S.W.Water Response to OFWAT

PENNON GROUP PLC
27 July 1999

     SOUTH WEST WATER'S RESPONSE TO OFWAT'S DRAFT DETERMINATION

We note Ofwat's announcement today of the draft price Determination for South
West Water Limited, the water and sewerage subsidiary of Pennon Group Plc.

The draft Determination provides for a one-off price cut in water and sewerage
charges of 13.7% or an average £51 per household in the first year 2000/01
followed by average increases above inflation (the K factor) of 0, 2, 2 and 2.5%
for the following four years - a decrease in the average household bill over the
five years of £36 or 10%.  It also proposes a total capital expenditure of £675
million between 2000 and 2005 to enable the major programme of improvements to
water and sewarage services in the region to continue.

This announcement is the latest step in the two year process leading to the
setting of price limits for water companies for the first five years of the next
decade.

There are a number of components in the draft Determination and we will need
some time to study the details ahead of a meeting with the Director General of
Water Services scheduled for September.   The final Determination is due to be
published at the end of November 1999.

For further information, please contact: 

Ken Hill  - Group Director of Finance    01392-443220
Jo Rayner - Investor Relations Manager   01392-443401