Statement re Resolution of Fines

Severn Trent Plc today announces that, notwithstanding reservations about the
enforcement process, Severn Trent Water has decided not to appeal the fines of
£35.8 million imposed by Ofwat for deliberately providing false information to
Ofwat in the period 2005-06, and for delivering poor service to its customers
in the same period.

It has also concluded discussions with Ofwat concerning the resolution of the
Ofwat interim report of March 2006. As a result, Severn Trent Water has agreed
to provide targeted financial support to its low-income customers who are in
most need of financial support in the current difficult economic climate by
making payments totalling £5m to the Severn Trent Charitable Trust Fund. This
is likely to be paid £2m in each of the two years 2008-09 and 2009-10 and £1m
in 2010-11.

Tony Wray, Chief Executive of Severn Trent plc, said: "This final step now
draws a line under the legacy issues stemming from a previous management
regime. As agreed with our Regulator, Ofwat, we can now focus entirely on our
continuing journey to put Severn Trent Water back into the positive position
our customers, regulators, shareholders and employees deserve."

For further information:

Andrew Marsh

Public Affairs Manager

0121 722 4121

Venetia Cooper

Investor Relations Manager

0121 722 4523

Notes:

The Severn Trent Charitable Trust Fund

The Charitable Trust is an independent grant making trust which was established
in 1997. It is a registered charity with the aim of helping customers who have
a clear intent to be "good payers", but are having some temporary difficulty in
paying their bill. Grants can be given to individuals towards water charges,
other household charges and costs, and to organisations for the funding of debt
counselling/money advice for householders falling into the individual category.
The average grant is £300-£400 for individuals. Grants are not paid to
customers who have no desire or perceived ability to become "good payers".
People unable to meet the cost of water charges and who live in the Severn
Trent Area can apply for help.

Legacy Issues

1. In March 2006 Ofwat published an interim report concerning allegations of
false reporting made against Severn Trent Water in 2004.  Ofwat concluded that
Severn Trent Water:

- Had poor internal processes and controls which led to incorrect income data
being submitted to Ofwat in 2004 and price limits being £8m a year too high for
five years to 2010.

- Provided data to Ofwat in 2002 which was deliberately miscalculated and which
meant customers were overcharged by £2m in 2004.

- Approached the collection and submission of data in a manner which caused
Ofwat serious concerns.

Severn Trent Water has credited customers' accounts and altered future bills
appropriately to ensure the company has not profited in any way.

2. Following information volunteered by an internal Severn Trent Water
investigation in 2006, Ofwat proposed in April 2008 to fine Severn Trent Water
£35.8 million for deliberately providing false customer relations information
to the regulator and providing a poor service to customers in 2005/06.  This
fine was confirmed by Ofwat on 2 July 2008.

Severn Trent Water is lowering customers' bills by £10.6million, around £2.40
per household, to ensure the company has not profited in any way.

3. In April 2008, having carefully studied the details of the charges, and
having taken legal advice, Severn Trent Plc announced that Severn Trent Water
was pleading guilty to two offences relating to leakage data supplied to Ofwat
in 2001 and 2002. On 1 July 2008 it was fined £2m by the Central Criminal Court
and ordered to pay £220,000 costs.