Final Business Plan proposals

Northumbrian Water Group PLC
07 May 2004

                                                                                
                                                                      7 May 2004

           NORTHUMBRIAN WATER ANNOUNCES FINAL BUSINESS PLAN PROPOSALS

Northumbrian Water Limited ("Northumbrian Water" or "the company"), the water
and waste water subsidiary of Northumbrian Water Group plc, has announced its
proposals for an increase in prices for the period 2005-2010 as part of the
Ofwat periodic review.

The company proposes to raise its charges by 28% in real terms over the
five-year period, with 11% of the increase coming in 2005-06.

The strategy in the final business plan is consistent with the draft plan
produced by the company in August 2003. The proposals take into account the
views of its customers and WaterVoice and also incorporate the Government's
requirements for drinking water and environmental improvements.

The plan provides an increase in the investment required to properly maintain
its assets and safeguard standards of service. Measures are proposed to meet the
demand for water from major new housing developments in Essex, as well as
tackling sewer flooding and further reducing the incidence of discoloured
drinking water in the company's northern area.

The final plan takes account of the interim determination of price limits agreed
by Ofwat in December 2003, which allowed a real increase in charges of 10% in
2004-05. As a result, the increase proposed in the final business plan is lower
than that proposed in the company's draft plan.

John Cuthbert, Managing Director, said: "The price increase we propose has been
kept as low as possible. However, there are a number of unavoidable items
driving the increase that cannot be funded from the remaining scope for
efficiency savings. These include rising taxation, drinking water quality
improvements and increases to operating costs from new obligations.

"We have proposed a plan that balances the needs of our stakeholders and which
is financeable and sustainable."

Ofwat will consider the proposals, issue its draft determination for
consultation in August and then announce its final determination in December
2004.

Full details of the Final Business Plan can be found on the Northumbrian Water
website www.nwl.co.uk


Enquiries

Finsbury [phone]
Rollo Head
Mark Harris




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