Water Industry Competition

Scottish & Southern Energy PLC
17 May 2007


                        SCOTTISH AND SOUTHERN ENERGY PLC
                           WATER INDUSTRY COMPETITION



Ofwat has announced a proposal to create the first new water and sewerage
company to serve domestic customers since privatisation 18 years ago. It is
proposing to grant an 'inset appointment' to allow Scottish and Southern Energy
Water ('SSEW'), a subsidiary of Scottish and Southern Energy plc ('SSE'), to
supply water and sewerage services to a 935 home development near the Wiltshire
city of Salisbury. The development is in Wessex Water's current area of supply.


Ofwat is now asking for views on its proposal to grant an appointment.

Keith Mason, Ofwat's Director of Regulatory Finance and Competition, said: 'This
is a good step forward for competition within the water industry. Scottish and
Southern will be a new player in the industry but it already has a good
reputation for customer service in the gas and electricity sectors. We expect it
to bring that expertise to the benefit of water and sewerage customers in this
small area.'


Inset appointments are allowed when sites are not currently served by an
existing appointed water company, or where the current appointed water company
agrees to the application, or when each of the premises in the inset area uses
at least 50 million litres of water per year. There are currently 11
appointments but this would be the first one where a new entrant to the water
industry would serve households.


Ofwat will ensure that customers of the new company will pay no more than they
would had they been supplied by Wessex Water.


Ian Marchant, Chief Executive of SSE, said: 'With interests in electricity, gas
and telecoms connections, we've reviewed the extent of SSE's ability to offer
'multi-utility' services to larger customers. This ability is currently limited
to a contracting role in providing water connections services. This licence will
allow us to install, own, operate and supply water and sewerage services. We
believe that this is the best way of getting into water. It complements an
existing business activity very well and it's based on our precedent of evolving
from electricity connections only to electricity and gas. It also means
competition in the water industry in England and Wales is moving forward.'

Enquiries to:

Scottish and Southern Energy plc
Justyn Smith - Head of Media Relations                  + 44 (0)870 900 0410
Sharron Miller-Mckenzie - Press Office Manager          + 44 (0)870 900 0410




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