Gas Distribution Networks

Scottish & Southern Energy PLC
28 January 2005


                        SCOTTISH AND SOUTHERN ENERGY PLC
                INVESTMENT IN GAS DISTRIBUTION NETWORKS ON TRACK


The announcements by energy regulator Ofgem on 21 January and by the Department
of Trade and Industry yesterday (27 January) confirm that the consortium in
which Scottish and Southern Energy plc ('SSE') holds fifty percent of the equity
is on course to complete the acquisition of the Scotland and the South of
England gas distribution networks from National Grid Transco later this year.
The consortium's financial arrangements, as set out on 31 August 2004, included
funding via a financial instrument of £42m held by SSE's partners, Borealis
Infrastructure ('Borealis') and Ontario Teachers' Pension Plan ('Teachers').
Under the consortium's agreement, SSE retained the right to 'buy out' fifty per
cent of the financial instrument.

Following a review of the structure of the instrument, and of its potential
benefits, SSE has decided to exercise this right. In effect, this will lead to
the financial instrument being cancelled and means that SSE will now make an
investment of £540m in cash to acquire its fifty per cent interest in the two
gas networks. SSE expects its additional investment to enhance its overall
return from the acquisition.

Ian Marchant, Chief Executive, said: 'I am pleased that our partnership with
Borealis and Teachers is continuing to develop in a positive direction and has
allowed us to make this sensible adjustment to the financial arrangements. Our
consortium continues to be very focused on the detailed work that needs to be
done over the next few months to ensure that the forthcoming acquisition goes
smoothly and delivers the benefits which we have identified.'

Enquries to:
Alan Young, Director of Corporate Communications0870 900 0410
Denis Kerby, Investor and Media Relations Manager0870 900 0410



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