2005 that, as a result of a
referral by Ofwat, it was undertaking a criminal investigation into alleged
reporting irregularities concerning leakage data supplied to Ofwat by Severn
Trent Water between 2000 and 2003.

Ofwat had been conducting its own investigation following allegations of false
reporting made by an employee of Severn Trent Water in May 2004. On 7 March
2006 Ofwat published its interim report concerning the allegations of false
reporting made against Severn Trent Water in 2004. In responding to the report
Severn Trent apologised to customers and has credited customers' accounts and
reduced future tariffs.

Severn Trent also acknowledged that Ofwat may expect further amends to be made
to customers. Ofwat has stated that this sum will be considered with Severn
Trent Water on completion of the SFO investigation into leakage.

Customer Relations Data

In April 2006 Severn Trent Plc announced that Severn Trent Water had uncovered
misstated customer relations data in submissions to Ofwat. Consequently, in
June 2006 Ofwat issued a notice under Section 22A(4) of the Water Industry Act
in relation to performance standards and a notice under Section 203 of that Act
in relation to regulatory reporting. Ofwat has indicated that it proposes to
fine Severn Trent Water in relation to these matters.

Ofwat has communicated with Severn Trent regarding the fines that it intends to
impose. At this stage the process is ongoing and therefore Severn Trent cannot
give a reliable estimate of the amount that might become payable.

For further information contact:

Peter Gavan
Director of External Affairs
0121 722 4310